While there is no shortage of examples of globalisation in books, articles and at conferences, most focus on product brands such as Coke, Marlboro, Starbucks, McDonald’s, Amazon, eBay and Intel. However, these examples are centred around unpredictable and/or radical innovations which, after becoming leaders in the United States (a domestic market that is equal to 50 per cent of the world market), were able to be exported on the basis of their reputation.
They do not correspond to the reality of most global groups and brands, which often have a small country of origin and have to become global from the start. This was true in the case of Nestlé (the world’s leading food company), which originated in Switzerland, Unilever (the Netherlands), Absolut (Sweden), Grey Goose (the Netherlands), Finlandia (Finland) and Velux (Denmark). It is significant that, four months after the launch of the first product ever manufactured by Nestlé (baby cereal), it was already being sold in five different countries.
Nestlé made diversity part of its strategy from the outset and still continues to do so today – Nescafé currently offers a range of no less than 32 different coffee-related products in Europe. This is a far cry from the single Coke-style product. Whereas US brands promote the ‘American way of life’, this does not apply to other brands and groups throughout the world. The object of this is to try to re-establish a certain balance and to suggest alternative, and sometimes more relevant, models.
Key stages in the process of brand globalization are:defining brand identity;choosing regions and countries;accessing the markets;choosing the brand architecture;choosing products adapted to the markets;constructing global campaigns.
Defining brand identity
Brand globalisation presupposes the definition of the brand to be globalised. That is, the brand must have an identity that will serve as a medium for its globalisation, in both tangible and intangible terms. The company must therefore start by defining and writing the parameters of the brand’s identity. This is essential for coherence, all the more so since globalisation will greatly increase the brand’s centrifugal tendencies, with everyone wanting to interpret it in their own particular way. To limit these tendencies, there must be a clear and concise platform with salient points and flesh.
It should be remembered that the modern brand is no longer a simple ‘product plus’ (a mere definition of a product with a plus value, like ‘the best toothpaste for helping prevent tooth decay’). It is a source that has to be defined. To avoid problems of understanding and translation, globalisation very often involves the choice of all-purpose words that have the advantage of creating consensus the world over, such as ‘high quality’, ‘client focused’, ‘dynamic’ and ‘competent’. But it is important to be wary of international consensus since it usually reflects a certain weakness in the brand definition and therefore the brand identity.
Brands are based on differentiation. They have to have character, salient and original points. But would Marlboro dare to launch its brand today using the symbol of a solitary, macho, craggy, outdoor figure?
Global brands are universal stereotypes
As a rule each brand should be based on a consumer or customer insight. An insight is literally an insight into the consumer or customer, a short sentence encapsulating the state of mind or expectation or attitude the brand is responding to.
As a consequence, global brands tend to address universal truths, global insights. Taking the spirit market, what are the universal truths of alcohols? Here consumption is conspicuous: by drinking, men try to enhance their male status. By its symbolic character, and the values it promotes (‘keep walking’, that is to say persevere) Johnnie Walker represents the adult male achievement. It is about effort and masculinity, about being a real male throughout the world. J&B is about social success. Chivas encourages joy and conspicuous consumption. Bacardi is an escape to paradise.
Give flesh to your identity
There are several ways of preventing the salient points of the brand identity becoming lost in the globalisation process:by accompanying the facets of the brand identity with a comparison, saying what the brand is and what it is not;by accompanying the words with images (brand concept board);by reinforcing the facets through training initiatives and creating local brand relays (keepers of the flame);by not delegating strategic implementation (such as advertising and the web) to the local level.
At this point, it is important to distinguish between exported brands and global brands in the strict sense of the term. Jaguar, Porsche and BMW are exported brands – Jaguar’s brand values have not been redefined for globalisation, while BMW and Porsche certainly incorporate the characteristics of the global market (in fact the US market) in order to define the specifications of their future products.
The Porsche 928 was designed for the United States, its broad highways and style of driving, and the design of the latest BMW Series 5 was developed entirely with the United States in mind. But what you are buying is Coventry, Stuttgart or Munich – the brands have not changed in the slightest in respect of their identity and core values. The same is true of Chanel. These are brands exported worldwide.
The brand to be globalised must think about its identity. Will the identity that has ensured success in its country of origin guarantee success in the rest of the world, or at least the key countries in which it is to be marketed? There is therefore an interaction between the first (defining brand identity) and second (choosing regions and countries) phases of brand globalisation.
When a brand is exported, it immediately acquires the added values associated with its international perception, and it enjoys the ‘spillover effects of international perception’. Absolut is not highly rated in Sweden, but in the United States – where it is perceived as an imported vodka, while Smirnoff (the local leader) is produced in the United States – it has created the premium segment.
Separate the domestic and the international positioning
When it leaves its country of origin, a brand is transformed, and changes its nature. For example, Barilla in Italy is a popular ‘mainstream’ pasta brand that offers good value for money and inspires confidence. As shown by Table below, in other countries it is positioned as the ultimate Italian ‘must have’, top quality, traditional and fashionable, but loses its ‘value for money’ and ‘confidence’ – it takes time to build up confidence.
Barilla’s international and domestic image
Generally speaking, exported brands must be positioned at the top of the range since they have to support transport costs and customs duties. Furthermore, it is an opportunity to take advantage of the spillover effects of perceived brand globalness (PBG). In this way, the Swedish vodka Absolut created the top-of-the-range (premium) segment in the United States, where it is sold for 20 per cent more than the local market leader (Smirnoff), which has factories scattered throughout the region.
Choosing regions and countries
An examination of the so-called global brands reveals that they are far from being as widely distributed throughout the world as we are led to believe. Of course, this could be because conquering world markets is a gradual process and a company must first of all establish itself as the leader in its domestic market. For example, the first Wal-Mart was not established outside the United States until 1991, 30 years after the creation of the first store in this famous US chain, while McDonald’s accessed other markets gradually, one by one.
However, there is another explanation – not all countries are potential customers for the brand in question. For example, dairy products are not part of Asian culture, which is a handicap for Danone. Similarly, yoghurt is not a part of US culture and this is a handicap for Dannon USA which, although created in 1942, has not managed to impose itself as a major brand. The Japanese do not like their perfume to impinge on others, which is a handicap for all brands of strong perfume. This is why brands such as Paloma Picasso, with its characteristically Spanish values and strong essences, sell better in Texas, California and of course southern Europe, but also in countries (such as Germany) whose tourists visit southern Europe.
At this stage a strategic analysis should be carried out to assess the potentials of each country and the barriers to accessing their markets. This analysis should incorporate:the size of the existing market; indicators of growth and/or the latent potentials of this market, and its ‘segmentability’ – sociocultural developments and the growth of purchasing power;consumer insights on their prospects for rapid development;the nature of any competition and its ability to react – does the brand in question have the potential for strong differentiation, or a ‘plus value’?the existence of a rudimentary brand equity in the country or region (via tourism or the international media which transmit brand images into homes throughout the world); the existence of adequate distribution channels likely to promote the brand concept;the existence of a media network;the existence of adequate commercial partners at local level;the non-existence of barriers to market access – customs, formal and informal regulations;the potential for registering or buying the brand name (a check that it is not already owned locally).
The presence of trade barriers was why countries like India, fearing a sort of neocolonialism through the intermediary of companies, for a long time remained closed to imports. It would have been theoretically possible, for example, to manufacture a major brand of car in that country, but this would require all the subcontractors who are a necessary part of the production process to do the same thing.
In the absence of subcontractors and adequate partners, there is a risk of departing from the brand contract in that particular country – its cars will sell but will be of inferior quality. This was also a problem in Brazil for a long time.
As has already been stated, the key issue in brand naming is the globalisation of product platforms – for example, Unilever defined five platforms for margarine. It is not a major problem that one of these platforms is Becel in Portugal and ProActiv elsewhere – since global economies and synergies must first of all be achieved at production and concept/positioning level, the name becomes a secondary problem.
As the focus of media attention, a name that is the same everywhere is of course desirable, but it is not the central issue because it is not the principal source of increased profitability.
The result of the strategic analysis of the countries in question sometimes explains the distribution of sales of international brands. Thus, the three key countries for The Laughing Cow brand are of course its country of origin but also Germany and Saudi Arabia, where temperatures are so high that processed cheese is the only way to provide the daily milk intake for both adults and children. The creation of factories in Morocco and Egypt has also reduced the problem of customs barriers.
Within the context of globalisation, the order in which countries, regions and continents are ‘conquered’ is also a strategic issue. For example, Amore Pacific is the international flagship brand of the Korean company of the same name – it embodies its know-how, values and ethics. It is also a modern brand that seeks to ally itself with the concept of western beauty without rejecting its Asiatic origins.
In 2003 the question arose as to which it should penetrate first, the US or European market. Apart from the issues addressed above, the company was concerned whether it was in its best interest to advertise success in Europe then the United States, or vice versa. Given that perceived brand globalness is not a driver of preference in the United States, or at least less so than in Europe (Holt, Quelch and Taylor, 2003), it was decided to penetrate the US market first.
In addition, the United States seem geographically, socially and culturally much closer to Korea than Europe, which is not only distant and fragmented, but also has strong well-established brands.
It will come as no surprise that, today, all western brands are looking towards the East:Eastern Europe and Russia are two of the long-awaited growth regions for brands battling it out on saturated western markets. They also offer a competitive advantage for Scandinavian brands that have long-established ties with these regions, and for Germany whose area of influence has always historically been Eastern Europe. But given the present low purchasing power, it is also an area of expansion for brands positioned according to price, such as the Korean brands LG, Samsung, Daewoo and Khia, and the Turkish brands targeting Romania, Bulgaria and Albania.China is another growth region – today, one-third of its billion inhabitants are creditworthy. It is significant that barely two years ago, l’Oréal was achieving 49 per cent of its turnover in Western Europe, 32 per cent in the United States and only 19 per cent in the rest of the world. Given the considerable needs of Asia in general, due to the size of its population and its improving standard of living, it is easy to understand that l’Oréal’s priorities now lie in this direction. This is reflected by the fact that one of the group’s basic international research centres was established in Japan, and also by the group’s acquisition of Japanese brands. Gone are the days when Chinese women only looked at western brands. Today they are very much aware of their Asiatic origins and are now turning to luxury and top-of-the-range Japanese and Korean brands – as evidenced by the success of the Korean brand, La Neige, in the department stores of Hong Kong and Shanghai. This is why l’Oréal bought the Japanese brand Sue Uemura, whose global brand portfolio reflects cultural diversity. Finally, the 11 global brands in the l’Oréal portfolio are to be launched in China.India, which is slowly emerging from a protectionist phase in respect of its identity and the desire to preserve its independence, will be the other growth region of the future. The competitive positions are already being taken up. The same applies to Brazil.
Accessing the markets
A brand is not a simply a name on a particular range of products – it is what distinguishes those products, and a source of added value in the eyes of the target market. A brand is established over a period of time, and nothing is more important than a brand’s first initiatives in a country, since these are what determine its long-term representation. The mainstay or basis of this representation is the ‘prototype’. It should be remembered that this key notion was identified by the psychology of abstract concepts – the prototype is the ‘best exemplar’ which embodies the brand identity.
Today, in response to the demands of rationalization and efficiency, many brands have two levels of branding – the parent brand and the daughter brand. A typical brand architecture is that of the source brand, a branded house with two levels. Frito Lay, Garnier, Dannon, Müeller, Campina, Ford, Toyota and Renault are all typical source brands. The brand can only be globalised via its daughter brands, which themselves cover a range of products. The key to globalising these parent brands is therefore a good daughter brand.
It is significant that Garnier was able to begin its globalisation in 2001 when it realized that it finally had a suitable prototype, one that could embody the brand’s modern values. This prototype – Fructis Style, created in 2000 – was the most recent of all the Garnier daughter brands, but it was the one that enabled Garnier to be launched in the United States, the Republic of South Africa, Brazil and China. It is now the segment leader in all these countries.
Globally speaking, there are two major strategies for accessing national markets, by creating a new category or segmenting an existing category.
Creating a new category
Garnier is a typical example of this. The parent brand establishes itself by launching a daughter brand that becomes the reference, the pioneer of a new category which has the benefit of the ‘first mover advantage’, little or no competition and easier negotiations with distributors who are eager for creative innovations and value rather than a mere change of brands between competitors. The downside of this strategy is that it requires a greater investment in marketing and advertising. Its success also establishes the meaning of the parent brand, which enables it to launch its other daughter brands at a later date.
Nivea uses the same strategy even though it has an ‘umbrella brand’ architecture. It launches Nivea Cream before the lines that establish its competence in the facial and body care sector, the keys to creating a longterm bond of confidence.
Segmenting an existing category
The alternative strategy involves the immediate creation of a significant volume of business by launching a differentiated product, based on the brand values, but in a large-volume local category. For example, in Lebanon Yoplait began by launching two traditional local dairy products, Laban and Labneh. The aim was to quickly become the referent for traditional fresh dairy products by giving the country what a large industrial company can give – superior and consistent quality, more hygienic products, a more subtle taste, products with a longer shelf life, and more practical packaging.
Lactalis, an international giant of the cheese industry, globalised its umbrella brand Président in the same way. The Président business model is the segmentation of generic categories. Created in 1968, it became the leading brand of France’s leading cheese (Camembert) and then the leading brand of butter, before extending to other products such as Brie and Emmental.
By segmenting the generic category, Président introduces modern quality, practicality, adaptability to new uses and so on. The mistake would be to try to globalise Président by exporting Camembert – for example, why would the Spanish, Russians or Kazakhs want to eat Camembert? At best it would appeal to a tiny minority (a niche). This is not how a leading brand is recreated – and this is the key issue.
It is the business model of the brand that has to be globalised. For Président, this involves recreating – in Russia, Kazakhstan, Spain or any other country – the initiative used to successfully create the original brand, by segmenting a large-volume traditional local category.
It is worth noting that Danone, unable to create a new category of dairy products in Asia, decided to establish itself by segmenting an existing category to embody its key value, health. Throughout the world, Danone is famous for its yoghurts and mineral water. In Asia it puts its name to biscuits – that promise health (growth and vitamins) to parents and children – via global daughter brands such as Prince and Pepito, or by endorsing an ultrapopular, leading local brand such as Jacob’s in Indonesia, Thailand and Singapore, and Tiger in China.
Adapting the brand architecture
Should the brand architecture be the same in all countries? Maybe it ‘should’ but can it in fact be the same? The gradual globalisation of a brand with two levels of branding (including a source brand or endorsing brand) automatically raises this type of question. Also, adaptation is governed by practical considerations – it is impossible to recreate what was achieved without the pressures of time and profitability in other markets, including the country of origin. Depending on the country, the type of brand architecture used will be the ‘horizontal crunch’ and/or the ‘vertical crunch’.
The ‘horizontal crunch’ involves reducing the horizontal range of brands and ‘nicheing’ certain brands below others. Thus, in the United States, it is possible to find a Mini Babybel cheese with a taste of Bonbel, the whole being endorsed by The Laughing Cow, whereas in France and Germany these three names correspond to three different brands.
But when a company moves into the United States, the problem is not so much ensuring greater market coverage with a portfolio containing a range of speciality products as surviving by capitalising. What was an independent brand becomes a daughter brand or an additional item under the same brand name (line extension).
The ‘vertical crunch’ has the reverse effect – vertical brand architectures with three levels of branding are reduced to two levels for reasons of efficiency and practicality. This type of crunch is subdivided into the ‘topdown crunch’ and the ‘bottom-up crunch’.
The ‘bottom-up crunch’ helps to reduce the number of levels by suppressing the one in the middle and raising the one at the bottom. In Europe, l’Oréal Paris is represented in the shampoo market by the Elsève brand, whose products have names (such as Color Vive) that describe the function of the product. They are therefore referred to as Elsève Color Vive by l’Oréal. The driver (what the consumer actually buys) is Elsève, while l’Oréal Paris acts as an endorsement.
In the United States, it was decided to do away with Elsève but to give all the products in the range the suffix ‘Vive’: Nutri Vive, Vita Vive, Color Vive, Curl Vive, Hydra Vive, Body Vive. This makes the relationship between l’Oréal and its products much stronger and more direct, which in turn promotes a reciprocal regeneration.
The brand now has a codriver since US consumers are not buying l’Oréal shampoo or Color Vive, but a combination of the two – l’Oréal Color Vive. This also avoids the fragmentation of publicity in a country where media costs are extremely high.
The ‘top-down crunch’ occurs when an endorsing brand becomes a driver and relegates the daughter brand to the role of descriptor. It is significant that in Europe, the European brand of biscuits Lu is sold by speciality brands. According to the packaging, Lu comes under the aegis of its daughter brands Prince, Pim’s and Mikado. Below the names, each specific product may even be described as an ‘energy added’ biscuit, for example.
In the countries to be ‘conquered’ by the brand (like the United States), Lu has been upgraded from an endorsing brand to a range brand, while the other names are less prominent on the packaging and become descriptors.
Choosing products adapted to the markets
Managing the growth of business and the establishment of the brand simultaneously means constantly adapting the marketing – and therefore the product ranges – to the market, but within the framework of a welldefined and coherent strategy. As has already been stated, the ‘prototypes’ must be chosen as a function of the image to be created. Gone are the days when importers decided which products would be allowed into a country on the basis of purely short-term requirements.
These importers were merchants and intermediaries, not shareholders in the company, and therefore had no long-term objectives. This was why many brands were launched via different products in countries that were in fact quite close to the country of origin. Within the space of a few years, this led to discrepancies in the product image and therefore to significant discrepancies in the price premium.
Products must be a source of rapid growth and yet comply with the sphere of influence that the brand wants to establish over a period of time. Product campaigns, especially in the initial stages, can help to achieve this. The different ways in which products are adapted to suit different countries, areas and regions were examined earlier as part of the localisation- globalisation dilemma.
Constructing global campaigns
Not all brands want to globalise their communication. Japanese companies typically allow their subsidiaries, in all their branches, a great deal of freedom at local level. Of course, this creates an impression of disunity since the images projected by the various branches within the same country tend to be very different.
But from a cultural point of view, large Japanese – and more recently Korean – groups seem to want to offset the extreme standardisation of their global products (the source of economies of scale) by allowing this freedom at local level. These local subsidiaries are mainly sales subsidiaries whose purpose is to optimise the sales of global products in a particular country.
Their local managers are judged on these results, not on the attendant creation of brand equity. Their marketing structures are essentially operational marketing structures, with the exception of Sony, which has developed its brand concept in other countries, and Toyota in the United States.
Another brand that favours a local approach is Bonduelle, a leading company on the European vegetable market, where it has to confront an amazing diversity of situations. In Spain, for example, the brand had to access the market via the frozen foods sector, in Russia via tinned sweetcorn. Peas, its flagship product, vary greatly from country to country. The Germans and Dutch like large, green peas, while the French prefer small, sweet, extra fine peas. In Italy, Germany and the Netherlands, peas are mainly used for decoration (as in a salad), which gave rise to the launch of Bonduelle’s ‘Crea Salad’.
Faced with such diversity, the company has centred its globalisation initiatives around internal values and company dialogue. Furthermore, the name, logo and packaging are the same for all products, although advertising remains very local.
An increasing number of brands want to control their global image. While it is important to start by creating a brand identity platform, this serves no purpose unless it is presented coherently throughout the world. So, if a brand has decided to conduct a voluntarist policy of globalisation, it needs to develop its own procedures for constructing its global campaigns. The most typical are outlined below.