Managers are gradually recognizing that brands are among their firm’s most valuable assets. Strong global brands allow companies to increase their international revenues and growth. Global branding also helps to improve margins by driving down unit costs through economies of scale associated by winnowing agencies, ad copies, and marketing messages.
Brands also simplify decisions for consumers, who are busier, more cynical, and face a wider array of choices in an increasingly cluttered world. By maintaining a consistent brand image they reduce consumer confusion and reinforce the message in a cluttered market.
Brands can also help to mobilize and generate resources. Firms use strong brands to attract and retain talent. Obtaining external equity and debt financing becomes easier with enhanced visibility and credibility. Brands help to quickly roll out new products and protect innovations from imitation. Emphasizing a brand during market entry solidifies a firm’s market position. Brands buffer firms during recessions and propel them forward when recessions end. For all these reasons, brands are intangible assets that increase the market value of firms.
Clarifying Global Branding
A brand is a collection of perceptions that may be positive or negative about a name or symbol of a product/ service. It goes beyond short-lived product features to include emotional benefits and associations. At their heart, brands create trust with stakeholders.
A misconception is that global branding seeks to pursue an identical name, product, and marketing message worldwide. This practice is uncommon and often counterproductive. Most brands are not global in this sense. Procter & Gamble has over 89 brands, but only a handful are promoted identically worldwide. Its well-known laundry detergent is sold in some countries as Tide and in others as Ariel. A global branding strategy is a cross-national process to improve and harmonize a brand. The goal of a global brand strategy is to develop strong brands in all countries through a continuous improvement process using organization structure, processes, and culture to allocate brand-building resources, to create synergies, and to coordinate and leverage multiple country brand strategies.
Brands are becoming more valuable. In a globalizing world, brands can protect firms from international competition. The marketplace is confusing and cluttered with the entry of more players and the introduction of products with short lives. There is a shift, especially in industrialized countries, from manufacturing products to providing services, which are harder to evaluate and compare. Buyers lead busier lives and have less time to discern among products and sellers. So there is a need for the decision shortcuts and simplification provided by trusted brands.
The lowering of trade barriers and freer information flows make it easier for brands to cross borders and be exploited internationally. The economic center of gravity is shifting from low-growth industrialized countries to rapidly growing emerging countries. While consolidation is often emphasized in industrialized countries, enthusiasm is the theme in growing parts of the world. In industrialized countries, brands may exploit loyalty among aging consumers, while in emerging countries they may reach out to their large population of younger consumers that is climbing the economic ladder.
From emerging markets, indigenous brands (such as Tata, Lenovo, Infosys, and China Mobile) are gaining strength in international competition. Brands (such as IBM, Goldman Sachs, and Morgan Stanley) are important also in the business-to-business space because of their reputation for expertise, reliability, and security.
Other recent trends include the proliferation of media among which consumers can now choose. Environmental issues are also growing in importance. Positioning a product close to environmental issues strengthens a brand. And some trends, such as being online, have become necessary to bolster brands.
Brands can appreciate, like McDonalds, or depreciate in value, like Starbucks. The rise and fall of brands is in part tied to the popularity of their product category. Private equity groups are on the lookout to buy tarnished brands to restore their health. Managers should review their corporate practices that may tarnish their brands, such as Wal-Mart’s labor relations, Microsoft’s market dominance, and Nike’s international contract manufacturing.
Most brands fail. Over 30,000 consumer products are launched each year, but less than a tenth have any staying power. Myopic companies reduce the quality of their products or stretch their brands unwisely, only to spend years attempting to repair the damage. Starbucks’ strong brand was commoditized by over expanding to over 13,000 coffee shops too quickly, which diminished its cachet. Brands that survive may be vulnerable to competing brands from retailers who also sell their private labels, from generic manufacturers, and from imitators where intellectual property protection is weak. They are also affected by the rise and fall of product categories, such as the Internet or unhealthy carbonated beverages.
A global branding strategy has to overcome various execution difficulties. It needs to understand the varying needs of many markets and be very creative to satisfy them. It must overcome coordination problems, varying coverage of agencies, and available media. It also needs to craft a process and design an organization to develop, strengthen, and leverage a brand.
Developing Strategy
Firms need to define various aspects of their brand. This includes a brand’s personality, which is how the brand would be described if it were a person. They should develop brand associations that resonate with the public. What does the brand stands for? They should clarify user imagery: how a typical user of the brand would be described. What symbols and logos will be associated with the brand? Is the product category new, growing, and not crowded?
Key decisions must be made on the elements that should be kept constant and those that may be adapted. When going global, the following elements usually remain constant throughout the world: corporate brand, the logo, and the brand essence or values. Factors that may vary from country to country are corporate slogan, products and services, product names and features, positioning, and marketing tactics based on local differences. Abstract general values travel more easily, and can more easily be tailored to local situations than specific product features and marketing tactics.
Managers should resist pressures for short-term gains at the expense of long-term value. These pressures may overextend a brand to unrelated areas, which leads to brand dilution and public confusion. Or it may tempt managers to go down-market with the same brand, which depreciates it.
Firms can use umbrella branding to endorse innovations and, in turn, be endorsed by them. Consider the Apple iPod, the Apple iPhone, and the Apple iMac, for which consumers are willing to pay over a 20 percent price premium. They are much more than an MP3 player, a cell phone, or a PC. Otherwise standalone innovations per se will be easily imitated. Firms should consider investing in design as a way to distinguish their brand through aesthetics and ease of use. Nissan improved its brand ranking by emphasizing bold design rather than quality to differentiate itself from Toyota and Honda.
The Samsung brand, whose value has increased substantially and surpassed that of Sony, illustrates some of these brand-building principles. Less than a decade ago, it was a maker of lower-end consumer electronics sold under several little-known brand names including Wiseview, Tantus, and Yepp. It retrenched these brands and put all its resources behind the Samsung name. Then it focused on building a more upscale image through better quality, design, and innovation in mobile phones and digital TV product categories. Consumers form strong bonds with their cell phones, which they carry everywhere, and with their TV, which is at the center of their family room.
Global Brand Components
Managers should focus on building their brand leadership architecture, rather than chasing one identical global brand that may prove elusive. To implement this larger task, it should be broken down into its components. Each component should be designed to support the larger global branding goal. And the components must be consistent and dovetail with one another.
Managers need guidelines for where, how, and how much to invest in order to build global brands. Since brands have high, long-term value, firms should budget for brand building more than what would be justified with a short-term view. And broader global brands need more total investment than what would be justifiable with a narrow country view. However, this larger total budget should be allocated to conduct many pilot experiments across countries in order to discover what works. Once a successful theme is discovered, investment should be stepped up and it should be leveraged to multiple countries quickly.
Given how hard it is becoming to reach the consumer who increasingly selects his/her media, firms should not rely on one media, such as traditional advertising, to break through. They should invest in multiple campaigns using diverse media: the Web, entertainment event promotions, cell phones, handheld computers, and a retail presence. New growth media may be a particularly effective avenue. Procter & Gamble once used the emerging TV and radio soap opera to market its household products. And Google’s ties to the rise of the Internet helped it become the most valuable brand in less than a decade since its founding.
Rather than restricting themselves to one marketing agency, managers should use multiple agencies to achieve broader reach while capitalizing on their relative strengths. They may have multiple agencies compete for creating new copy, then use one agency for execution, except in countries and media where that agency is weak, where they can bring in other agencies. When negotiating large contracts, firms should use their clout to insist on the best creative talent from an agency to work on their account.
Global Brand Managers
Responsibility for building a global brand should be given to an executive with branding and marketing experience. In some companies, an executive with this expertise can be found at the top management level. In other companies, this expertise is found at the middle-management level. Ideally, the appointed leader should have branding expertise, credibility, and contacts to put together a branding team. The members of the team should reflect expertise and perspectives from different countries, products, and marketing functions. The marketing functions represented should include marketing research, promotion, pricing, and advertising. Having such a diverse team reduces local bias and helps to attain synergies across units.
A global brand manager should be given more authority, especially if affiliates have been locally autonomous in the past in order to provide a counterbalance. The functions of the global brand manager are to make sure everyone knows what the brand stands for, what the guidelines are, and to approve any deviations from the guidelines when implementing it internationally. The global branding team should hold periodic meetings and conferences that bring together people from different units, marketing functions, and countries. These sessions should include a mix of formal presentations and informal idea sharing. The informal idea sharing develops contacts, transfers expertise, and leads to collaboration.
If managers are serious about building a brand, they need to develop metrics that measure its effectiveness, results, and value. These measures need to use a common vocabulary across markets and products so that performance can be compared and aggregated internationally. Brand equity may be measured by product performance in blind tests, consumer surveys of brand awareness and loyalty, and market distribution within and across markets. Brand value may be measured by the sum of all future earnings improvements that a brand is expected to generate, discounted to a present-day value. This discounted value is then capitalized to estimate the boost in the market value of the business over its tangible assets.
The International Brand Planning Process
These metrics form a common planning template and are part of a common international brand planning process. This planning process should conduct pilot experiments in different settings, evaluate performance, share insights, and leverage best practices across countries. The sharing of insights can be encouraged through meetings, conferences, and an intranet knowledge-sharing system. An example of international knowledge sharing occurred when Procter & Gamble developed a shampoo, Pantene Pro-V, whose branding was floundering in developed countries. But an experiment in Taiwan came up with a successful tagline—Hair so healthy that it shines! This tagline was then quickly rolled out to 70 other countries.
Building a global brand requires identifying and nurturing supportive values in the firm. Innovativeness is needed to try new marketing themes, messages, and product innovations. An appreciation for continuous improvement encourages brand refinements in an ongoing journey. A willingness to collaborate helps to share ideas so that insights can be leveraged internationally. And determination and a long-term view provide the discipline not to succumb to cutting corners because of short-term profit pressures.
Employees need to be rewarded for contributing to the brand-building effort. Rewards and recognition must be given for experimentation that leads to breakthrough ideas. Inventors may be recognized in company newsletters and given financial bonuses. Some companies track and reward in annual reviews the number of contributions made by employees to the knowledge-sharing system. Another possibility is to provide incentives and recognition to employees who share their insights and best practices at conferences and meetings.
A global branding strategy has the potential to create long-term value for the firm’s stakeholders, but requires dispelling misconceptions and adopting a strategic process. Managers should not chase a single global brand, product, or marketing message. Instead, they need to distill and emphasize the essence of what their brand stands for. And they need to put in place a planning process to innovate, share insights, and leverage best practices internationally to continuously improve their brand in order to develop a global leadership position.
Bibliography:
- A. Aaker, “Brand It or Lose It,” California Management Review (Fall 2007);
- A. Aaker and E. Joachimsthaler, “The Lure of Global Branding,” Harvard Business Review (November–December, 1999);
- David A. Aaker, Strategic Market Management (Wiley, 2008);
- Keith Dinnie, “21st-Century Perspectives on Global Brands,” Journal of Brand Management (v.12/5, 2005);
- Chekitan S. Dev, James. R. Brown, and Kevin Zheng Zhou, “Global Brand Expansion: How to Select a Market Entry Strategy,” Cornell Hotel and Restaurant Administration Quarterly (v.48,1, 2007);
- Hiro Minamiyama, World Branding: Concept, Strategy and Design (Gingko Press Inc, 2007).
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