CHAPTER 14: MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS

Kevin Lane Keller

Regional Market Segments

Regionalization is an important recent trend that, perhaps on the surface, seems to run counter to globalization. Reasons for regional marketing

Need for more focused targeting The shift from national advertising to sales promotions Production headaches (due to need of modifying products) Marketing efficiency may suffer and costs may rise Regional campaign may force local producers to become more competitive or they may blur a brands national identity 2

Drawbacks

e.g. Campbells soup

divide US market into 22 regions

Other Demographic and Cultural Segments

For example, the importance for marketers to consider age segments and how younger consumers can be brought into the consumer franchise As another example, the 2000 census revealed that Asians and Hispanics accounted for 79 million of 281 million people in the United States and an estimated $1 trillion in annual purchasing power.
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e.g. Bank of America; Hispanic ad

Rationale for Going International Push and Pull Factors

Pull Factors: proactive reason, forces of attraction pulls the business to foreign markets (host country) profit, growth etc. Push Factors: Reactive reasons compulsion of domestic market (home country) prompts companies to internationalize saturation etc

Rationale for Going International

Perception of slow growth and increased competition in domestic markets Market for product tends to saturate or decline in home country, and possiblity of market introduction/growth in host country (Marketing opportunities due to product life cycle) Competition in domestic market Govt. Policies & Regulations Belief in enhanced overseas growth and profit opportunities. Economic growth in many foreign countries strong attraction Desire to reduce costs from economies of scale Need to diversify risk/spreading risk Recognition of global mobility of customers

e.g. Farah Khan

FARAH KHAN is the first Malaysian fashion brand that is sold in over 31 fashion capitals worldwide, including Milan, Rome, Moscow, Dubai and Sao Paulo. In 2008, FARAH KHAN made its international red-carpet debut when Hollywood screen goddess Maria Bello wore a FARAH KHAN Demi short dress to the Mexico premiere of The Mummy: Tomb of the Dragon Emperor.
Source: http://www.melium.com/melium2008/index.php?brand=8

Ideal Marketing program for global brand

To become the most effective and efficient possible option for each and every country where the brand is sold, marketing program for a global brand should consist of:

One product formulation One package design One advertising program One pricing schedule One distribution plan, etc

Unfortunately, such uniform program is rarely possible

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Advantages of Global Marketing Programs

Economies of scale in production and distribution: manufacturing efficiencies & lower cost from higher volumes experience/learning curve Lower marketing costs: for marketing communication activities e.g. Sony Power and scope: selling in diverse market indicate companys expertise and acceptance as well as high quality, convenience to use, social status and prestige e.g. Avis Consistency in brand image: by maintaining common marketing platform, the image of the company and brand remained consistent e.g. Gillette functional superiority Ability to leverage good ideas quickly and efficiently: increased sustainability and facilitate continued development of core competencies with the organization Uniformity of marketing practices: by keeping the core marketing program constant, it simplifies coordination and provide greater control
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Disadvantages of Global Marketing Programs

Differences in consumer needs, wants, and usage patterns for products: differences in cultural values, economic development etc, influence consumer behavior Differences in consumer response to marketing mix elements: price sensitivity, promotion responsiveness etc may vary Differences in brand and product development and the competitive environment: PLC may different in various countries as well as brands perception and position Differences in the legal environment: advertising regulation may vary (e.g. should be local in Canada/Australia) Differences in marketing institutions: basic marketing institutions may vary e.g. distribution channel, media availability & costs, TV/supermarket penetration Japan Differences in administrative procedures: local officers may resist having their autonomy threatened 11

Standardization vs. Customization

According to Levitt (1983), because the world is shrinkingdue to leaps in technology, communication, and so forthwell-

managed companies should shift their emphasis from customizing items to offering globally standardized products that are advanced, functional, reliable, and low priced for all. e.g.
apple, Google, Nintendo, starbucks

It is difficult nowadays to identify and one company applying the global marketing concept in the strict sense. (Even Coca Cola did not

standardize its marketing activities!)

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Global Brand

The best and big losers of Global Brand 2007

(source from: http://www.finfacts.com/brands.htm)

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Standardization vs. Customization

Blending global objectives with local or regional concerns Coca Cola Mantra (1999) Think global. Act local. hiring more local staff and allowing field manager to tailor marketing programs in their regions in 2000 Think Local act Local. to alter the me-too product and inability of localities to develop cokes marketing activity by themselves P&G: to make global plan, re-plan for each region, and execute locally A global brand has a clear consistent equity across geographies: same positioning, same benefits plus local tailoring if needed but there must be room to adapt to local needs (Wehling, 1990) A global brand means: having an overarching strategy that optimize brand effectiveness in local, regional and international markets (Robert Kahn) 14

Mc Donald around the world

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Global Brand Strategy

To build brand equity, it is often necessary to create different marketing programs to address different market segments.

Identify differences in consumer behavior

How they purchase and use products What they know and feel about brands Choice of brand elements Nature of supporting marketing program Leverage of secondary associations

Adjust branding program, through:

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Building a Global Brand

How valid is the mental map in the new market?

What is the level of awareness? How valuable are the associations?

What changes need to be made to the mental map? By what means should this new mental map be created?
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Global Customer-Based Brand Equity

To build customer-based brand equity, marketers must (Ch.2):

1.

2.
3. 4.

Establish breadth and depth of brand awareness Create points-of-parity and points-of-difference Elicit positive, accessible brand responses Forge intense, active brand relationships

Achieving these four steps, in turn, requires establishing six core brand building blocks.

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Core Brand Building Blocks

1. 2.

3.
4.

5.

6.

Creating brand salience: the order of product introduction vary (e.g. Nivea). Because of that, company has to ensure that the proper brand salience and meaning exist along the line Developing brand performance: if the product does not vary across markets, basic performance associations may not need to me that different Crafting brand imagery: the challenge is to meaningfully refine the brand image across diverse markets Eliciting brand responses. Example: positive brand judgments, customers must find the brand to be of good quality, credible, worthy of consideration and superior. Creating brand feelings Challenges: creating proper balance & type of emotional response/brand feelings. Blending inner (enduring &private) and outer (immediate experiential) emotions Cultivating resonance: means, consumers must have sufficient opportunities and incentives to buy and use the product, interact with other customers & company, actively learn the brand and its marketing
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Questions for Global Branding Positioning

To best capture differences in consumer behavior & to guide efforts in revising the marketing program, we must revisit brand positioning in each market. Brand positioning means: creating mental maps, defining core brand associations, identifying points of parity and points of difference, and crafting brand mantra. Furthermore, we need to answer 3 questions:
1.

2.

3.

How valid is the mental map in the new market? How appropriate is the positioning? What is the existing level of awareness? How valuable are the core brand associations, points-of-parity, and points-of-difference? What changes should we make to the positioning? Do we need to create any new associations? Should we not re-create any existing associations? Should we modify any existing associations? How should we create this new mental map? Can we still use the same marketing activities? What changes should we make? What new marketing activities are necessary?

Because the brand is often at the early stage of development when going abroad, we often must first establish awareness and key points of parity, then consider additional competitive considerations define hierarchy of brand associations and attunes to similarities and differences across markets
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Building Global Customer-Based Brand Equity

In designing and implementing a marketing program to create a strong global brand, marketers want to realize the advantages of a global marketing program while suffering as few of its disadvantages as possible

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Ten Commandments of Global Branding

1. 2.

3.
4. 5. 6. 7.

8.
9. 10.

Understand similarities and differences in the global branding landscape Dont take shortcuts in brand building Establish marketing infrastructure Embrace integrated marketing communications Cultivate brand partnerships Balance standardization and customization Balance global and local control Define operable guidelines Implement a global brand equity measurement system Leverage brand elements
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1.

Understand similarities and differences in the global branding landscape

International markets can vary in terms of brand development, consumer behavior, marketing infrastructure, competitive activity, legal restriction etc need adjustment: recognize and take advantage of local consumer behavior e.g. MTV India with 80% local content; Snuggle from Unilever emphasize on softness with teddy bear and different names

Developed vs. developing markets (e.g. India & Germany) Changing landscape for global markets (due to increased consumer mobility, better communication capabilities, expanding transnational entertainment options lifestyles are fast becoming more similar across countries (younger generations accept MTV) e.g. Unilever Axe sex appeal
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AXE and LYNX

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AXE and LYNX : Lowering marketing (communication) cost?

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Contd.

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2. Dont take shortcuts in brand building

It is critical to have adjusted if necessary- sufficient level of brand awareness & strong, favorable and unique brand associations to provide brand equity Do not copy paste marketing programs from the existing-successful country! (should be bottom up strategy; building brand awareness (educate market) then brand image e.g. Kellogs in France, Brazil) Important key success: understand each customers, recognize what they know/could potentially value about marketing program and tailor marketing program as desired One major pitfalls: belief that strong market position in domestic market can easily/automatically translate into a strong position in foreign/global market
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Educate your new (geographical) customer/market (e.g. Biore Pore Pack Canada)

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3. Establish marketing infrastructure

1.
2. 3. 4. 5. 6. 7.

Create their infrastructure, i.e. manufacturing, distribution and logistical advantages from scratch, if necessary, as well as adapting existing local infrastructure Firm may blends push and pull strategies internationally Seven rules for international distribution
Select distributors, not vice versa Look for distributors capable of developing markets rather than those with a few obvious customer contacts Treat the local distributors as long-term partners, not temporary market-entry vehicles Support marketing entry by committing money, managers, and proven marketing ideas From the start, maintain control over marketing strategy Make sure distributors provide you with detailed market and financial performance data Build links among national distributors at the earliest opportunities
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4. Embrace integrated marketing communications

Embrace other IMC in different countries, both traditional or non traditional communication strategies (e.g. Disneyland serve as advertising vehicle to solidify Disneys association fun family entertainment)

Advertising (Red Bull/Kratingdaeng local adaptation ad and brand name; video vans infomercial in India-Colgate Palmolive) Promotion and sponsorship (Nestle with Disney tie-ins on Atlantis and Monster Inc.)
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Marketing Communication for Global Brand: Be Careful!

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5. Cultivate brand partnerships

Partners ranging from: joint ventures, licensees/franchisees, distributor, ad agencies, etc. to gain access to distribution (Toyota Astra; Lipton-Pepsi co.) Three alternatives to enter global market with three criteria: speed, control and investment (Barwise & Robertson)
1. 2. 3.

Exporting existing brands of the firm into the new market (geographic extension) Acquiring existing brand already sold in the new market but not owned by the firm Creating some form of brand alliance with another firms
SPEED CONTROL High Medium Low INVESTMENT Medium High Low
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GEOGRAPHIC EXTENSION BRAND ACQUISITION BRAND ALLIANCE

Slow Fast Moderate

Franchise/Acquisition/Alliance

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6. Balance standardization and customization

Marketers need to blend local and global elements in their marketing programs Some factors for favorable standardization

Three criteria as essential for development of global brand

Common customer needs Global customers and channels Favorable trade policies and common regulations Compatible technical standards Transferable marketing skills

What type of products difficult to be standardized?: food and beverages; Which one that easy?: high-end products, high-tech products, high-image products with associations to fashion ability, sensuality, wealth or status, services and B2B (airlines & banks), retailers for high class customers (Toysrus, Centro), Brand with country of origins positioning, product that do not need customization
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Basic positioning and branding that can be applied globally Technology that can be applied globally with local tailoring Capabilities for local implementation

Need to cuztomize?

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7. Balance global and local control

Choosing the most appropriate organizational structure for managing global brands, three option
1. 2. 3.

Centralization at home office/headquarters Decentralization of decision making to local foreign markets Some combination of both

The idea: Cost saving of standardization do not outweigh the revenue potential from tailoring program e.g. Levis using thermometer strategy

Freezing point are fixed (brand soul, logos) Above that, fluid point, is adjustable (product quality, pricing, advertising, distribution and promotion
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8. Define operable guidelines

Brand definition and guidelines must be established, communicated and properly enforced so marketers in different regions have a good understanding of what they are/arent expected to do, understand brand meaning and translate it to satisfy local preferences Brand definition revolves two issues:

Documents: brand charter: detail what brand is/ is not (e.g. Mc Donald operating manual) Product line should reflect only those product consistent with the brand definition

Provide effective lines of communication: The goal: to facilitate local managers ability to tap into what constitutes as relevance in any particular country and then communicate those ideals to headquarters
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Manual and Operating Guidance

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9. Implement a global brand equity measurement system

Set of research procedures designed to provide timely, accurate and actionable information for marketers or brands so they can make the best possible tactical decision in the S/R and strategic decision in the L/R in all relevant markets Define brand equity charter in global context outlining how to interpret the brand positioning and resulting marketing program in different markets With the global marketing strategy template in place, brand tracking can access progress (in term of creating desired positioning), eliciting the proper responses and developing brand resonance Challenge: the marketing research infrastructure may be lacking in many countries
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10. Leverage brand elements

Proper design and implementation of brand elements can be critical (due to cultural differences) Non verbal brand elements are more likely to directly transfer effectively (logo, symbol), e.g. Ronald Mc Donald without words clearly associated with kids; but doesnt mean without problem: green in Malaysia= disease or death
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The end

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