brand report

1. Perception of slow growth and increased competition in domestic markets

2. Belief in enhanced overseas growth and profit opportunities

3. Desire to reduce costs from economies of scale

4. Need to diversify risk

5. Recognition of global mobility of customers

B. Advantages of Global Marketing

1. Economies of scale in production and distribution

2. Lower marketing costs

3. Power and scope

4. Consistency in brand image

5. Ability to leverage good ideas quickly and efficiently

6. Uniformity of marketing practices

C. Disadvantages of Global Marketing

1. Differences in consumer needs, wants, and usage patterns for products

2. Differences in consumer response to branding elements

3. Differences in consumer response to marketing mix elements

4. Differences in brand and product development and the competitive environment

5. Differences in the legal environment

6. Differences in marketing institutions

7. Differences in administrative procedures

D. Differences in Consumer Response to Branding Elements

1. Linguistic differences across countries can twist or change the meaning of a brand name.

2. Lexicon is a well-known brand consultancy that uses linguists to assess brand names for clients.

3. Mental representations of verbal information are coded mainly visually among Chinese and in a phonological manner among English speakers.

E. Differences in Consumer Responses to Marketing Mix Elements

1. Consumers in different parts of the world feel differently about marketing activity.

2. There are also differences in advertising style and how consumers use social media.

3. Price sensitivity, promotion responsiveness, sponsorship support, and other activities may differ by country.

F. Differences in Brand and Product Development and the Competitive Environment

1. Products may be at different stages of their life cycle in different countries.

2. Perceptions and positions of brands may differ across countries, based on local market conditions.

3. The nature of competition may also differ; brand managers should have a plan to address unexpected rivals.

G. Differences in the Legal Environment

1. The legal restrictions change from country to country:

a. Global ad campaigns have different restrictions in different countries.

b. Social media advertising is subjected to restrictions.

2. Data privacy laws have been instituted in the European Union.

H. Differences in Marketing Institutions

1. Channels of distribution, retail practices, media availability, and media costs vary significantly from country to country.

2. The prevalence of online shopping, smartphones, supermarkets, and other institutions also may vary considerably, particularly in developing countries.

I. Differences in Administrative Procedures

1. It may be difficult to achieve the control necessary to implement a standardized global marketing program:

a. Local offices may resist having their autonomy threatened.

b. Local managers may raise objections to things that were not invented in the country.

2. Local managers who feel their autonomy is reduced may be less motivated.

V. Strategies for Creating and Managing Global Brands

A. Creating Global Brand Equity:

1. Establish breadth and depth of brand awareness.

2. Create points-of-parity and points-of-difference.

3. Elicit positive, accessible brand responses.

4. Forge intense, active brand relationships.

5. Marketers must consider how to achieve brand salience, brand performance, brand imagery, brand judgments, brand feelings, and brad resonance in each market.

B. Global Brand Positioning

1. It is recommended that companies evolve a global brand positioning derived from a deep understanding of how brands must be positioned across various markets:

a. Brand positioning means creating mental maps, defining core brand associations, identifying points-of-parity and points of difference, and crafting a brand mantra.

b. Some companies have a global brand positioning document that addresses a number of questions.

c. The answers to the following questions will guide how to structure a global brand positioning and will help identify which aspects of a brand’s positioning can be modified based on local considerations:

i. How relevant is the brand’s mental map from the home market to a new market? How appropriate is the positioning? What is the existing level of awareness? How valuable are the core brand associations, points-of-parity, and points-of-difference?

ii. What changes should we make to the positioning? Do we need to create any new associations? Should we not recreate any existing associations? Should we modify any existing associations?

iii. How should we create this new mental map? Can we still use the same marketing activities? What changes should we make? What new marketing activities are necessary?

2. In evolving a brand’s global positioning, we need to define a hierarchy of brand associations in the global context that defines which associations we want consumers in all countries to hold and which we want consumers only in certain countries to have:

a. We must be attuned to similarities and differences across markets.

b. A brand can modify different aspects of its marketing mix to improve its appeal to various global markets.

VI. Customizing Marketing Mix Elements in Local Markets for Global Brands

A. Product Strategy

1. Marketers may forego basic consumer research and put existing products on the shelf in new markets to see what will happen, so they learn about consumer differences after the fact.

2. One solution to the trade-off between global and local brands is to sell both types of brands as part of the brand portfolio in a category.

3. Standardized international marketing programs work with some products, in some places, some of the time.

B. Communication Strategy

1. Advertising is one area of marketing communications in which many firms face challenges internationally.

2. Even if positioning is the same, creative strategies may have to differ to some degree.

3. Different countries can be more or less receptive to different creative styles.

4. With the growth of social media and digital marketing, companies should carefully evaluate their options for communicating with consumers using online media.

5. The penetration of satellite and cable TV has expanded broadcast media options.

6. Each country has its own unique media challenges and opportunities.

C. Distribution Strategy

1. Channels present challenges to many firms because there are few global retailers, especially supermarkets and grocery stores.

2. Distribution challenges are greater in continents like Africa where consumers live in urban and rural areas.

3. Companies have responded by adopting unique distribution systems.

D. Pricing Strategy

1. The value-pricing principle still generally applies to global markets.

2. Marketers need to understand consumer perceptions of the value of the brand, willingness to pay, and elasticities with respect to price changes in each country.

3. Pressures for international price alignment have arisen due to increasing numbers of legitimate imports and exports and the ability for retailers and suppliers to exploit price differences through gray imports.

4. There are three options for varying prices offered in global markets:

a. Create an international price corridor that takes into account inherent differences between countries and alignment pressures.

b. Introduce different brands in high-price, high-income countries and in low-price, low-income countries, depending on the relative cost trade-offs of standardization versus customization.

c. Developing a completely new product for a local market using indigenous materials is another way to provide competitive offerings.

E. Marketing to Consumers in Developing and Developed Markets

1. The distinction between developing and developed markets is blurring because some markets may have a large GDP but lack infrastructure and resources relative to more developed counterparts.

2. Brazil, Russia, India, China, and South Africa are important developing markets.

3. Consumers in emerging and developing markets have different shopping behaviors:

a. Eighty percent of consumers in emerging markets buy their products from tiny bodegas, stalls, kiosks, and mom-and-pop stores.

b. Smaller packaging and lower sales prices are critical when income and housing space are limited.

c. Many companies have devised cheaper ways to make the right kinds of products to suit consumer demand.

d. Mobile and digital strategies take on greater importance given the relatively high smart phone penetration.

F. Ten Commandments to Building Global Customer-Based Brand Equity

1. Understand similarities and differences in the global branding landscape.

2. Don’t take shortcuts in brand building.

3. Establish marketing infrastructure.

4. Embrace integrated marketing communications.

5. Cultivate brand partnerships:

a. One way to enter a new global market is by exporting existing brands to a new market (a geographic extension).

b. Another way to enter a new global market is by acquiring existing brand already sold in the new market but not owned by the firm.

c. A third way is to create a brand alliance with another firm (joint ventures, partnerships, or licensing agreements).

6. Balance standardization and customization:

a. Factors that favor a more standardized marketing program include:

i. Common customer needs

ii. Global customers and channels

iii. Favorable trade policies and common regulations

iv. Compatible technical standards

v. Transferable marketing skills

b. Some products are more likely to retain similar marketing strategies worldwide:

i. High technology products with strong functional images

ii. High-image products with strong associations to fashionability, sensuality, wealth, or status

iii. Services and business-to-business products that emphasize corporate images in their global marketing campaigns

iv. Retailers that sell to upper-class individuals or that specialize in a salient but unfulfilled need

v. Brands positioned primarily on the basis of their country of origin

vi. Products that do not need customization or other special products to be able to function properly

7. Balance global and local control:

a. One approach is centralization at a home office or headquarters

b. Another approach is decentralization of decision making to local foreign markets

c. A third option is some combination of centralization and decentralization

8. Establish operable guidelines.

9. Implement a global brand equity measurement system.

10. Leverage brand elements.

Key Insights Regarding Global Brand Strategies Based on Research Findings

1. Cultures place varying emphasis on the self versus the group, with implications for consumer-brand relationships:

a. One important dimension on which cultures are different is whether the emphasis is on the independent self (or a focus on the individual rather than the group) or whether the culture focuses on the interdependent self (focus on the group as opposed to the individual).

b. Researchers have shown that consumers in independent cultures may use brands because it strengthens their individual identity, whereas consumers in interdependent cultures may use brands because it strengthens their relationship with the social group.

2. Vertical and horizontal cultural contexts cause differences in how consumers relate to high-status brands:

a. The power-distance dimension is defined as the extent to which society accepts inequality in power distribution and reflects the hierarchical or vertical nature of society.

b. In high power distance cultures, global brands can help consumers reflect social status.

c. Research reveals those in horizontal cultures place a great deal of emphasis on equality, so they may prefer brand names that convey uniqueness without being high status.

3. Brands can be symbolic of culture, and this has strategic implications for managers:

a. Brands can by symbolic of cultural identity, and the symbolism can influence global strategy.

b. Culturally symbolic brands are preferred when consumers have a high level of cultural identification within a given culture or when their social identity is threatened.

c. Cultural symbolism is an important contextual factor that influences how individuals react to advertising using multiple languages.

4. Brands have different personalities across cultures:

a. Consumers project their own personality preferences in various cultures onto global brands.

b. A large cross-national study suggested that meanings derived from brands and brand personalities are culture-specific.

Branding Briefs

Marketing to Ethnic Groups

Branding Brief 1 provides examples of brands that effectively appealed to different ethnic groups. The first example is Verizon’s marketing to African Americans through a gospel music festival. The second example is CoverGirl cosmetics’ successful targeting of African Americans with unique colors in its make-up line. The third example is Buchanan’s Whisky’s campaign that targeted Hispanic Americans and Latinos with a music partnership and messages of empowerment. The fourth example is Toyota’s campaign that targeted Asian Americans with a web series, which won over Chinese, Vietnamese, and Korean immigrants living in America. Collectively, the examples communicate the value of highlighting ethnicities and capturing values and interests that resonate with the target audience.

Coca-Cola’s Global Brand Strategy with Local Elements

Coca-Cola pursued aggressive global branding in the 1920s, finding such creative placements for its logo as on dogsleds in Canada and on the walls of bullfighting arenas in Spain. Its popularity throughout the world was fueled by colorful and persuasive advertising that cemented its image as the “all-American” beverage.

Despite immense scope, Coca-Cola did not institute a uniform marketing program in each of its global markets. Rather, the company often tailored the flavor, packaging, price, and advertising to match tastes in specific markets. Local managers were assigned responsibility for sales and distribution programs of Coke products to reflect the marked differences in consumer behavior across countries. Coke essentially keeps the same basic look and packaging of the product everywhere.

The company simultaneously stresses that the brand be relevant and well positioned against the competition. To keep it relevant, Coca-Cola uses different advertising agencies in different countries in order to make the brand feel local. The marketing mix is designed in each country to stress that Coke is positioned positively on attributes relative to local competitive products.

In 1999, Coca-Cola’s new global marketing mantra became “Think Local. Act Local.” Intended to get Coca-Cola back to the basics, the strategy meant hiring more local staff and allowing field managers to tailor marketing to their regions. The results of this hyperlocal focus were missed sales targets and local advertising that, in some cases, did not fit with the carefully crafted Coke image. The company scrapped the “Think Local. Act Local” mantra in favor of a hybrid strategy where local executives took direction from Coke’s Atlanta headquarters with room for interpretation at the local level.

In 2016, Coca-Cola announced a unified creative campaign called “Taste the Feeling,” which underscores the Coca-Cola is a simple pleasure which makes everyday moments special. Coca-Cola conducts business with more than 400 brands in more than 200 countries. Three-quarters of its revenues come from outside the United States. Its combination of local and global brands enables Coca-Cola to exploit the benefits of global branding and global trends in tastes while tapping into traditional domestic markets at the same time.

Marketing to Bicultural Consumers Using Bilingual Advertising

The multicultural consumer landscape is large, making up nearly 40 percent of the U.S. population and 232 million people living outside their home countries around the globe. When advertising to multiculturals, marketers should be aware that members of ethnically diverse populations may be at different stages of assimilation in the host country, meaning they have varying degrees of receptiveness to bicultural marketing efforts. Bicultural ads—ads that blend the words from the home language—can be appealing to the bicultural population under certain circumstances. However, bilingual ads only work when paired with brands that don’t have strong monocultural connotations.

Marketing to a bicultural audience means appealing to two identities, and it is important to ensure the associations of the brand mesh well with the themes of the bilingual or multicultural advertising. It is important to evolve an integrated communications approach which incorporates bilingual and multicultural themes across a range of marketing activations.

Managing Global Nestle Brands

For about 15 years, Nestlé spent more than $30 billion on acquisitions in different countries, including major brands like Carnation dairy, Perrier and San Pellegrino, Stouffer’s, Rowntree confectionery, Ralston Purina pet food, and Buitoni-Perugina pasta and chocolate. These acquisitions resulted in valuable economies of scale in developed markets.

In less-developed markets, however, the company adopted a different strategy. It manipulated ingredients or processing technology for local conditions and then applied the appropriate brand name. To limit risks and simplify its efforts in new markets, the company attacked with a handful of labels selected from a set of strategic brand groups. Then it concentrated its advertising and marketing money on just two or three brands.

Nestlé attempts to balance global and local control in managing its brands. Some decisions, such as branding, follow strict corporate guidelines. The company has six strategic corporate brands—Nestlé, Nescafé, Nestea, Maggi, Buitoni, and Purina. There are 70 different strategic international brands, including Nesquik line of chocolate milk products as well as product brands Kit Kat, Friskies, and Perrier. Eighty-three strategic regional brands include Aquarel and Contrex. Finally, there are a host of local brands that are only important to particular countries.

Nestlé had used a decentralized management approach, in which most decisions were primarily made by the local managers. The company consolidated factory management by region and combined oversight of similar products into strategic business units. Nestlé’s more centralized management approach enabled the company to focus on growing its core brands at each level. Despite tough economic conditions, the company experienced organic growth of approximately 4.2 percent in 2015.

Brand Focus

China’s Global Brand Ambitions

China, the world’s most populous country with 1.3 billion people, was closed to the West from 1949 to 1978 and has industrialized at a remarkable rate since its admission to the World Trade Organization in 2001. It is now the world’s second-largest economy, with a $41 billion trade surplus in 2016. It accounts for 25 percent of manufacturing worldwide, produces 80% of the world’s air-conditioners, 70% of its mobile phones, and 60% of its shoes. Recently, due to labor shortages and strikes, there has been a push to increase wages.

A Growing Consumer Class

China has the world’s largest number of billionaires and nearly four million millionaires, which triggered an interest in consuming conspicuously, which precipitated a windfall for foreign luxury-goods manufacturers. With a rapidly expanding middle class, China made the country the world’s largest luxury market. Luxury brands have flocked to China to try to cash in. Despite the fortunate wealthy few, vast numbers of urban and especially rural poor have been left behind. Despite the concerns generated by the wealth polarization, China’s consumer class still harbors enough purchasing power to attract foreign brands, including Chevrolet, Buick, Cadillac, Apple, and Starbucks.

Lenovo is the number one PC seller in China, with a network of more than 15,000 stores, an international workforce of 27,000 employees, 10 international laboratories, and a global presence in more than 160 countries. Lenovo is the largest PC manufacturer with nearly 19 percent of the worldwide market and has products like a gaming laptop called Legion, Thinkpad laptops, and Motorola smartphones, as well as new products like a VR headset and Lenovo Smart Assistant. Speed of decision making and examining strategic moves are keys to the company’s success. Its top executives from around the world meet and its global marketing features computers as machines that empower people to do things. Lenovo approaches its global market with care and caution.