how global brands compete_polson

40
HOW GLOBAL BRANDS COMPETE? Lekshmy R Nair Nikunj Barnwal Rahul T Thomas

Upload: niks2409

Post on 12-Nov-2014

430 views

Category:

Documents


2 download

TRANSCRIPT

Page 1: How Global Brands Compete_Polson

HOW GLOBAL BRANDS COMPETE?

Lekshmy R Nair

Nikunj Barnwal

Rahul T Thomas

Page 2: How Global Brands Compete_Polson

2

“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

Page 3: How Global Brands Compete_Polson

3

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

Page 4: How Global Brands Compete_Polson

4

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 !

Page 5: How Global Brands Compete_Polson

5

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

Page 6: How Global Brands Compete_Polson

6

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)

Page 7: How Global Brands Compete_Polson

7

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

Page 8: How Global Brands Compete_Polson

8

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

Page 9: How Global Brands Compete_Polson

9

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

Page 10: How Global Brands Compete_Polson

10

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

Page 11: How Global Brands Compete_Polson

11

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

Page 12: How Global Brands Compete_Polson

12

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

Page 13: How Global Brands Compete_Polson

13

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

Page 14: How Global Brands Compete_Polson

14

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

Page 15: How Global Brands Compete_Polson

15

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

Page 16: How Global Brands Compete_Polson

16

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

Page 17: How Global Brands Compete_Polson

17

Why consumers pick Global Brands?

Page 18: How Global Brands Compete_Polson

18

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 ?

Page 19: How Global Brands Compete_Polson

19

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

Page 20: How Global Brands Compete_Polson

20

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

Page 21: How Global Brands Compete_Polson

21

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

Page 22: How Global Brands Compete_Polson

22

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

Page 23: How Global Brands Compete_Polson

23

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

Page 24: How Global Brands Compete_Polson

24

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

Page 25: How Global Brands Compete_Polson

25

Page 26: How Global Brands Compete_Polson

26

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

Page 27: How Global Brands Compete_Polson

27

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

Page 28: How Global Brands Compete_Polson

28

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

Page 29: How Global Brands Compete_Polson

29

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.

Page 30: How Global Brands Compete_Polson

30

“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

Page 31: How Global Brands Compete_Polson

31

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

Page 32: How Global Brands Compete_Polson

32

“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?”

Page 33: How Global Brands Compete_Polson

33

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

Page 34: How Global Brands Compete_Polson

34

‘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

Page 35: How Global Brands Compete_Polson

35

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

Page 36: How Global Brands Compete_Polson

36

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

Page 37: How Global Brands Compete_Polson

37

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

Page 38: How Global Brands Compete_Polson

38

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

Page 39: How Global Brands Compete_Polson

39

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

Page 40: How Global Brands Compete_Polson

40