Global Branding Analysis - Essay Example

1 Introduction In an age of globalisation, global brands have penetrated into practically every corner of the earth, every country and neighbourhood within. McDonald's, KFC and Pizza Hut, to name but three examples, may be described as home-grown American brands, founded upon American lifestyles and national food tastes, which have internationalised and achieved a transnational identity. As globally popular as these brands, and numerous others, are, and despite the fact that most of their sales and profits are generated outside of their home markets, there are challenges to their penetration into, and later retention of, foreign markets. Following a definition of the report's key terms, a review of brand management literature, this report will identify those challenges and forward a set of recommendations for their amelioration. 2 Conceptual Definition Despite popular familiarity with the concepts of brand and global brand, it is necessary to provide definitions of either. These definitions will serve the purpose of clarifying the distinction between the two, of highlighting the various components inherent in the constructs and of outlining the purpose of branding. 2.1 Brand Aacker (1991, p. 7) defines the brand concept as follows: a distinguishable name and /or symbol (such as logo, trademark, or package design) intended to identify the goods or services of either one seller or a group of sellers, and to differentiate those goods or services from those of competitors. As indicated in this definition and as confirmed by Kohli and Thakor (1997), brands have two primary purposes. These are the identification of sellers and differentiation from competitors. These two functions are very important since consumers are currently inundated with products which are hardly distinguishable, one from the other. For example, while there may be a clear distinction between KFC and McDonald's, there is hardly such a distinction between McDonald's and Burger King or Hardy's. Brands are important because they impose distinction upon products. As quite clearly indicated in the preceding definition of brands and the function of branding, brands are created through marketing strategies. As several marketing researchers have pointed out, marketing is responsible for the creation of brands and for endowing brands with personalities which the consumer market would find attractive. Brand marketing ensures consumer familiarity with the brand in question and, if successful, incites positive consumer perceptions of the brand in question (Grace and O'Cass, 2002; Steenkamp et al., 2003; Escales and Bettman, 2003; Escales, 2004). In light of the preceding definition and articulation of the functions of branding, it is evident that significant marketing resources enter into the branding process. It is in consideration of the resources which entered into the branding process and consumer familiarity with the brand, that one would tentatively suggest that products should be marketed under a brand. 2.2 Global Brands While certain brands are generally considered as good examples of the global brand, such as Coca-Cola and McDonalds, there are no clearly and formally agreed upon definitions and characteristics of the global brand. Instead, many different definitions of the global brand are provided and used. For example, Aaker and Joachimsthaler (2000, p. 306) define global brands as "brands with a high degree of similarity across countries with respect to brand identity, position, advertising strategy, personality, product, packaging, and look and feel." According to Hankins and Cowking (1996, p. 3), the global brand, "offers consumers across the world, a consistent (i.e., standardized) proposition and the same product formation." Several definitions of the global brand suggest that while scholars consider the term "global brand" to imply a standardised product/branding approach, practitioners are more interested in global availability of the brand/product (Khermouch 2002). More problematic is that there are some contradictions in the application of the concept of the global brand. Some global brands, for example Pepsi-Cola and McDonald's, are known to modify their products to satisfy local preferences. While the flavour of Pepsi-Cola remains similar throughout the globe, its package or container has been modified occasionally to cater the local tastes (Czinkota and Ronkainen 2000). McDonald's, for instance, developed Maharaja Mac, which uses mutton patties instead of beef in India and rye-bread burgers in Finland (Czinkota and Ronkainen 2002). The level of similarity, therefore, is often debated. As indicated in the preceding definition, a global brand is, supposedly, the internationalisation of a local/national brand. In theory, it has the same functions, purposes and implications of national brands. It is, in brief, the geographic expansion of the branding concept. In practice, however, and as also evidenced in the foregoing definitions and explanations, the global brand concept is somewhat misleading because it appears to suggest a homogenous presentation of the brand and a unitary brand personality. This is rarely the case as most brands adjust themselves, as in their image and personality, to the local/national culture within which they are being promoted. It is with this in mind that the question of whether products should be marketed under global brands needs to be asked and answered. 3 Consumer Attitudes towards Global Brands Building upon the foregoing definitions of brands and global brands, this section of the report will critically review and discuss the literature on consumer attitudes towards global brands for the purposes of determining whether or not products should be marketed under a global brand name. Several studies have investigated consumer attitudes toward global brands. Roth (1992) investigated the effectiveness of depth versus breadth strategies for global brand image management. Depth strategies rely only on one image aspect out of three image-components -functional, symbolic, and sensory - while breadth strategies rely on plural aspects from the three. He found that although depth brand image strategies generally yielded better market performance, several market characteristics (country's level of economic development, cultural context, and the competitiveness of the marketplace) affected the effectiveness of brand image strategies. In a second study, Roth (1995) investigated the extent to which managers customized or standardised brand images according to cultural variations and the level of socioeconomic development. While managers could enhance their brand image strategies using cultural and socioeconomic information, he reported that this information was underutilised. A study by Steemkamp et al (2003) is particularly relevant to the question at hand. Steenkamp et al. (2003a) investigated the mechanism of value creation of global brands and found that consumers tend to relate perceived brand globalness with high quality and prestige and consequently these brands may improve the likelihood of consumer purchase. In another study, Steemkemp et al. (2003b) reported that consumers with positive attitudes toward global consumer culture have a positive attitude toward global brands. In direct relation to these studies, it seems that consumers have a positive perception of global brands and believe global brands to have innate value. Accordingly, and as Van Gelder (2007) quite rightly points out, within the consumer market, global brands are, to a significant degree, viewed as synonymous with quality and their purchase and use as prestigious. From within the matrix of this perception, therefore, it seems that products should be marketed under a brand name, or in association with a brand as global consumers tend to trust global brands. Even though he admits to the advantages of marketing products under a global brand, Van Gelder (2007) makes note of the challenges which accompany such a practice. Brand images are supposed to be consistent with the culture which they address and the products which they embrace are expected to fit into the lifestyle advocated by the culture in question. Transposing a brand from one culture to another, or internationalising a brand which had been formulated with a specific culture in mind, can work against the brand products, culminating in their rejected by the market in question (Van Gelder, 2007). The implication here is that despite the advantages of marketing products under a global umbrella brand, possible conflicts between brand image and personality and the culture in question may constrain the product's potential for success. Several studies have sought to examine the proposition forwarded in the preceding: marketing products under a global umbrella brand may work against the product in question. Temporal (2008) strongly agrees with this proposition, warning that if brand images are not internationalised, they will be a constant reminder of the country of origin and, within the parameters of national markets, this can function against the product. Besides the internationalisation of brands, the successful penetration of global brands into national markets is predicated on endowing the brand, and its products, with a local flavour. McDonald's has quite effectively achieved this through the localisation/nationalisation of its products. For example, in India it markets mutton, rather than beef burgers, and in the Middle East, it has added local foods to its menu items, such as the MacFalafel (Temporal, 2008). The nationalisation or localisation of brands is the optimal strategy for global branding. Several studies have reached this same conclusion. Comparing English and Chinese brand names of Fortune-500 companies, Francis, Lam, and Walls (2002) found that the strategy of the majority of firms is to localise their brand names and use transliteration, which is the translation of words in one language into corresponding characters of another language with or without consideration of the meaning. Hong, Pecotich, and Shultz (2002) also recommend use of transliteration for the brand name translation from English to Chinese, especially when introducing an unknown brand, whereas for existing strong brands (i.e., global brands), retaining the original name in the original language can be considered. That is, for some brand names like Coca-Cola, it is expected that Chinese consumers may recognize English alphabets without Chinese transliteration. This set of studies, in direct comparison to those mentioned above, appears to favour global branding without localisation/nationalisation and, by association, support the marketing of global products under global brand names. Another set of studies which investigated the linguistic impact of the brand name on consumers' cognitive processing, arrived at a somewhat different conclusion (Han and Schmitt 1996; Pan and Schmitt 1996; Schmitt and Pan 1994; Schimitt, Pan, and Tavassoli 1994; Zhang and Schmitt 2001; Gregory and Weichmann, 2008). They compared Chinese and English brand names as perceived by Chinese consumers. Since Chinese is ideographic or logographic (i.e., each character has meaning as well as phonetic value), Chinese brand names are perceived differently from English, which is phonemic (i.e., each character has a phonetic value only). They found that Chinese consumers tend to rely on visual processing when they recall information, rather than phonological memory (Schmitt, Pan, and Tavassoli 1994). In addition, they rely more on visual (shape of the characters) and semantic (meaning of the characters) cues for processing Chinese words and more on phonetic (sound of the characters) cues for processing English words (Zhang and Schmitt 2001). Additionally, Chinese brand attitudes are influenced by the match between the meaning of the visual cues (i.e., whether the brand font is considered masculine or feminine) and brand association, while English brand name attitudes are affected by the match between phonetic aspects of the brand and the brand association (Pan and Schrnitt 1996). In sum, it is suggested that the difference in the language structure may affect consumers' cognitive processing and in turn, the processing of the brand name. In other words, brand associations differ in accordance with differences in language and culture. The implication here is that to avoid a misinterpretation of a brand's image, global brands have to adjust to their specific cultural context through small-scale re-branding. Proceeding from the above stated, it is amply evident that there are several advantages to marketing global products under a global brand name. Were one to follow this set of studies, one would strongly recommend product marketing under global brand names. Another set of studies, however, insists that while transnational brands should have a global brand image, if they are not, at the same time, slightly adjusted for a greater fit with the culture in question, they will not perform to their fullest potential. As may be inferred from this set of studies, therefore, products should only be marketed in association with global brand names which have acquired a local market flavour and are, accordingly, consistent with the norms and values of the market in question. Read More