As more companies come to view the entire world as their market, brand builders look with envy upon those that appear to have created global brands, write authors David Aaker and Erich Joachimsthaler - brands such as IBM and Visa, whose positioning, advertising strategy, personality, look and feel are in most respects the same from one country to another.
But according to the authors of Brand Leadership, developing global brands can cause problems that outweigh any advantages.
Aaker and Joachimsthaler explain their position in an article, 'The Lure of Global Branding,' which appeared last year in the Harvard Business Review.
An edited excerpt from the article:
First, economies of scale may prove elusive. It is sometimes cheaper and more effective for companies to create ads locally than to import ads and then adapt them for each market.
Second, forming a successful global brand team can prove difficult.
Third, a brand's image may not be the same throughout the world. Honda means quality and reliability in the United States, but in Japan, where quality is a given for most cars, Honda represents speed, youth and energy.
For all those reasons, developing global brands should not be the priority. Instead, companies should work on creating strong brands in all markets through global brand leadership.
Global brand leadership means using organizational structures, processes and cultures to develop a global brand strategy that coordinates and leverages country brand strategies. That is, of course, easier said than done.
Companies tend to give the bulk of their brand-building attention to countries with large sales, at the expense of emerging markets that may represent big opportunities. But some companies have successfully engaged in global brand management as we learned by interviewing executives from 35 companies in the United States, Europe and Japan.
Four common ideas about effective brand leadership emerged from those interviews:
1. Stimulate the sharing of insights and best practices across countries.
2. Support a common global brand-planning process.
3. Assign managerial responsibility for brands in order to create cross-country synergies and to fight local bias. An individual or group must be in charge of the global brand.
4. Execute brilliant brand-building strategies.
A companywide communication system is the most basic element of global brand leadership. Creating such a system is harder than it sounds. Busy people usually have little motivation to take the time to explain why efforts have been successful or ineffective; furthermore, they'd rather not give out information that may leave them exposed to criticism. Another problem is information overload. To overcome those problems, companies must nurture and support a culture in which best practices are freely communicated.
Formal meetings are useful, but true learning takes place during informal conversations and gatherings. The personal relationships that people establish during those events are often more important than the information they share.
Field visits are another useful way to learn about best practices. Honda sends teams to 'live with best practices' and to learn how they work. Ford UK, for example, which is very skilled at doing direct mail and research on segmentation, makes its technology and research methods available to other countries.
Companies that practice global brand management use a planning process that is consistent across markets and products.
First, the process should include an analysis of customers, competitors and the brand. Analysis of customers must go beyond quantitative market research data; managers need to understand the brand associations that resonate with people. Analysis of competitors is necessary to differentiate the brand and to ensure that its communication program, which may include sponsorship, promotion and advertising, doesn't simply copy what other companies are doing.
Second, the process should avoid a fixation on product attributes. Most strong brands go beyond functional benefits; a brand can also deliver emotional benefits and help people express themselves.
Third, the process must include programs to communicate the brand's identity (what the brand should stand for) to employees and company partners. Without clarity and enthusiasm internally about the associations the brand aspires to develop, brand building has no chance.
Fourth, the process must include brand equity measurement and goals. Without measurement, brand building is often just talk. Yet surprisingly, few companies have systems that track brand equity. Pepsi is an exception.
Finally, the process must include a mechanism that ties global brand strategies to country brand strategies. The top-down approach begins with a global brand strategy, and country strategies follow from it. In the bottom-up approach, the global brand strategy is built from the country brand strategies.
Over time, the number of distinct strategies will usually fall as experiences and best practices are shared. As the number shrinks, the company can capture synergies. Mercedes, for example, uses one advertising agency to create a menu of five campaigns. Brand managers in different countries can then pick the most suitable campaign for their market.
Global brand leadership, especially in these days of media clutter, requires real brilliance in brand building efforts - simply doing a good job isn't enough. Our research indicates that those who aspire to brilliant execution should do the following:
1. Consider what brand building paths to follow - advertising, sponsorship, increasing retail presence, promotions. The path you choose may turn out to be more important than the way you follow through with it. Experience shows that if the path starts with advertising, as it usually does, other, sometimes more innovative and more effective brand-building approaches, get the short end of the stick.
2. Put pressure on the agency to have the best and most motivated people working on the brand, even if that means creating some agency-client tension.
3. Develop options. The more chances at brilliance, the higher the probability that it will be reached.
4. Measure the results.
Managers won't be able to tell how well they're building brands unless they develop a global brand measurement system. The system must go beyond financial measures - useful as they are - and measure brand equity in terms of customer awareness, customer loyalty, the brand's personality and the brand's associations that resonate with the public. When these measures of the brand are available, a company has the basis to create programs that will build a strong brand in all markets and avoid programs that could destroy the brand.
All multinational companies should actively engage in global brand management. Any company that tries to get by with unconnected and directionless local brand strategies will inevitably find mediocrity as its reward.