how global brands compete_polson
TRANSCRIPT
HOW GLOBAL BRANDS COMPETE?
Lekshmy R Nair
Nikunj Barnwal
Rahul T Thomas
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“The Globalization of Markets”: HBR article by Levitt Declared that a global market for uniform products/ services
had emerged
Corporations should exploit ‘economics of simplicity’ and grow by selling standardized products all over the world
He did not explicitly discuss Branding
But his ideas were interpreted to mean: Transnational companies should standardize products, packaging, communication to achieve a Least-Common-Denominator (hereafter mentioned as LCD) positioning that would be effective across cultures
Branding was only about saving costs and ensuring consistent customer communication
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This idea was popular in 80’s: several countries opened
up to foreign competition
But consumers in most countries had trouble relating to generic products and communications that resulted from LCD thinking
So Hybrid strategies (Glocal) were adopted Global scale: Technology, Production, Organization Customized to Local customer: Product features, Communication,
Distribution, Selling Techniques Such Glocal strategies have ruled the marketing ever since
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Flip side… Global branding has lost its luster: Transnational companies have been under virtual
siege (anti-globalization protests)
Transnational Companies are the most visible and vulnerable symbols of globalization’s side-effects
E.g.: Pashmina shawls
USA’s war with Iraq and Afghanistan added to it
According to Interbrand: 62 out of top 100 most valuable global brands were American
Most transnational companies now fly below the radar !
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Global Brands… Cant escape notice
People view most transnational brands differently than other firms
Due to their pervasiveness, they are seen as powerful institutions, capable of doing great good and also causing considerable harm
Research Project conducted involving 3300 consumers in 41 countries: most people choose one global brand over another because of differences in brand’s global qualities
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Firms must learn to manage the brand’s global characteristics
Critical because: future growth for most companies will come from foreign markets
By 2030, according to World Bank, the planet’s population will rise to 9 billion (with 90% people living in developing countries)
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Rise of Global Culture Culture: created and preserved by Communication
For decades communication was only within borders of countries: strong national culture
With the wide availability of Music, Movies, TV Channels and Internet, people started comparing their cultures with foreign ones
Towards end of 20th century: global culture
Thus Global Brands become the lingua franca of consumers all over the world
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Rise of global culture doesn’t mean that consumers share same taste or values!
Rather people with often conflicting viewpoints participate in a shared conversation, using shared symbols (global brands)
Consumers attribute some characteristics to global brands and use those attributes as criteria while making purchase decisions
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Global Brands: Study
2 stage research project Research International/USA
Objective: To find out how customers in different countries value global brands
Qualitative study in 41 countries to identify the key characteristics people associate with Global Brands
Then, a survey of 1800 people of 12 nations was taken to measure the relative importance of dimensions, when consumers buy products
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Global Brands Study: Details
1st stage: Qualitative study (in 41 countries) to identify key characteristics that people associate with Global brands
RI held Focus group sessions:
1500 urban consumers (20-35 yrs) in 41 countries
Sessions with social activists in some countries
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Details of the research Research helped them identify 4 dimensions that consumers may
associate with global brands: Quality signal Global myth Social Responsibility American Values
2nd stage: Surveyed 1800 people (in 12 nations) to measure relative importance of the above dimensions when buying products Developed multiple measures for each of the dimensions and pre-tested
in US & UK
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RI administered the survey in UK, US and 10 other countries (different in terms of economic development, religion, heritage & political history)
In each country the consumers were 18- 75 yrs chosen at random
Respondents were asked to choose among 3 competing global brands in 6 product categories
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Brand preferences were given by dividing 11 points among the 3 brands in each category
Then weights were derived for each of the global dimensions by the extent to which each factor explained brand preferences
Examined: how importance weights varied by country, category and segment
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Three Important Characteristics 1.Quality Signal
More people buying a brand- Better the quality
Rationale for charging premium
Transnational companies try developing new products faster than rivals and keep developing new products (unlike local brands)
Initially the countries of origin-factor was important, but now it reduced to 1/3 of the globalness
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2. Global Myth Global brands are seen as symbols of cultural ideals
Create imagined global identity that they share with like minded people
Transnational companies compete: to offer highest value products; to deliver cultural myths with Global appeal
Post World War- II era, companies spun American myths
Today’s global myths has less to do with American way of life
Myths are now created by virtually all brands: across industries
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3. Social Responsibility
Global companies have extraordinary influence on society’s well being
Expected to address social problems
Infamous cases: Union Carbide’s Bhopal Gas tragedy in 1984
Playing field isn’t level
Such expectations are pronounced in developing countries, as they are in developed countries in Europe
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Why consumers pick Global Brands?
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American companies have been criticized that they treat the cultures in other countries in a harsh manner
But those who support free trade have countered the people in other countries
This debate has cast a shadow over American firms
Americans: ‘want to impose their way on everybody’
Major finding: it didn’t matter to the consumers if the global brands they bought were American
American Values ?
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This finding is remarkable
All the consumers looked for is quality in the products
The relative importance of the 3 dimensions was consistent across the 12 countries studied
Taken collectively global dimensions were more powerful in some countries than in others: Smallest impact on US consumers Less impact on consumers in Brazil & India Consumers in Indonesia, Turkey and Egypt were influenced to a great extent
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GLOBAL CONSUMER SEGMENTS
Not much variation across countries regarding views on global brands
But within each country consumers held a variety of views about global brands
Consumers who evaluate brands similarly were then grouped (regardless of home country) into:
Global Citizens Global Dreamers Antiglobals Global Agnostics
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Global Citizens
55% of respondents rely on global successof company as a signal for quality and innovation
Concerned whether the companies are socially responsible
US & UK: few Global citizens Brazil, China, Indonesia: relatively higher number
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Global Dreamers
23% of respondents are less discerning about, but more ardent in their admiration of transnational companies
See global brands as quality products and readily buy into the myths
Are not as concerned with social responsibilities as are the Global Citizens
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Antiglobals
13% of consumers are skeptical if transnational companies deliver higher quality goods
Dislike brands that preach American values and do not trust global companies to behave responsibly
Try to avoid business with transnational firms
UK & China: relatively high numbers Egypt & S.A: relatively low
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Global Agnostics
8% of the consumers don’t base purchase decisions based on brand’s global attributes
Evaluate global product by same criteria as they judge local brand (don’t think global nature requires special consideration)
US & S.A: higher percentage Japan, Turkey, China, Indonesia: lower percentage
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COMPETING WITH GLOBAL BRANDS
Global brands compete with global brands
To succeed: transnational companies should:
Strive for superiority on basics (like brand’s price, performance, features and imagery)
At same time must learn to manage brand’s global characteristics
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1. Think Globalness
Smart companies manage their brands as global symbols
People are either astonished or disturbed by giant transnational companies
Firms must learn to participate in the polarized conversation and influence it
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Consumer understanding of global brand is framed by mass media and discussions which spread rapidly over the internet
Companies should monitor these perceptions closely
It is important for executives to break the habit of thinking about global branding in least-common-denominator or Glocal terms
This will ignore the transnational company’s most distinctive characteristic- GLOBAL Symbol
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2. Manage the Dark Side
Globally successful companies- do the customers have only positive perceptions about them?
Transnational companies often have a “dark side” that they must manage.
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“Solutions for a small Planet” : Ad campaign of IBM Reason: In early 1990’s, IBM discovered that while consumers
believed the company was quality focused, they also thought it was arrogant and bureaucratic
Campaign: The ad showed non-business people in non-business settings
Implication: The scenes were jarring and evocative The campaign smoothed over the feeling that IBM was arrogant
and bureaucratic even as it asserted the company’s ability to deliver customer driven solutions across the world
By late 1990’s the campaign helped to change the perception to the fact that IBM is Kind & gentle
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3. Build Credible Myths
Firms must create appropriate myths because Global success of a brand allows companies to deliver value to consumers by authoring identity-affirming myths
E.g.: The idea of technological Utopia
The idea in which personal empowerment would reign supreme took hold in the late 1990’s
Major technology firms competed fiercely to own that ideal and become the company that people would join with, to feel empowered
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“Where do you want to go Today?” : Microsoft Microsoft was particularly effective with an advertising campaign
built around the tagline
The American version showed the stories about common people
The dialogue was philosophical, not technological
“Anybody who says that one person can’t make a difference is wrong .Try to push, don’t give up, don’t give up, don’t give up, Where do you want to go today?”
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Implication: Microsoft was not selling just technology; it was selling the dream of personal empowerment. The campaign worked because being the world’s dominant software company, Microsoft earned the credibility to author such a dream
When companies are responsible for less than credible myths it can hurt brands
In 1990’s when global warming was a major concern, the dream of a sustainable world where fuels wouldn't pollute became particularly attractive. BP tried to tap in to this dream
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‘Beyond Petroleum; Campaign: BP Reason: Evocative stories and images invited consumers
to share in an imagined have-your-cake-and-eat-it-too future of clean fuel
Implication: The idea was appealing but BP, as a major petroleum producer but minor alternative energy player, was not a credible author
The media and the activists roundly ridiculed the company for ‘greenwashing’ itself
Eventually BP had to rethink the campaign
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Treat Antiglobals as customers Most transnationals are not sure how to treat people who dislike them
The study reveals that one person in ten wouldn’t buy global brands if given a choice
This is an extraordinary number: antiglobals represent more potential sales than markets, the size of Germany & UK
These people should be targeted
This can be done by investing in social activities to convince such skeptics
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Turn Social Responsibility into Entrepreneurship Most efforts on corporate social responsibility appears to be a new form of public relations
Even when companies are proactive, initiatives are often limited to those that are" sustainable” (money making activities)
Repackage philanthropic efforts using the new language of social responsibility to target socially responsible investors
Problem: Consumers are skeptical of transnational’s motives and regard
those approaches as opportunistic
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Litmus Test: Will consumers perceive the actions to be motivated primarily by self interest or by an interest in the welfare of the people and the planet
P&G identified safe drinking water –critical social problem; fell within their scope of expertise
It leveraged its knowledge of household sanitation to develop a water purification system that would be effective in poor countries
Developed a sachel of particulate matter-Reduced the frequency of diarrhea episodes by around 25%
P&G deployed its vast technological capabilities to tackle a problem that govt. & NGO’s couldn’t do for decades
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To be credible - Global companies’ social responsibility efforts must demonstrate that the firms have used their ample resources to benefit society
People trust powerful individuals who are seen to have sacrificed their interests for the good of the whole
Priority to deliver return’s to Shareholders – Shortsighted
Consumers believe that Global companies must shoulder graeter social responsibility
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Conclusion Globalness has become a stronger quality signal than nation of origin
Consumers prefer brands hail from countries that have particular expertise.
Eg:- Switzerland for chocolates, Italy in clothing, France in cosmetics etc
Consumers expect global brands to tell their myths from that particular place associated with the brand
Eg: Nestle – Swiss mountains, L’Oreal- France
Transnational companies would do well if they can manage their national identity and globalness
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