Key to investing is knowing what brand will be hot tomorrow, not today

With the world's consumer base growing faster than ever before, identifying top brands in an increasingly crucial skill for investors.

Signs such as this one in the capital of the Republic of Mali helped Coca-Cola become the world's most recognisable brand in 2011. Debbie Egan-Chin / Getty Images
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Nothing could be more revealing about the high-flying brands of the 21st century than the legal battle taking place between digital electronics giant Apple and Eastman Kodak.

For decades, consumers around the world were happy to capture memories with "a Kodak moment," buying low-priced cameras from the US photographic giant.

But, despite the power this brand once held, Kodak has filed for bankruptcy. The company failed to take account of the speed digital photography would eclipse traditional film cameras. In an era when even low-cost digital cameras face extinction thanks to high-quality cameras being bundled into smartphones, Kodak's traditional technology is now historic.

Apple, with a market capitalisation of almost half a trillion dollars, appears to be attempting to deliver a coup de grace to Kodak. It is pursuing Kodak for alleged patent infringement involving technologies Kodak uses in its digital cameras and printers, one of the key product areas Kodak has decided to focus on.

With the world's consumer base growing faster than ever before, identifying which brands are failing and which are about to supplant them is becoming an increasingly crucial skill for investors.

The branding battlefield is littered with the carcasses of old-school technology with media streaming website, Netflix, taking a large proportion of video rental chain Blockbuster's business a perfect example of this.

Anyone reading the headlines on their shiny new iPad could be forgiven for thinking it's a case of 'out with the old and in with the new'. But there is more to branding than keeping up with the latest technologies, otherwise Coca-Cola would have gone out of business long ago.

According to brand consultancy Interbrand's 2011 ranking of the world's top 100 brands, Coca-Cola is ranked first, followed closely by IBM, Microsoft and Google in that order.

However, out of the brands gaining the most popularity among consumers in 2012, the big US technology companies such as Google and Microsoft are noticeable by their absence. The only digital electronics company listed is one based far outside the US. In any case, products based entirely on new technologies account for only a relatively small proportion of consumer spending.

According to Brand Asset Consulting, two-thirds of the most developed countries' gross domestic product (GDP) is generated by consumerism with the five brands today's consumers love the most: illy, Ford SYNC, Burberry, HTC and LinkedIn. The five they appear to be forsaking are: MTV, Carnival Cruise, Nokia, Banana Republic and Playboy.

illy is a prime example of a brand that has been relatively unaffected by the impact of technology.

"It isn't just about coffee anymore," says Brand Asset's chief executive Scott Siff. "Although illy still makes the bulk of its profits from the iconic coffee grounds, they have begun to branch out into coffee machines, branded retail establishments and membership packages."

Luxury fashion retailer Burberry has also successfully branched into new product lines with a global appeal.

But while they're not the best-known IT brands yet, the remaining three companies gaining consumer credibility the fastest are all digital based: HTC, the Taiwanese manufacturer of smartphones and tablets; automaker Ford's in-car communications arm, Ford SYNC and LinkedIn, a social networking site with 150 million users.

In the third quarter of 2011, HTC became the number one handset maker by sales in the USA.

"With their sleek designs, consumer-correct pricing and majority hold on the Android market, HTC isn't playing catch-up to Apple, they're going head-to-head," says Mr Siff.

Ford is an example of a highly traditional global brand which is determined not to follow after Kodak. Realising that car drivers need to update their personal IT more frequently than their cars, Ford SYNC is forging partnerships with IT giants to ensure its customers have easy access to the latest digital media on the road.

"What originated as an added feature has become a strategic pillar for Ford. Their SYNC partnership with Microsoft has led the way in integrated car technology," Mr Siff says.

Nor has Ford, which was an established brand long before Bill Gates or Steve Jobs were born, shied away from investing in cutting-edge technologies.

"The voice-activated system has been instrumental in the resurrection of Ford from a has-been corporate giant, to an industry-leading brand that is pushing the boundaries of what it means to drive."

Among the five major brands now being cold-shouldered by consumers are two media companies, MTV and Playboy, whose format and content now appear dated.

MTV is facing growing competition not only from other music channels but also from music videos delivered to all kinds of online devices.

For other ailing brands, unforeseen bad publicity is all it takes to head into a decline. Think of Carnival Cruise when its ship, the Costa Concordia, ran aground off the coast of Italy earlier this year sending a brand already labelled as overpriced into serious trouble.

A prolonged recession can also test some high-end brands, such as Banana Republic, if their pricing and strategy doesn't respond to changing consumer preferences.

And even mobile phone brands need to tread carefully. Blackberry, once dominant in the business-led smartphone market, has seen its market share fall as consumer smartphones such as the iPhone attract more users.

But the potential demise of so many leading brands is clearing the way for new names to emerge. As the rapid growth of Taiwan's HTC in the smartphone sector illustrates, not all new 21st century brands will come from Europe.

With the exception of PC maker Lenovo, major Chinese brands have yet to penetrate western markets. But frustrated with remaining a low-cost manufacturing base for western brands, China's government is now seeing the development of global Chinese brands as a matter of economic necessity.

As global competition to develop the top brands of the 21st century hots up, 2012 is set to be an interesting year for brand watchers.