• by Laurie Sullivan  @lauriesullivan, February 15, 2008

The world's top 250 consumer products companies garnered more than $2.65 trillion in sales during 2006, according to a Deloitte study released Thursday. Strong consumer spending contributed to growth. Overall sales for the bunch grew by 8.4% for the year, but 16% of companies experienced a decline.

Seven of the 10 Top 250 on the Global Powers of Consumer Products Industry report are electronics companies, many of which rely heavily on marketing to drive sales.

Hewlett-Packard & Co. ranks No. 2. South Korea's Samsung Electronics follows closely at No. 3. Japan's Matsushita ranks No. 5, Sony No. 7, and Toshiba at No. 8. Dell hung onto No. 9, despite disappointing sales and earnings in 2006. Nokia, the world's top cell phone maker, ranks No. 10.

Joining the ranks of Deloitte's top 250 list required companies to generate at least $2.36 billion in sales during fiscal 2006. The average was $10.7 billion. The 10 largest companies, which also include Altria Group, Nestle and Procter & Gamble, reported combined sales of $751 billion in fiscal 2006, or 28.1% of the total top 250 net sales.

While ranking relies on top revenue for the year, how much does branding and marketing come into play? "The companies that reached the pinnacle have done so through innovative products and informing consumers of those innovations through good brand management," says Ira Kalish, director of consumer business at Deloitte Research.

Kalish says Samsung has been very innovative, going from a company known for producing commodity products at low prices 20 to 30 years ago to being known today for its premium products. It has become critical to manage the brand and clearly communicate the differences to consumers.

Robert Passikoff, founder and president at marketing firm Brand Keys, says most buying decisions are made from emotion. "Looking at 1,800 brands in the United States and England, an emotional tie to the brand contributes about 70% to the consumer's decision for buying the brand, the remainder to the rational, such as pricing and distribution," he says.

The Deloitte report notes these consumer products companies rely on several growth strategies. Market-leading brands favored by big retailers typically look for innovative products offering unique consumer benefits, strategic acquisitions and partnerships, and entry into high-opportunity geographies that help to keep companies on top.

"Powerful brands own a word in the mind of the consumer," says Laura Ries, president at Atlanta-based marketing strategy firm Ries & Ries. "Brands either own something specific like BMW owns driving, or iPod is synonymous with hard drive music player."

Ries says consumers think of Gatorade when wanting an electrolyte drink and then make the connection to the brand. They couldn't care less about who owns Gatorade. It's not influential in their purchasing decision.

Syndicated radio talk show host Leo Laporte says the tech companies at the top of Deloitte's list have more than a recognizable name. "Successful companies get close to customers by listening and giving them a chance to influence the direction of products," he says, pointing out an interesting shift between Samsung, once known as a Kmart special, and Sony, which held the title king of consumer brands.

"Samsung consciously decided to revitalize its brand by making quality products and getting closer to consumers," Laporte says.

Laporte, whose radio shows The Tech Guy and This Week in Tech (TWiT) run on Los Angeles radio station KFI and XM Satellite, among others, has branded himself in media as the go-to-gadget guru by getting to know his listeners.

Deloitte says building positive brand equity has become critical, however. The challenge resides with differentiating products to attract target consumers, using new marketing tools to engage the target consumer in a dialogue, and executing the strategy to convince consumers they have purchased a reliable brand.

The study suggests that companies must find alternatives to traditional marketing. Recently, the power of mass marketing has dramatically declined with the advent of peer-to-peer (P2P) networks, social networks and widgets. All have enabled consumers to obtain entertainment and information in many more ways than in the past.

Technology now allows consumers to avoid marketing information through channel surfing, by recording programming, or by purchasing entertainment online. Marketers need to look more toward software analytics to measure consumer loyalties for communities built in online networks like YouTube, Twitter, among others.

This means that alternative marketing approaches--including advertising online, in cinemas, product placement in movies and games, special events, and tie-ins with other brands--are essential.