Today, all eyes are turned towards the East, where companies are keen to compete in countries that were once part of the Soviet bloc. Beyond lies Asia – the five ‘tiger economies’ and China. Pioneer managers sent into the field are faced with the task of achieving major sales objectives within a short space of time. There is a great temptation to use an internationalised version of the flagship brand as far as possible, for example the Kraft, Müeller or Campina dairy brands. In fact, everything encourages managers to do so:
It is a well-known fact that the first thing multinationals do in these countries is to rationalize production. The skill of manufacturers lies in their ability to significantly increase the quality of production, which gives local consumers access to levels of quality worthy of the name. Is not the primary function of a brand to guarantee quality? The brand therefore serves to endorse production and symbolise the newly acquired quality and reliability. By adopting this logic, the international brand becomes a strong umbrella brand from the outset, a source of reputation and power. The way to creating a strong brand appears to be clearly mapped out.
It should be pointed out that most examples of globalisation cited in managerial literature written in English are in fact ‘product globalisations’ based on a model of geographical extension from the country of origin, as with McDonald’s, Mars and Coca- Cola. In many cases, however, this model is not applicable since companies are not seeking to impose specific tastes on the inhabitants of other countries, but to recreate their brand (Kraft, Müeller or Président) at local level.
For example, while it is reasonable to assume that most Russians would not want to eat Camembert, it is quite legitimate for Lactalis to try to globalise its flagship brand Président. But this can only be done via largevolume local products to get the business off to a good start, otherwise it is not worth investing in a sales force or advertising.
The first problem is that, by covering all segments in a new country, the brand may deviate from the strategy (positioning) that has been fixed for it, in Europe or the United States for example. What is not a problem for Thailand or China can be a serious issue in Russia. But the strategy is global and has to be reflected in each country. Creating an umbrella brand that covers all segments in a country from the outset may favour shortterm sales but does not really prepare for the future.
The second problem is that establishing an umbrella brand quickly from the outset may fill the brand catalogues but does not really create a strong brand for the future. So what will happen exactly?
It will not take long before all the brand’s western competitors will be in the country as well. The levels of quality between these competitors will therefore be comparable. So what will differentiate the brand from all the others? It will be a general brand, with no real identity, no prototype, no strong differentiation.
How long can you go on introducing new initiatives that keep working? This type of success can be short-lived if a competitor also decides to launch an innovation. Taking the easy option does not lay foundations for the future. It is essential not to lose sight of the long-term objective and to bear the middle and long term in mind when considering short-term initiatives, for example when promoting difference(s) to create preference over future competitors.
It is therefore essential to build firm foundations at the outset and extend the brand later. This means making choices and selections, despite the temptation not to do so. But this is the way global brands are constructed.
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