Global Brands & Local Markets

Ram Brijesh Pudi ravi krishna

Definition:

• Globalization has been defined in business schools as the production and distribution of products and services of a homogenous type and quality on a worldwide basis.

• Why?

• the fact that foreign sales account for more than 50 per cent of the annual revenues of companies such as Hewlett Packard, IBM, Johnson and Johnson, Mobil, Motorola, Procter & Gamble, etc..

Yesterday’s Globalism

In yesterday’s one-size-fits-all world, big companies could often migrate something that was a hit in the U.S. or Europe by tweaking the language and advertising .

Examples:

• Mercedes-Benz, traded on its reputation for building highly engineered automobiles to drive into foreign markets.

• Coca-Cola Co. and Marlboro cigarettes traded on their “American-ness” to create large overseas followings.

• Sony Corp. found that compact, economical, and reliable electronics like the Walkman, struck a chord with people everywhere.

Today’s Globalism

Things have changed.

No company can safely assume there will be viable foreign markets for an existing product.

Any company seeking to expand globally needs to ask if its offerings are culturally and socially appropriate for its targeted market.

Problems faced by Global brands

Companies find it difficult to succeed in new markets that are culturally unfamiliar.

• They often underestimate differences in the patterns of daily life in the new markets.

• This makes it difficult to develop products and services that fit peoples’ lives,

• It is difficult to extend their brand, and manage culturally diverse teams.

Western companies are now paying a great deal of attention to the growing number of people with expendable income in China, India, and other developing regions where the cultures are very different from those in the West.

Coca-cola : Global is Out, Local is In

• Initial set backs in 80s the benefits of global integration are sought and the need to adapt products to local markets is largely ignored.

• Coke is instituting a strategy of ‘think local, act local’ by putting increased decision making in the hands of local managers.

• Make model citizen by reaching out to the local communities and getting involved in civic and charitable activities.

Better understanding and appealing to local differences.

Disney: Learning to Say Oui Not Yes

Before :• workers were required to speak English, even if most people in attendance

were French.• liquor was not sold in the park, they have a drink with lunch or dinner.• many of the exhibits and rides did not have a local theme, they were the

same as those in Disneyland USA and thus did not appeal to Europeans.

After :• began creating European-specific attractions• Started to serve alcoholic beverages

series of changes, abandoning its global approach, and substituting one that appealed to local tastes.

P&G: Regional Focus and Global Coordination

Procter & Gamble (P&G) with annual sales of almost $40 billion has operations in virtually every country of the world.

Trick:• the firm employs a strategy that combines high national responsiveness

with high economic integration.• strategies being developed and implemented locally and/or regionally. In

particular, product delivery and marketing are local.• the ‘back office’ of payroll, financing, human resource management and

other general services and processes is coordinated on a more global basis, in order to achieve internal economies of scale.

Result:• economic efficiency and localization.

Kingfisher: Where Retail is Detail

The Kingfisher Group, a British retail enterprise with annual sales of over $10 billion, was founded in 1989.

• ‘retail is detail’ and ‘local knowledge is vital.’• The approach that is used in managing these geographically dispersed

operations

How Companies Try to Understand Consumers

Two general types of research that companies use to understand new markets

1. product-focused research: asks consumers through surveys, focus groups, interviews, home visits and usability tests, about existing or prototypical products and services.

2. culture-focused research: uses measures like census-taking and demographic data, to look at general patterns of daily life like value systems, social structures, and relationships among friends and relatives.

Advantages & Disadvantages

The advantage of product focussed research is that • it leads to specific insights about the offering, enabling the company to fix

problems or add features.• It can be fast, practical and can lead to statistically valid conclusions about

important details.• if a prototype of a new offering is being examined by a sample group,

these research techniques can tell you if they hate it – a good thing to know early in the process.

The problem with this type of research is • the results almost never lead to insights about possibilities that could make

large-scale improvements for users. • The insights from focus groups and surveys are almost always limited to

thecurrent expectations of the subjects.

Advantages & Disadvantages

The advantage of culture focussed research is that • A company can learn, for example, that increasing numbers of families

have two people earning salaries, that more people are getting high-school educations, and that people are putting more value on the privacy of their personal information.

• This research will give deep insights into behaviors, beliefs and peoples’ goals, which can be used, in turn, to think about the products a company is planning to launch.

The problem with this type of research is • Findings are seldom specific enough to lead a development team to

improve the offering they are trying to create. • research is time-consuming, and development time for companies only

gets shorter,• this is a difficult research technique to use.

• the product research that is practical but does not lead to new insights• the culture research that leads to major insights that are difficult to apply• Of course, the answer is that companies usually do some of both and hope

for the best.

Activity focussed research• focusing on people’s activities when they are using a product or service a

company wants to develop.

……

• Which market do we want to access.• Take macro and micro data to make a segmentation decisions on these

markets and choose our priorities.• How can we modify our product to make more attractive to each sepate

group: you can change.– Performance levels– Design– Support– Speed of services– Packagining– Positioning– Price?

• Can we position ourselves as being the best where there are many others to choose from?

Tips

• Do not assume an integrated global market. • be prepared to design strategies that take into account regional trade and

investment agreements.• Encourage all your managers to think regional, act local — and forget

global!• Develop new thinking and knowledge about regional business networks

and assess the similar attributes of competitors, rather than always developing pure global strategies.

• The foreign market is not always the same as your home market. • Make alliances and foster cross-cultural awareness.• When global brands target their regional markets using the appropriate

economic integration/national responsiveness, they tend to be successful.

How it will help?

• Planning products and services for culturally divergent markets. • Managing their brand across cultures. • Create and managing teams of culturally diverse employees. •