Reality Check!

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What is the best way to build a global brand?

Nigel Hollis of Millward Brown raises some interesting questions about the virtues of global brands:

”I know, I know. If I wrote a book on the subject, how come I am asking this question? Well, I can tell you what the accepted answer is: find a relevant human motivation, tap into it to create brand appeal that transcends countries and cultures, and adapt to local needs and circumstances when necessary.

But what I cannot tell you is whether this approach will actually make more money than a more localized approach.

The topic came up a few months ago in a phone call with Jim Stengel, former global marketing officer of Procter & Gamble (P&G), and now founder and CEO of The Jim Stengel Company LLC. We were meant to be discussing the content for his upcoming book, but somehow ended up discussing the value of global brands.

We came to the somewhat scary conclusion that neither of us had seen compelling evidence to suggest that global brands actually created more value for their owners, than an equivalent series of local brands. It seems to be an accepted fact that it is worth the time and effort to create a single brand, marketed in a relatively consistent way around the world, but the evidence to support this belief seems partial at best.

There are certainly examples where tapping into a common human motivation has empowered a brand worldwide. The best documented example I have seen, would be Diageo’s Johnnie Walker whisky.

The brand went from fragmented and declining, to consistent and increasingly successful. The case study that won an IPA Award clearly documents the increase in sales and market share realized by the new strategy. But, assuming that these additional sales justify the cost of managing the global strategy, is the return due to a more compelling positioning or its global nature?

I am sure the majority of value was realized from a new and more compelling positioning. But how much was realized from incremental sales that resulted from applying that positioning globally? It is tough to tell.

Sure, there are synergies to be realized from utilizing a common design and packaging around the world, but what about the consumer side of the equation? Is a global positioning somehow more compelling to consumers? It really does depend on the country and the category. It might matter far more to an aspirational whisky than to an everyday soap.

Unilever maintains many global brands, but also markets some “local jewels.” One such is, Hamam, a soap that has been marketed in Tamil Nadu since the 1930’s. Launched in 1931 as a “mild, family soap,” Hamam drew a large following because of its natural ingredients, long before it was trendy or fashionable. In spite of its limited geographic scope, the brand is still strong today and may well be more profitable than its global equivalent (the fact that Unilever has not sold the brand also suggests this might be the case).

One of the primary rationales for creating a global brand is that extending the brand from one country to another is less risky than launching a completely new one. Of course, whether it is more cost effective than buying an existing, successful local brand is questionable.

Admittedly, Vodafone has found that the acquisition strategy can be less rewarding than might be expected, but that has as much to do with the local government and competitive context as the strength of the brand they acquired.

Overall, I suspect the justification for creating global brands rests far more with the management desire to claim they have a global brand, than the financial benefit of owning one. It sounds good no matter how much money it realizes. But maybe I am being too cynical, what do you think?”

 

ons, maj 4 2011 » Opinions & observations

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