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Gale Business Insights Handbook of Global Marketing 1

In This Essay

n International Brands: Then and Now n Global Brand Philosophy n International Brand Architecture n Making a Good Brand Global

Building an International Brand

The Earliest International Brands Accompanying an increasingly global approach to running businesses and marketing products is the need to create a global brand that will ap- peal to as large a demographic as possible. Apple, Nike, Starbucks, and Calvin Klein are brands that have global as well as regional appeal. The proliferation of global brands is a relatively new phenomenon. It was once understood that the English, for instance, enjoyed Weetabix for breakfast while Americans ate Kellogg’s corn flakes. In the 21st century, however, these assumptions can no longer be made, and a business owner needs to think beyond local trends.

While Weetabix is still a popular brand in England, popular local brands tend to appear mainly in the countries that developed them. However, the owners of such brands, even those with strong regional appeal, are likely owned by large corporations, many of which are inter- national entities. The BBC reported that a 60% stake in the Weetabix brand was purchased by China Bright Food (BBC, 2012). Weetabix was a family-owned brand until it was purchased by Lion Capital, a British private equity firm, in 2004.

Before globalization, only a few truly global brands existed, such as Coca-Cola and IBM. These were symbols of their respective industries, and this symbolism created demand for products worldwide. However, increased globalization has broadened the market for a variety of global

Globalization: The growth of inter- dependence among world economies. Usually seen as resulting from the removal of many international regulations affecting financial flows.

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brands and has expanded the opportunity for companies to develop a brand that becomes a byword for a certain kind of technology and prod- uct (Wasserman, 2010).

The Story of Google Not only is the opportunity to expand globally available to companies that already have a brand and a sophisticated corporate structure, but the story of Google shows that two young men can develop a global force from one room and through word of mouth (Vise, 2007). Larry Page and Sergey Brin were both Ph.D. students at Stanford University in California when they devised a project to revolutionize Internet search. Before Google, search engines, rating systems were based on how many times the term appeared on the page. Page and Brin developed the system of the Page Rank, which used the number of pages linking to a certain website. The brand name was developed by an accidental misspelling of “Googol,” a word Page and Brin initially came up with as a name for the company. Google spread by word of mouth and through media, with- out expensive advertising. That was ironic since Google would eventually become the advertising king, generating more revenue from advertising than most media outlets combined. In the 21st century, Google is a by- word for Internet search.

Most business owners have to spend extensive research and develop- ment money to come up with the perfect brand name, logo, and market- ing strategy. Google, though it has some exceptional elements, is a prime example of the possibilities that are available to those who can come up with a solid global brand.

Global Brand Philosophy When someone starts a business, it is usually assumed that the brand should have some global appeal. In fact, according to Hayes Roth, chief marketing officer for Landor Associates, a consultancy firm for brand development, it is not even possible for a company to keep a brand local even if its management wanted to. “Only in the last 10 years has global business become the benchmark for how you do business these days … Thanks to the Internet, it’s hard to keep your brand just localized. Once you’re on the Web, you’re accessible pretty much anywhere in the world. It doesn’t necessarily make you a global brand but you have to be mindful of the implications” (Wasserman, 2010).

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To create a global brand, a business owner needs to develop a brand philosophy or a vision of the product or the experience using the prod- uct. Branding is based on people’s perceptions about your business and your products. Paul Williams, founder of the marketing firm Idea Sand- box, says, “Think of a brand as a reputation. Building a reputation in any new market, including overseas, involves a first impression, which comes from the initial interactions someone has with your company, products, and services” (Wasserman, 2010).

A brand is also considered a symbol of the product it signifies. It can express a certain philosophy, or a quality, such as a homemade touch, social responsibility, health and wellness, freedom and youth, and so on. Particularly in the fashion industry, but to some degree in other indus- tries, the brand can be more abstract and symbolic of certain human values or a philosophy of life.

Branding and Consumer Behavior Branding is particularly important because it can profoundly affect con- sumer decisions about what to buy. Jim Cramer of CNBC’s “Mad Mon- ey” noted on his program that although the supermarket industry faces stiff competition between one major chain and another, Whole Foods Markets’ stock and company fundamentals continue to be strong, even though items generally sell for a higher price (CNBC, 2011). One reason is that Whole Foods carries different offerings from the typical grocery store despite the fact traditional grocery stores are devoting an increasing amount of their aisle space to healthy offerings.

Whole Foods sells almost exclusively healthy items, from organic produce to free range eggs and hormone-free meat. However, it is not just the product but the image of the Whole Foods brand that attracts cus- tomers, even though they can now find increasing types of healthy foods in their regular grocery aisle. Consumers feel confident that when they go to Whole Foods, they will be bringing home groceries that contribute to the health and well-being of their families. Therefore, the Whole Foods brand encourages customers to drive out of their way or to pay a higher bill at the register because they have confidence in Whole Foods’ reputa- tion as a brand.

On another “Mad Money” program, Cramer hosted Danny Meyer, restaurateur and owner of the Union Square Café in New York City. Meyer, author of the book Setting the Table: The Transforming Power of

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Hospitality in Business, has developed the thesis of the Hospitality Quo- tient. His thesis maintains that companies have staying power if they provide their clients with care and attention, not just producing or serv- ing quality products. While Meyer mentions companies that fit certain standards of hospitality and customer care, those who have not yet pur- chased products from these companies or visited their restaurants be- come customers because of the companies’ reputation or brand image. The image, philosophy, or reputation of a company is essential to brand- ing, which is a highly influential component in decisions by consumers.

On the show, Cramer formed a list of stocks he referred to as “The Hospitality Index.” After three years, he did a follow-up on the Hospital- ity Index and found that the stocks on his list rose an average of 257% compared to the 65% gain in the S&P 500 (Metzinger, 2012a), indicat- ing the success of companies that have a positive brand reputation.

Global Brand Architecture There are different ways of approaching brand architecture, the way a brand concept is regarded in its various forms, including the corporate level, the product category level, and the individual product level. In the most basic sense, a corporate level of a brand involves the name and logo of the product or company. Management invests extensive effort and re- search to come up with a name and a logo for its product. Nike’s logo, a slanted slash with a curved end, and slogan, “Just Do It,” represent the company, the products, and the philosophy of fitness is victory around the world. The name Nike also represents this, but it is a testament to the success of the company that the logo can communicate throughout various cultures.

The word Nike is the name of the winged Greek goddess representing victory. However, consumer loyalty to the Nike brand does not require a working knowledge of ancient Greek mythology. While the association is made for those who know the source of the name, managers who want to create a global brand like Nike have to think also about the sound of the word and how well it can translate in the minds of its global clientele (Coucha, 2011).

Universal Logos A brand or logo should not be entirely linked to a specific language or culture if it is going to have global influence. Likewise, when companies

Consumer loyalty: Attachment by

consumers to particular goods and services.

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think about expanding globally, management might need to rethink the logo and name in relationship to every country it wants to sell the prod- ucts. Constant market research is needed as a company grows in size and global scope to ensure the brand name and logo will work in diverse areas. Market researchers often go to countries where the company would like to sell the product, conduct surveys, and engage in market research to gauge the potential efficacy of the brand.

A brand name might not work in a particular country for many rea- sons. Perhaps the word has a negative connotation in that language or represents a nation perceived to be hostile. In addition, social mores need to be taken into account. For instance, before expanding into a country with a strong theological emphasis in its national character, a company may want to eliminate logos and advertising that feature people in shorts (Wasserman, 2010).

Another way of thinking about a brand is to consider the product category. Coca-Cola, although it has many different drink categories, is known for its world-famous cola. While it also has other beverage prod- ucts, the one product is associated with the Coca-Cola brand in a more dominant way than other products. While the company markets many different brands, the Coca-Cola name, originally associated with just one specific beverage, has a compelling appeal when used to promote other beverages.

Nike and Apple, however, represent product categories, not specific products. Nike represents a wide range of sportswear, particularly athletic shoes, while Apple is symbolic of its many electronic products, including the iPhone, the iPad, the iPod, and others. Unlike Coca-Cola, which has its iconic drink as its long-standing symbol, Apple and Nike need con- stantly to come up with new products of a similar type and in line with the philosophy of the brand to keep customers interested. A brand as- sociated with product categories rather than with individual products re- quires constant innovation and new releases since customers are watching the company to see what it will produce next (Douglas & Craig, 2002).

In fact, for a company like Coke, identification with a specific brand can also be a disadvantage. The company might need to make acquisitions of smaller companies or create new products with different names to dissociate these products with the icon. With the trend toward healthier eating, and the campaign against having unhealthy soft drinks in school vending machines, Coca-Cola had to acquire the Dasani brand of mineral water to participate in the healthy-eating trend. It would not

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have helped the company to come up with a product called “Coke Min- eral Water” because of the incongruity of the Coke brand with its sugar and caffeine content with mineral water, a healthy alternative. Often a company can be more successful buying an already popular brand than to expend the resources to develop its own. Even though Dasani is owned by Coca-Cola, it does not carry with it the unhealthy connotations of a sugar-filled popular soft drink.

Branding for Multiple Products Companies like Procter & Gamble and Unilever are umbrella companies that have a diverse array of products and product categories. The strength of their brands lies in the individual products (Craig & Douglas, 2002). Even within a limited product category like laundry detergent, Procter & Gamble has more than 20 brands, which it needs to name, give a logo to, and package in a way that will appeal to specific demographics. These companies are able to tailor-make their brands for certain markets since they have the advantage of having a rather generic if reliable company reputation.

For instance, Unilever owns Walls ice cream brand, which is sold only in the United Kingdom. Procter & Gamble owns Marmite, a yeast spread that is a traditional sandwich favorite in the UK but is largely unused in the rest of the world.

Brand architecture is always evolving, and companies need to make decisions on how best to manage their brands in many countries or even reverse these decisions if they do not succeed. Phillips-Van Heusen, the leading purveyor of men’s shirts and ties in North America, has shown flexibility in managing its brands and cooperating with other famous brands in mutual marketing strategies. Phillips-Van Heusen (PVH) owns the Calvin Klein brand, which has seen strong sales in Europe, in spite of the recent economic slowdown on the continent.

PVH acquired the popular Tommy Hilfiger brand in 2010, a move that has been enormously profitable for the company. In addition to the acquisition of Tommy Hilfiger, PVH cooperated in a joint venture with Macy’s to feature its products in Macy’s stores. In this way, PVH could benefit from Macy’s brand name, and Macy’s could sell more merchan- dise on the strength of PVH’s brands.

When PVH saw weakness in sales of Calvin Klein underwear and jeans in the United States, it decided to acquire Warnaco, the company

Demographics: Statistics on various

markets, including age, income, and education,

used to target specific products or services to appropriate consumer

groups.

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that sold these products in 2012. Emanuel Chirico, CEO of PVH, said this move would “unite the house of Calvin Klein” and, by uniting the brand under one operation, management could have more control over the marketing and sale of the products (Metzinger, 2012). PVH is a strong example of how a company can effectively make acquisitions and joint ventures for greater success in its brands.

Making a Good Brand Global Given e-commerce and the global nature of marketing and selling prod- ucts in the 21st century, many company managers who start a business immediately think globally. The exception would be local service opera- tions such as a hair salon or an auto repair shop. Even in this case, many have a vision of expansion, but usually such expansion is, at most, re- gional to national. As discussed earlier, it is important to come up with logos, trademarks, and brand names that appeal internationally. This can be a significant challenge and requires knowledge, talent, and a market research team, ideally with those who can relocate to various places (Was- serman, 2010).

Companies that already have a brand name and a logo that might not appeal worldwide might consider brand diversification or brand ex- pansion. Developing an alternate brand name and logo is a challenge, but it might be necessary in many cases. Another strategy larger com- panies might use is to acquire popular local brands and expand indi- rectly through acquisition of another company. The work involved in integrating a new company under the umbrella of the larger organization might be as significant a challenge as developing a new brand, and each company manager needs to take into account corporate resources and energies to decide which strategy is better.

Market research is required to determine not only how much de- mand there is for a certain product in a given country, but also how much competition the expanding brand will face. Large demand for a product is not entirely a test of strength if there are plenty of other products to fill the need. The challenge an overseas company faces is to compete with local or national brands that capture the attitude and nuances and appeal to the tastes of a specific country. If a company wants to compete success- fully in such a situation, it might want to hire those native to the country to engage in market research, or at least those who are intimately aware of the needs and inclinations of the average local consumer. As mentioned

Trademarks: Exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others.

Market research: A systematic collection, analysis, and reporting of data about the market and its preferences, opinions, trends, and plans; used for corporate decision- making.

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earlier, larger companies might find a greater advantage in buying a local brand or a company than trying to start a new enterprise (Daye, 2007).

The Role of Distribution The second consideration a company must take into account when put- ting together a global expansion strategy is the important issue of dis- tribution (Daye, 2007). Will the products be imported from the home country, or will the company have to build a factory in various countries? Factors to measure include costs related to labor, constructing or pur- chasing a place of operation or production, raw materials, and delivery of goods. Costs of these items, especially labor, vary from country to coun- try, as do laws about labor and what raw materials can be used.

Growing awareness of fair labor practices and the environmental harm of mining or using certain raw materials has led to legislation in many parts of the world limiting a company’s ability to try to avoid high costs for such items at home or to try to skirt environmental restrictions in the home country. Currency fluctuations also have a deep impact on a company’s bottom line, and while certain commodities may seem inex- pensive in other countries, currency exchange rates can affect the profit- ability to the company. Tax issues are also an important consideration and vary from country to country.

Food products are governed by packaging laws that are specific to countries and even states. Nutritional information that appears on a package is governed by different regulations, and in some places, certain ingredients have been banned, such as trans fats in New York City. Vari- ations in packaging create another business expense that might provide a challenge to the company.

Company managers need to look into trademark and patent laws in various countries and register the trademark in various parts of the world. Patents and trademarks are protected in all areas of North America and Mexico by the North American Free Trade Agreement (NAFTA). Com- panies can file trademark protection in the European Union by filing for a Community Trade Mark (CTM). Website domains need to be regis- tered to assure they are not copied by others.

BiBlioGraphy

BBC. (2012, May 3). Weetabix bought by China Bright Food. Retrieved November 19, 2012, from http://www.bbc.co.uk/news/business-17935661 May 3 2012

North american Free Trade agreement:

Passed in 1993, the North American Free

Trade Agreement eliminates trade barriers among

businesses in the United States, Canada,

and Mexico.

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CNBC. (2011, December 14). Whole Foods CEO: We have tremendous momentum.” Retrieved November 16, 2012, from http://www.cnbc.com/ id/45671098/Whole_Foods_CEO_We_Have_Tremendous_Momentum

Coucha, A. (2011, June 20). Nike, building a global brand. Retrieved November 19, 2012, from http://www.slideshare.net/Ahmed_Coucha/brand-managment- nike-building-a-global-brand-case-analysis#btnNext

Craig, S., & Douglas, S. (2002, April). Dynamics of international brand architecture and overview and directions for future research. Retrieved November 16, 2012, from Stern.nyw.edu. 4.stern.nyu.edu/emplibrary/Michele%20Ng_Honors%20 2008.pdf

Daye, D. (2007, January 9). Building a global brand. Retrieved November 16, 2012, from http://www.brandingstrategyinsider.com/2007/01/building_a_glob.html

Metzinger, M. (2012a, May 10). The hospitality quotient revisited. Retrieved November 16, 2012, from http://seekingalpha.com/article/580581-cramer-s- mad-money-the-hospitality-index-revisited-5-10-12

Metzinger. M. (2012b, October 31). Uniting the house of Calvin Klein. Retrieved November 15, 2012, from http://seekingalpha.com/article/967421-cramer-s- mad-money-uniting-the-house-of-calvin-klein-10-31-12

Vise, D. A. (2007). The Google story. Retrieved November 19, 2012, from http:// yanko.lib.ru/books/internet/google_story-l.pdf

Wasserman, E. (2010, Feb. 1). How to build an international brand. Inc.com. Retrieved November 16, 2012, from http://www.inc.com/guides/build-an- international-brand.html