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BRAND OF THE STATE AND THE NECESSITY OF ITS FORMATION IN THE REPUBLIC OF ARMENIA
Vardan Atoian, Karen Babajanyan
http://www.noravank.am/en/?page=analit ics&nid=2041
01 October 2009
In the article the essence of the brand is presented, the main problems
which come forward during the formation of the brand are discussed,
as well as the complex of the measures, which implementation allows
raising the rate of the country, are presented. Those measures and
proposals are based on the best international practice and they can
be very useful in the elaboration of the strategy of the position of
the Republic of Armenia. The article also touches upon such vital for
the RA issues as the state authority, the investment attractiveness,
the development of tourism industry, the quality of the exported
goods and measures directed to the demand increase.
The formation of the state brand is the process of strategic importance
for any state. The foreign economic policy and the dynamic development
of the economic growth are mostly connected with the authority of the
given country on the external market. Firstly, let us try to mention
what is brand and how it differs from common name.
Let us mention that any name can be a brand, e.g. "FedEx", "Porsche",
"Marlboro", "New York", "Japan", "Mozart" and etc. Thus, it is any
name, title, trademark, which is associated in a certain audience
with a number of positive characteristics. In other words, brand can
be formulated as a complex of emotions and feelings.
If we try to differentiate between brand and trademark, it is
necessary to mention that the trademark is legal category and brand
is the so called intellectual side of the product. It only exists
in the subconscious of the consumers. It is remarkable that in
some countries the cost of the brand is included in the accounting
reports of the company as a tangible asset (e.g. Great Britain), and
often it is evaluated even more than all the production facilities
put together. Thus, "Phillip Morris" bought "Kraft Food" trademark
for $13 billion, which is 600% higher than its book cost, "Grand
Metropolitan" company bought "Pillsbury" trademark which is $5.5
billion more expensive than the cost of the owner company [1].
In our opinion, while elaborating the policy which will promote
to the formation of the state's brand several factors should be
taken into consideration. Let us bring several examples. Thus while
saying Paris, first of all, we understand fashion, romance, in case
with New York - business, energy, Washington - power, might, Tokyo -
modern, progressive technology, Egypt - old culture, Rome - wonderful
classical architecture, Rio-de-Janeiro - carnival, Germany - solidity,
punctuality and etc.
Amid the current worldwide globalization process various states,
cities, companies very often obviously and sometimes tacitly compete
with each other in order to attract the attention of tourists, local
and foreign investors, consumers and to obtain additional funds to
their economy. In this competition, in our opinion, win those who
can position themselves at the world market, among this carrying out
efficient regional marketing policy. From this point view the studies
by British scientist Simon Anholt and American "Global Market Insite"
(GMI) company dealing with the processing of the results of marketing
studies are very valuable. They tried to estimate the ratings of
35 developing and developed states and to present the rate of their
brand in figures. Thus, e.g., the brand of Russia, according to this
estimation, costs about $663 billion [2].
To estimate the ratings they used 6 main factors:
attractiveness from the point of view of tourism, human capital,
the quality of exported goods,attractiveness from the cultural
point of view, the rate of the fairness of the governments policy,
the attractiveness of the state as a place to live in general.
25 thousand people took part in the inquiry and basing on its result
the researchers formed the rate of the national brand. Then, "Brand
Finance" (BF) company presented each brand in figures. It should be
mentioned that the cost of the brand of any country constitute 2-10%
from GDP of the given state and the difference in the percentage is
explained by the common level of the development of the country,
but the final value is formed by the five years' sum of the GDP,
which is calculated by the current cost of funds.
Despite the fact that there is a number of methods to evaluate
the brand, this process is, nevertheless, rather laborious and
time-consuming and, as a result, some deflections are possible. Those
methods are mainly used to evaluate the trademarks, the brand and sum
evaluation of the state is innovation and it should become the object
of special study, but, however, it should be mentioned that according
to our observations the total cost of the brand of the companies,
organizations, enterprises working on the territory of the given
state also influences the cost of the country's brand.
In the table below the top 10 of the state's brands for the third
quarter of 2006 is presented [3].
The regularities which underlie the competition between the companies
and complex marketing measures can be used for the elaboration
of the state marketing policy. In this very context, according
to our observations, it is necessary to elaborate the long-term
conception of the marketing policy of the Republic of Armenia and
in that conception special section will be allotted to branding. The
importance, topicality and the urgency in carrying out this problem are
most vividly expressed in the countries with the transition economy
where the institutions characteristic to the free market economy are
in the process of the formation and establishment.
We think that the policy directed to the formation of the brand of
the Republic of Armenia will have positive influence, first of all, on
the raising of the investment prospects of the RA and the development
of tourism. The topicality of the problem is also conditioned by
the fact that clearly systematized, elaborated state policy directed
to the formation of the state's brand is extremely positive for the
given state, especially for taking right position on the world market.
Today every country is presented through its audible and visible
components, including National Emblem, flag, anthem, but, as Martin
Lindstrom mentions, the brand is formed not only through the auditory
or visual perceptions but also through taste, olfactory and tactile
receptors.
Marketing specialists mainly work in two-dimensional world of branding
and very often they ignore the importance of the five sense organs. We
receive the information about the environment through our sense
organs. Today with the help of advertisement you can influence only
olfactory and visual sense organs, meanwhile other sense organs remain
unused. Thus, all the specialized sales outlets in the big cities all
over the world smell well. This same policy was adopted by companies
specialized in other spheres, particularly such car-building titans as
"BMW", "Rolls-Royce", "VW", "Mercedes-Benz" have their special flavour
which comes from the salons of their cars; "Singapore Airlines" company
is the only air company which plans' salons smell the same. This kind
of measures conditions the success of the supranational brand. The
usage of this and other marketing means can mostly influence the
success of both Armenia and companies representing Armenia abroad.
The developed states are strong with their business entities. It is
impossible to form the brand of the countries without the improvement
of the latter. E.g., Swiss companies take leading positions on
the high-quality watches, knives, cheese and chocolate markets. The
reliability and the high quality services of the Swiss banking system
are also well known all over the world. It should be mentioned here
that the Swiss banks began the process of creation of their personal
brands as early as middle of the 19th century and during that process
they mostly used red colour. Today red and white colours became the
symbol of Switzerland, and one may even say its synonym which comes
to prove that this country has clearly elaborated marketing strategy.
Besides everything abovementioned there are also symbols, slogans
of the states and cities which are widely known. Let us bring some
examples of states' slogans:
USA - American Dream,
Great Britain - Cool Britannia,
Italy - Dolce Vita - sweet life,
Germany - Vorsprung durch Technik - progress through the technology,
Switzerland - Keeping Privacy .
Big, economically mighty and developed countries have created the
symbols, slogans characterizing their state for home and external
consumption long time ago, meanwhile many, including the Republic of
Armenia, are only trying to make the first steps in that sphere.
Today a number of countries, in order to prove the progress of the
state, carries out advertising campaigns or uses non-traditional
methods of advertising, ATL, BTL; they spend huge sums, which are
usually distributed among advertising agencies, consulting companies
and the specialists who are responsible for the public relations. Thus,
Singapore annually spends about $60 million, Malaysia - $150 million,
London in 2003-2004 spend for this purpose about $40 million [4]. In
2007 Russia spent $5 million from the state budget in order to improve
its international image, and the USA spends annually $1 billion for
the same purpose [5].
It is remarkable that the advertising expenses do not imply the
formation of the state brand in the case if any of the advertisement
efficiency assessment methods is absent. Today marketing studies tell
us that the advertising is gradually giving the ground to PR - the
public relations, meanwhile, though it becomes clear from the studies
that the majority of the consumers does not trust advertisement,
it continues to be one of the main marketing means for bringing
the information to the consumers. Taking that reality a number of
authoritative specialists thinks that in the modern economic world
the brand is not formed with the help of advertisement; it is formed
with the help of public relations, and the advertisement takes another
function, i.e. the preservation of the brand that has already been
formed.
In order to present the necessity of the state's brand formation
more vividly let us simply remember why people want to buy German
cars, Japanese technologies, French fashionable cloths, Czech beer,
Swiss watches and etc. In this context let us mention some positive
processes regarding Armenia, particularly: a) The trailer about Armenia
on CNN broadcasted all over the world and aimed at the development
of tourism in Armenia and which, naturally, contributed to making
Armenia recognizable and to formation of the state's brand.
b) The cultural events, such as the Days of Armenia, the Year of
Armenia and etc, arranged abroad in recent years, mainly in Russia,
France, and which also have their positive effect on the formation of
"Armenia" brand.
d) The modernization of "Zvartnots" international airport in recent
years, particularly, bringing of the arrival hall to the international
standards. It is also very important because the tourist gets the
first impression of the country in the airport.
Today the Republic of Armenia needs to be presented to the world and
in this context it is necessary to discuss what our republic is famous
abroad with and how and through what it should be presented to the
world to find its place on the world market most efficiently and become
attractive for the consumers and the investors. Let us mention that
even without deep studies we can state that Armenia and Armenians are
mostly known all over the world as the state which suffered Genocide,
disastrous earthquake in 1988 and which has conflict with neighbouring
Azerbaijan. In this context the events arranged in Armenia in 2001,
which were devoted to the 1700 anniversary of the adoption of the
Christianity as a state religion in Armenia and which, undoubtedly,
had positive effect on the rate of our state.
The rating of any country is to a considerable degree conditioned by
the level of the development of the tourism, for which, naturally,
appropriate infrastructures are necessary. In this context our top
priority is to cover the requirements of the tourists visiting Armenia,
because even one satisfied tourist, after returning to his country,
takes his positive impressions with him and this influences the general
rating of our state and the further development of the tourism. The
success in sport, culture, economy, science and other spheres also
contributes to the formation of the positive rating.
On the other hand, it should be mentioned that the formation of
the positive rating directly reflects at the attractiveness of the
products produced in that country, which give competitive advantage
to the companies of that country.
According to our observations the branding policy carried out at the
state level will have positive effect first of all on the increase of
the amount of the foreign investments, tourism and products produced
and exported from Armenia. For this purpose we think it is important
to have a body within the structure of, e.g. Ministry of Trade and
Economic Development of the RA, which would deal with the branding
policy of the state, which would elaborate its strategy as a component
of state's marketing policy for long and short periods collaborating
and taking the advantage of the owner's possibilities. That strategy
must include modern methods of communication with the consumer,
investors, particularly:
a) Regional branding - for the promotion of the Armenia, its regions
(marzes), separate communities it is necessary to study its historical,
cultural, economic resource, potential, on which background it would
be possible to build the general programme of the development of
the republic;
b) The usage of the educational resource;
c) The usage of the modern electronic means, mainly the potential
of Internet;
d) The publishing and distribution of the books about Armenia, road
maps for tourists;
e) The implementation of the event-marketing, which will allow pointing
out the target group more distinctly, drawing its attention to Armenia
and products produced in Armenia.
In our opinion in this work both foreign specialists, companies
(in order to use their experience and professionalism) and Armenian
specialists (who are aware of the Armenia's peculiarities) should be
involved. We are sure, that this very cooperation, the combination
of possibilities should have positive result.
Vardan Atoian, Karen Babajanyan
http://www.noravank.am/en/?page=analit ics&nid=2041
01 October 2009
In the article the essence of the brand is presented, the main problems
which come forward during the formation of the brand are discussed,
as well as the complex of the measures, which implementation allows
raising the rate of the country, are presented. Those measures and
proposals are based on the best international practice and they can
be very useful in the elaboration of the strategy of the position of
the Republic of Armenia. The article also touches upon such vital for
the RA issues as the state authority, the investment attractiveness,
the development of tourism industry, the quality of the exported
goods and measures directed to the demand increase.
The formation of the state brand is the process of strategic importance
for any state. The foreign economic policy and the dynamic development
of the economic growth are mostly connected with the authority of the
given country on the external market. Firstly, let us try to mention
what is brand and how it differs from common name.
Let us mention that any name can be a brand, e.g. "FedEx", "Porsche",
"Marlboro", "New York", "Japan", "Mozart" and etc. Thus, it is any
name, title, trademark, which is associated in a certain audience
with a number of positive characteristics. In other words, brand can
be formulated as a complex of emotions and feelings.
If we try to differentiate between brand and trademark, it is
necessary to mention that the trademark is legal category and brand
is the so called intellectual side of the product. It only exists
in the subconscious of the consumers. It is remarkable that in
some countries the cost of the brand is included in the accounting
reports of the company as a tangible asset (e.g. Great Britain), and
often it is evaluated even more than all the production facilities
put together. Thus, "Phillip Morris" bought "Kraft Food" trademark
for $13 billion, which is 600% higher than its book cost, "Grand
Metropolitan" company bought "Pillsbury" trademark which is $5.5
billion more expensive than the cost of the owner company [1].
In our opinion, while elaborating the policy which will promote
to the formation of the state's brand several factors should be
taken into consideration. Let us bring several examples. Thus while
saying Paris, first of all, we understand fashion, romance, in case
with New York - business, energy, Washington - power, might, Tokyo -
modern, progressive technology, Egypt - old culture, Rome - wonderful
classical architecture, Rio-de-Janeiro - carnival, Germany - solidity,
punctuality and etc.
Amid the current worldwide globalization process various states,
cities, companies very often obviously and sometimes tacitly compete
with each other in order to attract the attention of tourists, local
and foreign investors, consumers and to obtain additional funds to
their economy. In this competition, in our opinion, win those who
can position themselves at the world market, among this carrying out
efficient regional marketing policy. From this point view the studies
by British scientist Simon Anholt and American "Global Market Insite"
(GMI) company dealing with the processing of the results of marketing
studies are very valuable. They tried to estimate the ratings of
35 developing and developed states and to present the rate of their
brand in figures. Thus, e.g., the brand of Russia, according to this
estimation, costs about $663 billion [2].
To estimate the ratings they used 6 main factors:
attractiveness from the point of view of tourism, human capital,
the quality of exported goods,attractiveness from the cultural
point of view, the rate of the fairness of the governments policy,
the attractiveness of the state as a place to live in general.
25 thousand people took part in the inquiry and basing on its result
the researchers formed the rate of the national brand. Then, "Brand
Finance" (BF) company presented each brand in figures. It should be
mentioned that the cost of the brand of any country constitute 2-10%
from GDP of the given state and the difference in the percentage is
explained by the common level of the development of the country,
but the final value is formed by the five years' sum of the GDP,
which is calculated by the current cost of funds.
Despite the fact that there is a number of methods to evaluate
the brand, this process is, nevertheless, rather laborious and
time-consuming and, as a result, some deflections are possible. Those
methods are mainly used to evaluate the trademarks, the brand and sum
evaluation of the state is innovation and it should become the object
of special study, but, however, it should be mentioned that according
to our observations the total cost of the brand of the companies,
organizations, enterprises working on the territory of the given
state also influences the cost of the country's brand.
In the table below the top 10 of the state's brands for the third
quarter of 2006 is presented [3].
The regularities which underlie the competition between the companies
and complex marketing measures can be used for the elaboration
of the state marketing policy. In this very context, according
to our observations, it is necessary to elaborate the long-term
conception of the marketing policy of the Republic of Armenia and
in that conception special section will be allotted to branding. The
importance, topicality and the urgency in carrying out this problem are
most vividly expressed in the countries with the transition economy
where the institutions characteristic to the free market economy are
in the process of the formation and establishment.
We think that the policy directed to the formation of the brand of
the Republic of Armenia will have positive influence, first of all, on
the raising of the investment prospects of the RA and the development
of tourism. The topicality of the problem is also conditioned by
the fact that clearly systematized, elaborated state policy directed
to the formation of the state's brand is extremely positive for the
given state, especially for taking right position on the world market.
Today every country is presented through its audible and visible
components, including National Emblem, flag, anthem, but, as Martin
Lindstrom mentions, the brand is formed not only through the auditory
or visual perceptions but also through taste, olfactory and tactile
receptors.
Marketing specialists mainly work in two-dimensional world of branding
and very often they ignore the importance of the five sense organs. We
receive the information about the environment through our sense
organs. Today with the help of advertisement you can influence only
olfactory and visual sense organs, meanwhile other sense organs remain
unused. Thus, all the specialized sales outlets in the big cities all
over the world smell well. This same policy was adopted by companies
specialized in other spheres, particularly such car-building titans as
"BMW", "Rolls-Royce", "VW", "Mercedes-Benz" have their special flavour
which comes from the salons of their cars; "Singapore Airlines" company
is the only air company which plans' salons smell the same. This kind
of measures conditions the success of the supranational brand. The
usage of this and other marketing means can mostly influence the
success of both Armenia and companies representing Armenia abroad.
The developed states are strong with their business entities. It is
impossible to form the brand of the countries without the improvement
of the latter. E.g., Swiss companies take leading positions on
the high-quality watches, knives, cheese and chocolate markets. The
reliability and the high quality services of the Swiss banking system
are also well known all over the world. It should be mentioned here
that the Swiss banks began the process of creation of their personal
brands as early as middle of the 19th century and during that process
they mostly used red colour. Today red and white colours became the
symbol of Switzerland, and one may even say its synonym which comes
to prove that this country has clearly elaborated marketing strategy.
Besides everything abovementioned there are also symbols, slogans
of the states and cities which are widely known. Let us bring some
examples of states' slogans:
USA - American Dream,
Great Britain - Cool Britannia,
Italy - Dolce Vita - sweet life,
Germany - Vorsprung durch Technik - progress through the technology,
Switzerland - Keeping Privacy .
Big, economically mighty and developed countries have created the
symbols, slogans characterizing their state for home and external
consumption long time ago, meanwhile many, including the Republic of
Armenia, are only trying to make the first steps in that sphere.
Today a number of countries, in order to prove the progress of the
state, carries out advertising campaigns or uses non-traditional
methods of advertising, ATL, BTL; they spend huge sums, which are
usually distributed among advertising agencies, consulting companies
and the specialists who are responsible for the public relations. Thus,
Singapore annually spends about $60 million, Malaysia - $150 million,
London in 2003-2004 spend for this purpose about $40 million [4]. In
2007 Russia spent $5 million from the state budget in order to improve
its international image, and the USA spends annually $1 billion for
the same purpose [5].
It is remarkable that the advertising expenses do not imply the
formation of the state brand in the case if any of the advertisement
efficiency assessment methods is absent. Today marketing studies tell
us that the advertising is gradually giving the ground to PR - the
public relations, meanwhile, though it becomes clear from the studies
that the majority of the consumers does not trust advertisement,
it continues to be one of the main marketing means for bringing
the information to the consumers. Taking that reality a number of
authoritative specialists thinks that in the modern economic world
the brand is not formed with the help of advertisement; it is formed
with the help of public relations, and the advertisement takes another
function, i.e. the preservation of the brand that has already been
formed.
In order to present the necessity of the state's brand formation
more vividly let us simply remember why people want to buy German
cars, Japanese technologies, French fashionable cloths, Czech beer,
Swiss watches and etc. In this context let us mention some positive
processes regarding Armenia, particularly: a) The trailer about Armenia
on CNN broadcasted all over the world and aimed at the development
of tourism in Armenia and which, naturally, contributed to making
Armenia recognizable and to formation of the state's brand.
b) The cultural events, such as the Days of Armenia, the Year of
Armenia and etc, arranged abroad in recent years, mainly in Russia,
France, and which also have their positive effect on the formation of
"Armenia" brand.
d) The modernization of "Zvartnots" international airport in recent
years, particularly, bringing of the arrival hall to the international
standards. It is also very important because the tourist gets the
first impression of the country in the airport.
Today the Republic of Armenia needs to be presented to the world and
in this context it is necessary to discuss what our republic is famous
abroad with and how and through what it should be presented to the
world to find its place on the world market most efficiently and become
attractive for the consumers and the investors. Let us mention that
even without deep studies we can state that Armenia and Armenians are
mostly known all over the world as the state which suffered Genocide,
disastrous earthquake in 1988 and which has conflict with neighbouring
Azerbaijan. In this context the events arranged in Armenia in 2001,
which were devoted to the 1700 anniversary of the adoption of the
Christianity as a state religion in Armenia and which, undoubtedly,
had positive effect on the rate of our state.
The rating of any country is to a considerable degree conditioned by
the level of the development of the tourism, for which, naturally,
appropriate infrastructures are necessary. In this context our top
priority is to cover the requirements of the tourists visiting Armenia,
because even one satisfied tourist, after returning to his country,
takes his positive impressions with him and this influences the general
rating of our state and the further development of the tourism. The
success in sport, culture, economy, science and other spheres also
contributes to the formation of the positive rating.
On the other hand, it should be mentioned that the formation of
the positive rating directly reflects at the attractiveness of the
products produced in that country, which give competitive advantage
to the companies of that country.
According to our observations the branding policy carried out at the
state level will have positive effect first of all on the increase of
the amount of the foreign investments, tourism and products produced
and exported from Armenia. For this purpose we think it is important
to have a body within the structure of, e.g. Ministry of Trade and
Economic Development of the RA, which would deal with the branding
policy of the state, which would elaborate its strategy as a component
of state's marketing policy for long and short periods collaborating
and taking the advantage of the owner's possibilities. That strategy
must include modern methods of communication with the consumer,
investors, particularly:
a) Regional branding - for the promotion of the Armenia, its regions
(marzes), separate communities it is necessary to study its historical,
cultural, economic resource, potential, on which background it would
be possible to build the general programme of the development of
the republic;
b) The usage of the educational resource;
c) The usage of the modern electronic means, mainly the potential
of Internet;
d) The publishing and distribution of the books about Armenia, road
maps for tourists;
e) The implementation of the event-marketing, which will allow pointing
out the target group more distinctly, drawing its attention to Armenia
and products produced in Armenia.
In our opinion in this work both foreign specialists, companies
(in order to use their experience and professionalism) and Armenian
specialists (who are aware of the Armenia's peculiarities) should be
involved. We are sure, that this very cooperation, the combination
of possibilities should have positive result.