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Gale Business Insights Handbook of Global Marketing 277

In This Essay

n Designing and Controlling Expanded Management Organization n Managing Brand Presence and Reputation in the Face of Market

Expansion n Maintaining Product Consistency Across Multiple Markets n Avoiding Global Pitfalls and Brand Dilution During Periods of Growth n Useful Social Marketing Methods for Multiple Market Companies

Managing a Brand Across Multiple Markets

Overview At some point, a successful company will be faced with the decision of staying small or expanding. A company may choose to grow its opera- tions, moving into new markets, for a variety of reasons. Reasons for growth include a desire to make the most of what a company has to offer, the dilution of risk through diversification, fortifying a brand name, and achieving economies of scale.

Some types of company organization are more suited to expansion than others. Chain organization, for instance, is the most common form of business operating in several different markets at once. A chain of supermarkets may be capable of serving several different markets at once using an identical business model with only a few small changes while a hotel chain may find it less expensive to operate on a larger scale.

Operating in several markets at once can be profitable. However, ac- counting for and controlling operational issues in multiple markets can be a challenge. Serving diverse communities means that data generated from one community may not be comparable to that of another since the parameters of the data are different. This can make it difficult for the company’s headquarters to interpret and address issues for many com- munities at once.

Diversification: A firm increasing the range of products it produces.

Economies of scale: Unit cost reductions which result from increasing total output.

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Moreover, with each additional market, a certain distance enters the relationship between local management personnel and headquarters. Headquarters may not know as much about an individual market as local personnel and may find it difficult to offer useful guidance. Local issues may therefore be better served by local personnel.

Effective Strategy In general, a local manager will have limited authority to make decisions about how much inventory to stock. Meantime, the most important de- cisions regarding company strategy, promotions, and products tend to remain with the upper echelons of management. However, it can be dif- ficult for top management officials to monitor business units well enough to plan effective strategy and direction.

Another challenge in running operations in several markets is satisfy- ing the demands of many different types of customers. A company may be selling a single product line that must appeal to diverse customers from varied cultures and subcultures. It may be necessary to develop a different promotional strategy for every location in which the company operates. Labeling and advertising may have to be translated into a dif- ferent language. A logo or tag line may not have the same meaning when translated and may generate public laughter or offense (Campbell, Datar, & Sandino, 2008).

Extending business operations may yield more sales, but it comes with many considerations and potential pitfalls. Prodigious research can help identify problem areas and appropriate strategies either to deal with these problems or avoid them altogether. Following the examples of com- panies with a history of successfully navigating market expansion may also be instructive.

Multiple Market Challenges

Maintaining Brand Consistency With the advent of personal computers and the Internet, moving into new markets would seem to be the natural outcome of the world’s more global nature. Networks such as Facebook and Skype make faraway lands accessible in ways that were not previously possible. The strongest brands have an edge in global markets, but maintaining brand consistency

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throughout several business units can be a challenge, according to a 2006 survey by the Economist Intelligence Unit (EIU).

Participants in the EIU survey consisted of 145 top executives from various parts of the world. Half of the participants stated that control- ling brand consistency is a major impediment in managing expanded operations. Participants cited two main obstacles in achieving effective brand regulation. The primary issues to maintaining branding consist- ency included cultural disparities (63%) and language or translation con- siderations (44%). An encouraging result of the survey was that two out of three survey subjects found that adapting branding messages to local culture and language did positively impact sales volumes.

The survey further discovered that firms deal with issues of brand control by concentrating marketing efforts on a short list of their more robust brands. Resources are expended toward finding and implementing the latest technology to improve and facilitate branding messages. The EIU survey subjects said that a corporate brand, as a whole, held greater significance than individual product brands marketed on their own, ei- ther locally or abroad.

Corporate brands were rated crucial by 81% of the survey partic- ipants while only 64% felt this way about individual product brands marketed singly. The upshot of the survey is that technology and trade agreements may facilitate global commerce, but managing branding in- formation across cultures and in varied languages is a complicated and difficult process (“Companies Struggling to Manage Brands Across Mul- tiple Markets,” 2006).

Local Challenges Another major challenge in operating across multiple markets is dealing with localized competition in each operative locale. Brand loyalty may be deeply rooted. Local or regional brands are what the people know. When a new brand comes to market, the existing competition reacts as to a threat and may attack the new operation as a rival.

Where several brands exist, assaults may come from numerous sourc- es at once. Crafting strategies to beat all contestants in each market can be a significant and painstaking challenge. Management at both the local and executive levels must weigh the amount of resources (money, man- power, community goodwill) to invest in combating entrenched domes- tic competition at multiple points of commerce.

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An example of a local challenge that impeded market penetration is illustrated by Google’s attempts to make inroads in China during the first decade of the 21st century. Chinese government censors first blocked ac- cess to the local Google website in 2002. Users circumvented the censors by accessing the website’s universal address, google.com.

Weighing Risks Attempts by the Chinese government to block access to Google contin- ued as the popular search engine moved into new Chinese territory. These government challenges to Google kept the Internet giant from effective- ly competing against competitors such as Yahoo!, Bing, and Baidu and hampered Google operations wherever the company began to operate. In March 2010, Google offered its final compromise, moving all Chinese operations to Hong Kong. Today, typing “Google.cn” into an Internet browser brings up Google.hk (“Google in China: A Timeline,” 2010).

Knowing when and when not to adapt to local conditions can make or break a brand’s success. McDonald’s is famous for hamburgers, but the product necessarily went off the menu in India where cows are sacred and Indian sensibilities proscribe offering beef products. The chain’s Indian menu instead offers vegetable, chicken, and fish burgers. McDonald’s weighed the wisdom of diluting its brand to win over a market, gambled, and won. Starbucks, however, came to a different conclusion when de- ciding whether or not to set up shop in India.

The Indian government does not allow foreign entities to have di- rect ownership of retail operations. Starbucks would have been forced to create a minority partnership in order to enter India’s retail sector. The company felt that such an agreement would compromise Starbuck’s branding and consumer perceptions of company culture, key features of the company message. In the end, Starbucks declined to enter the Indian market. Identifying and weighing the risks must preclude the possible formation and implementation of localized strategies (Roll, 2011).

Consumer Learning Curve According to Nielsen, the United States-based global consumer informa- tion ratings company, 85% of the worldwide population has purchased an item online. The primary Internet shopping force is South Korea, where 99% of those with an Internet connection have bought products

Market penetration: A pricing policy used to

enter a new market, usually by setting a

very low price.

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online. Tied for second place are the United Kingdom and Germany, both with 97% of their respective populations having purchased items through the Internet.

These global markets can be a tempting proposition for domestic companies looking to grow their operations, but it is important to un- derstand that marketing strategies must be adapted to particular markets. Social networking venues can be important global marketing tools, but a social networking forum popular in the United States may not be as popular elsewhere. Honing in on the correct medium and learning that medium’s proper usage come down to conducting market research.

Facebook and Twitter are the most popular social networking venues for commerce within the United States. Facebook sells advertising space to support operations. Qzone in China, on the other hand, with more than 500 million users within seven years of existence, sells various mar- keting tools to bring home the message that different brands require dif- ferent marketing methods (Kemp, 2012). In France, Skyrock is a favored forum with its 10 million end-users, most often men aged 18–34. On Skyrock, users build company pages to connect with targeted markets.

Professional Social Networking After identifying the relevant social networking venue for a particular market, the marketer is ready to craft and style the contents of promo- tional messages. Gathering information about the consumer base in a particular market will tell the marketer about local purchasing habits and the likely local response to a brand. Where necessary, the promotional message is translated into the language of the target market. Using a pro- fessional copywriter well-versed in the local language is critical for cap- turing language-related nuances that might escape any but those who live in that region. Errors in grammar, spelling, and language usage may cause local consumers to lose interest in the brand and turn to the competition.

It has become par for the course for companies to hire a director of social media. Social media is fluid. Consumer feedback shows that the target market is engaged with the brand. There must be someone who can generate interest in the brand, interact with the public, and respond to questions and comments. A good social media director responds to comments with unfailing courtesy. A responsive social media director generates brand loyalty.

In addition to social media directors who monitor and respond to

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the public, online monitoring systems can track all mentions of specific industries, companies, brands, and company-related individuals such as CEOs. Google Alerts is one such system that is free of charge, easy to use, and can be configured a number of different ways to help companies keep abreast of industry-related consumer buzz. It is possible to set up several alerts at once, making judicious use of keywords in the various languages of the company target markets. Monitoring tools are useful and hassle-free as a source of market research (Arno, 2011).

Branding Tactics The strongest brands offer perceptive marketers guidance by example. When Apple, for instance, announces a product launch date and time, the company’s vast and loyal consumers line up the night before in a queue extending several city blocks for an update of a gadget that is al- most identical to one they already own. Generating and maintaining this level of robust branding comes from Apple’s refusal to make or sell sub- standard products. Apple products are a study in excellence of design, in both performance and looks.

There is a sense that buying a top-quality product says something about the consumer. The Apple consumer chooses only fine products. Using an iPhone in public is a kind of status symbol for a select group of people. In this effective example of branding, the consumer seeks an association with the brand.

Marketing professionals say that the key to creating a branding mes- sage is to make it relevant, stick to the message, and say it often. Before the message can be created, it is helpful to think about what the brand is meant to convey. Writing up a brand charter that describes the target market can be an aid in defining the brand.

Defining Brand Identity A common mistake is trying for universal appeal in the branding mes- sage. By attempting to appeal to all, the brand may, in the end, fail to appeal to anyone. Some marketers, therefore, feel it is just as significant when committing a brand statement to paper, to define the nature of the consumer who will neither buy nor benefit from the brand. In describing the identity of the brand, the marketer learns how to focus the brand, thus increasing its relevance to the target market.

Target market: The clients or customers

sought for a business’s product or service.

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Tom Dougherty, CEO and senior strategist for StealingShare, a branding consultancy firm, points to two companies, Ikea and Target, to illustrate the importance of brand focusing. According to Dougherty, Ikea has done a good job of focusing its brand while Target has diluted its branding message by opening too many branch stores. “They understand fundamentally, if they’re not five minutes to my house, I’m going to go somewhere else,” says Dougherty about the proliferation of Target shops. “If they had relevance, I’d be willing to travel to it” (Donnelly, 2010b).

Dougherty believes that Target erred in making generic products easy to obtain, thus rendering the company brand insignificant. Accord- ing to this theory, the issue of brand dilution might be addressed by closing some Target stores or by having the store offer products that are somehow unique.

Levels of Comfort A good example of a brand that is available at many locations yet retains its relevancy is the Marriot Hotel chain.

In some cases, two Marriot hotels may be within sight of each other, yet each has something unique to offer that sets it apart, while still offer- ing a sense of brand unity. Marriot offers various levels of comfort for its clientele. The hotels under the heading of “Courtyard,” for example, offer basic, low-budget hospitality, while a Marriot “Residence Inn” will be a resort hotel that provides many extras to guests. The no-frills approach is suitable for traveling businessmen while the luxury Residence Inn hotels are suited to vacationing travelers at leisure.

The key to Marriot’s success is in identifying its target market and focusing its brand to suit. Marriot customers have certain expectations, and the hotel aims to satisfy them. At the same time, the hotel chain knows what its consumer base does not want and might find distasteful. For example, Marriot operated a chain of fast food restaurants under the name Roy Rogers from 1968 to 2002 but divested them to concentrate on their lodging line.

Market research found that hotel guests did not like the idea that Marriot might be involved in a fast-food operation. An established hotel sideline is serving as a venue for weddings. Weddings are associated with elegance and class while fast food has a connotation of low-budget provi- sions. Customers did not like the idea that a wedding might be catered with greasy fast food chicken although the association between weddings

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and fast food might be all in their mind. The company worked hard to escape public knowledge that it operated these two distinct brands at once (Donnelly, 2010a).

Avoiding Self-Competition Marriot hotels manage to avoid brand dilution even where the hotels proliferate by offering different levels of comfort. This allows two Mar- riot hotels on the same street to retain their relevance while the brand remains strong. This highly effective branding strategy rests on efficient, centralized organization. Keeping track of the distance between Marriot hotels offering the same level of comfort is crucial, or the chain would risk competing against itself. It is one thing to have a Courtyard hotel and a Residence Inn hotel on the same block, but having two Courtyard hotels on the same block, for instance, would detract from sales volumes for both.

It has become common practice for companies to designate a chief marketing officer (CMO). The CMO keeps watch over all company brands, retaining a broad perspective on operations to offer synchronic- ity and brand compatibility. To avoid a state of constant competition between management at the different company units, senior executives should encourage an atmosphere of sharing, in which employees offer effective tips and tricks.

Periodic consumer surveys can help management ensure there are no conflicts among brands. Brands are not static, so it is important to review and perhaps adapt marketing strategies to suit. Companies that fail to schedule and carry out brand reassessments run the risk of having competition define the brand (Donnelly, 2010b).

Organizing an Expansion The benefits of expansion, especially on a global basis, include added income and a more robust margin. Expanding a brand across multiple markets, however, is complex and requires intensive oversight to succeed. Most modern companies are finding technology to be of invaluable as- sistance in running brands in multiple markets.

Cloud-based software is one popular option for organizing expanded operations. One such enterprise collaboration platform (ECP) is known as Software-as-a-Service (SaaS). SaaS provides a virtual office on an in-

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dependent, dedicated network. Virtual office suites on the order of SaaS offer the office application plus technical support and maintenance. Most large companies see these virtual office applications as time- and money-savers since the SaaS provider takes responsibility for support and maintenance. The provider also installs updates, although a fee may be charged for this purpose.

A virtual office system allows employees to communicate with each other at any time, from any place, as long as an Internet connection is available. Critical information can be relayed in real time and with im- mediacy, whenever the need arises. The company ECP ensures brand consistency by making the same branding tools and materials available to all branch operations.

Central Hub In addition to ensuring brand consistency, the ECP eases project man- agement by providing a central hub for projects spread among various markets. With the ECP, all business units have access to the same data and data updates. Employees in different business units around the world can communicate by way of Skype and similar tools, even holding webi- nars and conferences, with the tools provided by the virtual office space. The various communication tools help employees to feel like a team al- though they may be spread out in various locations. The end result is improved brand delivery.

Securing documents and office-related digital items is another im- portant facet of the ECP. The ECP offers a central secure storage and retrieval system to ensure that confidential intellectual properties, for in- stance, will not be lost or stolen. Cloud storage means that if anything untoward happens to a local office system, the company will still have backup copies on the ECP cloud storage system.

Virtual office software also allows training of employees through on- line management courses. Office software suites offer a rich variety of media tools for creating such training courses. New managers or employ- ees, no matter where in the world they are located, can learn about the brand in an efficient and consistent manner (Rogers, 2012).

Meeting the Challenge The savvy marketer calculates the risks inherent in making the switch

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from domestic to multiple markets and then plans for every possible pit- fall along the way, regularly assessing progress and methods. The mod- ern marketer also makes ample use of technology for successful brand expansion. Maintaining brand consistency, learning the ins and outs of designing and using an enterprise collaboration platform, and adapting to local conditions and culture are part of the process of expanding into new markets.

Expanding a brand across multiple markets may seem a daunting prospect to the businessman contemplating growth. Challenges are to be found in successfully marketing a brand across many markets. By identi- fying the nature of those challenges and through rigorous planning and preparation, however, a way forward can be delineated and diligently traversed, to the benefit of the brand and the company as a whole.

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