Go Local, Not Global
"Global branding" is a hot topic among marketers. Harvard Professor of Marketing Ted Levitt has been its foremost advocate. The mega-mergers in advertising have in part been predicated on implementing the idea. The problem is that it's a bunch of baloney. Fragmentation, not uniformity, is the real trend to watch in market development, both at home as well as abroad.
Global branding brings to mind the familiar red-and-white Coca-Cola signs and McDonald's golden arches. But they pretty much exhaust the list—and even that short list is deceptive. Coke earned a 60 percent market share in Japan primarily by tailoring products. While the sacred Coke Classic formula was kept intact there, every other drink was changed, to cater to Japanese desires for more lemon-like taste, for example. And in much of Europe, inside McDonald's golden arches you'll find alcoholic beverages, a sharp contrast to the squeaky-clean family image that Ronald McDonald conjures up in the U.S.
I heartily acknowledge that the Coke and McDonald's names are worth a bundle overseas as they are at home, and they should be preserved, protected, and supported by advertising to the hilt. But the product itself, whether high tech or low—and the approach to selling it—must almost unfailingly be tailored.
Pizza Hut provides another case in point. To succeed, it introduced a popular squid topping in Japan, hot jalapenos for Mexico, and in Australia mutton is the favorite. On the high-tech side of the ledger, Kodak altered its film emulsion formula in Japan to portray skin tones that appeal to the Japanese. Computer companies' Japanese success or failure has in part hinged on how rapidly they adopted Kanji character keyboards.
The need to attend to local considerations is even greater for smaller institutions, which don't bring with them the power of longstanding brand recognition. Relatively small Weaver Popcorn, profiled in an earlier column, achieved stunning success in Japan when it responded to the Japanese perception that orange kernels are higher quality than yellow, even though scientific tests show color does not affect taste or quality.
These differences in foreign markets have always existed, though many have ignored them. But the real marketing news is that changing technology and a turbulent competitive scene are causing fragmentation of all markets, not consolidation. It starts at home: Campbell Soup, Frito-Lay and the automobile companies are in the forefront. In early 1986 for instance, Campbell created 22 regional marketing offices in the U.S. It thereby bucked a 50-year tradition of dominance by centralized, all-powerful brand management schemes in packaged goods marketing. Campbell was the first big firm to acknowledge, on a widespread basis, that the concept has become badly outdated. Numerous brand managers now work in the field, with decisive input to product development and control over a growing share of the ad and promotion budgets. Frito-Lay launched a similar initiative, acknowledging not only obeisance to regional tastes, but to a new shift in power sped on by the information technology revolution. Its distributors, grocers, et al, now have timely, localized sales information before Frito does.
Even the pioneer of monolithic brand management, Procter & Gamble, is experimenting vigorously with such decentralized marketing approaches. And the auto companies are the latest to take the plunge. Regionalization of advertising is one step. A Ford vice president recently commented to the New York Times, "You can't go after people [such as young, female, Western buyers] with mass media!" Basic product design is coming to reflect localized tastes, too, with some car models specially tailored to regional preferences.
No company understands the benefits of using novel approaches to cater to localized tastes better than Italy's wildly successful Benetton. In the space of just a few blocks on Fifth Avenue in New York City, one passes several outlets that, other than sporting the familiar Benetton logo, bear little resemblance to one another. Advanced flexible manufacturing is coupled with online computers that record and analyze sales data of each store instantaneously; each neighborhood's stocking levels and style needs—from Eastern Europe to Miami—are accommodated with lightning speed.
On the one hand, going international has never been more important, and no firm is too small to play. But don't be misled by the image of the Marlboro man or slick talk of account execs from a new advertising mega-combine. Increasingly, markets abroad and at home are being won by those who take advantage of fine-grained differences in taste, not by those who attempt to shove what works in Moline down the throats of those in Milan.
Above all, don't forget the obvious. I recently bought an American product in Germany. I didn't know it was American at the time that I purchased it (not a name brand), and I was delighted in retrospect to see a small American firm exporting to quality-conscious Germany. But when I opened the package and prepared to assemble the product, I found to my dismay that the directions were only in English. Can you imagine buying German cutlery or a BMW with directions only in German? Let's at least start by fixing such commonplace show stoppers. Only after such basic gaffes are disposed of should we move on to consider the slippery surrounding global synergy.
(c) 1987 TPG Communications.
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