Lexicon News
Brands without Borders
Jaimie Seaton, The MarketeerAugust 2004
'THINK GLOBAL ACT LOCAL' has long been the mantra of community-based organizations. Now marketers of global brands are borrowing that mantra and making it their own. Increasingly, the paradigm is shifting from a top-down marketing approach towards one that is more localized. Even the largest conglomerates are empowering their local offices to make marketing decisions 'on the ground'.
When global brands really began to take off, multiplying exponentially in the 1980s and 1990s, many had the field to themselves. They were cowboys galloping across the desert, leaving a trail of dust in the faces of competitors. But slowly the landscape has changed. That dusty desert is now a crowded bazaar, bustling with products from the four corners of the world.
The explosion is evident in almost any super-market aisle in the United States, where shoppers can pick up juice from South Africa, candy bars and cookies for Britain, butter from Ireland, beer from Germany, biscuits from the Netherlands and produce from Israel and Spain. But the United States is not the only bazaar where the world's goods are for sale. Grocery stores in Africa, Asia and Europe increasingly offer a wide array of international brands. In fact, global brands have become so ubiquitous that it's easy to take their success for granted.
But as the Coca-Cola Company recently learned in Britain with their catastrophic launch of Dasani bottled water, branding internationally is not always a sure thing.
No Blueprint
A successful global branding strategy must take into account the brand's corporate identity, the brand name, local market, cultural sensitivities and the political and business landscapes; not to mention competitors and the fickle taste of consumers. It's not an easy terrain to navigate, but if the past decade has seen an escalation in the number of global brands, it has also seen an increase in the number of firms ready to advise companies on every facet of taking a brand to the international marketplace.
And like every great movement, global branding also has some of the best academic minds on the planet pondering its next move. New York's Columbia University Business School is home to the Center on Global Brand Leadership, which brings together academics, brand consultancies and corporations in an exchange of ideas. Based in Manhattan, the Center has a network of centers around the world: at the University of Munich, ESADE in Spain, the University of Hong Kong and Yonsei University in Seoul. A center in Singapore will open later this year.
Given the amount of concentrated brainpower directed at this one activity, one might expect the development of a blueprint companies could follow when taking a brand global.
"Not so", says Schmitt. "There is no simple answer. For each product, the company has to look at the point in time, the customer it wants to reach and then must localize," he explains.
Standardize or Localize
"One of the major issues right now is standardization versus localization. There are many issues coming up that are culture-specific, which put the emphasis on localization. Once companies identify the customer group, they might be able to devise a step-by-step approach," says Schmitt, "but they must start with the customer. If a company takes an imperialistic approach, it is bound to fail." "There is still too much of an internal view at companies," Schmitt complains. "The branding models are totally internally focused. Consultants will go in, talk to top management, and see where they want to take the brand."
Over the past few years, Schmitt says this model has been dismantled to an extent, replaced by one that is more customer-centric.
The second step is to look at the interaction between the company, the desired customer experience and the current economic conditions. For instance, a company may want to do certain things with the brand in order to be culturally sensitive, but it may not be economically feasible.
The third step is to conduct market research. As might be expected, Schmitt say that research is critical. Inadequate research can lead to a host of pitfalls in the global arena. Something as ostensibly simple as naming a brand is laden with a host of intricate issues to be considered. For example, when translating to a language such as Chinese, should the meaning or the sound be translated? And if the sound is translated, do the characters used have a positive or negative connotation?
Schmitt says it's also important to understand the symbolism of colors and numbers. In China red is a lucky color; in the US and UK blue is associated with business. The number 13 is bad luck in the West; in Asia the number 4 is associated with death. The name, colors used in the logo and signage all become the essence of the brand and must be tested.
What's In a Name?
What's in a name? That's a question David Placek is eminently qualified to answer. As founder and president of Lexicon Branding®, Placek has overseen the creation of brand names such as BlackBerry, Pentium and Dasani.
He's also been in the business long enough to be able to say with some confidence that marketing was easier twenty years ago.
"It was certainly easier to name products back then," says Placek. "Brands are instantly global today, whether they want to be or not."
Placek says that the concept of The Global Market is somewhat misleading because products are always created at some local level.
"No one ever came to us and said, '35 people in 35 countries came up with this'. When we talk global, we're really only talking about a few countries, maybe five to fifteen," says Placek.
The issue then becomes, what can we find in common in those countries and what are the differences? How do people in India and Saudi Arabia feel about shampoo, for instance? They are going to have different views. Placek says the trick is in understanding the issues and then transferring the message throughout the cultures.
Conversation and Experience
"It all comes down to conversations", says Placek. "What is the conversation the company wants to have with their customers and what is the conversation the customers should be having with each other? With successful products, you always find customers having good, positive conversations with one another," explains Placek.
It's all about creating an experience. The next step at Lexicon® is translating that experience into a brand name, and that begins with research.
"We say, here's the conversation and experience you want, let's ask the customers how they feel about this," says Placek of his approach with clients. "We then ask what the brand name can do to add immediate value, the day it's launched. The semantics, words used and sound should all bring something to play right away," says Placek.
Unfortunately, if the name isn't vetted in numerous languages, there's a risk that it could create a real faux-pas. That's what nearly happened to Mitsubishi when it brought a popular SUV to the Americas. Luckily, someone noticed that the name of the vehicle, Pajero, is a slang term for self-gratification in Spanish. Needless to say, the name was changed; to Montero, but the company must now shoulder the cost of two sets of marketing materials for the same product.
In order to avoid such expensive snafus, ten years ago Lexicon® developed the GlobalTalk® network. "We have 35 teams in 35 countries and each is coordinated by a PHD linguist who is under contract to us," explains Placek.
Lexicon® staff tap into the linguistic teams throughout the creative process, even with names being developed for brands launched only in the United States. For these, Placek says the company checks Mandarin and Spanish, two widely spoken languages in the US.
Typically, says Placek, brand names are not translated, particularly in Asian countries. Japanese conji is a language that allows users to pronounce English words; in China many brands are transliterated, meaning Chinese characters are chosen which imitate the sound of the brand. But, as Bernd Schmitt pointed out, the characters must also have a positive connotation.
"We translated Pentium to Bentang, which has a similar sound and the characters literally mean, galloping horse. So it worked out perfectly. There's always a little luck to this game," says Placek.
Cultural Sensibilities
Even if the name is perfectly conceived, however, companies can still be tripped up by not paying enough attention to cultural sensibilities. Coca-Cola learned this lesson the hard way when they launched Dasani water (the #2 brand in the US, behind Pepsi-Cola's Aquafina) in Great Britain.
First, consumers learned that the fancy water was actually tap water in an expensive bottle. And then, to add insult to injury, half a million bottles of Dasani were recalled after it was discovered they contained exceedingly high levels of bromate, a chemical that has been linked to cancer. Luck was definitely not on the side of the company in that instance.
Coca-Cola released a statement last spring saying it had no plans to re-launch in Britain, and was postponing its launch in France.
Of the Dasani blunder, Placek (whose company did not handle the launch) says he thinks the cultural issues were not carefully thought through. Noting that Europeans have been drinking bottled water extensively for a long time (especially as compared to the Americans), and that the water in Europe tends to come from springs, Placek says the direct approach might have been more effective.
"It probably would have been more authentic to talk about what Coca-Cola actually does to make the water and why it tastes the way it does. They could say something like, 'we invested X amount of money to create just the right purification system in order to create Dasani'. I think there would have been a percentage of the people who would have responded to that," theorizes Placek.
If Coca-Cola emerged from the UK Dasani debacle with its reputation slightly tattered, it is not alone, according to a study conducted by the market research and consulting firm NOP World (a subsidiary of United Business Media, UK) based in New York.
Researchers in 31 countries conducted face-to-face interviews with 31,000 people between the ages of 13 and 65, and found that recognition of global brands in general is on the decline; and that popularity and consumption of both American and non-American brands has declined for the first time since the research program began in 1998.
In 2002 and 2003, both awareness and use of global brands rose slightly among those surveyed. But in 2004, those numbers began to decline. Though the numbers are small, the sentiment behind them may carry a long-term punch to American brands.
The survey found that the number of consumers who "trust" Coca-Cola had fallen from 55% to 52%, McDonalds went from 36% to 33%, Nike from 56% to 53% and Microsoft fell from 45% to 39%. Likewise, when asked about brands associated with "honesty" the same companies each fell a few percentage points.
Falling trust in global brands
It would be easy blame the Iraq war or Bush's unpopular foreign policy in general as an explanation, but it's more complicated than that, says Tom Miller, Managing Director of NOP World.
"Those things haven't helped but they are not the only factor," says Miller.
"There is long-term resentment about American wealth and success and the fact that the US is the only super-power. Those feelings may be bubbling up, coming to the surface."
What's interesting about the study's findings is that American brands are not the only ones suffering a loss of respect. Non-Americans brands associated with "trust" fell from 48% to 47%; while brands associated with "honesty" fell from 19% to 16%.
Miller points to accounting scandals at companies such as Enron and Parmalat for undermining trust of corporations in the mind of consumers; and predicts it will become a bigger issue down the road.
"The new angle we're working on is the extent to which globalization itself is starting to change. We don't see marketers slowing down their efforts, but it may have happened. Globalization has kind of stalled," says Miller. "In the last year or two, the winds have gone out of global expansion."
Miller says that the swift growth of globalization in the 1990s cast the net wider and wider, into territories such as the former Eastern-bloc countries, Russia and China, resulting in the emergence of national brands. So while globalization in general may be slowing down, in certain markets it is accelerating. "The success of brands from countries like Japan and Korea in the global arena has had the effect of encouraging brands from the same regions. Brands such as Sony from Japan encouraged Korean brands such as Samsung to develop and compete globally." explains Miller.
While noting the rapid development in Southeast Asian markets, Miller says the truly dramatic expansion has been in China and India.
"China has been growing by something like 8% for the past 10 or 20 years. China is huge and moving ahead so quickly, it's astounding. The Chinese brands are coming; they are already growing rapidly in their own country. V-Tech educational toys, for example, is going into new territories. They're one of the early ones, but they'll be a lot more on their heals," foresees Miller.
India has seen a proliferation of software companies and outsourced telemarketing firms in the past years. While not in the retail sector, per se, they are nonetheless part of the global economy, and product brands are sure to follow.
As the 21st century marches forward, China and India will inevitably play an increasingly important role on the global stage. Both countries have strong local brands, many of which are sure to emerge as the super-brands of tomorrow.
For now, all global brands must learn to navigate a constantly shifting terrain. The opening up of new markets can be a boon to sales, but also offer pitfalls for the company that tries to ride roughshod over local cultural expectations, desires and needs as they relate to the brand.