Advanced Brand Stratgy Masterclass - Week Seven - Global Branding

This one is long overdue and I apologize for the delay. Between airports, clients meetings and running workshops there is not much time left. This is the last of the series and next week we will conclude our masterclass.  This week we will focus on global branding, I remember we did touch on this subject during week two and three, so we can now revisit this again.

While many consumer goods markets in the Europe and North America are stagnating, 65% of the world’s population is living in societies that are experiencing economic growth of 5% or more a year. While the baby boom occurred between 1945 and 1960 in the US, much of the rest of the world is still experiencing a baby boom that began in 1975. The average person has seen his or her standard of living double in the past 15 years, far surpassing that of the US or Western Europe. Put very simply, the majority of the growth potential in consumer markets exists outside of the US and Western Europoe.

Here's an excellent piece by John Quelch, Prof Quelch is the Senior Associate Dean and at Harvard Business School where he taught markeitng for decades. I remembered one time when he was lecturing he presented a marketing positioning diagram of the royal family members, it was hilarious. He is also the non-executive director of WPP Pepsi and a few other companies and has published probably half a dozen books on global marketing.

How To Build a Global Brand - by John Quelch

Ford has finally woken up to what Toyota knew a long time ago: the power of a single global brand. Over twenty years ago, Harvard professor Theodore Levitt praised Japanese manufacturers for their focus on "what every consumer in the world is seeking: world-class modernity at affordable prices." Either because they didn't understand regional differences in consumer preferences or out of self-confidence, Toyota, Nissan and Honda sold standard products under a single brand umbrella. For decades, Ford adapted its manufacturing platforms, features, and model names from one country to another. The results: added manufacturing and supply chain costs that strained consumers' willingness to pay; a balkanized bureaucracy in which regional managers exaggerate the need for local adaptations to defend their turf; and a deteriorating market share, financial performance and stock price. Ford was once one of the ten most valuable brands in the world. They’re no longer on that list, but Toyota now is. How did Toyota—and the other nine companies—do it? There are five characteristics that all top global brands have in common:

1. The same positioning worldwide. This provides a combination of functional product quality and innovation with emotional appeal. Think Coca-Cola and Disney.

2. A focus on a single product category. Think Nokia and Intel.

3. The company name is the brand name. All marketing dollars are concentrated on that one brand. Think GE and IBM.

4. Access to the global village. Consuming the brand equals membership in a global club. Think IBM's "solutions for a small planet."

5. Social responsibility. Consumers expect global brands to lead on corporate social responsibility, leveraging their technology to solve the world's problems. Think Nestle and clean water.

Ford has a proud history. Its name recognition is strong worldwide. The chairman is committed to the environment. Many consumers are no longer considering Fords when buying their new cars, but they are predisposed to giving Ford another chance. Fords worldwide should henceforth have a common look, feel and brand essence. Low volume management distractions including Jaguar, Land Rover and Volvo will be sold off; they’re now meaningless. US-based models like Mercury will be discontinued.Can Ford recover? The answer lies in whether the common vehicle platforms developed for the new strategy prove to be truly global in design or merely more of the same Detroit-centric product that have caused Ford's market shares around the world to erode.

Comments

[Rory MacDonald]

So many interesting points to discuss.....

In answer to the questions Slide 5/21 on global/local brands, I think the suitability for either scenario comes down to the brand vision. If the vision is global and translates you have a potentially global brand. If the vision is local, and globalising it destroys this - keep it local.

For a global brand, I would say vision and identity have to remain unified, localising/changing these make the whole brand seem hollow, meaningless and potentially hypocritical to the global citizen.

The specifics of brand implementation and the image can be changed and be adapted. And traditionally the implementation and image should be adapted if cultural nuances make this necessary to maintain a unified global vision and identity.

However (and this is where I suspect I will get shot shot down in flames again in the subsequent discussion - but its fun), I think that in doing this, current attempts at global brands are beige, politically correct dross.

Call me a cynic, but if it where simple to redress the differences between all local cultures, I think some of the greatest minds in politics and philosophy may have got there ahead of ad-execs.

The only other alternative if you want to pursue the "think global act local" (excuse me while I vomit), is to think very little, say even less and say it in beige.

My hope is that increased globalisation and the Internet (which is really the birth of global culture) will see the development of new type of global brand, a bottom up global brand which draws on an understanding cultural differences, but doesn't necessarily try to agree with them all and aligns itself to a specific global audience.

In order to do this and represent something interesting, meaningful (claiming a powerful brand space), the brands will necessarily have to tread on a few local cultural nuances, but I think this is necessary (if not desirable).

I also think these new brands and the culture they appeal to and nurture, will have the potential to achieve things where philosophy and politics currently have no answers, but only if they are created around the whole brand 2.0 concepts we have been discussing.

[André Galhardo]

Thinking about politics and global branding, there's one remarkable case that maybe we should discuss here: Al Gore.

"Please join the conversation: (your email address)", his brand asks at algore.com

Now the question seems to be: After a "Nobel Certificate", what should be its next step?

[Flavio Azevedo]

Being global seemed a little easier a few years ago.

Basically, multinationals would have only to impose their global campaigns, customize ads and job done.

I had to do that for years in multinational ad agencies here in Brazil.

The consequence: big and strong global brands such as Coke ended up with beige (as Rory puts it) and weak communication. So we have...

Globalization Challenge #1
Global brandnames from the TV Times are used to produce very poor global communication (as Mr. Mootee shows us, having one global name is already a big challenge...not to mention a good campaign).

Then there´s the second big fact, which exposed all the weaknesses of global companies: the web.

Truly, now we have a global medium. YouTube, the first global channel.

Having done such a poor global job with the One-Way Media (TV, magazines, global companies will take a while to really understand the Two-Way Media (web, mobile, etc).

One little proof: thousands of fake-looking branded 2.0 communities, as we have discussed so much here.

Globalization Challenge #2
Global companies never learned how to talk, being used only to make speeches and pose for pictures. Will the web help global brands as effective communication tools? Or will the internet be used mainly as a better Yellow Pages, with a nice e-shop and some B2B facilities?

Som brands, as Nike, have managed to do a few nice global communication tricks.

But in the majority of the cases, results have been limited to a few countries or one continent. Which is not so bad. But still, a global form of communication is yet to emerge.

Putting Brad Pitt to drive a car is not really a global communication revolution, is it?

It´s still the "doing speeches and posing for pictures" paradigm.

[George]

I think there is a new global branding paradigm. Not about adveritising and selling globally, but becoming a tryly global brand. Global in thinking and global in action. I'd like to hear thoughts from Flavio and Rory as they are alwasy insightful. I agree with many of the things you guys wrote, with some expeptions. I don't think one need a global vision to become global. It is like saying we are global but you may not be. A vision doesn't mean much these days.

[Bart]

"If the vision is global and translates you have a potentially global brand. If the vision is local, and globalising it destroys this - keep it local."

But what about communication? Aren't people discussing brands more globally anyway? People can't discuss your brand globally if you're called Vauxhall in one country and Opel in the next. I think this is a key point in having a global branding strategy: creating possibilities for people to discuss your brand globally. Mind you: within this boundary, there's still room for localism (McDonalds comes to mind), but you should remain global from the start.

"However (and this is where I suspect I will get shot shot down in flames again in the subsequent discussion - but its fun), I think that in doing this, current attempts at global brands are beige, politically correct dross."

In Holland there's quite a discussion about the health/beauty-brands of Unilever. They're marketing products that 'make you more white', which in our culture has a racist sound to it. In India, however, it's equal to our 'dream' to have a sun-bronzed body. I think this shows that companies aren't that politically correct (hey, they're companies, not politicians! :)), as they try to be culturally sensitive.

"My hope is that increased globalisation and the Internet (which is really the birth of global culture) will see the development of new type of global brand, a bottom up global brand which draws on an understanding cultural differences, but doesn't necessarily try to agree with them all and aligns itself to a specific global audience."

You mean like youtube, google, et al? I can't remember clearly what session it was, but didn't people come to the conclusion those weren't 'true global brands'?

"In order to do this and represent something interesting, meaningful (claiming a powerful brand space), the brands will necessarily have to tread on a few local cultural nuances, but I think this is necessary (if not desirable)."

I think this is were the bottom up principle comes in. As the new internet companies are mostly providing services, they're pretty much saying: here's our service, you can use it. If you don't like it, go forth and build something yourself. With new chances opening up (openSocial), the field is more open than ever to let cultures create their own local global brand. I think of this like a kind of 'fluid global branding', where the problem seems to be mostly letting go of your brand (at what point do you let go).

The question I have is this: I can see this happening for service based internet-ventures, but what about classic production companies (Coke, Apple, Unilever, etc). What should be their strategy in this world of global connected - social - consumers?

[Rory MacDonald]

What I meant by the vision thing was not that companies need one "global vision" (ie. that their visions have to be of global proportions and significance) but rather that they need "one" global vision (ie. that vision has to remain constant and coherent).

Other aspects of the brand can change, although I am arguing they shouldn't, but vision has to stay constant. Otherwise, what you create is a series of connected local sub-brands, a lack of clarity and an opportunity to appear hypocritical and inconsistent. Not a (single) global brand.

Bart says:

"I think this is a key point in having a global branding strategy: creating possibilities for people to discuss your brand globally."

I think this is already here: Internet, low cost airlines, globalised trade....

And this is why, I agree with George, if you want a global brand, it has to be consistent companies/brands have to "act global", not this patronising "think local" or should I say "dumb it down for the natives" attitude.

"The question I have is this: I can see this happening for service based internet-ventures, but what about classic production companies (Coke, Apple, Unilever, etc). What should be their strategy in this world of global connected - social - consumers?"

Coke, Apple and Unilever are 95% sevice companies. When I buy a can of Coke 5% goes on production, the rest goes on the brand. Equally, with Apple, you are paying for the product design, software development and the brand. If you analysed their production facitilities in china they doublessly pollute, underpay and abuse in a way which doesn't fit the rest of the brand at all.

Alright so the 95/5 % figure is generalisation based on a very old Economist article, but the priniciple is the same: Modern products are about embedded services not production (production is just a question of who has the most lax heath and safety regs and gets landed with the toxic waste). These embedded services can gain as much from web/brand 2.0 as any pure internet venture.

[Sarah Bell]

Coke, Apple and Unilever are 95% sevice companies. Hmm I don't think I agree with that. When I buy a can of Coke 5% goes on production, the rest goes on the brand. Or May be. It is interseitng that Rory raises the point that Coke with Apple are service companies,not sure if they see it the same way. I don't know how much is going to service and software, but a consumer thinks Coke is a product. They consume it and need to replace it next time one is thirsty. I see the point, but they are still product companies in my opinion. The service component is way too small.

[Bart]

I think we're in agreement about the think global stuff: in my view, there has come a necessity to not 'act local' to a certain degree by this enhanced connectivity.

However, I don't quite agree with you one the production companies: Yes, there's a lot of service going into it, but it's fundamentally different than the kind of internet-based service company I'm referring to. I don't see a Coke-API being developed or Unilever joining the openSocial bandwagon anytime soon ;)

So I guess my point is this: it's easier for internet-based companies to think AND act global (perhaps with local 'templates') from a branding point of view, because of the single distribution network (a browser connected through a worldwide network). That's why hotmail, Google and others are the same brand all over the world and that's why those brands aren't reaching countries like China (where companies seem to have quite another branding strategy: focus local and let our locals become global)

For production companies, it's a different story. In order to sell a can of Coke, the can actually has to be there and it has to be sold by someone local (okay, there's expats, but you get the idea). In order to do that, the brand HAS to have some localism built in.

which brings me to another thought: might this be the reason all those 'classic' production companies have geographically based landingpages on their websites? I see this with a lot of production companies, whereas I almost never see it in service/tech-companies. I wonder why...

[Rory MacDonald]

The 95/5% figure was, from a hazy memory, a figure based on the value of a cheap production car. 5% was materials, labour and the logistics of getting it to the showroom, 95% was design, brand, marcomms and sales.

Design, marketing and sales (ie. 95% of the product value) can all benefit from closer interactivity with the customer/target and brand is the tool to achieve this.

The difference between marketing of my car insurance and my car are increasingly pretty negligible. The differences of where and how it they are being sold are far greater. And despite owning many phones, I have only once bought one (sometime in the early 90's) - they generally come as a part of a service from your mobile provider.

Sorry, I am getting polemic now, but even if you disagree that product/service distiction is disappearing, if not gone, how about this:

You will find the benefits that web/brand 2.0 can deliver to marketing a product by analysing the service aspects of the product. In exactly the same way that I have to productise services if I want to try and sell them more effectively in a supermarket.

[Flavio Azevedo]

Good debate...and truly global!

I think there are two facts:

1) Internet services have one big advantage. They are global in nature. They are in the WORLD wide web, after all. Whereas products and normal services would have to fight to be global.

2) New companies (from any category, mostly) can now be planned as global, from the very first day. There´s even a buzzword for that: born-global.

All other companies will have to struggle harder and adapt. It won´t be as easy as we are talking here.

Companies like Coke have huge marketing, sales and logistic departments spread over hundreds of countries around the world.

In Brazil, for instance, internet reaches only 16% of the homes. For Coke, it would be risky to introduce a whole new global strategy in Brazil (which is the 4th global market for Coke, I think).

The big mistake, in my opinion, is that global companies today think that doing little global communication tricks, once in a while, will make their marketing truly global 2.0.

[Jeremy cott]

I am very impressed with the knowledge and insights. Is it possible to use some material for our graduate classes? Will contact you shortly. Thanks