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 program—that
is, the less the marketing program varies from country to country—the 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 exist—such that the cost of
making and marketing a product declines sharply with increases in cumulative
production—the 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 parties—and
did in fact come and buy products at parties—they
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 logistics—poor
roads, jammed rivers, and clogged railways—and
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 objections—rightly or wrongly—that 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 cultures—to 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
infrastructure—in terms of manufacturing,
distribution, and logistics—from 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?
