Global branding in the 1980s was influenced by a famous 1983 Harvard Business Review article, "The Globalization of Markets." The article argued that companies should leverage the "economics of simplicity" and sell standardized products around the globe. The benefits were lower costs and consistent customer communications.
That approach lost favor. Companies found that messages that resonated with South Americans fell flat in Europe. The "least common denominator" approach also shrank opportunities for differentiation.
So the next generation of branding in the 1990s focused on the so-called "glocal" approach. Companies would centralize production, research and technology, but localize marketing, distribution and PR to accommodate cultural and geographic differences.
Now another article—"How Global Brands Compete"—in the September issue of Harvard Business Review may presage the next generation of branding. Based on results from focus groups involving 1,500 urban consumers, age 20 to 35, in 41 countries, the article argues that many popular brands have largely lost their nationalistic connotation.
Coca-Cola is not an American brand, L'Oreal is not a French brand, and Samsung is not a Korean brand. Rather, they are global brands. They are symbols of a global culture created by the Internet, travel, music and other influences that easily seep across borders.
Global brands have three dimensions:
- They signal quality. "Made in USA" or "Made in Japan" no longer carries as much weight as an individual brand reputation for quality.
- They represent positive international attributes. Apple says cool, no matter what country.
- They represent vehicles for social responsibility. Consumers demand more from global brands, which helps to explain why McDonalds has been so heavily criticized for its labor practices in the UK and Nestle's infamous sales of tainted baby formula in Africa continue to damage their brands.
Another aspect of the study identified four consumer segments: global citizens, global dreamers, antiglobals and global agnostics.
Some 55% of respondents were global citizens who saw global brands in terms of quality and as guardians of consumer health, the environment and worker rights. Global dreamers, constituting 23% of respondents, were consistent admirers of global brands. Said one Costa Rican, "Local brands show what we are; global brands show what we want to be."
Antiglobals (13%) did not trust global brands and avoided doing business with them. Global agnostics (8%) judged local and global brands by the same criteria.
The implications for global branding strategists:
- Manage global brands globally: No longer can strategists manage brands as national products with international reach. Today, global brands are unique symbols that belong to every nation and not just one. That requires a delicate balancing act to meet the requirements of a global culture while still satisfying differing local tastes.
- Address the negatives: Consumers often perceive international brands as big, uncaring and only interested in themselves and their profits. Sometimes that perception can be changed with marketing and PR; at other times, more active involvement in local communities is required. The payoff can be huge. The 10% of respondents who saw themselves as antiglobals represent millions of potential customers worldwide.
- Sacrifice self-interest for customer interest: Consumers tend to be suspicious of multinational efforts in local countries. Whom does the initiative ultimately benefit? But some forms of social responsibility represent win-win branding. As an example, the article cited Procter & Gamble's efforts to market a water purification system in Guatemala. The product was both cheap and cut diarrhea episodes by about 25%. Hopefully, P&G can make it profitable as well.
The study is good news for US companies, which (understandably) worry that the global fallout from Bush's policies in Iraq will hurt American brand profitability. Said the authors: "We found that it simply didn't mater to consumers whether the global brands they bought were American."
It is also good news for national brands around the world that worry whether their association with a particular country will limit their potential. But it does place new pressures on brand managers to understand not just French or American or Chinese requirements but also global imperatives as ubiquitous as hip-hop or tattoos.
