Tuesday 11 May 2021

MANAGING BRANDS OVER GEOGRAPHICAL, CULTURAL, SEGMENT BOUNDARIES

RATIONALE FOR GOING INTERNATIONAL

A number of well-known global brands have derived much of their sales and profits from non-domestic markets for years, for example, Coca-Cola, Shell, Bayer, Rolex, Marlboro, Pampers, and Mercedes-Benz to name a few. Brands such as Apple comput­ers, L'Oreal cosmetics, and Nescafe instant coffee have become fixtures on the global landscape. The successes of these brands have provided encouragement to many firms to market their brands internationally. A number of other forces have also contributed to the growing interest in global marketing, includ­ing the following:

1.      Perception of slow growth and increased competition in domestic markets

2.      Belief in enhanced overseas growth and profit opportunities

3.      Desire to reduce costs from economies of scale

4.      Need to diversify risk

5.      Recognition of global mobility of customers 

In more and more product categories, the ability to establish a global profile is becoming virtually a prerequisite for success For example, with U.S. liquor consump­tion steadily declining, many American producers have stepped up their marketing efforts abroad, riding the fortunes of brands such as Jim Beam, Jack Daniels, and Southern Comfort in overseas markets. As one observer notes, "Spirits companies now view themselves as global marketers. If you want to be a player, you have to be in America, Europe, and the Far East. You must have world-class brands, a long-term per­spective, and deep pockets."

Ideally, the marketing program for a global brand would consist of one product formulation, one package design, one advertising program, one pricing schedule, one distribution plan, and so on that would turn out to be the most effective and efficient possible option for each and every country in which the brand was sold. Unfortunately, such a uniformly optimal strategy is rarely possible. Before considering the decisions to be made in developing a global marketing program for a brand and the factors affect­ing the tradeoff between standardization and customization, it is useful to first consider some of the main advantages and disadvantages of creating globally standardized mar­keting programs for brands.

ADVANTAGES OF GLOBAL MARKETING PROGRAMS

A number of potential advantages have been put forth concerning the development of a global marketing program. In general, the more standardized the marketing programthat is, the less the marketing program varies from country to countrythe greater the extent to which these different advantages will actually be realized.

Economies of Scale in Production and Distribution

From a supply-side or cost perspective, the primary advantage of a global marketing program is the manufacturing efficiencies and lower costs that derive from higher vol­umes in production and distribution. The more that strong experience curve effects existsuch that the cost of making and marketing a product declines sharply with increases in cumulative productionthe more economies of scale in production and distribution will be realized from a standardized global marketing program

Lower Marketing Costs

Another set of cost advantages can be realized from uniformity in packaging advertis­ing, promotion, and other marketing communication activities In particular the more uniform the branding strategy adopted across countries, the more potential cost sav­ings should prevail Along these lines, a global corporate branding strategy (e g as with Sony) is perhaps the most efficient means of spreading marketing costs across both products and countries

Power and Scope

A global brand profile may communicate credibility to consumers. Consumers may believe that selling in many diverse markets is an indication that a manufacturer has gained much expertise and acceptance The fact that the brand is widely available may signal that the product is high quality and convenient to use A prominent international profile may be especially important for certain service brands For example, Avis assures their customers that they can receive the same high-quality service renting its cars anywhere in the world, further reinforcing a key benefit promise embodied in its slogan, "We Try Harder "

Consistency in Brand Image

Maintaining a common marketing platform all over the world helps to maintain the consistency of brand and company image This consideration becomes particularly important in those markets where there is much customer mobility or where media exposure transmits images across national boundaries For example, Gillette Mach3 sells "functional superiority" and "an appreciation of human character and aspira­tions" worldwide Services often desire to convey a uniform image due to consumer movements For example, American Express communicates the prestige and utility of its card and the convenience and ease of replacement of its traveler's checks worldwide

Ability to Leverage Good Ideas Quickly and Efficiently

One global marketer notes that globalization also can result in increased sustainability and "facilitate continued development of core competencies with the organiza­tion   in manufacturing, in R&D, in Marketing and Sales, and in less talked about areas such as Competitive Intelligence   all of which enhance the company's ability to compete "

Uniformity of Marketing Practices

Finally, a standardized global marketing program may simplify coordination and pro­vide greater control of how the brand is being marketed in different countries By keeping the core of the marketing program constant, greater attention can be paid to making refinements over markets and over time to improve its effectiveness

DISADVANTAGES OF GLOBAL MARKETING PROGRAMS

A number of potential disadvantages of standardized global marketing programs have also been raised Perhaps the most compelling criticism is that stan­dardized global marketing programs often ignore fundamental differences of various kinds across countries and cultures Critics claim that designing one marketing pro­gram for all possible markets often results in unimaginative and ineffective strategies geared to the lowest common denominator. Possible differences across countries come in a host of forms, as discussed next.

Differences in Consumer Needs, Wants, and Usage Patterns for Products

Because of differences in cultural values, economic development, and other factors across nationalities, consumer behavior with respect to many product categories is fun­damentally different. For example, marketing research at one time revealed that the French ate 4 times more yogurt than the British, the British consumed 8 times more chocolate than the Italians, and Americans drank 11 times more soft drinks than con­sumers abroad Product strategies that work in one country may not work in another. For example, when Disney entered a licensing agreement with Tupperware to sell in Japan, although marketing research suggested it was a good idea, the product failed miserably. Apparently the problem was in the politeness of the Japanese housewives Although, they said they would attend Tupperware partiesand did in fact come and buy products at partiesthey resented the people who hosted the party and the com­pany for putting them into that situation.

Differences in Consumer Response to Marketing Mix Elements

Consumers in different parts of the world can vary in their attitudes and opinions con­cerning marketing activity For example; countries vary in their general attitudes toward advertising as an institution. Research has shown that Americans, in general tend to be fairly cynical toward advertising, whereas Japanese view it much more posi­tively. Research has also shown differences in advertising style between the two coun­tries: Japanese ads tend to be softer and more abstract in tone, whereas American ads tend to be richer in product information.

Price sensitivity, promotion responsiveness, sponsorship support, and other activi­ties all may differ by the country involved. These differences in response to market­ing activity may also be reflected in differences in consumer behavior and decision-making.  For example, in a comparative study of brand purchase intentions for Korean and U.S. consumers, the purchase intentions of Americans were twice as likely to be affected by their product beliefs and attitudes toward the brand itself, whereas Koreans were eight times more likely to be influenced by social normative beliefs and what they felt others would think about the purchase. 

Differences in Brand and Product Development and the Competitive Environment

Products may be at different stages of their life cycle in different countries. Moreover, the perceptions and positions of particular brands may also differ considerably across countries. Relatively few brands appear on all the lists, suggesting that, if nothing else, consumer perceptions of even top brands can vary significantly by geographic region. The nature of competition may also differ. Europeans tend to have more competitors because shipping products across borders is easy. For example, Procter & Gamble competes in France against Italian, Swedish, and Danish companies in many categories

Differences in the Legal Environment

Different kinds of regulatory hurdles exist in different countries. One of the challenges in developing a global ad campaign is the maze of constantly changing legal restric­tions that exist from county to country. For example, at one time, laws in Venezula, Canada & Australia stipulated that commercials had to be physically produced in the native country; Poland required commercial lyrics to be sung in Polish. Advertising restrictions have been placed on the use of children in commercials in Austria, heroic figures in cigarette ads in the U.K. (e.g. even use of the Marlboro man), comparative ads in Singapore, and toy soldiers with either machine guns or tanks in Germany.

Although some of these laws have been or are being relaxed, numerous legal differences still exist.

Differences in Marketing Institutions

Some of the basic marketing infrastructure may differ from country to country, making implementation of the same marketing strategy difficult. For example, channels of dis­tribution, retail practices, media availability, and media costs all may vary significantly. Foreign companies have struggled for years to break into Japan's rigid distribution system that locks out many foreign goods. China's primitive logisticspoor roads, jammed rivers, and clogged railwaysand inexperienced, indifferent, and often cor­rupt middlemen present a different kind of challenge. The penetration of television sets, telephones, supermarkets, and so on may vary considerably, especially with respect to developing countries.

Differences in Administrative Procedures

In practice, it may be difficult to achieve the control necessary to implement a stan­dardized global marketing program. Local offices may resist having their autonomy threatened. Local managers may suffer from the "not invented here" syndrome and raise objectionsrightly or wronglythat the global marketing program misses some key dimension of the local market. Local managers who feel that their autonomy has been reduced may lose motivation and feel doomed to failure.

GLOBAL BRAND STRATEGY

With the preceding comments as background, in building brand equity, it is often necessary to create different marketing programs to satisfy different market segments. In terms of building global customer-based brand equity, strategically it is therefore necessary to do the following:

1.      Identify differences in consumer behavior (i.e., how consumers purchase and use products and what they know and feel about brands) in each market.

2.      Adjust the branding program accordingly (i.e., through the choice of brand elements, the nature of the supporting marketing program, and leverage of secondary associations).

 

Because the various entities that may be linked to a brand may take on very different meanings in different countries, secondary associations may have to be leveraged dif­ferently in different countries. For example, American companies such as Coca-Cola, Levi Strauss, and Nike gain an important source of equity in going overseas by virtue of their American heritage, which is not as much of an issue or asset in their domestic market. Harley-Davidson has aggressively marketed its classic American image - customized for different culturesto generate a quarter of its sales from abroad. Thus, in developing global brands, it is important to consider how sec­ondary associations may vary in their strength, favorability, and uniqueness and may therefore play a different role in building brand equity.

Global Customer-Based Brand Equity

To build customer-based brand equity, it is necessary to

(1)   Establish breadth and depth of brand awareness

(2)   Create strong, favorable, and unique brand associations

(3)   Elicit positive, accessible brand responses and

(4)   Forge intense, active brand relationships.

 

Achieving these four steps, in turn, involves estab­lishing six core brand building blocks:

a.       Brand salience

b.       Brand performance

c.       Brand imagery

d.      Brand Judgments

e.       Brand feelings and

f.        Brand resonance.

 

In each and every mar­ket in which the brand is sold, consideration must be given as to how to achieve these steps and create these building blocks. Some of the issues that come into play are dis­cussed in the following subsections.

Creating Brand Salience

One of the most challenging aspects of building global brand equity for a widely extended, multiple-product brand is the order of product introduction. It is rare that the product rollout for a brand in new markets will duplicate the order of product introduction in the home market. Often, product introductions in the domestic market are done sequentially, stretched out over a longer period of time, as compared with the more simultaneous introductions that occur in overseas markets.

Crafting Brand Image

To the extent that the actual composition of the product does not vary appreciably across markets, brand performance associations in terms of the basic benefits provided may not need to be that different. In other words, product functionality often will be held relatively fixed across markets even if some of the specific attributes may differ. Brand imagery associations, on the other hand, may be quite different, and one chal­lenge in global marketing is to meaningfully refine the brand image across diverse markets. For example, the brand's history and heritage, which may be rich and a strong competitive advantage in the home market, may be virtually nonexistent in a new mar­ket. A desirable brand personality in one market may be less so in another.

Eliciting Brand Response

Brand judgments must be positive in new markets such that consumers find the brand to be of good quality, credible, worthy of consideration, and superior. Crafting the right brand image will help to accomplish these outcomes. One of the challenges in global marketing, however, is to ensure that the proper balance and type of emotional responses and brand feelings are created. Blending inner (enduring and private) and outer (immediate experiential) emotions can be difficult given cultural differences across markets.

Cultivating Resonance

Finally, achieving brand resonance in new markets means that consumers must be given sufficient opportunities and incentives to buy and use the product, interact with other consumers and the company itself, and actively learn and experience the brand and its marketing. Clearly, interactive, online marketing can be advantageous as long as it can be designed to be accessible and relevant anywhere in the world. Nevertheless digital efforts cannot completely replace grassroots marketing efforts that help to con­nect the consumer with the brand. In dealing with diverse international markets, sim­ply exporting marketing programs, even with some adjustments, may be insufficient because consumers are at arm's length. As a result, they may not be able to develop the intense, active loyalty that characterizes brand resonance.

 

Building Brand Equity Across Other Market Segments

The common themes or guidelines that have emerged for success in global branding are:

1 Understand similarities and differences in the global branding landscape

Have you tried to find as many commonalities as possible across markets

Have you identified what is unique about different markets

Have you examined all aspects of the marketing environment (e g, stages of brand development, consumer behavior, marketing infrastructure, competitive activity, legal restrictions)?

Have you reconciled these similarities and differences in the most cost-effective and brand-building manner possible

 

2 Don't take shortcuts in brand building

Have you ensured that the brand is being built from the bottom up strategically by creat­ing brand awareness first before crafting the brand image

Have you ensured that the brand is being built from the bottom up tactically by deter­mining the appropriate marketing programs and activity for the brand in each market given the particular strategic goals

 

3 Establish marketing infrastructure

Have you created the appropriate marketing infrastructurein terms of manufacturing, distribution, and logisticsfrom scratch if necessary9

Have you adapted to capitalize on the existing marketing infrastructure in other countries

 

4. Embrace integrated marketing communications.

Have you considered non-traditional forms of communication that go beyond conven­tional advertising

Have you ensured that all communications are integrated in each market and are consis­tent with the brand's desired positioning and heritage

 

5 Cultivate brand partnerships

Have you formed partnerships with global and local partners to improve possible defi­ciencies in your marketing programs

Have you ensured that all partnerships avoid compromising the brand promise and do not harm brand equity in any way

 

6 Balance standardization and customization

Have you been careful to retain elements of marketing programs that are relevant and add value to the brand across all markets

Have you sought to find local adaptations and additions that complement and supplement these global elements to achieve greater local appeal

 

7 Balance global and local control

Have you established clear managerial guidelines as to principles and actions that all global managers must adhere to

Have you carefully delineated the areas in which local managers are given discretion and autonomy in their decision making

 

8 Establish operable guidelines

Have you explicated brand management guidelines in a clear and concise fashion in a document to be used by all global marketers

Have you established means of seamless communication between headquarters and local and regional marketing organizations

 

9 Implement a global brand equity measurement system

Do you conduct brand audits when appropriate in overseas markets9

Have you devised a brand tracking system to provide timely, accurate, and actionable information on brands in relevant markets

Have you established a global brand equity management system with brand equity char­ters, brand equity reports, and brand equity overseers?

 

10. Leverage brand elements.

Have you checked the relevance of brand elements in global markets?

Have you established visual brand identities that transfer across market boundaries?

 

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