Factors that will continue to advantage global brands.
Last year I wrote a three-part Insights article entitled “The Pros and Cons of Going Global” which focused on the research and planning required before moving into foreign markets. In this series, I’ll explore key branding and marketing strategies that have forged the success of international giants like Apple, Starbucks, Ikea, Coca-Cola as well as new startups.
The rise of digital platforms and social media allows even obscure brands to reach global audiences. When a breakthrough product is backed by culturally sophisticated brand marketing, it can become an overnight world-wide sensation.
What do consumers think of global brands?
Some marketers believe growing anti-globalist, populist sentiment requires a rebranding of many international products to make them more appealing to local markets. Of course, this strategy predates the rise of populism. Cultures will always respond differently to brands. Over the years, many organizations have had to revise messaging that in other cultural contexts was experienced as confusing or offensive.
Two of the factors that will continue to advantage global brands–
- Consumers in many developing countries believe global brands offer higher quality and better guarantees than local brands.
- Consumers in economically developed countries like New Zealand and Costa Rica, prefer international brands because they identify as international citizens who aspire to achieve higher levels of quality.
Some cultures continue to prefer local brands, especially in certain categories. In Italy, for example, it’s hard to find a non-Italian restaurant. It will be interesting to see whether Starbucks succeeds in its current push to gain a foothold in that country. In India, over 90% of music and movies are produced within the country, in sharp contrast to American domination of music and movies in most of the world.
Billion-dollar brands provide–
- A compelling, consistent brand promise- BMW promises ‘the ultimate driving experience,’ and L’Oreal, tells women to buy their products “because you’re worth it.” Volvo bases its appeal on its strong commitment to vehicle safety.
- Insight into consumer need- General Mills Cheerios has gained credibility as a healthy breakfast alternative because of its promise to lower cholesterol. Colgate’s “#1 recommended by dentists” convinces consumers that the brand must, therefore, have superior quality.
- Dedication to improving our daily lives- Google’s mission is to make the world’s information universally, immediately accessible. Disney’s continues to deliver wholesome family entertainment.
- Tailored branding- China is now the second largest market for Starbucks, with locations in 90 Chinese cities and employing over 25,000 people. Their stores invest heavily in creating a peaceful, tranquil environment in which families and friends can choose from a wide assortment of teas, coffee drinks, and Chinese deserts. Starbucks management also reaches out to the families of their employees to help them understand various career paths within the organization, etc. Their brilliant marketing relies heavily on social media that reaches more than a half billion potential Chinese customers.
Looking at larger brands, I’ll focus at greater depth on the success of global giants like Apple, Nike, Ikea, Coca-Cola, and other internationally recognized brands.
Lessons learned from Apple vs. Samsung
I outlined key principles of success for global corporations: (1) a compelling, consistent brand promise that resonates cross-culturally; (2) innovative product development strategies; (3) a passion for improving the daily life of customers; and (4) branding that can be tweaked for different cultures and economies.
Benefits of building a successful global enterprise
Going global makes it possible to dramatically expand sales and profits while reducing costs by shifting resources from one region to another, e.g., moving a product to another region where demand exceeds expectations. Also, having regional centers with their own R&D product development and marketing makes it easy to spread one region’s innovation to the entire global enterprise. Most people are unaware that Coke’s successful ‘share a coke’ marketing campaign was first launched in Australia before going global. Other advantages include more efficient procurement, reduced manufacturing costs, and better logistics.
A global organization requires coherent, consistent marketing. However, there needs to be some regional variation in messaging to accommodate different cultures. This is why marketing executives at dispersed international centers normally have the authority to tweak corporate marketing initiatives.
Case history: Apple vs. Samsung
Apple’s rise to become America’s first $700B company is perhaps the most inspiring brand success story in history. Ten years after Apple introduced the iPhone, it remains the world’s most popular premium phone. It took a tremendous investment for Apple to pioneer this revolutionary product.
Samsung, the next major smartphone competitor, had the advantage of modeling their Galaxy phones after the iPhone. Apple’s many court challenges to what they saw as theft of their intellectual property didn’t stop Samsung from developing a competitive product.
In 2012, Samsung introduced the Galaxy S III, their first high-end phone that was comparable to the iPhone. Since then, these two phones have been judged about equal in the range of features and overall quality.
Apple has maintained their competitive advantage by staying true to their original iconic brand image. This allows the company to make a $400 profit on every iPhone it manufactures, a 200% profit margin. Though the iPhone only accounts for 15% of global smartphone sales (21% for Samsung, down from 30% in 2010) this amazing profit margin gives them a big edge. Neither Samsung nor any of the growing number of other smartphone brands is likely to overtake Apple as number one in revenue anytime soon.
Key differences between Apple’s and Samsung’s marketing
- Apple’s Silicon Valley-based executives carefully maintain a consistent global brand image. Regional directors are asked to be ‘creatively consistent’ but never to dilute Apple’s highly successful, established brand messaging.
- Samsung’s marketing, compared with Apple’s, is much more decentralized, encompassing extensive social media outreach and multiple advertising platforms. However, despite Samsung’s bigger investment in marketing, they have found it difficult to make inroads into Apple’s loyal customer base.
- Apple doesn’t have social media accounts, product blogs, or YouTube web series. This would be a deficient strategy for most international companies. However, Apple’s iconic image allows it to focus on periodic carefully crafted marketing campaigns that always focus on customer satisfaction. This reinforces customer loyalty, the ultimate ROI.
Apple now beats Samsung as the favorite brand even in undeveloped emerging markets despite the high cost of their products. This makes it more likely that emerging middle-class customers in third world countries will one day switch to iPhones.
Vision and grit are essential
So to sum up, I outlined four principles of success for global corporations: (1) a compelling, consistent brand promise that resonates cross-culturally; (2) innovative product development strategies; (3) a passion for improving the daily life of customers; and (4) branding that can be tweaked for different cultures and economies while at the same time staying true to corporate identity. I’ll discuss more ‘lessons learned’ by other major global players.
I described the epic marketing competition between the iPhone and Samsung for smartphone dominance. iPhone still comes out ahead, mainly because the platinum Apple brand has succeeded in building unprecedented custom loyalty. –In recent weeks, however, Apple stock has taken a dive. Most analysts believe this is because iPhone buyers have been postponing new iPhone purchases until the widely anticipated fall 2017 release of the iPhone 8, marking the iPhone’s 10-year anniversary.
Of course, there are no long-term guarantees, especially for international tech brands. In 2008, Blackberry accounted for 70% of the market—down to 0% as of 2017. Nokia took a similar hit in the 00’s, but this year is launching a low-end ‘comeback’ smartphone.
Vision and grit
What differentiates successful international brands (local ones, as well) is (1) a clear vision for a breakthrough product or service that serves an unfulfilled human need, and (2) the grit to fight through obstacles to achieve success. –Entrepreneurs who care only about making money usually fail.
Vision and tenacity require the mindset of viewing challenges, even a complete initial failure, as valuable lessons. Such experiences give determined entrepreneurs a surer sense of how to evolve a product, or to move on to something completely different that in time will establish an international customer base. Nokia, for example, began as a wood mill! Coca-cola was conceived in the 19th century as a locally distributed ‘medicine’ (the magic ingredient, cocaine, then completely legal). And, in 1965, when their competitors got suppliers to boycott IKEA, the company began designing and building its own furniture, eventually creating an epic global empire.
Advantages of a compelling corporate brand
An effective corporate branding strategy focuses on its top identifier. For example, P&G, a 50+ multiproduct company has created a strong corporate brand widely recognized for quality and reliability. All products within their portfolio are enhanced by this positive corporate image.
Corporate branding also creates cost-saving efficiencies by integrating product marketing efforts. –At the same time, regional marketing strategies can be adapted to local contingencies. For example, Johnson & Johnson sells its band aids in smaller quantities and at lower margins in developing markets.
3 profiles of global corporate success
When founded in 2008, Airbnb had a hard time convincing people around the world that staying in a stranger’s home was safe. However, CMO Jonathan Mildenhall orchestrated a brilliant social media campaign which focused on themes of ‘belonging’ and international community brought to life by personal stories to build trust between hosts and travelers. Airbnb established a dedicated localization department with global reach to navigate bookings. This has resulted in the company now having 1,500,000 listings in 190 countries.
In the late 20th century, Coca-Cola had to overcome its image in different parts of the world as a U.S. ‘imperialist corporation.’ So in 2000, Coca-Cola introduced its ‘think local, act local’ marketing strategy which successfully aligned the company with universal values like ‘sharing’ and ‘happiness.’ The company has carefully constructed a more international image. For example, during the 2010 and 2014 FIFA World Cups, all of Coca-Cola’s international homepages featured local celebrities and celebration of national cultures. The company also has invested money in various community outreach charity efforts around the world, including less developed countries like Egypt and India.
Nike is similar to other international sports brands in creating marketing campaigns based on hundreds of international sports celebrity and team sponsorships. Nike has also benefitted greatly from modifying their products for different cultural preferences and styles.