10 Jul. 2013 | Comments (0)
Consumers cannot distinguish product quality as much as they think they can, and brands are to blame for this. It becomes even more complicated when the image of a country is associated with the product. If someone sold you a pair of shoes made in Italy, it would have connotations of high quality, whereas a precision machine made in Germany may be perceived to be superior to, one made in say, Italy.
China’s GDP is as large as that of the next four largest emerging economies combined (Brazil, India, Russia, and Mexico). China is the world’s manufacturing hub. Yet, the term “made in China” has negative associations. Even though Western consumers are surrounded by products made in China (just think Apple’s products), there is little to no recall of any Chinese brand. J Walter Thompson’s study of U.S. and U.K. consumers demonstrated that Chinese companies ranked near the bottom in consumer perceptions of quality, ethical behavior, and environmental consciousness.
“Branding is not only about differentiating products; it is about striking an emotional chord with consumers. It is about cultivating identity, attachment, and trust to inspire customer loyalty.” This insight comes from Professors Nirmalya Kumar (London Business School) and Jan-Benedict Steenkamp (University of North Carolina) in their latest book, “Brand Breakout – How Emerging Market Brands Will Go Global.”
The country of origin automatically has connotations of six dimensions: quality, innovativeness, aesthetics, prestige, price value, and social responsibility.
Emerging market products are generally associated as low in price point (or cheap). So, how can the emerging markets build their brands to address this problem? The authors suggest eight possible routes:
- 1) Migrate to higher quality and brand premium (Haier, China);
- 2) Leveraging the B2B strength in B2C (Huawei, China);
- 3) Follow the emigrants into the world (Dabur, India);
- 4) Buying global brands from Western multinationals (Tata Motors, India);
- 5) Overcoming negative country of origin association (Chang Beer, Thailand);
- 6) Positioning on positive cultural myths (Havaiana, Brazil);
- 7) Branding commodities in four steps (Natura, Brazil); or
- 8) Leveraging strong support from the state (Emirates Airlines, Dubai).
The place where the framework wobbles is how the authors have defined “emerging economy.” The Economist defines the developed economies as Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and the United States. “Emerging economies” also account for 46% of world retail sales, 52% of all purchases of motor vehicles, and 82% of mobile phone subscriptions.
In 2011, The Economist reported, “Real GDP in most rich economies is still below its level at the end of 2007. In contrast, emerging economies' output has jumped by almost 20% over the same period. The rich world's woes have clearly hastened the shift in global economic power towards the emerging markets.”
To make this transition, organizations need to look at their corporate culture. In the recent book, Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform, the approach taken by Haier in transforming their culture is documented. While the authors have suggested several obstacles to overcome, I believe that in this brand breakout, the companies need to first globalize their top leadership pool and make it more diverse. Remember how so many global brands have fumbled as they first entered the Indian or the Chinese market. The brands have to connect emotionally with the consumers in each market. Only a diverse talent pool can help them create a global brand.
Only then can a brand appeal to the head through its tangible features and to the heart of the consumers through its ability to resonate emotionally to create a “Lovemark.” Lovemarks refer to those brands that reach your heart as well as your mind, creating an intimate, emotional connection that you just can’t live without. These are products and services that not only evoke respect, but also have an emotional connection with the consumer.
Overall, I loved the central idea of the book and the eight ideas on brand building. I wish the authors had not restricted themselves to a marketing framework, but had used the core differentiator of global brands (i.e. their ability to tap and nurture leaders across the globe). Brands are, after all, more about human appeal than just being a product or service with great features. That is the secret sauce – at least for brands from developing markets. Without a diverse talent pool they will not be able to turn their brands into “lovemarks.”
View our complete listing of Strategic HR blogs.