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obal Brand Strategy_ Unlocking Brand Potential Across Countries,

Cultures

Description

Global Brand Strategy: Unlocking Brand Potential Across Countries,

Cultures & Markets by Sicco van Gelder Kogan Page © 2003

ISBN:0749440236

This book provides a rigorous analytical framework that can be used comparatively across markets to reveal the factors that are most significant to particular types of brands

Table of Contents Global Brand Strategy—Unlocking Brand Potential Across Countries,Cultures & Markets Preface Introduction Part I

Chapter 1

Chapter 2

Chapter 3

Part II

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Part III

Chapter 9

Chapter 10

Back Cover In Global Brand Strategy,

Sicco van Gelder tackles this central issue head on

He shows how both global and local brand management need to agree on a common basis for their brand strategy and planning

Drawing on his extensive experience,

he has created a unique framework—the Global Brand Proposition Model—which enables them to analyse their brand’s sensitivity and vulnerability to specific internal and external influences across a multitude of diverse markets and societies

The model,

which combines the strategic planning cycle with the brand environment,

provides a powerful and practical tool that can be applied both globally and locally

Following the structure of the model,

and filled with reallife global examples and case studies,

the book comprises three parts

Part I shows how to undertake an internal analysis,

Part II looks at the external analysis,

and Part III covers the central issues of global brand strategy,

such as: taking a brand global

About the Author Sicco van Gelder runs a Netherlands-based global branding consultancy called Brand Meta

The company is based on his deeply held belief that brands play a key role in creating value for organizations and their various stakeholders

He is also a co-founder of Placebrands,

a firm dedicated to helping cities,

regions and countries define their purpose and achieve their full potential

Sicco has previously held senior international research and consultancy positions with leading companies in Asia and Europe

He has lived,

worked and traveled across four continents,

and his exposure to their great diversity has helped him to develop his understanding of and sensitivity to differing cultural,

His current work consists of advising and assisting his clients in their global and local brand analysis

He works closely with a client’s brand teams to conduct internal and external analyses and consult with global and local management

Sicco’s role is typically one of providing the analytical framework,

facilitating workshops and consultation sessions,

and advising on strategic options

Sicco has also contributed to Beyond Branding (Kogan Page),

a book that challenges businesses to adopt new ways of meeting the needs of stakeholders and to operate with openness and integrity

Global Brand Strategy—Unlocking Brand Potential Across Countries,Cultures & Markets Sicco Van Gelder London and Sterling,

VA To Helga,

David and Joost,

for their love First published in Great Britain and the United States in 2003 by Kogan Page Limited

Apart from any fair dealing for the purposes of research or private study,

as permitted under the Copyright,

Designs and Patents Act 1988,

this publication may only be reproduced,

with the prior permission in writing of the publishers,

or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA

Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road London N1 9JN UK 22883 Quicksilver Drive Sterling VA20166–2012 USA www

Designs and Patents Act 1988

ISBN 0 7494 4023 6 British Library Cataloguing-in-Publication Data ACIP record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data Van Gelder,

cultures and markets / Sicco Van Gelder

Includes bibliographical references and index

ISBN 0-7494-4023-6 1

Brand name products--Planning

Brand name products--Marketing

Brand name products--Management

Export marketing

I Title

B7V357 2003 658

Printed and bound in Great Britain by Creative Print and Design (Wales),

Ebbw Vale

Acknowledgements When I started work on this book,

various people asked me why I wanted to write a book on branding,

an area already so cluttered with titles

There was clearly nothing that had not been written already on the subject,

and what hope did I have of adding anything of consequence

been trying to find books that did not deal with global branding as an academic or elevated pursuit,

or in a one-size-fits-all manner

The thing I felt was missing was a book that considered global branding in a practical way without unduly reducing the complexity of the subject matter

My own experience,

as a commercial researcher and consultant to global and international clients and as a geographer by training,

had taught me that no two brands and no two countries are ever the same,

and that it takes persistence,

honesty and creativity to do branding well across multiple geographies,

That same experience taught me about the factors that determine whether one gets global branding right or not

This understanding,

acquired through years of talking to and listening to people talk about specific brands,

forms the foundation of this book

Alot of additional reading,

and even more pondering about what I had heard,

read and had seen in the world around me,

Creating this book has been a demanding task,

my head spinning frequently from trying to put the words together that would make sense to others,

but it has been well worth the time and effort

I believe that,

although far from being perfect,

this book does meaningfully increase the knowledge about global branding

I want to express my deepest gratitude and love to my wife Helga for her patience and unwavering support during the two years that it took me to write this book

I would not have been able to complete this personal project without it

My deepest appreciation also extends to both our parents who have lovingly given up their own time to look after our children week after week

My father deserves a separate mention for reviewing and commenting on practically every incarnation of this manuscript

I am also extremely grateful to Guus and Rik at Groenholland who so graciously offered me a place to work and all manner of office conveniences

My thanks also extend to all other people at Groenholland who have provided me with assistance and a chance for conversation

There are a number of people who have reviewed my (all but) final manuscript and have provided their commentary to help improve it

I want to thank them wholeheartedly for their valuable time and counsel

They are Simon Anholt,

Nicholas Ind,

Chris Macrae and Jack Yan

Preface Globalization was the battle cry of the last decade of the 20th century

This phenomenon is not new or unique to this period

In the 19th century,

colonialism was a potent force of globalization and created a multitude of cross-border trading links

For the first time,

goods bearing a brand name were sent abroad in large quantities

Many of the cross-border trade links bearing branded goods,

were limited to directly neighbouring countries and to the countries’ colonial empires: British brands found their way to India,

French branded goods to Indochina and Dutch brands to the Netherlands’ East Indies

The reasons for exporting these branded goods lay in the demand that existed in the foreign markets for quality goods – especially among the colonial populations – and the ability of manufacturers to produce goods at a low enough unit cost to be able to transport their wares halfway around the world

This was the effect of mechanization of both the means of production and transportation,

and resulted in low marginal costs for each additional unit produced and shipped

The next big spur for globalization came after the Second World War when,

often in the wake of US military forces,

new consumer brands came to Europe and Asia

The difference with the colonial era was that although these were foreign brands,

production facilities were largely located in the markets that they served,

as were the companies’ subcontractors

The reasons for arranging matters in this way were that because of increased affluence among the general populations in Western Europe,

and urban areas in East and South-east Asia and Latin America,

there was such a demand that a local presence became not only affordable but also necessary

Branding also became very much a local phenomenon,

as the local representatives were responsible for marketing the brand

The third big push for branding came in the wake of the erosion and subsequent demise of communism

The fall of the Berlin Wall opened up previously inaccessible markets to foreign brands,

not just in Eastern and Central Europe,

but also markets that had previously been off-limits due to political sensitivities,

such as Chile and South Africa

However the biggest impetus came from the opening up of China,

which is not only a massive market,

but also a massive production location for US,

Japanese and European brands

Deregulation of markets has allowed for flexible production and has led to increased competition

Spurred on by logistical and IT developments,

manufacturers constantly seek configurations that best suit their production needs

This has lead to a fragmentation of once monolithic company structures

Branding has become separated from other company functions

The closure of local production facilities often also leads to company management questioning the need for supporting brands locally

These developments have put pressure on companies to rationalize their international brand portfolios,

to harmonize their international brands,

to co-brand or even merge with other global brands

The effect that this intensified globalization has had on brands has been spectacular

New brands are seemingly born global,

or at the very least experience a quick roll-out from home or lead countries into other markets

Many traditionally local brands are sold,

or face transition to a new regional or global brand name and subsequent harmonization

Brand portfolios that have been built up through decades of acquisitions are rationalized in order to focus attention and resources on a limited number of strategic brands

Long-established brands have enhanced their dominant positions across the globe,

threatening less marketing-savvy local brands,

but are also encountering stern opposition from local brands that find ways to fight back

Some of the global brands manage to become local institutions by filling a local role in the societies where they operate,

while others dominate their category as global monoliths

Debates have also flared over the supposed supremacy of global brands and the inadequacy of (multi-)local brands

In his seminal manifesto for global brands,

a 1983 Harvard Business Review essay entitled ‘The globalization of markets’,

Levitt argues that consumers across the globe are becoming more alike,

require the same mass-produced products at reasonable prices,

and that brands should not bother with adapting to local

needs and cultural preferences

Levitt’s prime example is the way Japanese car manufacturers were able to trounce European and American car makers in the 1980s because of their lean production technologies

The Japanese were able to produce better cars at lower cost,

something that American and European consumers were happy to lap up

However,

the past decade has shown the adoption of lean manufacturing and quality control have made non-Japanese car makers competitive again and that,

excitement and so on have become of primary importance

The rather bland Japanese cars have not been able to keep up,

and their market share has slipped

This book argues that Levitt’s conclusions that consumers are becoming more similar are incorrect

Far from homogenizing,

markets have fragmented over the past decade,

and people around the world have asserted their local identities and idiosyncrasies

This has happened not despite,

As people interact more with the outside world,

they become increasingly sophisticated in their attitudes and behaviours,

not content to take foreign brands at face value

This book also argues that each individual global or international brand has specific opportunities and limitations when it comes to standardization or localization

Only a thorough understanding of a variety of factors that influence brands in their global and local contexts helps determine the best course for them

Sense and Sensitivity One of the key issues facing the management of brands today is how to deal with a brand as it stretches across multiple societies and geographies

This is not just a question of management scope (How do we control and monitor the brand

but of reaching the full potential of a brand in diverse markets

There is often a tension between finding an optimum fit of the brand with local circumstances,

and the desire to obtain brand consistency across markets

More often than not,

decisions are made on the basis of organizational constructs rather than on the basis of an understanding of the brand and the various internal and external influences on it

This leads to tensions between global and local brand management that can result in power struggles about the ownership of the brand

Instead,

global and local brand management need to understand each other’s viewpoints on the brand and the resulting need for adaptations,

the possibilities for obtaining sustainable competitive advantage,

and the opportunities for standardization

In the end,

a compelling brand is in the interest of all those affected by it

The first thing that global and local brand management need is a common basis for their brand strategy and planning work

This common basis needs to provide a shared language,

and most importantly a clear understanding of the relationships between the factors that shape a brand in its global and local contexts

The past decade has seen the increasing popularity of brand standardization among brand management

Brand standardization can reap huge benefits in terms of economies of scale: centralized production,

increased leverage over distribution partners,

one advertising campaign across markets,

the same brand extensions everywhere,

reductions in brand management staff and so on

This has made brand standardization into brand management’s holy grail

For many brand managers,

their brands can only be considered truly global if they are the same in every aspect everywhere

In reality,

this leaves precious few brands to claim such a title

Brand management started asking questions such as ‘Should all brands be standardized across markets

‘In how many markets must a brand be present to be considered global

and ‘How much revenue must a brand generate before you consider it to be a global brand

At the same time other voices emerged lambasting global brands for their detrimental effects on the environment,

on workers in developing countries,

on the mental well-being of children,

Global brands are being portrayed as the epitomes of degradation,

Anti-globalization activists started asking questions such as ‘Are global brands forces of destruction in the Third World

‘Should local brands be protected in order to defend local culture

and ‘How can global brands be stopped

these are the wrong questions to ask

In fact,

Anholt (2003) claims that

developing countries do not need to be the victims of globalization

If they can learn to use the classic richnation tricks of branding and marketing,

they can turn the forces of global markets to their advantage

What then are the right questions to ask

? This book rests on the premise that each brand has its own specific potential for standardization across and adaptation to culturally and structurally diverse markets

One of the right questions to ask is,

‘How can a brand best provide value to its stakeholders,

those (directly) affected by the brand,

?’ Do consumers value the brand enough to buy and use it

? Do employees value it enough to want to work for it

? Do distributors value it enough to carry it

? Do shareholders value it enough to invest in it

? Do communities value it enough to welcome it in their midst

? Who these stakeholders are and how they relate to each other may differ by brand and also by location where the brand is present

As for those critical of global brands,

this book agrees with them that transgressions have taken place in the name of brands

On the one hand,

to blame branding for these wrongdoings is to overestimate the role of this discipline in most global corporations

How many branding experts do you find on the boards of Fortune 500 companies

it is to misunderstand the discipline

This book considers branding to be a deeply humanistic discipline seeking to connect the various processes of an organization,

in order to get people to rally around the purposes and principles of the brand and provide unique value to stakeholders

This book focuses on how the unique characteristics of a brand can best be extended across societies by understanding that brand’s sensitivity or vulnerability to particular factors,

both internal and external to the brand’s organization

Although each brand is unique,

it is possible to categorize brands in a manner that helps us to understand to which factors certain types of brands are most susceptible

This kind of understanding is useful not only to all those corporate managers eager to make a success of their brand around the globe,

but also to those who are responsible for a local brand that is faced with seemingly better endowed global competitors

In fact,

this kind of knowledge can be useful to everyone with a vested interest in particular brands,

non-governmental organizations (NGOs),

local communities and even anti-globalization activists

In this book,

global brands are defined rather loosely as brands that are available across multiple geographies,

without setting any specific lower limit or any continental requirements

The revenue these brands generate also does not matter,

nor does the manner in which they present themselves in each society

The term ‘global’ is used in this book as shorthand for brands with varying degrees of globalness

Some may be present in dozens of countries across all continents,

while others may be active only in a more regional setting

Although it would be possible and worthwhile to address the brand from the perspective of various stakeholder groups,

this book focuses squarely on the perspective of consumers

In the end,

it is they who decide whether they value a brand enough to spend their time and money on it

addressing each type of stakeholder perspective is outside the scope of this book

Readers are encouraged to use their own judgement when applying the thinking presented here to stakeholder groups other than consumers

Introduction The Strategic Planning Cycle Defining a brand is not something that is generally left to chance

Abrand is a construct and not a living and breathing organism,

as some would have us believe,

and as much of the language employed in branding,

including some of the terminology in this book,

Brands are created,

stimulated and applied by people working in organizations seeking to create worthwhile experiences for their customers that will induce behaviour beneficial to the organization

This calls for some careful preparations and planning

The various stages of the strategic planning cycle are shown in Figure 0

Figure 0

The Business Strategy The strategic planning for a brand starts with an understanding of an organization’s business strategy

Strategizing for business is not something that is exclusive to the business world

Not-for-profit organizations also have a need for this type of activity,

particularly those that are dependent on donations from the general public

The business strategy is aimed at achieving particular consumer behaviour

Only if consumers actually purchase,

pay a higher price or donate (more) will the objectives of a business strategy be met

These objectives may include a larger market share,

higher margins and increased shareholder value

Brands are designed to persuade consumers to exhibit the behaviour that will make these objectives come true for the organization

the influence of business strategy upon brand strategy is direct and compelling

The Brand Expression It is the task of brand management to translate the business strategy into a brand expression

Most brand managers usually consider this to be ‘the brand’ without fully realizing the influences on the brand as it winds its way towards the consumer

However,

the brand expression does contain the materials with which brand managers are able to shape their brand

It is imperative to obtain a good understanding of one’s ammunition,

to determine what kind of battles can be fought with the brand

This means getting a complete view of all the elements of the brand expression,

then choosing which to use and emphasize in the brand’s manifestations

It is important to realize that these manifestations do not consist merely of advertising and promotions,

but that they encompass the full experience that consumers have of the brand

Finally Marketing The marketing mix in its turn aims to translate the brand expression into actual products or services,

to be sold at specific outlets,

to be promoted through specific communications activities and channels,

and to be supported by a specific service

The influence of the marketing policy is indirect,

in that the correct translation of the brand into the marketing mix determines whether consumers are provided with the correct experience of the brand

The marketing implementation consists of the actual production and delivery of the products and services,

their accompanying messages to consumers,

and the actual product or service experience

The implementation eventually determines whether consumers experience what the brand strategy sets out to provide

The marketing implementation may make or break a brand at the moment that is of most importance to consumers: for instance when they actually experience the brand through advertising,

It Does Not End There Having translated the business strategy into the brand expression,

which in turn has guided marketing activities,

brand management would seem to have done its job

Managers could be forgiven for leaning back and waiting for well-deserved acclaim to erupt

However,

all the hard work put into devising and executing the brand may still flounder on the perception of the brand among consumers

Much of the central argument in this book focuses on how brand perception is influenced not only by the policies and actions of the organization,

but also by the lenses through which consumers observe these activities

Understanding which lenses affect the consumer perception of a particular type of brand helps brand management to determine the brand’s potential among consumers in a particular market

The subsequent brand recognition is far more than simple awareness of the brand

It is rather the way in which consumers discriminate (or not as the situation may be) between the brand and competitive brands

In addition,

it consists of how consumers see the relationships between the brand and other brands

Other brands may be part of the same organization (such as a master brand or extension brand),

but can also be brands that are related through partnership,

co-branding or as a branded element

These forms of brand recognition are also considered by consumers through particular lenses that need careful consideration

Finally,

the brand must be appreciated by consumers to such an extent that they happily part with their money and are satisfied in the process

If this is the case,

such behaviour will generally fulfil the business strategy

However,

the organization’s management will likely see the results as the basis to reassess the assumptions,

policies and activities to try to improve performance in one way or another

This starts off a new cycle of planning

The Brand Environment More factors influence a brand than the business strategy and the subsequent efforts of the organization and its affiliates to bring about the brand,

as described in the previous paragraph

A brand operates in an environment consisting of,

the elements of the strategic planning cycle,

consumer motivation and media attention: the lenses and filters through which consumers perceive and experience the brand

These factors combined constitute the brand environment (see Figure 0

Figure 0

Factors That Influence The Brand The brand environment consists of the brand itself – expression,

perception and recognition – surrounded by internal and external factors that have an influence on the brand

Only by taking these factors into consideration can management understand the entire brand proposition,

and how it is affected in different markets

Some factors affect some brand elements more than others,

some types of brands are more sensitive to particular factors,

and the effect may vary according to markets and consumer segments

The problem facing brand managers is how to unravel all these elements and turn their insight into policies that will unlock the full potential of their brand in a particular market,

and across multiple markets at the same time

This requires a common framework that can be used across markets in order to obtain equivalence of brand analysis

A framework ensures not only that global brand management talks the same brand language and follows the same procedures as local brand management,

but also that it becomes clear which internal or external factors are uniquely influencing to particular societies or even segments of societies

Global and Local Brand Management Global brand management needs to understand how various markets compare on these issues in order to determine how best to manage the brand globally

Determining communalities and differences in business strategy,

brand expression and marketing provides insight into the extent to which the organization’s policies and activities regarding the brand diverge,

as well as the causes and rationale for divergence

Doing the same for the situational factors,

the brand perception and the brand recognition provides an understanding of the extent to which the brand is perceived differently across markets,

and what causes these differences

A complete analysis offers brand management an appreciation of the core elements of the brand,

and perceived around the world

This type of information forms the basis for shared strategizing and planning for the branding process by global,

regional and local brand management

Decisions regarding brand extensions,

alliances and acquisitions depend on a thorough understanding of a brand and its environment

The Global Brand Proposition Model This book introduces a unique framework for equivalent and comparable brand analysis across multiple markets and societies,

the global brand proposition model (see Figure 0

The model combines the strategic planning cycle with the brand environment into an analysis tool that can be applied both globally and locally

It allows global and local analyses to be linked together seamlessly

The model consists of two main parts,

an internal analysis and an external analysis

Figure 0

The Internal Analysis The internal analysis is essential for gaining an understanding of how the brand’s global and local organizational constructs shape the brand expression or multiple brand expressions,

Issues such as business strategy,

the brand’s significance to the organization and the relationships between global and local brand management teams all play a role in shaping brand expression elements

These individual elements,

The way the brand defines its advantages over competition,

its legacy and principles and its character have a specific influence on issues such as product and service development,

delivery and supply chain management

Most important is to gain an understanding on how well these processes connect up in order to provide consumers with the required brand experience

Although there is a certain hierarchy between the processes analysed,

it may well transpire that a requirement in a lower order process compels a change in a higher order process

For example,

to realize a specific brand expression may require a rethink of the organizational structure by which the brand is managed

The External Analysis The external analysis focuses on how local conditions act as lenses through which consumers – or particular consumer segments – observe the brand,

and how these circumstances affect consumers’ understanding of the brand by itself,

and in relation to other brands

Specific situational factors affect brand perception elements in a particular manner,

thereby influencing brands that are perceived as being especially adept at individual elements

The resulting brand recognition relates the perception of the brand to those in its environs,

both competitive brands and related brands,

either brands within the same organization or others that provide enhancement to the brand

The findings from the external analysis provide new input for the internal analysis

The analysis of the brand perception,

provides a starting point for further strategic planning

As the brand perception holds the meaning and significance of the brand to consumers,

it is the main area that global and local brand management will want to influence

As a result,

the model functions as a constant and consistent feedback loop

Each iteration of the process will help refine or redefine global and local brand propositions

The Road Map This book largely follows the structure of the global brand proposition model

This helps the reader to understand the flow of the analysis process,

and also clearly defines the setting of the analysis

However,

this book is not intended as a manual on how to do global brand strategy

Rather,

the intention is to provide the reader with an understanding of the issues he or she is faced with when dealing with a brand in a global context

In addition,

the book provides insight into the connections between various business processes and their subsequent interpretation by consumers,

viewing these activities from their own local standpoints

Part I: The Organization,

Brand Expression and Marketing The first part of this book discusses the internal analysis,

and consists of three chapters dealing with the global branding context,

and the analyses of the organization,

the brand expression and marketing

This section examines globalization and its impact on branding,

as well as how organizations shape their brands through their policies,

An appreciation of how these differ between global and local brand management,

and vary from country to country,

lays the foundation for a global brand strategy

The Preface provides a short discussion of the phenomenon of globalization: the increasing economic,

regulatory and political interaction between societies across large parts of the globe

This process is not new,

but the pace at which globalization develops certainly intensified during the final decades of the past century

The impact of globalization on branding has been profound,

and debates about both the assumed superiority and supposed immorality of global brands have flared

This book holds that neither globalization nor branding are inherently good or bad,

and that each brand has its own particular potential for extending across countries,

Chapter 1 delves into the organizational issues relevant to global brand strategy,

the internal conventions and the internal brand legacy

The business strategy is broken down into its inspiration,

justification and substantiation elements

The inspiration of the business strategy consists of a view on the future of the business in terms of vision,

The justification of the business strategy is concerned with its goals and the soundness of the strategic reasoning

The substantiation of the business strategy deals with the resources,

competencies and motivation required to realize the strategy

The internal conventions of an organization can be summed up by the oft-heard phrase ‘That’s how we do things around here’

Internal conventions have to do with the organization’s culture,

These conventions can be formalized through policies and diagrams,

but are often non-formalized beliefs,

Finally,

the internal brand legacy determines how the brand is regarded by the organization: who founded the brand,

its milestones and its role for the organization

Chapter 2 discusses the brand’s expression,

and introduces three brand constructs that enable management to mould the brand,

brand identity and brand personality

This trio can be considered the prime materials for shaping the manifestation of the brand

Positioning is about being different and better than the competition

Identity is what the brand stands for and where it comes from

Personality is what the brand wants to be liked for

These constructs will differ between brands in terms of their availability and richness,

and for the same brand they may also differ between countries

essential that the brand expression that is created is congruent with the objectives of the business strategy

Chapter 3 is the last chapter in this section,

with marketing being the final activity an organization undertakes to set the brand loose on the public

This chapter deals with the policy making of marketing as well as its execution

Both are essential to generate the required consumer experience and the subsequent behaviour that the business strategy set out to achieve

Both marketing planning and the implementation deal with the products or services that are offered by the brand,

However,

the distinction between the two activities is that defining the marketing mix still largely deals with intangibles,

while implementation makes the offer concrete to consumers

At these so-called customer touch points,

the brand experience is brought to life

Both marketing policy and implementation can differ from region to region and from country to country because of local circumstances,

and thus affect the brand’s manifestations

Part II: Conventions,

Brand Perception and Brand Recognition The second part of the book considers the external analysis

In other words,

it looks at what happens to the brand once it is set loose on the public

A brand’s management can have painstakingly devised a brand expression and can have methodically managed the marketing,

planning and execution activities,

still to find that the brand is not understood by consumers as was intended

The same brand may be perceived in totally different ways by consumers around the globe,

because of various local circumstances

It is therefore imperative for brand management to know how the brand is perceived,

what external factors are affecting the brand,

and what this means for fulfilling the brand’s potential

This is generally the most demanding part of global branding,

and getting it right can mean the difference between success and failure

This section,

goes into quite a lot of detail

It considers the factors that are outside the direct control of global and local brand managers,

but that they can try to understand and learn to work with

In many ways this is the core section of the book,

because it describes and analyses the parameters within which the brand’s potential can be unleashed

The extent to and the manner within which this can be achieved are unique to each and every brand

Nevertheless,

there are sufficient communalities to allow us to identify the external factors that impact most on particular types of brands

This part of the book contains five chapters

Chapter 4 introduces three kinds of situational factor that brand management will encounter in any marketplace,

needs and cultural conventions

These conventions are discussed in considerable detail to assist the reader in understanding them

The effects of these conventions on the various elements of the brand perception are discussed in the next three chapters

Chapter 5 examines the brand domain,

the perceived offer to consumers by the brand in terms of what goods and services the brand provides,

how it communicates with consumers,

where the goods and services can be obtained,

and what solutions the brand provides to consumers

Chapter 6 considers the brand reputation,

or the way consumers perceive the brand’s background,

its achievements and the company the brand keeps

Chapter 7 examines the brand affinity,

or the motivations of consumers for feeling an attachment to or affection for the brand

This affinity can be based on various kinds of binding factor,

ranging from purely practical efficacy to arousing sentiments and passions rooted in national pride,

Chapter 8 deals with the resulting brand recognition,

with a discussion on how a brand relates to competing and non-competing brands in the eyes of consumers

Part III: Typical Global Brand Strategy Issues The first two sections of the book are – by necessity – rather preparatory,

because it is imperative to identify and understand all the issues that go into developing a global brand strategy,

as well as to appreciate how these aspects interact to ultimately shape a brand experience for consumers

The last part of this book attempts to illustrate the use of the global brand proposition model with typical global brand strategy issues

Chapter 9 looks into the difficulties of taking a brand global,

discussing the issues that brand management faces when introducing a brand in one or more foreign countries

Chapter 10 examines the issue of harmonizing a global brand,

dealing with the opportunities and difficulties that accompany the (partial) standardization of a brand in multiple countries

Chapter 11 considers how to extend a global brand,

examining the concerns surrounding the introduction of product and service extensions to an existing global brand

Finally,

Chapter 12 deals with the issues of creating a global brand from scratch,

examining how new global brands are created,

This last part of the book demonstrates how the unique approach described in this book can be applied to a number of typical strategic global brand management issues

In practice,

the situations will inevitably differ from the ones described in these chapters

However,

the purpose of this section is to familiarize the reader with the methodology and illustrate its application

Part I: The Internal Analysis Chapter List Chapter 1: The Organization Chapter 2: The Brand Expression Chapter 3: Marketing Mix and Implementation

Chapter 1: The Organization Introduction Not only is a brand the property of an organization,

it is also an integral part of the organization in the sense that it impacts on and is impacted by the policies,

history and character of the organization

The organizational influences on the brand are both direct and indirect

As discussed in the previous chapter,

the business strategy has a direct bearing on the brand,

as the brand seeks to translate the objectives of the strategy into consumer experiences

Other direct and indirect organizational influences on the brand are internal conventions and the internal legacy of the brand

The internal conventions consist of the organizational status quo,

which can be summed up by the oft-heard expression ‘that is how we do things here’

The brand’s internal legacy is formed by the stories about the brand’s inception and its (historic) role for the organization

These three areas – business strategy,

internal conventions and internal legacy – are the subjects of this chapter

It is not the intention to examine the way in which these three areas are formed,

In principle,

the brand expression should follow from what is there

However,

a revision of these organizational elements may result from a brand strategy process

Rather,

this chapter aims to provide a brand’s management with tools to understand the effects of business strategy,

internal conventions and internal brand legacy on the brand

Business Strategy A brand is the translation of the business strategy into a consumer experience that brings about specific consumer behaviour

This means that a proper understanding of the business strategy is imperative to any brand development work

It does not necessarily mean that brand management must be involved in the formulation of business strategy

Business strategy and brand strategy can be formulated separately,

depending on the degree of their integration

For example,

the business strategy and brand of Cisco Systems are so entwined – everything revolves around the Web – that it is difficult to distinguish where one ends and the other begins,

while for the Mars Corporation it is clear where the business strategy ends and the individual Mars (the candy bar) brand strategy commences

Whatever the situation,

it is still imperative that the business strategy and brand strategy are aligned in order to create value for the organization’s stakeholders,

and specifically its customers

Business strategy contains a number of elements that need to be examined in the process of brand strategy development

These elements are the inspiration for the business strategy (what the organization’s future looks like),

the justification of the strategy (what we want and why will it work),

and the substantiation of the strategy (what we need to do to achieve it)

These three elements are summarized in Figure 1

Figure 1

Inspiration To understand business strategy,

we start by examining its inspirational elements,

mission and ambition that underpin the long-term view of the business

The board or management of the organization generally formulates these inspirational elements

The inspirational elements are important as they provide the perspective on the future of the organization from those who are ultimately responsible for the brand

The inspirational elements provide guidance to the business strategy,

and consequently the entire strategic planning cycle

The three inspirational elements can be described as follows: Vision is developed to provide a business with a point of view on the future of its sector or category for a number of years to come

Typical questions to be asked are ‘What are anticipated major technological,

economic and regulatory developments

?’ and ‘Who are the anticipated major players in the market and what are their positions in terms of their rank,

the segments they serve and their strengths and weaknesses

?’ Visions seldom turn out to be accurate,

and they should not be considered as predictions or prophecies

Their main function is to set the stage for strategic thinking,

and they are useful because they provide the perspective within which to understand the business strategy

A mission is the stated sense of purpose for an organization

Typical questions to be answered are ‘Who

and why and how do we want to serve them

?’ and ‘Where are we trying to get to as an organization

?’ Defining a mission entails management providing leadership and defining concrete indications of what stakeholders can expect from the company

Hamel and Prahalad (1994) lament that most mission statements of large industrial corporations are interchangeable,

and therefore offer no sense of destiny to these organizations

These authors introduce the notion of strategic intent as a goal that demands the respect and allegiance of every employee

Such a concept combines mission and ambition,

Ambition is a statement of what the organization aspires to

This may involve a desire to be the dominant player in an industry,

to be recognized as the most desirable in a category by consumers,

to be available in more countries than any competitor,

or to be considered the most socially responsible corporation

Whatever the aspiration,

it is important that this ambition is based on the notion of providing value to stakeholders and is not just a management pipedream

Justification To take the understanding of the business strategy a step further it is essential to determine what the strategy actually sets out to accomplish,

and whether there is sufficient logic as to how this will be achieved

This is a concrete conversion of the inspirational elements of the strategy into actual strategic objectives and a strategic rationale

Strategic Objectives The strategic objectives ultimately need to define what the organization wants to achieve in terms of changed consumer mind-set and behaviour,

and what needs to be done by the organization to bring these changes about

The strategic objectives must meet the following criteria: They must follow from the strategy’s inspirational elements

For example,

the strategic inspiration may call for an organization to become the dominant player in a particular category,

based on a vision of imminent technological discontinuities that will change the way consumers interact with the suppliers in that category

They should specifically describe the consumers’ attitude change to be brought about

An example of such an objective is the desire to be seen as a company that helps specific consumer segments extract the full value of technological developments

They ought to be specific as to the subsequent behaviour expected from targeted consumers,

in relevant terms such as trial,

The objectives must be specific as to their magnitude: proportion of consumers whose mind-set is changed,

share of consumers who will try the product or service,

Obviously these objectives need to be attainable and need to be set within a certain realistic time frame

The objectives also need to include a description of the activities that the organization plans to deploy in order to meet them

This includes time frames for research and development,

distributor development and the like

In the case of a global brand there are also decisions about the roll-out in multiple countries: will there be a lead country,

will the process start with a phased roll-out,

or will there be a big bang across all countries

Strategic Rationale It is important that the reasoning behind a business strategy is sound

This means that the cause and effect chains that underpin the strategy are logical and probable

Rangan and Adner (2001) describe seven strategy

which they apply to the Internet

Six of these also hold true for global brands

First mover advantage,

which is based on the idea that the order of players’ entry into a market is positively correlated with the odds of adoption by consumers

New global brands thus try to perform a kind of ‘land grab’ on a global scale in order to pre-empt competition

The misconception lies in the fact that being first is not the same as being the best (that is,

being most valued by consumers)

With switching costs for consumers low and falling in most categories and in most markets,

the first mover advantage alone is unlikely to an offer compelling rationale for global brands

which rests on the premise that a firm’s potential customers are often distributed in heterogeneous rather than homogeneous segments

This means that consumers belong to so many segments at the same time that it becomes important to be able to embrace more consumer heterogeneity,

or go after as many consumers as possible

Thus new global brands try to address consumers around the world to maximize growth

Unfortunately,

as a brand tries to address this multitude of consumers,

it will have more and more difficulty in defining a brand proposition that ‘fits’ with these consumers

Solutions provider,

or the logic that specific products and services can be complemented by additional products and services

The idea is that once a consumer has purchased one product or service he or she will be game for complementary products or services provided under the same brand name

A strategy based on this assumption may conflict with the required focus for the global brand at its inception

Partner leverage,

which is about capitalizing on or creating a market opportunity by combining own-firm resources and capabilities with those of other firms

This can take the form of co-branding or component branding,

whereby some of the meaning of one brand is transferred onto the other

The problem with the strategy premise is that it aligns two firms’ activities,

but often fails to align their interests

As one brand does not have control over the other,

this strategy can be very risky

The ‘born global’ myth,

which is the mistaken belief that as media (satellite television,

all new brands must be global too

This strategy does not take into account that national and cultural borders embody real discontinuities,

which are not easily eliminated

The satellite television stations most watched and the Web sites most visited are strictly local and with local content

Technology as strategy driver,

which holds that technology is the benefit,

rather than the purveyor of particular benefits to consumers

As this technology is universal,

it must be appealing to consumers all over the planet

This is the trap that Iridium strayed into when it decided that (business) consumers would be willing to pay a hefty premium to own technology that would give them a phone in their hand wherever they are or choose to be

There is one more misconception that seems to drive the strategy of global brands,

and that is the one about global consumer segments,

also known as horizontal markets (as opposed to country or industry-specific vertical markets)

Kinnear (2000) defines horizontal markets as those based on common needs among consumers

Such a needs-based consumer segment can provide an organization with a multi-country market that offers sufficient potential,

as opposed to several local markets with insufficient potential for a brand

The problems with this approach centre on defining common needs among consumers in various countries

Needs that are in essence similar may actually vary significantly in the way they need to be addressed

In practice many brands do not target needs-based segments,

but rather segments that are believed to share common needs

An example of such a fallacy is the idea that young people around the world,

being exposed to similar events,

must form one almost homogenous mass of youngsters with the same needs,

There is no doubt that young people in many modern societies share superficialities,

but this idea overlooks the fact that these people have been formed in their own particular cultures and at local institutions

Substantiation

To achieve the strategic objectives,

it is necessary to determine what the organization has in store to realize these

Three aspects play an important part here,

namely the competencies and the resources available to the organization,

and the motivation among management and employees to achieve the objectives

Competencies The competencies of an organization are the shared skills,

technologies and talents that its management and employees must be able to apply to achieve the objectives of the business strategy

This entails having a clear understanding of the portfolio of competencies available to the organization and those that need to be acquired through research and development,

strategic partnerships or acquisition

Hamel and Prahalad (1994) define a core competence as ‘a bundle of skills and technologies rather than a single discrete skill or technology’

A core competence enables an organization to provide a particular benefit or value to customers

Core competencies can encompass areas such as miniaturization,

service demeanour and story telling

A core competence must meet three tests: It must make a disproportionate contribution to consumer-perceived value

It must be competitively unique

This mainly means that the skills and technology involved must not be ubiquitous to a category or industry

It must be extendable to other new products or services

Resources Not only must an organization have the capabilities to execute a business strategy,

it must also have sufficient and the right kind of resources,

such as human and financial resources,

facilities for research and development,

It must be clear that there are resources available and that management are willing and able to allocate them to meet the strategic objectives

Obviously,

resources are always limited and they need to be used efficiently and creatively

Motivation Finally,

the business strategy must be driven by the enthusiasm of management and staff alike

Even if all the above-mentioned elements of the business strategy are in place,

lacklustre execution will still make it fail

It is therefore imperative to gauge whether the inspirational elements of the strategy spring not only from the intellect of those who formulate them,

but also from a passion for their business

these inspirational themes need to be understood and supported by the employees of the organization

In the same manner,

it is crucial to understand the depth of belief attached by management to its strategic objectives and strategic rationale

Finally,

it is important to determine whether the allocation of competencies and resources to the strategic objectives adds to or detracts from the employees’ enthusiasm for the organization that they serve

As Herzberg (1987) observed,

motivation does not stem from primary and secondary working conditions – what he termed hygiene factors – but rather from issues such as achievement,

advancement and the nature of the work people do

Clearly,

the better motivated an organization is to fulfil the business strategy,

the better the chances are of translating it into an effective and worthwhile brand

Internal Conventions A brand is not only affected by business strategy,

it is also governed by conventions internal to the organization

These internal conventions are best summarized by the comment,

‘That’s how we do things around here

’ Such conventions can seriously circumscribe the brand expression and limit it to what is internally acceptable

Internal conventions can restrict a brand’s manifestations,

its distribution and its character development

Cultural Web Johnson and Scholes (1993) describe internal conventions,

what they term a cultural web,

consisting of key factors surrounding a paradigm (see Figure 1

The par