Before we move forward, it is important to specify the meaning of global. For most managers a brand is global when it is sold everywhere in the world. Finding ads in all airports about Nokia, Dell, IBM or Alcatel seems to be a living sign of real globalisation. However, this may be a superficial vision.
We saw that there are strong compelling economic reasons to globalise products or platforms. There are also good reasons to use the same name, for the sake of capitalising on one single name and exploiting the extra value of global perception. Finally, some concepts are reflections of the existence of global segments. Actually, the combination of these three poles creates eight possible alternative strategies as far as the continuum from globalisation to localisation is concerned (see Table below).
From global to local: eight alternative patterns of globalisation
When people refer to globalisation, it is generally in a loose sense, a feeling that the brand is known, visible and distributed everywhere. When we travel abroad some brands do seem global: we see them on billboards as soon as we land at an airport. It is this vision that creates negative attitudes about globalisation, the feeling of an inescapable loss of country differences.
All commercial centres sell now the same stuff, the same brands, throughout the world. Human richness and diversity now seem dangerously eroded by the law of economies of scale. Of course, those who do not travel are pleased by the possibility of accessing the brands and products they see on television while watching the world.
What are these eight structural types obtained by combining the two possible answers on each part of the brand system?
Danone for instance, like Unilever, is not obsessed with common names, but with the creation of products/concepts that reach an annual turnover worldwide of s1 billion. The CEO, Frank Riboud, states that ‘our ambition is not to develop brands that are number one in the world, but brands that are number one locally with global world concepts/products’.
For instance ‘Taillefine’ (literally, slim waist), whose name changes according to the country (Light’fit in the United States, Silhouette in Canada, Corpus in Brazil, Ser in Argentina, Vitalinea in Spain, Vitasnella in Italy, Vitaline in Greece), is a concept of adult tasty food aimed at those maintaining a low-fat diet. It is stretched over the three divisions of Danone group, dairies, water and biscuits.
As such one finds the products of this concept either as purified water, or as biscuits under Lu source brand, or as dairies under Danone source brand. But in Argentina the group has kept the endorsing local brand Serenissima, with its 65 per cent market share, to reinforce its competitiveness. This local brand, number one in Argentina, now endorses the global concepts.
Another global concept is Actimel, a specific yoghurt designed to reinforce the body’s natural defences. It is sold in 22 countries, with a sales turnover of half a billion euros, and a sales growth of 40 per cent in 2002. A final example of a world concept is the aromatised water sold as Danone Activ’Aro in the UK, Volvic Magic in France, and Bonafont Levite in Mexico. On the whole more than 60 per cent of the Danone group sales are made by concepts that are the market leader in most of the countries where they are sold.
Unilever has been criticised for having more than 1,400 brands, none of which reach the critical size (US $1 billion) to become a world mega-brand. It is now engaged in a fierce reduction of the number of brands. However, to take the ice-cream business, it is operated under the endorsement of the wellknown names of the former local market leaders (Walls in the UK, Miko in France and so on), all presenting a common international logo.
But their sales are made through power products that are sold globally and managed as real brands: Magnum, Solero and so on. In the margarine business, trust is very important. Local names have been maintained, but the whole company operates four typical product platforms for the whole European market.
The matrix in Table below reminds us that most companies started in quadrant A. They were international in sales before they thought they had an asset called a brand, and by default before they realised they had to globalise their business. Mostly operating in existing categories, and they do not consider Coke or McDonald’s as a valid benchmark for them.
From A they can move either to B or C. B entails rationalising the products: it is the main source of profits and synergies. C means creating brand transfers to reduce the number of brands. The output is less strong and the risks higher. However, for all disruptive new products such as Actimel, the quadrant D strategy should be adopted.
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