Global brand power for an organisation

Global brand power for an organisation

 

Introduction

 

The essay focuses on effects of developing global brand, such as impacts on production, position and promotion in individual target country, the challenges from various cultures and customer behaviour with some successful and unsuccessful examples of famous global brand organisations. First, the essay discusses the balance of standardisation and customisation for product and brand when organisations consider launching globalisation. Second, the essay explains development of global brand may bring more benefits for organisations through economics of scale. Moreover, cultural differences may make the organisations hard to develop their global brand, such as language barriers, customer value, various customs and legal reasons. Finally, the tendency of developing global brand, such as building global brand leadership and effective global brand management team, is presented.

 

The world is becoming more international with the development of high technologies, such as information technology. A few years ago, people did not hear of global village. Nowadays, people use different products from all over the world. These products could be manufactured and distributed thousands of miles away. Competition is becoming more intense between various commercial organisations. Commercial organisations need to attract new customers and retain existing customers to fight against competition. One of various ways is through brand. If organisations want to gain their sales and profits from non-domestic markets, the goal of organisations could be achieved through global brand.  

 

Globalisation is a major problem which organisations face when they consider developing global brand. The main arguments for globalisation focus on the point of view that the world is not only becoming smaller but also becoming similar. People’s needs are basically the same. The development of world culture is formed by global communications, such as the activities of multinational organisations. The world culture is motivating people to become the same. It should be noted that the landscape of global brands is changing, especially concentrating on younger consumers. The reason is that generally increased consumers mobility, better communication capabilities, and expanding transnational entertainment options and lifestyles are dramatically becoming more and more similar in different countries (Keller 1998). Example, a teenager in Paris has more and more common points with a teenager in London, New York, Sydney or almost any other major cities in the world because of the growth of global media, such as Internet. Thus, younger generation will be more easily influenced by broader world cultural movements and the consequence of the trend is that standardised product and brand will be more easily accepted by new generation through global branding programme and marketing strategy (Keller 1998). Motameni and Shahrokhi (1998) argued that the development of global consumer products and brands is the key to the success of an organisation because the world is growing internationalisation. Their viewpoints are based on Levitt’s argument, who is a proponent of global products and brands. For example, Colgate Company took three years to prepare its total anti-bacterial toothpaste. The sales of total anti-bacterial toothpaste are 150 million dollars every year and the product is sold in 75 countries (Motameni and Shahrokhi 1998). The global toothpaste brand got much more profits and market shares for Colgate Company. However, other arguments highlight there are significant differences between countries, namely, markets are actually different, even in different regions of one country. As an example, the brand Vizir which P&G Company uses it to launch Europe market in the early 1980s, but the Vizir liquid detergent did not get a success in Europe market (Keller 1998). The reason is that P&G Company did not recognise that washing machines in Europe were not designed to accept liquid detergent. After researching the situation of target country, they made variations about the product so that modified product suited the market. On the other hand, P&G Company has varied the smell of Camay soap, the flavour of Crest toothpaste and the formula of Head and shoulders shampoo according to target countries. P&G Company’s products are now changed to suit different markets when it learns from its mistakes. Furthermore, the development processes of product and brand have different stages in every country so that it is necessary to vary for global brand and product in each country (Randall 2000). Otherwise, the global brand and product are not useful to getting more benefits if one organisation considers completely standardised development of global brand and product.

 

Randall (2000) loosely defined global brand is basically the same product or service everywhere, with only small variations, such as Coca-Cola and McDonald’s. They vary their products to be suitable for local customers’ tastes. However, the variations are not very great. Coca-Cola Company only changes the sweetness level for Coke. McDonald’s adds local tastes to their menu, such as adding local sauce.   Furthermore, global brand includes the same brand identity, values, the same positioning and the same marketing mix (Randall 2000).

 

It is obvious that a global brand has several advantages, such as the status and prestige of company, maximising market benefits, reducing advertisement costs. According to Motameni and Shahrokhi (1998) summarised Posten’s argument, there is no better way to build value for organisations and global consumers than to build a strong brand. It is crucial to consider different brand effects at global level which drive consumers to purchase. 

 

After the organisation makes a decision to develop its global brand through global marketing programs, are these marketing elements, such as same positioning, same package design, same pricing schedule, and same distribution plan, the most effective and efficient for the development of its brand in every country?

 

Generally speaking, global brand impacts on organisation’s products and services. Thus, it is useful to consider that products and services are standardisation or customisation at a global level. Aaker (1991) summarised Ted Levitt’s viewpoint, which is that the tastes and styles all over the world are becoming more homogeneous because of the spread of TV, Internet and other technologies. Keller (1998) also summarised Ted Levitt’s viewpoint, which is that companies need to learn to ignore regional and national differences if the world is one large market. However, other critics think it is necessary to point out that even McDonald’s does not standardise its product (Keller 1998). McDonald’s and Coca-Cola are famous examples of global brands. As a famous global marketer, McDonald’s, has also modified and adapted its successful menu to develop overseas markets. McDonald’s provides beer in Germany, wine in France, and coconut, mango, and tropical mint shakes in Hong Kong and hamburgers are made with different meat, such that McDonald’s prepares a lamb burger and offers no beef products on the menu in the first Indian restaurant (Keller 1998).

 

On the other hand, global economies of scale could give unbelievable competitive advantage to organisations through global brand so that local competitors’ brands can not respond quickly. For example, Gillette is one of the companies which has successfully developed global brand. According to Gillette Company’s estimate, 1.2 billion people use at least one Gillette product every day. Gillette Company enjoys the benefits from huge economies of scale by selling a few types of products to every single market. The basis of developing global brand is that the domestic product is not assumed to be introduced to another country (Kotler and Keller 2006). Many companies have tried to launch global brand with a world product which is required some adaptations. However, Randall (2000) supported Levitt’s viewpoint to argue that economies of scale could actually overcome preferences of local market by making single and standardised model to offer value of money for consumers. Nevertheless, the argument needs to be tested in every market of real world because organisations will take a risk if the market preference is not clear. It is essential to balance between taking into account all different consumers’ preferences and ignoring them completely. Therefore, transforming a brand into a global brand needs to suit several basic requirements. Randall (2000) summarised, firstly, the brand should have obvious competitive advantage which is distinguished from other competitors. Secondly, the cost will be raised to a new level as soon as global sales are reached through global brand. Then, the organisation has to consider affording such costs to fight against local brands and other global brands from other organisations. Finally, there must be a segment which is so big enough to support the development of global brand in each target country.

 

Global brand has an effect on the position of product. A global brand’s positioning may vary in every country. Normally, the global brand’s position is influenced by economy, expenditure level and culture of target country. For example, McDonald’s seems to be the same brand all over the world. McDonald’s uses the same name, appearance and products with not great variation, however, the consumer’s perception about McDonald’s in the United States is very different from consumer’s perception in developing countries. Randall (2000) illustrated that McDonald’s is everyday, low-priced, convenient symbol for an American, however, it is a status symbol for customers in Moscow or Thailand.

 

Furthermore, global brand also impacts on the promotion of product. Then, organisations have to consider some normal factors to make some variations in order to develop its global brand because of legal reasons in different parts of the world, different pronunciations in different languages. If the global brand has not been made variations, the standardised brand will lead to lose the original brand essence. For instance, Diet Coke is changed and called Coca-Cola Light in Europe because of legal reasons. The promotion packaging for Diet Coke is different in different parts of the world. It is obvious that Coca-Cola’s advertisements have been adapted and developed for different countries. For example, Coca-Cola’s global advertisements, such as the advertisements campaign of the 1992 Winter Olympic Games, were used by twelve languages before being published to 3.8 billion viewers in 131 countries (Keller 1998). Furthermore, brand name normally is difficult to be standardised at global level. The reason is some translation problems so that these problems could lead wrong version and misunderstanding. Hence, Johnson’s Pledge furniture cleaner is called Pronto in Switzerland, Pliz in France, but they retain its American brand name in the UK (Palumbo and Herbig 2000).

 

Development of global brand will be challenged by different customer behaviours from various countries. Customer behaviour is dramatically different from various markets of target countries. The following data reveals the different results of customer behaviours about annual beverage consumption. One of the highest consumption of carbonated soft drinks is in the United States. The number is 203.9 liters per capita consumption. Italy is the lowest. Relatively, Italy is one of the highest per capita consumption of bottled water. The number is 164.4 liters per capita consumption, but the United Kingdom is only 20 liters. For beer market, Ireland and the Czech Republic are over 150 liters per capita, and France is the lowest with 35.9 liters (Kotler and Keller 2006). As another example, Green Giant Company decided to develop its local brand to become a global brand. The company introduced a canned sweet corn as the product of developing global brand. However, Green Giant Company found the French added their product to salad and ate them cold, the British put them into a sandwich and pizza, and Japanese children ate them as a meal after lecture time. Similarly, after General Foods launched its orange drink to become a world brand, they found that the Germans did not like its brand name, the British did not like its taste and the French did not drink orange juice during breakfast time (Keller 1998). Obviously, the same product which is launched as a global product and brand is difficult to be sold in various countries because of different customer behaviours and the extent to acceptance.

 

On the other hand, the culture of the target country gradually influences customer behaviour so that the development of global brand will meet obstructions. Customers do not appreciate brand essence so that they are not satisfied with products and services. For instance, Walt Disney launched the Europe Disney theme park outside Paris in 1992. They are criticised because they do not take account of local culture factors, which are a number of local French customs and values, such as serving wine with meals. However, after Disney Paris theme park renaming, it finally became Europe’s biggest tourist attraction by making a number of changes and adding local culture and values. (Kotler and Keller 2006) Similarly, Coca-Cola Company even offers wine with meals to replace cappuccino in Italy. However, as a global brand pioneer, P&G Company learned a lesson so that the company was aware of importance of understanding culture and customer behaviour for launching a global brand. P&G Company tried to sell the same diaper to Japanese parents as the diapers were sold in the United States when Procter & Gamble entered Japanese market with Pampers disposable diapers in 1977 (Keller 1998). Initially, P&G Company gets great success, but they found the growth is slowed when it is challenged by a Japanese competitor which entered the diaper market with a new design. P&G Company clearly found its market share declined from 90 percent to under 10 percent from company’s statistics (Keller 1998). After it analysed the problem, P&G Company found the problem is that they did not recognise differences of culture and customer behaviours between Japan and the United States. The difference is that Japanese housewives went to laundry daily and used diapers only at night, but American housewives did weekly. Therefore, P&G Company regained market share after they make a little variation, such as smaller and thinner diapers, so as to make the diapers better to suite to Japanese market.

 

Moreover, organisations have to meet great challenges, such as customer loyalty for global brand. Customers’ brand loyalty problem will be enlarged at global market level. Global brand of the organisation meets a real challenge not only from other global brands but also the brands of local competitors. Accordingly, the organisation has to take into account how to identify, attract and retain a market in each country because it is difficult to assess customer loyalty for a global brand. Palumbo and Herbig (2000) agreed Alden’s viewpoint and claimed brands with a global image can get their competitive power and value from customers’ improved self-worth and status by purchasing of brand. The reason is that customers may purchase certain global brands to reinforce their self-worth and status in a specific global segment so that customer loyalty for global brand is reinforced. However, customer loyalty for global brand can be improved by organisations to create awareness and image for their brands (Palumbo and Herbig 2000).  

 

Otherwise, organisations can get higher prices or higher margins from developing global brand. Aaker and Joachimsthaler (2000) claimed an organisation can help enhance shareholders’ value through launching global brand and building global brand leadership. They thought global brand leadership is not only global brand but also organising for brand leadership. Such an organisation really needs an effective global brand management team because developing a global brand strategy will coordinate and balance the brand strategies of individual target countries, utilise an organisation’s human resource, culture and allocate the resources of building global brand (Aaker and Joachimsthaler 2000). Therefore, Aaker and Joachimsthaler (2000) argued that any organisations which are seeking to build or improve their global brand and global brand leadership and relationship have to assign managerial responsibility for developing global brand and carry out their grand global brand building programme with best practices in individual target countries. For example, the relationship which Procter & Gamble Company built was that it has restated its core purpose of improving the lives of its consumers, and Samsung Company talked about creating brilliant products and services to contribute to a better global society, namely, to human society all over the world (Clifton 2003).

 

Conclusion

 

One organisation gets more market share and profits through developing global brand although it will meet a lot of problems. In the near future, any organisation which want to launch and improve their global brand need to understand similarities and differences in the global branding landscape. Furthermore, it is useful to balance global and local control, balance standardisation and customisation of product and brand and consider key elements of global marketing for any organisation (Kotler and Keller 2006). In addition, the tendency of developing global brand is to build global brand leadership and focus on building effective global brand management team which is necessary to launch global brand marketing programme.

 

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