Copyright 2013 Pearson Education CHAPTER:14 MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS

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1 Copyright 2013 Pearson Education CHAPTER:14 MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS

2 Learning Objectives Understand the rationale for developing a global brand Outline the main advantages and disadvantages of developing a standardized global marketing program Define the strategic steps in developing a global brand positioning Describe some of the unique characteristics of brand building in developing markets

3 Regional Market Segments A regionalization strategy can make a brand more relevant and appealing to an individual Downsides: Marketing efficiency may suffer and costs may rise with regional marketing Regional campaigns may force local producers to become more competitive Upside: Marketing can have a stronger impact

4 Other Demographic and Cultural Segments Demographic differences often serve as the rationale for a separate branding and marketing program Younger generation may be more easily influenced by trends and broad cultural movements due to media exposure Brands can tap into global sensibilities of the youth market. A teenager in Helsinki may have more in common with a teenager in London, New York and Toronto than with his or her parents.

5 Other Demographic and Cultural Segments Some consumers may not like being targeted on the basis of their being different Since that reinforces their image as outsiders or a minority They may feel alienated or distanced from the company and brand Do we need to communicate differently to some specific target/minority groups?

6 Rationale for Going International Forces that have encouraged many firms to market their brands internationally: Perception of slow growth and increased competition in domestic markets Belief in enhanced overseas growth and profit opportunities Desire to reduce costs from economies of scale Need to diversify risk Recognition of global mobility of customers

7 Rationale for Going International The marketing program for a global brand consists of: One product formulation One package design One advertising program One pricing schedule One distribution plan Then, they would prove the most effective and efficient option for every country in which the brand was sold Oreo with less sugar and with green tea ice cream and raspberry and strawberry in China.

8 Advantages of Global Marketing Programs Economies of Scale in Production and Distribution Uniformity of Marketing Practices Lower Marketing Costs Advantages Ability to Leverage Good Ideas Quickly and Efficiently Power and Scope Consistency in Brand Image

9 Advantages of Global Marketing Programs Economies of scale in production and distribution Manufacturing efficiencies and lower costs that derive from higher volumes in production and distribution. The more that strong experience curve effects exist, the more economies of scale in production and distribution from a standardized global marketing program will prevail. Lower marketing costs Arises from uniformity in packaging, advertising, promotion, and other marketing communication activities. The more uniform, the greater the potential savings.

10 Advantages of Global Marketing Programs Power and scope A global brand profile can communicate credibility. An admired global brand can also signal social status and prestige (e.g. Avis and high-quality services). Consistency in brand image Maintaining a common marketing platform all over the world helps maintain the consistency of brand and company image (e.g. Gillette). Services often desire to convey a uniform image due to consumer movements (e.g. American Express cards and its prestige worldwide).

11 Advantages of Global Marketing Programs Ability to leverage good ideas quickly and efficiently Not having to develop strictly local versions, speeds a brand s market entry. Uniformity of marketing practices A standardized global marketing program may simplify coordination and provide greater control of communications in different countries. By keeping the core of the marketing program constant, marketers can pay greater attention to making refinements across markets and over time to improve its effectiveness.

12 Disadvantages of Global Marketing Programs Differences in Consumer Needs, Wants, and Usage Patterns for Products Differences in Consumer Response to Branding Elements Differences in Consumer Responses to Marketing Mix Elements Differences in Brand and Product Development and the Competitive Environment Differences in the Legal Environment Differences in Marketing Institutions Differences in Administrative Procedures

13 Disadvantages of Global Marketing Programs Differences in consumer needs, wants, and usage patterns for products Differences in cultural values, economic development, and other factors across nationalities lead customers to behave very differently. Product strategies that work in one country may not work in another. Differences in consumer response to branding elements Linguistic differences across countries can change the meaning of a brand name. Sound systems that differ across dialects can make a word problematic in one country but not another (e.g. sexual insult, sacrilegious, impotence etc.).

14 Disadvantages of Global Marketing Programs Differences in consumer responses to marketing mix elements Price sensitivity, promotion responsiveness, sponsorship support, and other activities all may differ by country. These differences can motivate differences in consumer behavior and decision making (e.g. Toyota Corolla). Differences in brand and product development and the competitive environment Products may be at different stages of their life cycle in different countries. The nature of competition also differs.

15 Disadvantages of Global Marketing Programs Differences in the legal environment One of the challenges in developing a global ad campaign is the changing legal restrictions. Venezuela, Canada, and Australia stipulated that commercials had to be physically produced in the native country. Canada banned prescription drug advertising on television. Poland required commercial lyrics to be sung in Polish. Sweden prohibited advertising to children.

16 Disadvantages of Global Marketing Programs Differences in marketing institutions Channels of distribution, retail practices, media availability, and media costs all may vary significantly from country to country. Makes implementation of the same marketing strategy difficult. The penetration of cable television, smart phones, supermarkets, and so on may also vary considerably, especially in developing countries. Differences in administrative procedures It may be difficult to achieve the control necessary to implement a standardized global marketing program. Local offices may resist having their autonomy threatened.

17 Global Brand Strategy Global Customer- Based Brand Equity Global Brand Positioning

18 Global Customer-Based Brand Equity Identify differences in consumer behavior how consumers purchase and use products and what they know and feel about brands in each market. Adjust the branding program accordingly through the choice of brand elements, the nature of the actual marketing program and activities, and the leveraging of secondary associations.

19 Global Customer-Based Brand Equity Global customer-based brand equity To build customer-based brand equity, marketers must: 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.

20 Global Customer-Based Brand Equity Creating brand salience Product introductions in the domestic market are sequential, stretched out over a longer period of time than the nearly simultaneous introductions that occur overseas. Different orders of introduction can profoundly affect consumer perceptions about what products the brand offers, the benefits supplied, and the needs satisfied.

21 Global Customer-Based Brand Equity Crafting brand image One challenge in global marketing is to meaningfully refine the brand image across diverse markets. A desirable brand personality in one market may be less desirable in another.

22 Global Customer-Based Brand Equity Eliciting brand responses Brand judgments must be positive in new markets. Blending inner (enduring and private) and outer (immediate experiential) emotions can be difficult, given cultural differences across markets.

23 Global Customer-Based Brand Equity Cultivating resonance Achieving brand resonance in new markets means that consumers must have sufficient opportunities and incentives to buy and use the product, interact with other consumers and the company itself, and actively learn and experience the brand and its marketing.

24 Global Brand Positioning Because the brand is at an earlier stage of development when going abroad: Awareness and key points-of-parity need to be established first We must revisit the brand positioning in each market How appropriate is the positioning? What changes should we make to the positioning? How should we create this new mental map?

25 Standardization and Customization Centralized marketing strategies that preserve local customs and traditions can be a boon for products sold in more than one country. Product Strategy Communication Strategy Distribution Strategy Pricing Strategy

26 Product strategy Due to the relative expense, many smaller companies tried to sell their products without sufficient market research. As a result, they sometimes became aware of consumer differences only after the introduction of the product. Marketing research reveals that product differences are not justified for certain countries. From a corporate perspective, a solution to the trade-off between global and local brands is to sell both types of brands as part of the brand portfolio in a category.

27 Communication strategy Although the brand positioning may be the same in different countries, creative strategies in advertising may have to differ to some degree. Johnnie Walker Scotch Gatorage in Israel Each country has its own unique media challenges and opportunities. Marketers can execute sponsorship in a global basis. Entertainment and sports sponsorships can be an especially effective way to reach a younger audience.

28 Distribution strategy Lacking many global retail powerhouses, companies often differ in their approach to distribution, and the results can be dramatic. Coca-Cola vending machines in Japan As in domestic markets, firms will often want to blend push and pull strategies internationally to build brand equity (Matel Barbie distribution in China). Sometimes companies mistakenly adapt strategies that were critical factors to success, only to discover that they erode the brand s competitive advantage.

29 Pricing strategy Marketers need to understand in each country what consumer perceptions of the value of the brand are, their willingness to pay, and their elasticities with respect to price changes. Pressures for international price alignment have arisen, in part because of the increasing numbers of legitimate imports and exports and the ability of retailers and suppliers to exploit price differences through gray imports across borders (e.g. Oral B and Gillette in India and China).

30 Developing Vs. Developed Markets BRICS (Brazil, Russia, India, China and South Africa) Most important developing markets They do not yet have the infrastructure, institutions, and other features that characterize more fully developed economies in North America and Western Europe The product category itself may not be well developed

31 Developing Vs. Developed Markets Three As model for emerging markets strategy: Applicability - Product must suit local culture. Heinz ketchup has a slightly sweet taste in the United States, but in certain European countries, it is available in hot, Mexican, and curry flavors. In the Philippines, it includes bananas as an ingredient. Koreans and Brazilians put ketchup on pizza. Availability - Product must be sold in channels that are relevant to the local population. In Indonesia, two-thirds of people buy food in tiny grocery stores or open-air markets, so Heinz must be there. Affordability - Product can t be priced out of the target market s range. To meet consumer budget constraints in emerging markets, Heinz employs different packaging sizes or recipes. In Indonesia, it sells billions of small packets of soy sauce for 3 cents apiece.

32 Figure Ten Commandments of Global Branding

33 To Sum Up Marketers are blending global objectives with local or regional concerns Some of the biggest differences in global marketing occur between developed and developing or emerging markets In entering a new market of any kind, it is necessary to identify differences in consumer behavior and adjust the branding program accordingly

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