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Part Four The Global Marketing Mix 10 Brand and Product Decisions in Global Marketing MyMarketingLab™ Improve Your Grade! Over 10 million students improved their results using the Pearson MyLabs. Visit mymktlab.com for simulations, tutorials, and end-of-chapter problems. CASE 10-1 The Beatles Story, Liverpool T he global music business is a major industry; annual global sales of recorded music are valued at over $15 billion. Worldwide interest in legendary artists such as Elvis Presley and the Beatles has also led to growth in music-based visitor attractions and music tourism in the United States and the United Kingdom, two countries that are strongly associated with the music and entertainment industries. Elvis Presley’s home, the Graceland Mansion in Memphis, Tennessee, attracts over 600,000 Exhibit 10-1 The Beatles Story is a museum with a permanent exhibition of artifacts, memorabilia, and collector’s items from the lives of the Fab Four in their hometown of Liverpool. With other special exhibitions and learning-oriented programs, the place receives a crowd of 300,000 annually. Source: Tutti Frutti/Shutterstock 314 M10_KEEG7389_08_SE_C10.indd 314 12/03/14 9:33 PM visitors each year. The Beatles Story, Liverpool tells the story of the band from its early days through the height of Beatlemania and attracts large numbers of visitors from all over the world. Fans also visit locations made famous by album covers, such as the iconic crosswalk featured on the album cover of the Beatles’ “Abbey Road” album. These consumers are buying into world famous music brands; they are buying the songs, the experience, and the merchandise; and, in the case of the Beatles and Elvis, they are buying into musical and cultural memories shared by millions of music fans worldwide. The growth and success of the global music industry illustrates the point that products are the most important part of a company’s marketing offering. It is the product, the brand, its packaging, and the services supplied with the product that together meet the needs of the consumer and offer the unique added value that the consumer is willing to pay for. In Part 3, we studied the topics that directly affect product decisions when an organization is formulating a marketing strategy for global markets. Global marketing research information guides the development of products suitable for international markets. The market must be segmented and the global consumer’s profile understood so that appropriate product positioning can be developed. Global marketers also have to make appropriate market entry and distribution decisions to ensure that their product is fully available to the consumer. As we will see in Part 4, every element of the global marketing mix must support and fit with the product. This chapter examines the main aspects of global product and brand decisions. We begin with a review of product and brand concepts, followed by a discussion of how products can be adapted to meet the needs of international markets. The guidelines for global brand leadership are discussed and attitudes towards foreign products are explored. Finally the strategic alternatives in global marketing are identified and new product development processes are discussed. Once you have read the chapter, turn to Case 10-1 at the end of the chapter to learn more about the branding and marketing of the Beatles Story, Liverpool. Learning Objectives 1 Review the basic product concepts that underlie a 4 Outline the importance of “country of origin” as a 2 Compare and contrast local products and brands, 5 List the five strategic alternatives that marketers can successful global marketing product strategy. international products and brands, and global products and brands. 3 Explain how Maslow’s needs hierarchy helps global brand element. utilize during the global product planning process. 6 Explain the new-product continuum and compare and contrast the different types of innovation. marketers understand the benefits sought by buyers in different parts of the world. Basic Product Concepts The product P of the marketing mix is at the heart of the challenges and opportunities facing global companies today: Management must develop product and brand policies and strategies that are sensitive to market needs, competition, and the company’s ambitions and resources on a global scale. Effective global marketing often entails finding a balance between the payoff from extensively adapting products and brands to local market preferences and the benefits that come from concentrating company resources on relatively standardized global products and brands. A product is a good, service, or idea with both tangible and intangible attributes that collectively create value for a buyer or user. A product’s tangible attributes can be assessed in physical terms, such as weight, dimensions, or materials used. Consider, for example, a flat-panel TV with an LCD screen that measures 42 inches across. The unit weighs 22 pounds, is 3 inches deep, features four high-definition media interface (HDMI) connections, has a built-in tuner capable of receiving high-definition TV signals over the air, and delivers a screen resolution of 1080p with a 120 Hz screen-refresh rate. These tangible, physical features and attributes translate into benefits that enhance the enjoyment of watching HDTV broadcasts and DVD movies. Accessories such as wall mounts and floor stands enhance the value offering by enabling great flexibility 315 M10_KEEG7389_08_SE_C10.indd 315 12/03/14 9:33 PM 316    Part 4 • The Global Marketing Mix in placing the set in a living room or home theater. Intangible product attributes, including the status associated with product ownership, a manufacturer’s service commitment, and a brand’s overall reputation or mystique, are also important. When shopping for a new TV, for example, many people want “the best”: They want a TV loaded with features (tangible product elements), as well as one that is “cool” and makes a status statement (intangible product element). Product Types A frequently used framework for classifying products distinguishes between consumer and industrial goods. For example, Samsung offers products and services to both consumers and businesses worldwide. Consumer and industrial goods, in turn, can be further classified on the basis of criteria such as buyer orientation. Buyer orientation is a composite measure of the amount of effort a customer expends, the level of risk associated with a purchase, and buyer involvement in the purchase. The buyer orientation framework includes such categories as convenience, preference, shopping, and specialty goods. Electronics products are often high-involvement purchases, and many shoppers will compare several brands before making a decision. Products can also be categorized in terms of their life span (durable, nondurable, and disposable). Samsung and other electronics companies market products that are meant to last for many years; in other words, they are durable goods. As these examples from the electronics industry suggest, traditional product classification frameworks are fully applicable to global marketing. Product Warranties A warranty can be an important element of a product’s value proposition. An express warranty is a written guarantee that assures the buyer that he or she is getting what he or she has paid for or that provides recourse in case a product’s performance falls short of expectations. In global marketing, warranties can be used as a competitive tool to position a company in a positive way. For example, in the late 1990s Hyundai Motor America chief executive Finbarr O’Neill realized that many American car buyers perceived Korean cars as “cheap” and were skeptical about the Hyundai nameplate’s reliability. The company had made significant improvements in the quality and reliability of its vehicles, but consumer perceptions of the brand had not kept pace with the changes. O’Neill instituted a 10-year, 100,000-mile warranty program that represents the most comprehensive coverage in the auto industry. Concurrently, Hyundai launched several new vehicles and increased expenditures for advertising. The results have been impressive: Hyundai’s U.S. sales jumped from about 90,000 vehicles in 1998 to more than 500,000 vehicles in 2011. Hyundai has also overtaken Toyota as Europe’s best-selling Asian car brand. Packaging Oftentimes, packaging is an integral element of product-related decisions. Packaging is an especially important consideration for products that are shipped to markets in far-flung corners of the world. The term consumer packaged goods applies to a wide variety of products whose packaging is designed to protect or contain the product during shipping, at retail locations, and at the point of use or consumption. “Eco-packaging” is a key issue today, and package designers must address environmental issues such as recycling, biodegradability, and sustainable forestry. Packaging also serves important communication functions: Packages (and the labels attached to them) offer communication cues that provide consumers with a basis for making a purchase decision. Today, many industry experts agree that packaging must engage the senses, make an emotional connection, and enhance a consumer’s brand experience. According to Bernd Schmitt, director of Columbia University’s Center on Global Brand Leadership, “Packages are creating an experience for the customer that goes beyond the functional benefits of displaying and protecting the object.”1 Absolut Vodka, Altoids breath mints, and Godiva chocolates are a few examples of brands whose value proposition includes “experiential packaging.” Brewers, soft drink marketers, distillers, and other beverage firms typically devote considerable thought to ensuring that packages speak to consumers or provide some kind of benefit beyond simply holding liquid. For example, a critical element in the success of Corona Extra beer in export markets was management’s decision to retain the traditional package design, 1 M10_KEEG7389_08_SE_C10.indd 316 Queena Sook Kim, “The Potion’s Power Is in Its Packaging,” The Wall Street Journal (December 21, 2000), p. B12. 12/03/14 9:33 PM chapter 10 • Brand and Product Decisions in Global Marketing    317  which consists of a tall transparent bottle with “Made in Mexico” etched directly on the glass. At the time, the conventional wisdom in the brewing industry was that export beer bottles should be short, green or brown in color, and have paper labels. In other words, the bottle should resemble Heineken’s! The fact that consumers could see the beer inside the Corona Extra bottle made it seem more pure and natural. Today, Corona is the top-selling imported beer brand in the United States, Australia, Belgium, the Czech Republic, and several other countries.2 Coca-Cola’s distinctive (and trademarked) contour bottle comes in both glass and plastic versions and helps consumers seek out the “real thing.” The bottle design dates back to 1916, and was intended to differentiate Coke from other soft drinks. The design is so distinctive that a consumer could even use his or her sense of touch to identify the bottle in the dark! The Coke example also illustrates the point that packaging strategies can vary by country and region. In North America, where large refrigerators are found in many households, one of Coca-Cola’s packaging innovations is the Fridge Pack, a long, slender carton that holds the equivalent of 12 cans of soda. The Fridge Pack fits on a refrigerator’s lower shelf and includes a tab for easy dispensing. In Latin America, by contrast, Coca-Cola executives intend to boost profitability by offering Coke in several different-sized bottles. Until recently, for example, 75 percent of Coke’s volume in Argentina was accounted for by 2-liter bottles priced at $0.45 each. Coke has also introduced cold, individual-serving bottles priced at $0.33 that are stocked in stores near the front; unchilled, 1.25-liter returnable glass bottles priced at $0.28 are available on shelves farther back in the store.3 Other innovation examples include the following: ● ● ● Grey Goose, the world’s top-selling super-premium vodka brand, is the brainchild of the late Sidney Frank. The owner of an importing business in New Rochelle, New York, Frank first devised the bottle design and name. Only then did he approach a distiller in Cognac, France, to create the actual vodka.4 Nestlé’s worldwide network of packaging teams contribute packaging improvement suggestions on a quarterly basis. Implemented changes include a plastic lid to make ice cream containers easier to open; slightly deeper indentations in the flat end of candy wrappers in Brazil that make them easier to rip open; and deeper notches on single-serve packets of Nescafé in China. Nestlé also asked suppliers to find a type of glue to make the clicking sound louder when consumers snap open a tube of Smarties brand chocolate candies.5 When GlaxoSmithKline launched Aquafresh Ultimate in Europe, the marketing and design team wanted to differentiate the brand from category leader Colgate Total. Most tube toothpaste is sold in cardboard cartons that are stocked horizontally on store shelves. The team designed the Aquafresh Ultimate tube to stand up vertically. The tubes are distributed to stores in shelf-ready trays, and the box-free packaging saves hundreds of tons of paper each year.6 Labeling One hallmark of the modern global marketplace is the abundance of multilanguage labeling that appears on many products. In today’s self-service retail environments, product labels may be designed to attract attention, to support a product’s positioning, and to help persuade consumers to buy. Labels can also provide consumers with various types of information. Obviously, care must be taken that all ingredient information and use and care instructions are properly translated. The content of product labels may also be dictated by country- or region-specific regulations. Regulations regarding mandatory label content vary in different parts of the world; for example, the EU now requires mandatory labeling for some foods containing genetically modified ingredients. Regulators in Australia, New Zealand, Japan, Russia, and several other countries have also proposed similar legislation. In the United States, the Nutrition Education and Labeling Act that 2 Sara Silver, “Modelo Puts Corona in the Big Beer League,” Financial Times (October 30, 2002), p. 26. 3 Betsy McKay, “Coke’s Heyer Finds Test in Latin America,” The Wall Street Journal (October 15, 2002), p. B4. 4 Christina Passarielo, “France’s Cognac Region Gives Vodka a Shot,” The Wall Street Journal (October 20, 2004), 5 p. B1. Deborah Ball, “The Perils of Packaging: Nestlé Aims for Easier Openings,” The Wall Street Journal (November 17, 2005), p. B1. 6 Clare Dowdy, “GlaxoSmithKline’s New Toothpaste,” Financial Times (August 11, 2011), p. 8. M10_KEEG7389_08_SE_C10.indd 317 12/03/14 9:33 PM 318    Part 4 • The Global Marketing Mix went into effect in the early 1990s was intended to make food labels more informative and easier to understand. Today, virtually all food products sold in the United States must present, in a standard format, information regarding nutrition (e.g., calories and fat content) and serving size. The use of certain terms such as light and natural is also restricted. Other examples of labeling in global marketing include the following: ● ● ● ● ● Mandatory health warnings on tobacco products are required in most countries. The American Automobile Labeling Act clarifies the country of origin, the final assembly point, and the percentages of the major sources of foreign content of every car, truck, and minivan sold in the United States (effective since October 1, 1994). Responding to pressure from consumer groups, in 2006 McDonald’s began posting nutrition information on all food packaging and wrappers in approximately 20,000 restaurants in key markets worldwide. Executives indicated that issues pertaining to language and nutritional testing would delay labeling in 10,000 additional restaurants in smaller country markets.7 Nestlé introduced Nan, an infant-formula brand that is popular in Latin America, in the American market. Targeted at Hispanic mothers, Nan’s instructions are printed in Spanish on the front of the can. Other brands have English-language labeling on the outside; Spanish-language instructions are printed on the reverse side.8 In 2008, the United States enacted a country-of-origin labeling (COOL) law. The law requires supermarkets and other food retailers to display information that identifies the country that meat, poultry, and certain other food products came from.9 Aesthetics In Chapter 4, the discussion of aesthetics included perceptions of color in different parts of the world. Global marketers must understand the importance of visual aesthetics embodied in the color or shape of a product, label, or package. Likewise, aesthetic styles, such as the degree of complexity found on a label, are perceived differently in different parts of the world. For example, it has been said that German wines would be more appealing in export markets if the labels were simplified. Aesthetic elements that are deemed appropriate, attractive, and appealing in one’s home country may be perceived differently elsewhere. In some cases, a standardized color can be used in all countries; examples include the distinctive yellow color on Caterpillar’s earthmoving equipment and its licensed outdoor gear, the red Marlboro chevron, and John Deere’s signature green. In other instances, color choices should be changed in response to local perceptions. It was noted in Chapter 4 that white is associated with death and bad luck in some Asian countries; when General Motors (GM) executives were negotiating with China for the opportunity to build cars there, they gave Chinese officials gifts from upscale Tiffany & Company in the jeweler’s signature blue box. The Americans astutely replaced Tiffany’s white ribbons with red ones because red is considered a lucky color in China and white has negative connotations (see the Emerging Markets Briefing Book, p. 326). Packaging aesthetics are particularly important to the Japanese. This point was driven home to the chief executive of a small U.S. company that manufactures an electronic device for controlling corrosion. After spending much time in Japan, the executive managed to secure several orders for the device. However, following an initial burst of success, Japanese orders dropped off; for one thing, the executive was told, the packaging was too plain. “We couldn’t understand why we needed a five-color label and a custom-made box for this device, which goes under the hood of a car or in the boiler room of a utility company,” the executive said. While waiting for the bullet train in Japan one day, the executive’s local distributor purchased a cheap watch at the station and had it elegantly wrapped. The distributor asked the American executive to guess the value of the watch based on the packaging. Despite all that he had heard and read about the Japanese obsession with quality, it was the first time the American 7 Steven L. Gray and Ian Brat, “Read It and Weep? Big Mac Wrapper to Show Fat, Calories,” The Wall Street Journal (October 26, 2005), p. B1. Miriam Jordan, “Nestlé Markets Baby Formula to Hispanic Mothers in U.S.,” The Wall Street Journal (March 4, 2004), p. B1. 9 David Kesmodel and Julie Jargon, “Labels Will Say if Your Beef Was Born in the USA,” The Wall Street Journal (September 23, 2008), p. B1. 8 M10_KEEG7389_08_SE_C10.indd 318 12/03/14 9:33 PM chapter 10 • Brand and Product Decisions in Global Marketing    319  understood that, in Japan, “a book is judged by its cover.” As a result, the company revamped its packaging, seeing to such details as ensuring that the strips of tape used to seal the boxes are cut to precisely the same length.10 Basic Branding Concepts A brand is a complex bundle of images and experiences in the customer’s mind. Brands perform two important functions. First, a brand represents a promise by a particular company regarding a particular product; it is a type of quality certification. Second, brands enable customers to better organize their shopping experience by helping them seek out and find a particular product. Thus, an important brand function is to differentiate a particular company’s offering from all other companies’ offerings. Customers integrate all their experiences of observing, using, or consuming a product with everything they hear and read about it. Information about products and brands comes from a variety of sources and cues, including advertising, publicity, word of mouth, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account. The sum of these impressions is a brand image, defined as perceptions about a brand as reflected by brand associations that consumers hold in their memories.11 Brand image is one way that competitors in the same industry sector differentiate themselves. Take Apple and Nokia, for example. Both market smartphones. Former Apple CEO Steve Jobs was a constant media presence and a master at generating buzz; the iPhone, iPad, and other Apple products generally receive stellar reviews for their sleek designs, powerful functionality, and user-friendly features. Apple’s retail stores reinforce the brand’s hip, cool image. By contrast, Nokia’s brand image is more heavily skewed toward technology; few Nokia users are likely to know the name of the company’s chief executive.12 Another important brand concept is brand equity, which represents the total value that accrues to a product as a result of a company’s cumulative investments in the marketing of the brand. Just as a homeowner’s equity grows as a mortgage is paid off over the years, brand equity grows as a company invests in the brand. Brand equity can also be thought of as an asset representing the value created by the relationship between the brand and its customers over time. The stronger the relationship, the greater the equity. For example, the value of global megabrands such as Coca-Cola and Marlboro runs in the tens of billions of dollars.13 As outlined by branding expert Kevin Keller, the benefits of strong brand equity include: ● ● ● ● ● ● ● Greater loyalty Less vulnerability to marketing actions Less vulnerability to marketing crises Larger margins More inelastic consumer response to price increases More elastic consumer response to price decreases Increased marketing communication effectiveness14 Warren Buffett, the legendary American investor who heads Berkshire Hathaway, asserts that the global power of brands such as Coca-Cola and Gillette permits the companies that own them to set up a protective moat around their economic castles. As Buffett once explained, “The average company, by contrast, does battle daily without any such means of protection.”15 That 10 Nilly 11 Landau, “Face to Face Marketing Is Best,” International Business (June 1994), p. 64. Kevin Lane Keller, Strategic Brand Management: Building, Measuring, and Managing Brand Equity (Upper Saddle River, NJ: Prentice Hall, 1998), p. 93. 12 Cassell Bryan-Low, “Apple, Nokia Face Off in UK Music-Phone Clash,” The Wall Street Journal (October 18, 2007), p. B3. 13 For a complete discussion of brand equity, see Kevin Lane Keller, Strategic Brand Management: Building, Measuring, and Managing Brand Equity (Upper Saddle River, NJ: Prentice Hall, 1998), Chapter 2. 14 Kevin Lane Keller, Strategic Brand Management: Building, Measuring, and Managing Brand Equity (Upper Saddle River, NJ: Prentice Hall, 1998), p. 93. 15 John Willman, “Labels That Say It All,” Financial Times—Weekend Money (October 25–26, 1997), p. 1. M10_KEEG7389_08_SE_C10.indd 319 12/03/14 9:33 PM 320    Part 4 • The Global Marketing Mix “There is a strong local heritage in the brewing industry. People identify with their local brewery, which makes beer different from detergents or electronic products.”16 —Karel Vuursteen, chairman, Heineken protection often yields added profit because the owners of powerful brand names can typically command higher prices for their products than can owners of lesser brands. In other words, the strongest global brands have tremendous brand equity. Companies develop logos, distinctive packaging, and other communication devices to provide visual representations of their brands. A logo can take a variety of forms, starting with the brand name itself. For example, the Coca-Cola brand is expressed in part by a word mark consisting of the words Coke and Coca-Cola written in a distinctive white script. The “wave” that appears on red Coke cans and bottle labels is an example of a nonword mark logo, sometimes known as a brand symbol. Nonword marks such as the Nike swoosh, the three-pronged Mercedes star, and McDonald’s golden arches have the great advantage of transcending language and are therefore especially valuable to global marketers. To protect the substantial investment of time and money required to build and sustain brands, companies register brand names, logos, and other brand elements as trademarks or service marks. As discussed in Chapter 5, safeguarding trademarks and other forms of intellectual property is a key issue in global marketing. Local Products and Brands A local product or local brand is one that has achieved success in a single national market. Sometimes a global company creates local products and brands in an effort to cater to the needs and preferences of particular country markets. For example, Coca-Cola has developed several branded drink products for sale only in Japan, including a noncarbonated, ginseng-flavored ­beverage; a blended tea known as Sokenbicha; and the Lactia-brand fermented milk drink. In India, Coca-Cola markets Kinely brand bottled water. The spirits industry often creates brand extensions to leverage popular brands without large marketing expenditures. For example, Diageo PLC markets Gordon’s Edge, a gin-based ready-to-drink beverage in the United Kingdom. Allied Domecq created TG, a brand flavored with Teacher’s Scotch and guaraná, in Brazil.17 Local products and brands also represent the lifeblood of domestic companies. Entrenched local products and brands can represent significant competitive hurdles to global companies entering new country markets. In China, for example, a sporting goods company started by Olympic gold medalist Li Ning sells more sneakers than global powerhouse Nike. In developing countries, global brands are sometimes perceived as overpowering local ones. Growing national pride can result in a social backlash that favors local products and brands. In China, a local TV manufacturer, Changhong Electric Appliances, has built its share of the Chinese market from 6 percent to more than 22 percent by cutting prices and using patriotic advertising themes such as “Let Changhong hold the great flag of revitalizing our national industries.” White-goods maker Haier Group has also successfully fought off foreign competition and now accounts for 40 percent of China’s refrigerator sales. In addition, Haier enjoys a 30 percent share of both the washing machine and air conditioner markets. Slogans stenciled on office walls delineate the aspirations of company president Zhang Ruimin: “Haier—Tomorrow’s Global Brand Name” and “Never Say ‘No’ to the Market.”18 In 2002, Haier Group announced a ­strategic alliance with Taiwan’s Sampo Group. The deal, valued at $300 million, called for each company to manufacture and sell the other’s refrigerators and telecommunications products both globally and locally. International Products and Brands International products and international brands are offered in several markets in a particular region. For example, a number of “Euro products” and “Euro brands” such as Daimler’s two-seat Smart car are available in Europe; the Smart was recently launched in the United States as well (see Case 10-2). The experience of GM with its Corsa model in the early 1990s provides a case study in how an international product or brand can be taken global. The Opel Corsa was a new model originally introduced in Europe. GM then decided to build different versions of the Corsa for China, Mexico, and Brazil. As David Herman, chairman of Adam Opel AG, noted, “The 16 John Willman, “Time for Another Round,” Financial Times (June 21, 1999), p. 15. 17 Deborah Ball, “Liquor Makers Go Local,” The Wall Street Journal (February 13, 2003), 18 p. B3. John Ridding, “China’s Own Brands Get Their Acts Together,” Financial Times (December 30, 1996), p. 6; Kathy Chen, “Global Cooling: Would America Buy a Refrigerator Labeled ‘Made in Quingdao’?” The Wall Street Journal (September 17, 1997), pp. A1, A14. M10_KEEG7389_08_SE_C10.indd 320 12/03/14 9:33 PM chapter 10 • Brand and Product Decisions in Global Marketing    321  original concept was not that we planned to sell this car from the tip of Tierra del Fuego to the outer regions of Siberia. But we see its possibilities are limitless.” GM calls the Corsa its “accidental world car.”19 Honda had a similar experience with the Fit, a five-door hatchback built on the company’s Global Small Car platform. Following Fit’s successful Japanese launch in 2001, Honda rolled out the vehicle in Europe (where it is known as Jazz). Over the next few years, Fit was rolled out in Australia, South America, South Africa, and China. The Fit made its North American market debut in 2006. Global Products and Brands Globalization is putting pressure on companies to develop global products and to leverage brand equity on a worldwide basis. A global product meets the wants and needs of a global market. A true global product is offered in all world regions, including the Triad and in countries at every stage of development. A global brand has the same name and, in some instances, a similar image and positioning throughout the world. Some companies are well established as global brands. For example, when Nestlé asserts that it “Makes the very best,” the quality promise is understood and accepted globally. The same is true for Gillette (“The best a man can get”), BMW (“The ultimate driving machine”), GE (“Imagination at work”), Harley-Davidson (“An American legend”), Visa International (“Life takes Visa”), and many other global companies (see Exhibit 10-2). Former Gillette CEO Alfred Zeien explained his company’s approach as follows: A multinational has operations in different countries. A global company views the world as a single country. We know Argentina and France are different, but we treat them the same. We sell them the same products, we use the same production methods, we have the same corporate policies. We even use the same advertising—in a different language, of course.20 Zeien’s remarks reflect the fact that Gillette creates competitive advantage by marketing global products and utilizing global branding strategies. Gillette reaps economies of scale associated with creating a single ad campaign for the world and the advantages of executing a single Exhibit 10-2 In French (“La perfection au masculin”), German (“Für das Besteim Mann”), Italian (“Il meglio di un uomo”), Portuguese (“O melhorpara o homem”), or any other language, Gillette’s trademarked brand promise is easy to understand. Source: KARIM SAHIB/AFP/Getty Images 19 Diana 20 Kurylko, “The Accidental World Car,” Automotive News (June 27, 1994), p. 4. Victoria Griffith, “As Close as a Group Can Get to Global,” Financial Times (April 7, 1998), p. 21. M10_KEEG7389_08_SE_C10.indd 321 12/03/14 9:33 PM 322    Part 4 • The Global Marketing Mix brand strategy. By contrast, Peter Brabeck-Letmathe, the former CEO of Nestlé, has a different perspective: We believe strongly that there isn’t a so-called global consumer, at least not when it comes to food and beverages. People have local tastes based on their unique cultures and ­traditions—a good candy bar in Brazil is not the same as a good candy bar in China. Therefore, decision making needs to be pushed down as low as possible in the organization, out close to the markets. Otherwise, how can you make good brand decisions? A brand is a bundle of functional and emotional characteristics. We can’t establish emotional links with consumers in Vietnam from our offices in Vevey.21 Whichever view prevails at headquarters, all global companies are trying to increase the ­visibility of their brands, especially in key markets such as the United States and China. Examples include Philips with its “Sense and simplicity” global image advertising and Siemens’ recent “Siemens answers” campaign. In the twenty-first century, global brands are becoming increasingly important. As one research team noted: People in different nations, often with conflicting viewpoints, participate in a shared conversation, drawing upon shared symbols. One of the key symbols in that conversation is the global brand. Like entertainment stars, sports celebrities, and politicians, global brands have become a lingua franca for consumers all over the world. People may love or hate transnational companies, but they can’t ignore them.22 These researchers note that brands that are marketed around the world are endowed with both an aura of excellence and a set of obligations. Worldwide, consumers, corporate buyers, governments, activists, and other groups associate global brands with three characteristics; consumers use these characteristics as a guide when making purchase decisions: ● ● ● Quality signal. Global brands compete fiercely with each other to provide world-class quality. A global brand name differentiates product offerings and allows marketers to charge premium prices. Global myth. Global brands are symbols of cultural ideals. As noted in Chapter 7, marketers can use global consumer culture positioning (GCCP) to communicate a brand’s global identity and link that identity to aspirations in any part of the world. Social responsibility. Customers evaluate companies and brands in terms of how they address social problems and how they conduct business (see Exhibit 10-3). Note that a global brand is not the same thing as a global product. For example, personal stereos are a category of global product; Sony is a global brand. Many companies, including Sony, make personal stereos. However, Sony created the category 30 years ago when it introduced the Walkman in Japan. The Sony Walkman is an example of combination or tiered branding, whereby a corporate name (Sony) is combined with a product brand name (Walkman). By using combination branding, marketers can leverage a company’s reputation while developing a ­distinctive brand identity for a line of products. The combination brand approach can be a powerful tool for introducing new products. Although Sony markets a number of local products, the company also has a stellar track record as a global corporate brand, a creator of global products, and a marketer of global brands. For example, using the Walkman brand name as a point of departure, Sony created the Discman portable CD player and the Watchman portable TV. Sony’s current global product brand offerings include Bravia brand HDTVs, CyberShot digital cameras, PlayStation game consoles and portables, and the Xperia Z smartphone. Co-branding is a variation on combination branding in which two or more different company or product brands are featured prominently on product packaging or in advertising. 21 Suzy Wetlaufer, 22 “The Business Case Against Revolution,” Harvard Business Review 79, no. 2 (February 2001), p. 116. Douglas B. Holt, John A. Quelch, and Earl L. Taylor, “How Global Brands Compete,” Harvard Business Review 82, no. 9 (September 2004), p. 69. M10_KEEG7389_08_SE_C10.indd 322 12/03/14 9:33 PM chapter 10 • Brand and Product Decisions in Global Marketing    323  Exhibit 10-3 Nucor is a steel company best known for its pioneering use of the minimill. Minimills produce steel by melting scrap in electric arc furnaces. This process is much more efficient than that used by traditional integrated steel producers. Nucor uses print and online media for an integrated general branding campaign featuring the tagline “It’s our nature.” The campaign is designed to raise awareness about the company’s stance on a variety of issues, including the environment, energy conservation, and the importance of creating a strong corporate culture. Source: Nucor Properly implemented, co-branding can engender customer loyalty and allow companies to achieve synergy. However, co-branding can also confuse consumers and dilute brand equity. The approach works most effectively when the products involved complement each other. Credit card companies were the pioneers, and today it is possible to use cards to earn frequent-flier miles and discounts on automobiles. Another well-known example of co-branding is the Intel Inside campaign promoting both the Intel Corporation and its Pentium-brand processors in conjunction with advertising for various brands of personal computers. Global companies can also leverage strong brands by creating brand extensions. This strategy entails using an established brand name as an umbrella when entering new businesses or developing new product lines that represent new categories to the company. British entrepreneur Richard Branson is an acknowledged master of this approach: The Virgin brand has been attached to a wide range of businesses and products (www.virgin.com). Virgin is a global brand, and the company’s businesses include an airline, a railroad franchise, retail stores, movie ­theaters, financial services, and health clubs. Some of these businesses are global, and some are local. For example, Virgin Megastores are found in many parts of the world, whereas Virgin Rail Group and Virgin Media operate only in the United Kingdom. The brand has been built on Branson’s shrewd ability to exploit weaknesses in competitors’ customer service skills, as well as his flair for self-promotion. Branson’s business philosophy is that brands are built around reputation, quality, innovation, and price rather than image. Although Branson is intent on establishing Virgin as the British brand of the new millennium, some industry observers wonder if the brand has been spread too thin. Branson’s newest ventures include Virgin America Airlines and Virgin Galactic. The history of the Sony Walkman illustrates the fact that it is up to visionary marketers to create global brands. Initially, Sony’s personal stereo was to be marketed under three brand names. In their book Breakthroughs!, Ranganath Nayak and John Ketteringham describe how the global brand as we know it today came into being when famed Sony Chairman Akio Morita realized that global consumers were one step ahead of his marketing staffers: At an international sales meeting in Tokyo, Morita introduced the Walkman to Sony ­representatives from America, Europe, and Australia. Within 2 months, the Walkman was introduced in the United States under the name “Soundabout”; 2 months later, it was on sale in the United Kingdom as “Stowaway.” Sony in Japan had consented to the name changes because their English-speaking marketing groups had told them the name “Walkman” sounded funny in English. Nevertheless, with tourists importing the Walkman from Japan and spreading the original name faster than any advertising could have done, Walkman became the name most people used when they asked for the product in a store. Thus, M10_KEEG7389_08_SE_C10.indd 323 12/03/14 9:33 PM