Table of Contents
I. Introduction
II. Marketing Under a Global Brand Name
A. Creation of Demand on Other Countries
B. Strategic Appeal
III. Brand Management in the Global Setting
A. Value Creation in Branding
B. Using Brand Equity
C. Consumer-Centered Brand Management
IV. Issues to Consider
A. Buying Behavior of the Consumers
B. Possibility of Replacing of Global Brand Names
V. Conclusion
VI. References
I. Introduction
In this day and age, consumers automatically relate a product to the name of a particular brand. More specifically, the reputation of the said brand tends to trigger signals of whether a product is cost-effective, superior in quality, or even equate to a particular social status. Numerous studies have maintained that brands have become powerful tools in modern marketing. It has become one of the major factors that consumers consider in their purchasing decisions. Any commercial organization knows this as a fact. That is why they are inclined to place their attention to brands and the demands of the consumers. It has become an indispensable component of the marketing operations of the modern organization. For existing multinational companies, having a global brand name has been immensely helpful in expanding their operations the world over. Presenting their products and services as the top alternative in the market nowadays is not enough to ensure the success. In this era where the consumer is sovereign, every company needs to build a brand that will be universally recognizable in any market. Companies seek to establish a global brand with the ends of acquiring a bigger market share and a better position in the market. Though it is a common belief that having a global brand name equate to success in terms of business, there are still existing issues that comes with it. This paper will be considering the minutiae of establishing a global brand name. Similarly, the key reasons why this is being considered by most, if not all, companies will be taken into account along with the other alternatives that these companies have in marketing a global product.
II. Marketing Under a Global Brand Name
The term “global brand” is often interchanged with the term “global product.” However, there are studies that pointed out that the two are completely different terms. Basically, a global product connotes merchandise sold all over the world that share standardized attributes. (Steenkamp, Batra, and Alden 2003, 53) This means that these products tend to have a uniform set of characteristics and normally take on common brand names. On the other hand, a global brand tends to characterize the identity and image attached to a specific product. More importantly, it is the blend of both tangible and intangible attributes that constitute a global brand.
Recent studies of global branding indicate that the said concept is subject to the perspective of the individual consumer. (Holt, Quelch, and Taylor 2004, 69) More specifically, the more recent views of international branding strategies tend to reflect the demands of the consumers. As Holt, Quelch and Taylor (2004, 70) puts it, these global brands are subjected to the global culture. In its simplest terms, global culture pertains to a set of consumer tastes and values. These tastes and values do not necessarily share the same standards and often show conflict with one another. Thus, global brands have to take on a certain level of flexibility in their operations.
In its face value, this seems quite a daunting task for any company. However, this does not stop them from seeking to establish a global brand name and engage in global branding strategies. Why? The reason is that despite these complex concerns of the consumers, these brands have become embedded in their consciousness. (Holt, Quelch, and Taylor 2004, 70) The bottom-line is that, despite their best efforts, consumers cannot ignore global brands. The following parts will discuss the other advantages that companies enjoy in operating a global brand.
A. Creation of Demand on Other Countries
One of the advantages of having a global brand is the possibility of demand spillovers. This means that the marketing efforts held in a particular country could essentially spread out to markets of other countries. Basically, the image of the global brands encapsulates this advantage. (Kim and Chung 1997, 361) The concept of brand popularity and the country of origin often establish this type of demand spillover. Holt, Quelch, and Taylor (2004, 71) share this intimation of demand of global brands. Mainly, they call this dimension of global brands as the “global myth.” Simply put, demand of global brands tends to provide the consumers a feeling of having a “global identity” or having a feeling of being a “citizen of the world.”
Studies on the effect of brand popularity on the company maintained that it has major implications on its market share. In the study of Kim and Chung (1997, 361) they pointed out that the company acquires benefits from brand popularity. One benefit is that having brand popularity provides the consumers more confidence in their purchasing decisions with particular reference to giving the implied assurance that a popular brand is better than the alternative. Another benefit of brand popularity is the association of value to the product. (Kim and Chung 1997, 361) Holt, Quelch, and Taylor (2004, 71) coined this dimension of global brands as “quality signals.” Thus, issues of price of the product with a global brand are often regarded as “reasonable” because of its perceived high quality among consumers.
B. Strategic Appeal
Another perceived reason why organizations seek to establish a global brand is because of its strategic appeal. Steenkamp, Batra, and Alden (2003, 53) indicated in their study that global brands tend to have more opportunities than their counterparts in the local markets. This is supported by the earlier studies on the markets in the US, Japan, and EU. Brouthers, Werner, and Matulich (2000, 39) noted that global brands offers companies an efficient way of exhausting its resources. More specifically, maintaining global brands tend to offer the possibility of lower costs and having the highest quality product.
Aside from the earlier fact pointed out on the demand spillover, a consequent outcome of that phenomenon would be the demand for standardized products. (Brouthers, Werner, and Matulich 2000, 39) This means that modifications to meet the local demands are significantly lessened as the demand reflects greater value with the unaltered global brands. In this regard, time and resources in the modification processes is taken away which equates to cost reductions and further profit for the company. On the whole, the creation of global brands creates a much greater economies of scale and scope for companies. (p 43)
III. Brand Management in the Global Setting
Recent marketing initiatives in the global setting have acknowledged the importance of bands in dealing with the dynamic business environment. Recent studies maintained that it is important for companies to treat their brand management initiatives as they treat their strategic management processes. (Chan-Olmstead and Kim 2001, 75) This means that the battle of brands in both their local and domestic counterparts have intensified throughout the years. This increase in the demands on the part of the organizations has given them the responsibility of making their brand management more systematic, scientific and a continuous process. The study of Chan-Olmstead and Kim (2001, 75) basically maintained that companies should bake sure that their brand will be remembered constantly. Be it through logos or taste, the consumer has to readily recognize the brand right away. This is where brand management comes in to the picture.
There are studies that maintain initially what their brand intends to represent. In doing so, the company is able to find a way to position its brand with reference to the other players in the market. (Chan-Olmstead and Kim 2001, 75) This is seen in the case of global brands like Nike and Coca-Cola. In the case of Nike, they have decided to package themselves as a brand associated with winning. On the other hand, the Coca-Cola brand tends to place value on their universal taste. (Andrews Chompusri, and Baldwin-Obe 2003, 198)
A case study of Procter & Gamble maintained that a use of a brand portfolio would be able to help a company in managing its brand in the global setting. (Madapati 2003) With such a tool at their disposal, P&G is able to make sound decisions with regards to their brand management initiatives. In doing so, P&G are able to position their products properly with reference to the other players like Unilever, Kimberly-Clark and Colgate-Palmolive. Studies pertaining to branding strategies and theories point out two important components organizations should consider in their brand management initiatives. These are brand equity and brand value.
A. Value Creation in Branding
Brand value is the perceived worth of the consumers on the brand. The most notable form of value creation in brands is through advertising. (Steenkamp, Batra, and Alden 2003, 53) There are three known approaches in the creation of value in brands: decoration, gluing, and mascot approach. The decoration approach basically shows a branding strategy displaying differentiation by connecting the brand to completely different cues presented by the other players in the market. (Todreas 1999, 51) The gluing strategy of value creation associates their product to certain emotional cues of the consumer. These are seen in advertisements that attempt to stir the emotion of the possible buyers. (Cook 1992, 10) The mascot approach on the other hand indicates the use of a human-like entity that is believed to be able to establish a connection to the potential buyers. The use of charismatic non-human characters (Pillsbury Dough Boy) tends to reflect this type of value creation approach in branding. (Alleyne 2004, 188) Basically, these approaches of value creation tend to be influential for the buying decisions of the consumers. In the same regard, the use of brands could also be a way towards building this value to the company.
B. Using Brand Equity
The term brand equity denotes the net revenue of the brand which it is expected to amass eventually. There have been instances that local brands have changed its name to build up its brand equity. In the Netherlands, the potato chip brand, Smiths, has acquired the brand name of Lay’s despite being one of the top brands in the market. (Steenkamp, Batra, and Alden 2003, 53) They pointed out that the shift of brand names is an attempt to capture “affinity” with the global brands and establish more value in their products. This is also seen in the case of Vodafone which operated local brands with different names. Steenkamp, Batra, and Alden (2003, 53) mentioned that these local brands are now employing the brand name Vodafone to establish brand stature and brand validity at par with the other global and local brands operating in the same market. In the international retail industry, P&G started to eliminate the redundant brands in the local markets and started acquiring brands with an existing consumer base. This is seen in their recent acquisition of Gillette which resulted to the expansion of the scope of their market. (Madapati 2003) In essence, the development of brand equity tends to cling on the intangible aspects of the brand. Factors like the consumer awareness and differentiation of established by these brands contribute to the overall equity of the company’s particular brand.
C. Consumer-Centered Brand Management
Looking at the discussions above, it is implied that branding is in the business of giving consumers what they want. Instances of local brands acquiring the brand name of the global brand seem to be the trend so as to ensure greater brand equity and brand value. However, Coca-cola took on a different path. In its acquisition of Parle, a beverage company in India, Coca-Cola kept the local brand name, Thums Up, in operation. (O’Shaughnessy and O’Shaughnessy 2003, 185) In looking at this scenario, Coca-Cola appears to center its attention to the consumers in the market. Before the acquisition, Parle was the leading distributor of carbonated drinks, even surpassing the monoliths Pepsi and Coke. Their product, Thums Up, has become a part of the Indian society. Advertisements of the product emulated the Coca-cola formula of “can’t beat the feeling” campaigns. (Bhattacharyya 1998, 250) Though the soft drink consumption is somewhat considered a luxury in India, these advertisements created value for Thums up and prompted the market to take the product as their constant companion in meals and other past times. Thus, instead of the convention of homogenizing the products after acquisition, the decision to keep the Thums Up brand essentially ended up as a great marketing stride for the overtops of Coca-cola in the Indian market.
IV. Issues to Consider
Based on the claims above regarding the dynamic nature of the market, it appears that there are certain issues that companies have to take on in their global brand management initiatives. The following discussions will be covering these issues and how existing companies dealt with it.
A. Buying Behavior of the Consumers
A key element in for every profit-seeking organization is the recognition of the behavior of the consuming public. Consumer behavior is essentially a product of the culture of a particular market. (Haugtvedt, Petty, and Cacioppo 1992, 239) The seminal study of Hofstede (1980, in Katz, Zarzeski, and Hall 2000, 119) points the importance of culture for multinational organisation. In his theory, Hofstede intimated that societies could have either “individualism-collectivism, masculinity-femininity, high-low power distance, and high-low uncertainty avoidance.” (p. 120) The theory basically reinforces the claim that consumers tend to base their buying decisions on the existing social conventions. This theory also claims that for every state, there is a distinct buying behavior which could also entail distinctive branding strategies and marketing initiatives. Recent studies like that of Katz, Zarzeski, and Hall (2000, 119), points out that the national culture contributes to the future performance of an organisation. Other distinctive features of the state like language tend to trigger changes in the packaging of the brand and changing characters that the buying public could understand. This basically manifest that every market has a distinctive way of reacting to certain products or services. The best way to provide some sort of positive reaction is to make the company relate to the consumers. Some companies went as far as changing the menu like that made by Pizza Hut in Hong Kong. (Lan and Khan 1995)
B. Possibility of Replacing of Global Brand Names
As indicated in the previous discussions, the awareness of the market should be among the top priorities of the operations of global brands. In terms of using the global brand name or using a local one, the Coca-cola model in India should be very helpful. Good companies like Coca-Cola should realize when and how to use their brand names. For instance, the European operations of Budweiser tend to emphasize the name of their global brand as the “King of Beers.” (Weidenbaum 2007, 62) Prominence on the symbols and letterings are also ensured because there is a similar alcoholic brand that has a slight similarity to the global brand. The said brand is called Budvar. This prompted the Budweiser brand to refrain using the “Bud” label in their beers in their European distribution. In the same regard, they reinforced their brand management initiatives by their “this Bud is right for you” campaign.
In the area of mobile phones, the situation of Nokia takes a whole different approach. Being the leading provider of mobile technologies, Nokia is able to acquire local brands and manufacturers all over the world. In this scenario, they tend to change the name of the acquired companies and place their global brand names in all the products that they sell. (Ricart, Enright, Ghemawat, Hart, Khanna 2004, 175) This makes perfect sense given that Nokia’s brand name has been equated with innovation and top of the line products since the mobile phone surge in the later part of the 90s.
Another global brand name is Electrolux. It was the company who are among the early ones who built value on their brand through door-to-door sales. (Church and Godley 2003, 86) Thus the name is often associated with top house appliance sold all over the world. (Todreas 1999, 173) However, the company holds other brand names aside from Electrolux as they have acquired numerous local companies (like Zanussi) in their years of operation. (Kay 1995, 162) In the same regard, they have decided to keep the names of the local brands to show diversity in their products.
V. Conclusion
The concept of globalization has been the most influential and possibly of furthermost significance in the realm of business and commerce. With the apparent elimination of geographical boundaries, the market has given organizations the opportunity to trade regardless of the size of their company. The emergence of globalization has triggered inclinations towards global products and establishing global brand names. It is this phenomenon that maintained the need for standardization of their products and indispensable condition of brand management strategies. Building up a global brand name is as complex as sustaining the potential of the products in the global scale. As indicated in the discussions above, issues on competitiveness, close consideration in changing of local brand names and the recognition of the consumer behavior in the market could spell the difference between the success and failure of the company in their ventures. Recognition of the demands of the market allows them to make informed decisions and take actions that would essentially place them in a favorable business situation. Elements like consumer behavior, personality, product characteristics and even the culture of the market tend to dictate the direction on which a global product’s life cycle. In the end, the awareness of the company of these elements along with the intangibles of the brand (vitality and stature) will ensure an impressive performance of a global product in the respective markets that it operates. Essentially, as manifested in companies cited above, a fit between the right marketing strategies, brand management, and knowledge of the respective market not only ensures the success of the company but also guarantee its sustainability for years to come.
VI. References
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