Digital “shitstorms” threaten brands all over the world if they hurt religious feelings, offend minorities or break political taboos through negligence. In some growth markets around the world, this risk is significantly higher than in Europe or the US because of greater cultural and religious diversity and countless local sensitivities, so that the number of stumbling blocks is greater from the outset. According to the Duden, a “shitstorm” is a “storm of indignation in a medium of communication on the Internet, sometimes accompanied by insulting statements”.
Think Mobile: The “great migration” from traditional PCs to mobile devices has created a completely new universe. The numbers are breathtaking. In mid-2017, China officially had 1.36 billion mobile Internet subscribers, which was more than one device for every adult. Smartphones are widely used to interact with brands. Over 500 million Chinese made purchases online with their smartphones last year. In India, one in four consumers is already making online purchases. With 480 million smartphone users, mobile consumption has already become the biggest driver in e-commerce.
When Western chambers of commerce in China describe their local market environment in annual reports, terms such as “regulatory environment”, “reforms” and “fair competition” are often included. These words reflect the fact that even after four decades of market-oriented reforms, the state still largely controls the economy. India, Russia and Mexico are hardly any different. Two-thirds of A-Share companies on China’s stock exchanges are either purely state-owned or state-controlled companies. And even private companies in China often have strong unofficial ties to the government. The government still plays a key role at all levels and has the final say in many strategic industries, from pricing and regulation to investment planning. There is practically no way around the Chinese government.
Compared to Western “network citizens”, Internet users in emerging countries are usually younger, more active and have a high degree of confidence in product ratings from friends and family. For most of them, the digital world is an escape from crowded family homes and an affordable way to explore the world. For many companies in growth markets, social media have replaced television as the most important communication channel for marketing. In many cases, social media have become the biggest sales drivers. The availability of different social channels enables cross-media campaigns that greatly improve direct interaction between brands and their customers.
People in international growth markets usually tweet, like, upload and share information much more intensively than consumers in Europe or the US. In the digital sphere, where most of them were socialized, they communicate not only about their personal lives, but also about products, brands and companies. Digital media have a great influence on how they act, communicate and make purchasing decisions. This is not only due to digital socialization, but also has political reasons, for example the limited freedom of print media in China. China and India have become real epicenters of the explosive growth of the digital world. The biggest growth opportunities in e-commerce, the most widely used apps and the world’s leading social platforms – including extensive brand information – can be found there.
Brand schizophrenia can confuse consumers in local target markets. As a result, the brand value weakens and the brand image loses its contours. For consumers, however, it is still extremely important whether a vehicle was imported or manufactured locally. For consumers, the non-domestic origin of trademarks is usually indicated by a reference to the country of origin. Sometimes the country of origin is further differentiated into the country of manufacture and the country in which the product was developed (country of design). In principle, the country of origin is the country in which the Group headquarters that markets the product or brand is located. However, the product does not necessarily have to be manufactured there. In the discussion about possible brand schizophrenia, three response strategies have emerged so far.
An international brand expansion targeting only the top segment of the income pyramid or exclusively the rapidly growing mid-range segment misses a good opportunity to tap additional purchasing power in the emerging markets. Buyers there are increasingly opting for more expensive premium products, which in the truest sense of the word leads to an appreciation of numerous product categories. Barilla, one of the market leaders in the international pasta industry, reports, for example, that the effect of premiumization is already responsible for the increase in demand for pasta in emerging markets. Premiumization is a general market phenomenon and by no means limited to the existing premium markets. According to various market researchers, it is now a common and nationwide phenomenon in many growth markets. There are two important factors in particular:
The basic idea of “Experiential Marketing” is that this approach is not primarily about selling something, but about showing how a brand can enrich the customer’s life. Generally speaking, it is a kind of customer-centered marketing activity in the form of staged, experience-oriented events and points of contact, through which a multi-sensual and emotional connection to the target group is established. Experience marketing has long been known in the developed markets of industrial nations. But the concept has a unique significance for emerging markets. This is not only true for premium markets, but for practically every market segment.
In major growth markets, the mid-price market segments are growing at practically the same pace as incomes. In order to capture larger market shares in dynamically growing product categories, an increasing number of companies are relying on a strategy known as “category flooding”. They aim at several target groups at the same level of the income pyramid, but also address other levels of the income pyramid. By offering more than one brand in the same category, they can achieve greater market share. You know: who only uses one single brand cannot increase sales above a certain level. The main reason for this natural “cap effect” is that consumers have different psychological needs and expectations compared to their preferred brand. Since brands also have a kind of personality, there are correspondingly many people who do not want to commit themselves to a certain brand.
Increasing competition, escalating advertising costs and rapidly growing product categories are confronting marketing managers in major growth markets with the challenge to design the best brand architecture. Depending on the choice, it can help a company grow in the fastest and most profitable way. First, it is important to analyze the circumstances in the target market and the brand status of your own company in this market. A company must then select the strategy that suits it best. If the company brand, usually the company name, already has a high degree of recognition and a high reputation or a larger country of origin bonus, it makes sense to take full advantage of this value.