The Lure of Global Branding

See below for an excerpt of Erich Joachimsthaler and David Aaker’s article published in the Harvard Business Review: 

As more and more companies come to view the entire world as their market, brand builders look with envy upon those that appear to have created global brands—brands whose positioning, advertising strategy, personality, look, and feel are in most respects the same from one country to another. It’s easy to understand why. Even though most global brands are not absolutely identical from one country to another—Visa changes its logo in some countries; Heineken means something different in the Nether-lands than it does abroad—companies whose brands have become more global reap some clear benefits.

Consider for a moment the economies of scale enjoyed by IBM. It costs IBM much less to create a single global advertising campaign than it would to create separate campaigns for dozens of markets. And because IBM uses only one agency for all its global advertising, it carries a lot of clout with the agency and can get the most talented people working on its behalf. A global brand also benefits from being driven by a single strategy. Visa’s unvarying “worldwide acceptance” position, for example, is much easier for the company to manage than dozens of country-specific strategies.

Attracted by such high-profile examples of success, many companies are tempted to try to globalize their own brands. The problem is, that goal is often unrealistic. Consolidating all advertising into one agency and developing a global advertising theme—often the cornerstone of the effort—can cause problems that outweigh any advantages. And edicts from on high—“Henceforth, use only brand-building programs that can be applied across countries”—can prove ineffective or even destructive. Managers who stampede blindly toward creating a global brand without considering whether such a move fits well with their company or their markets risk falling over a cliff. There are several reasons for that.

First, economies of scale may prove elusive. It is sometimes cheaper and more effective for companies to create ads locally than to import ads and then adapt them for each market. Moreover, cultural differences may make it hard to pull off a global campaign: even the best agency may have trouble executing it well in all countries. Finally, the potential cost savings from “media spillover”—in which, for example, people in France view German television ads—have been exaggerated. Language barriers and cultural differences have made realizing such benefits difficult for most companies.

Second, forming a successful global brand team can prove difficult. Developing a superior brand strategy for one country is challenging enough; creating one that can be applied worldwide can be daunting (assuming one even exists). Teams face several stumbling blocks: they need to gather and understand a great deal of information; they must be extremely creative; and they need to anticipate a host of challenges in execution. Relatively few teams will be able to meet all those challenges.

Third, global brands can’t just be imposed on all markets. For example, a brand’s image may not be the same throughout the world. Honda means quality and reliability in the United States, but in Japan, where quality is a given for most cars, Honda represents speed, youth, and energy. And consider market position. In Britain, where Ford is number one, the company positioned its Galaxy minivan as the luxurious “nonvan” in order to appeal not only to soccer moms but also to executives. But in Germany, where Volkswagen rules, Ford had to position the Galaxy as “the clever alternative.” Similarly, Cadbury in the United Kingdom and Milka in Germany have preempted the associations that connect milk with chocolate; thus neither company could implement a global positioning strategy.

Click here to read the full article.