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global branding
While many consumer-goods markets in the West are stagnating, 65 percent of the world’s population lives in societies that are experiencing economic growth of 5 percent or more a year. While the baby boom occurred between 1945 and 1960 in the United States, much of the rest of the world is still experiencing a baby boom that began in 1975. The average person in the rest of the world has seen his or her standard of living double in the past fifteen years, far surpassing that of the United States or Western Europe. Put very simply, today most of the growth potential in consumer markets exists outside the United States and Western Europe.
Benefits of Global Branding
Outstanding growth opportunities are one of the benefits that drive the increasing interest in taking brands global. Other benefits are:
• Economies of scale (production and distribution)
• Lower marketing costs
• Laying the groundwork for future extensions worldwide
• Maintaining consistent brand imagery
• Quicker identification and integration of innovations (discovered worldwide)
• Preempting international competitors from entering domestic markets or locking you out of other geographic markets
• Increasing international media reach (especially with the explosion of the Internet)
• Increasing international business and tourism
When to Leverage a Single Brand Globally
A company is more likely to leverage a single brand globally if:
• It is already operating worldwide (one brand is more efficient).
• The brand is an extension of the owner and this individual’s personality.
• The brand’s relationship to its country of origin creates positive associations (like a watch brand from Switzerland or a gourmet food brand from France).
GLOBAL BRAND CONSTANTS
At a minimum, when going global, the following elements should remain constant throughout the world:
• Corporate brand
• Brand identity system (especially your logo)
• Brand essence
GLOBAL BRAND VARIABLES
The following elements may differ from country to country:
• Corporate slogan
• Products and services
• Product names
• Product features
• Positionings
• Marketing mixes (including pricing, distribution, and media and advertising execution)
These differences will depend on:
• Language differences
• Different styles of communication
• Other cultural differences
• Differences in category and brand development
• Different consumption patterns
• Different competitive sets and marketplace conditions
• Different legal and regulatory environments
• Different national approaches to marketing (e.g., media, pricing, distribution)
LANGUAGE TRANSLATION
A key question in global branding is: Do you translate the brand name into the local language or keep it in the original language? You should probably keep it in the original language if a) there is no intrinsic meaning and it is easy to pronounce or b) global awareness of the brand name is already high. You should consider translating the name into the local language if it is suggestive of a key benefit (that would be lost if the original name were used).
Global Branding Questions
Other key questions when considering global branding are:
• Have you identified the relative attractiveness of each market for your brand (and have you identified consistent criteria for doing so)?
• Have you conducted an attitude and usage study in each country whose market you are considering entering?
• Do you know the category and brand development indices in each country in which you operate?
• Do you have a global branding scorecard that can be applied country by country?
• Do you have agreement on which decisions are made centrally and which ones are made locally?
Here are some other considerations when taking a brand global:
• Because of the extended global baby boom, youth marketing is a huge opportunity. Brand names, designer labels, and other forms of status will play well to the global youth market, in general.
• Global advertising needs to consider the fact that, for much of the world, the economy is booming and the context is unprecedented optimism. Increasing international tensions caused by terrorism and the volatile situations in Iraq and North Korea notwithstanding, the economies of many nations continue this growth.
• The world’s consumers are not naïve. Much of the world has access to English-language television programs.
• You should start marketing in countries before their spending power is fully realized. Due to media exposure, people are forming their brand opinions now.
• Representing male/female relationships appropriately will vary from society to society, so be sure that you fully understand the local cultures before attempting to do so.
• Using distributors is frequently a good way to break into foreign markets. It is critically important to choose the right distributor when trying to enter a new market.
Ultimately, there is much to be gained by extending your brand globally. The saying “think globally, act locally” makes much sense in this context. The key is determining what elements you will tailor for local markets. That depends on a thorough understanding of the similarities and differences among the local markets you intend to serve.
Place of Origin
Place of origin often has an impact on the viability of brands that are known to originate from a specific place. That is because the place of origin itself has its own associations and those associations may either enhance or detract from the brand associations.
For instance, any of the following might be associated with these places:
Countries
• Australia: kangaroos, Sydney Opera House, Great Barrier Reef, the Outback, aborigines
• Brazil: Carnival, Rio de Janeiro, beaches, samba music
• Canada: hockey, maple leaf, cold
• China: manufacturing, new cities, economic development, Chinese food and culture
• England: London, Big Ben, royalty, gray skies, fog
• France: Paris, Eiffel Tower, Riviera, wine, food, culture, fashion
• Germany: automobiles, Berlin, castles, Oktoberfest, Hitler
• India: contrasts, exotic (Hindu) religion, bright colors
• Mexico: spicy food, sombreros, siestas, beaches, gang violence
• Spain: Bullfighting, sunny weather, tapas, economic issues
• Switzerland: banks, watches, the Alps, orderliness
• United States of America: New York City, world power, military might, Hollywood, current U.S. president, cowboys
States
• California: diversity, Hollywood, San Francisco, L.A., surfing, Route 1, Napa Valley, liberal, “marches to its own drummer”
• Florida: retirement, alligators, swamps, Orlando, Miami, beaches, fishing
• Maine: lobster, L.L.Bean, rocky coastline, sailing, seaports
• Texas: oil, Dallas, Houston, “everything is bigger,” George W. Bush, conservative
Cities
• Bangalore: IT jobs, outsourcing, business hub
• Branson: family entertainment, country music, conservative, tacky
• Dubai: skyscrapers, desert, wealth, Arabs, economic growth, oil money
• Las Vegas: gambling, prostitution, bright lights, shows, adult fun, fantasy
• New York: Wall Street, Broadway, shopping, high energy, nightlife
• Orlando: Disney, theme parks, family vacations
• Paris: The Louvre, Eiffel Tower, cafés, great food, romance
• Singapore: Modern, clean, strict laws, thriving city state
• Vienna: Vienna State Opera, waltzes, Mozart, coffeehouses
Consider which of the preceding places are the most likely to enhance brands in these categories and which are the most likely to make them less credible:
• A new spiritual practice
• Automobiles
• Classical music
• Coffee
• Consumer electronics
• Fashion
• Gourmet food
• Rock groups
• Watches
• Wine
• Yachts
Here is another way to think about places of origin. What comes to your mind when one says Made in China? How about Made in Japan, Made in Mexico, Made in Taiwan, Made in the USA, or Exported from France, Exported from Germany, Exported from New Zealand, or Exported from Patagonia?
DID YOU KNOW?
• “Purchase intent” tends to be inflated for declining brands and understated for emerging brands.
• Advertising is often most effective in increasing share of market when brands are so similar that the advertising message is the primary source of differentiation.
(Source: Nigel Hollis, “It Is Not a Choice: Brands Should Seek Differentiation and Distinctiveness,” Millward Brown, 2011, www.millwardbrown.com/Libraries/MB_POV_Downloads/MillwardBrown_POV_Brand_Differentiation.sflb.ashx.)
LEVERAGING THE BRAND CASE STUDY:
Hallmark
In the early to mid-1990s, an ever-increasing share of greeting card sales occurred in the mass channels. Wal-Mart alone was projected to achieve a 20 percent share of the total greeting card market by the year 2000. Three brands accounted for the vast majority of sales in these channels: American Greetings, Gibson, and Ambassador—Hallmark’s flanker brand. (The sale of Hallmark-branded greeting cards accounted for no more than 20 percent of the overall market. Hallmark-branded products were sold primarily in Hallmark card shops and select chain drugstores. Hallmark’s corporate share of greeting card sales was 39 percent, counting all brands, including Ambassador and Shoebox and others).
While Ambassador-brand sales were becoming an ever-increasing proportion of Hallmark’s overall corporate sales, Ambassador’s margins were eroding because of increased retailer leverage over manufacturers and because of heightened mass channel competition. This trend of a less and less profitable brand becoming a larger and larger share of corporate sales was not acceptable. We knew that more sophisticated contract negotiations and sales term innovations would not be enough to halt or reverse this negative trend. We had to do no less than change the rules of the game itself.
After some thought, we knew our only hope was to unleash the power of the Hallmark brand in the mass channel. But that was tricky and unpopular, because we did not want to undermine the success of the Hallmark card shops and chain drugstores—channels that were our “cash cows” and to which we felt a strong loyalty. We conducted the most extensive research in Hallmark’s history to assess the impact of pursuing this strategy on Hallmark card shop and chain drugstore sales—which turned out to be minimal. Nevertheless, prior to the launch of this strategy, we fortified the viability of these two channels through extensive store consolidation, marketing, merchandising, and systems and standards improvements, most notably through the development of the Hallmark Gold Crown program. And we expended great effort to quantify and communicate the equity and power of the Hallmark name to the mass channel retailers. In fact, one mass channel retailer believed in the power of the Hallmark brand so much that it refused to switch to one of our competitor’s brands in return for $100 million in sales term.
(Greeting card manufacturers negotiate multiple-year contracts with mass channel retailers in which they receive most or all of a retailer’s business for a specified minimum floor space and number of stores for a specified period of time. In return for that privilege, they pay substantial sales terms.)
Here is some salient information to help you understand the strategy: Hallmark’s primary competitors had significantly reduced their costs by reducing their internal marketing research and creative development capabilities. They leveraged Hallmark’s resources in this area (Hallmark employed over 700 artists and writers and 70 marketing researchers at the time) through well-constructed systems of emulation. All mass channel (non-Hallmark) brands had raised prices faster than inflation for a number of years, as a result of the apparent lack of price sensitivity for greeting cards (until the major price thresholds of $2 and $3 were surpassed) and the pressures applied by retailers for year-over-year sales productivity gains. In fact, more than 65 percent of Hallmark-branded cards were priced under $2, whereas 89 percent of competitive mass channel brand’s cards were priced over $2. Competitors used their lower cost structures and higher product prices to fund ever-accelerating sales terms. They placed their bets that rich sales terms would buy distribution with major mass retail chains, which was in fact what was occurring.
Despite the fact that mass channel share was increasingly based on which brand could write the biggest check, Hallmark was betting on the fact that it could change the rules by introducing the power of brand equity to the mass channel. After all, Hallmark is the only greeting card brand widely recognized by consumers. (It had unaided top-of-mind awareness of nearly 90 percent; and Shoebox—a tiny little division of Hallmark—was the only other greeting card brand with significant top-of-mind awareness or preference.) Hallmark’s product also was superior (validated by rigorous market research), and Hallmark products were priced lower than any other major competitive brand.
To rally the internal troops around this strategy, I was fond of saying about Hallmark’s primary competitors: “Would you rather be our competitors with overpriced, no name, inferior products?” If Hallmark could align consumer price perceptions with reality (Hallmark was perceived to be “expensive” by consumers), I knew we could win with this strategy. Our competitors (both public companies, one of which consistently touted quarter over quarter revenue and profit increases) were locked into multiple-year retailer contracts with very high sales terms. They would not be able to reduce prices without severely affecting their revenues, profits, and stock prices.
I could devote at least a whole chapter to the nuances of this strategy, but suffice it to say that Hallmark’s static 39 percent greeting card market share increased to 42 percent with increased profitability in the first two years after we implemented this strategy. Since then, Hallmark’s share has steadily grown to 55 percent in a few short years. Unleashing the power of the Hallmark brand in the mass channel resulted in substantial market share and profitability gains for Hallmark without taking away from the success of the card shop and chain drugstore channels. (Hallmark card shops achieved consistent month-over-month sales increases for at least three years during this period, validating my held belief that the added marketplace exposure to the Hallmark brand would have a positive impact on all channels carrying Hallmark products.)
Use the checklist in Figure 16–1 to assess the efficacy of your brand management practices in the area covered by this chapter. The more questions to which you can answer “yes,” the better you are doing. The checklist also provides a brief summary of the material covered in the chapter.
Figure 16–1. Checklist: Global branding.