We’re calling it the Serviceplan Group Middle East Diary: Every week, one of our team members will be sharing what’s currently going on in her or his life at Serviceplan Middle East.
Who is responsible for an advertisement to end up precisely at the right time to reach the intended target group? An Account Manager Social Advertising of course. Get to know Katharina Steinert und Steven Carthy from Plan.Net Content Marketing in part 5 of our series Jobtitles Bingo!
Most companies are convinced that their brand has fully exploited its potential. But far from it: the brand can only score maximum points in the target group if its tradition, its promise and its unique history are well known. The most general definition of a brand is: “The consumer’s idea of a product or service”. So it’s not just about knowing and recognizing, it’s above all about associative connections. Clearly, this is the big moment of storytelling.
And this often starts from scratch in young markets. After all, international brands are often completely unknown to local consumers and potential customers in the major growth markets. In 2013, 70% of Chinese car buyers were still first-time buyers. Most of them had just obtained their driving licenses. They had no product or purchasing experience. Many of them had never been in a showroom before or had dealt with the technical aspects of an engine. For Western brands, this is a challenge, but also a great opportunity. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group) therefore explain the cornerstones of an engaging storytelling. Further details on that can be found in our new Springer publication “Successful brand development in the major emerging markets” (written in German).
1. Brand knowledge: Managers like to overestimate consumers
A well thought-out strategy with determined implementation is needed. When formulating the strategy, marketing cannot simply assume that the target group being addressed already has the necessary knowledge of the brand simply because connoisseurs of the company are familiar with many details. Brand managers often overestimate what consumers already know. This often results in communication campaigns that do not go far enough. But it is imperative to explain what the brand in question stands for. If this is done in a committed, interesting and motivating way, a lot can be gained. It is important not to overload the storytelling with messages. Target groups in emerging markets are usually 10 or 20 years younger than those in developed Western markets.
2. Understandable messages: Consumers must be addressed in their language
In the new markets, the 30- to 40-year-olds belong to the richest target group, which is already accustomed to exciting and committed marketing techniques. If a bank argues with traditional terms such as “trust” or “security”, its marketing message will not automatically be well received by these “newly-rich” consumers. Many people in these middle income brackets are also consumers without good foreign language skills. Don’t use too many English and technical terms. Admittedly, design and other concrete arguments of conviction are very important for this. But they must be communicated to consumers who are generally not technical experts in their own language. They must also be made aware of why this brand in particular meets their specific needs. Making new customers familiar with the brand requires patience.
3. Tradition is the trump card: With the brand history to the price premium
Every brand strategy must have enough space to tell the history of the brand. You have to take enough time to explain why your brand is unique and how much time it took to become a leading brand. The traditional aspect and the associated foreign brand image are the only sustainable competitive advantage that cannot easily be imitated. Those who tell their own story thus have the opportunity to achieve a clear price premium for the brand, compared to local competitors. This goal can be achieved with clear language and simple explanations as well as with visual clarity and a creative implementation of the campaign. This is the only way to break the communicative flooding in megacities.
4. Educating the consumer: For each product there are instructive campaigns
Educational campaigns or brand academies are particularly suitable for informing a target group about the brand history and special unique selling points. There are many educational examples of awareness-raising campaigns. For example, the highly creative and very successful “MINI Academy for Rapid Learners”. Its success is due to the fact that it has been excellently integrated into the local cultural framework. In Europe, MINI has the image of a cheeky, flexible and individualistic small car. In 2009, the brand was still not able to develop the hoped-for potential in China so quickly. In China, the MINI was initially considered a cute little car for young women and a fun car for young people as a whole. Men and older customers were underrepresented in this group. The MINI managers wanted to make “the most exciting small car in the world” interesting for a broader group of buyers. To this end, a creative strategy was developed around the themes of “dynamic driving experience”, “cult design” and “tradition”. A MINI Academy was founded to inform Chinese consumers about the rich tradition and history of the MINI brand. The Academy was a platform that made it possible to communicate within the local cultural environment via different media channels and at the same time to establish a strong connection to the Chinese mentality.
There are many success stories proving how well storytelling can attract young target groups in growth markets. The history of the brand and its special features must be clearly highlighted. Educational campaigns with instructive and easy-to-understand content are achieving great success.
Colorful advertisements, television ads and tourism: foreign influences in the major growth markets are getting ever stronger – and they are leaving a clear mark on the perception of local consumers. In addition, the economic opening up of these markets through their WTO entry and bilateral trade agreements are flushing more and more Western brands onto local shelves. The more respected the country of origin, the greater the propensity to buy. Sometimes the foreign brand origin proves to be an important factor in the international brand development. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group) explain why this is the case and they elaborate on additional advantages of this positioning concept. Read more about this in our new Springer publication “Successful brand development in the major emerging markets” (written in German).
Since the 1970s, research has consistently shown that consumers intuitively attribute positive or negative characteristics to a company or brand when they know the country of origin. This results in a so-called image transfer: associations with the country of origin are transferred to the company or the brand. This country of origin effect contributes significantly to a kind of “subconscious brand DNA” and therefore continues to play an important role in today’s marketing.
Two facets of the country of origin: production and design
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 headquarter that markets the product or brand is located. However, the product does not necessarily have to be manufactured there.
A country of origin perceived as positive has a positive effect on brands, for example by perceiving the quality of a brand as significantly higher. Much evidence suggests that certain countries of origin increase the prestige factor of brands. The following three factors show why the country of origin plays such an important role in international brand development – especially in the major growth markets.
1. The country of origin as a distinctive feature of brands
As a rule, consumers associate specific ideas with different countries. For example, the USA is considered to be very innovative and technology-oriented. For brands, it can be much more effective to use this existing knowledge of the country of origin effect than to communicate the same qualities and characteristics individually and without reference to the country of origin – for example through expensive advertising.
2. Growing claims are tied to foreign brands
In many growth markets, foreign brands are used to demonstrate social advancement: they are more expensive, not yet very widespread and are associated with high prestige. The preference for foreign brands is usually pronounced in product categories where the country of origin is supposed to have a higher level of competence. The preference for foreign brands is increasing in step with income. Against this background, the emphasis on brand origin offers a cost-saving and effective opportunity to attribute to a foreign brand such characteristics as quality, flawless functionality and excellent design.
3. Limited availability increases demand
Many emerging markets are opening up slowly, which in turn means that foreign brands are only available to a limited extent. Brands from Western countries in particular therefore enjoy a high reputation in these growth markets due to their relative novelty and scarcity. In addition, many local products cannot yet keep up with the products developed in the West.
“Made in Germany”: Germany as a favorite
Among the countries currently benefiting most from a positive country of origin image are Germany, the USA, Japan and Switzerland, due to their tradition, excellent quality and state-of-the-art technology or engineering. “Made in Germany”, for example, has been regarded for decades as a quality feature that communicates prestige and reputation in a great measure. The advantage: the country of origin image cannot really be imitated by competitors and is therefore a sustainable differentiation factor. For global marketers, this clearly means that the better the COO image, the more clearly the origin should be communicated.
Programmatic advertising (PA) is a multi-faceted term. Many market players use it as a buzzword, a label for the hype that has at times raised very high expectations among lots of market players, especially advertising customers. Others frequently use PA as a synonym for automation projects that are several years overdue, especially in so-called classic media, but in which nothing is “programmatic”. At mediascale, we generally define programmatic advertising as data-driven media-buying and as a process we are only just beginning.
Therefore, the disappointment that may have occurred with one or other advertisers is not a fundamental issue for programmatic advertising. Rather, it should be an incentive to take programmatic to the next level: on the one hand, by rethinking the set-up of service providers and technology; on the other, individual expectations should be reasonably calibrated.
In recent years, it has mainly been venture capital-financed players, who wanted to be part of the media value chain, who have fuelled the programmatic hype starting from their own interests, which has led to high expectations. And of course they have claimed “their” part of the supply chain. But those who worked more intensively with the market knew that the quantity and quality of the available profile data for programmatic campaigns is limited. However, only good data can increase the efficiency of campaigns significantly enough so that the additional costs for the additional members of the value chain are reintegrated. A possible disappointment was thus an announcement or based on unrealistic expectations.
In many conversations with our customers, we have realistically presented both the possibilities as well as the limits of data-driven advertising in order to rule out exaggerated expectations of PA from the outset. In doing so, the following assumptions were made, which our customers, sometimes against their initial will, have been getting along well with so far:
- Programmatic advertising is not a new channel with completely different rules to traditional display business. Also when auctioned and backed by data, a content ad remains a content ad and will not develop the advertising impact of an instream pre-roll large format
- Meaningful, validated data is the indispensable basis for programmatic advertising. Here it is important to look carefully and carry out comprehensive auditing of the available data offers. At first glance, the data market in DMPs seems expansive. But data segments that deliver what they promise (delivering a corresponding uplift to campaigns) are by no means abundant. And they have their price.
- An impression that cannot be assigned to valuable data should not be bought programmatically. As meaningful as it is to uniformly track all advertising contacts and accumulate all campaigns and pseudonymous profile data in one system, it makes little sense to put untargeted campaign volume into systems just to have bought it “programmatically”. This results in costs and technical performance losses that are not offset by financial added value.
- The open market, open to all, originally proclaimed by many to be programmatic’s central promise of salvation, has created more problems than it solves, as it has also opened up the market to a plethora of dubious players. The efforts of the large, open sell-side platforms to push the black sheep out are commendable, but unfortunately not always successful. That is why we only buy inventories that we can thoroughly test, both technically and commercially. Furthermore, whenever possible, we buy from partners (often in private marketplaces) that we know and have established business relationships with – including any sanction options which may be necessary in the interest of the customer in an emergency.
- And we’re not forgetting the creation: What use is the most sophisticated planning on a profile basis, if only one means of advertising is available? That’s why data driven creativity is, in our view, the indispensable fourth pillar of programmatic advertising – alongside technology, media space and data.
Today, programmatic has already caused major changes in the digital media business. But we are sure that this transformation process is far from finished yet. And it will encompass more and more media types in the future: TV, out-of-home, audio, cinema and eventually also print. In five years at the latest, we will be able to plan, book and control more and more channels via programmatic. In addition, people’s media use is evolving, new, relevant platforms are being created at ever-increasing speed, and data protection requirements also require fundamental and sometimes new solutions. All these challenges keep us busy and agile. Staying at the current level of development is not a solution. Particularly as we are just scratching the surface with programmatic.
This article was first published in adzine.
Without a deep understanding of local culture and myths, hardly anything works in the major growth markets, even if the rest of the preparations are perfect. Whether it´s about gods, festivals and colors in India, Chinese legends and Confucianism, or infectious joie de vivre and folk tales in Brazil: those who do not internalize the cultural DNA of the target markets and coordinate their own marketing accordingly will run into a wall. From Chinese philosophy to Hindu mythology, the extremely diverse future markets offer endless analogies to link a brand with the prevailing symbols, beliefs, tastes and myths. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group) explain the four factors that are especially important for this undertaking. All details can be found in our new Springer publication “Successful brand development in the major emerging markets”, written in German.
1. Referencing local worldviews: Reincarnation is a telling example
Each region has its own beliefs, religious convictions and myths. They express themselves in colorful rituals and festivals, in serious processions, or in traditional narratives. Western companies and brands have imaginatively used local myths and beliefs in many target markets. Volkswagen in India is a great example. For a while, the car manufacturer drove an ad alluding to the topic of reincarnation. Reincarnation is very important in Hinduism. The ad showed an old VW Polo, which was highly appreciated by its owner. Even in old age the man still took care of the vehicle. But he died when his daughter was expecting a child. The daughter and her husband buy a new Polo and discover that their grandson appreciates the car as much as his late grandfather. The analogy here is that the grandfather must have reincarnated himself in his grandson and thereby also transferred the love for the vehicle. The advertising spot culminates in the slogan: “The new Polo – so good that you will come back for it”.
2. Use local festivities: How to make effective connections
Religious and other traditional festivals in some countries initiate massive migration of peoples. Hundreds of millions of Chinese return home to their families to celebrate Chinese New Year. The whole country is on its feet for these emotional celebrations. They are wonderful occasions for brands to establish or expand connections with their target groups. Starbucks used the Chinese calendar in a clever advertising campaign to increase sales. The Seattle-based coffee chain developed a 30-day calendar around the annual Spring Festival, when all of China is on its feet and all Chinese give their loved ones red envelopes with gifts of money. The Spring Festival is often used in China for weddings, travel or other important events. One day in the Starbucks calendar was declared to be good for visiting relatives. Another day was reserved for blind dates. The calendar was distributed on social media platforms and the various days were linked to special offers in the coffee chain stores. Once, customers were asked to hug their parents in a shop to take advantage of an “order three, pay two” offer. On another day the drinks were free and customer cards were offered. With relatively little investment, Starbucks made its “Campaign of Daily Friendliness” a huge success. It is said to have increased sales revenues tenfold compared to other advertising campaigns.
3. Local research: Identifying future global trends at the source
Global trends usually emerge from the largest, most agile and creative markets. The large growth markets are therefore increasingly becoming the source of new standards and trends. For this reason, Western brands have been strengthening their local research and development in the markets of the future for some years now. Mercedes-Benz was one of the trendsetters in China. The car manufacturer opened a center for advanced design in Beijing in the first half of the decade. The reason was the farsighted assumption that the preferences of Chinese consumers will set global trends in the future. In addition to adjustments to infotainment and driver assistance systems, the R&D center is also researching the vehicle design of the future and the specific preferences of local consumers. Parallel to the opening of the R&D center, Mercedes presented its first local concept car, an SUV coupé crossover called “G-Code”. The car features numerous adaptations that serve the special taste of the local target group. In addition to borrowings from traditional national architecture, fashion and calligraphy, the design was also influenced by specific tastes of modern customers. The Chinese prefer an expressive and dominant design to demonstrate their individual social rise. This even includes striking gimmicks such as a radiator grille that can change its color.
4. Well translated is half integrated: When BMW turns into a “precious horse”
A local adaptation can be really tricky when it comes to the language. There are pitfalls lurking here. They can prove expensive if something goes wrong, especially when it comes to translating the brand name. Names are very important, for example, in the Chinese culture. Before the Cultural Revolution, it was a widespread custom to add a pseudonym to the family name and first name when you reached adulthood. From this self-chosen name one could deduce characteristics and activities of the name bearer. The same applies to brand names. From the point of view of Chinese consumers, the brand name is a manifestation of the culture and values of the product advertised. But with about 50,000 characters and hundreds of dialects, negligence in translation can end in disaster. Some German companies have succeeded in making successful transfers with the help of experts. The name for Siemens – “Xi-men-zi” – means “Gateway to the West”. In Chinese, the name BMW is “Bao-ma” – “Precious Horse”. And “Ben-chi” as a transmission from Mercedes-Benz is translated as “galloping fast”.
As a result of rapid social and economic change all over the world, individualism is on the rise everywhere, especially in large growth markets, which up to now were characterized by a rather collectivist mentality. The drivers of this change are better income and an expanding middle class in large parts of the world. Consumers are enjoying to finally catch up with Europe and North America. They want to make inspiring and fascinating experiences. They want to make up for what was once an impossible dream. Along with disposable income, demand and the strive for independence are growing. This means that emotional factors are increasingly coming into play on top of purely functional aspects as a factor for consumption that is aimed at demonstrating social status, individual taste and being part of the “global village”. The level of individualism, though, still varies from country to country. Successful brand differentiation must therefore address these factors, if international brand development is to succeed. The way this works is described in detail in our new Springer publication “Successful brand development in the major emerging markets”, written in German, by Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
No contradiction: emotionality and functionality must go hand in hand
Marketing scientists and managers have known for quite some time that successful brand differentiation can also be achieved by emotionalizing the brand, which addresses the trend towards individualism. The emotional benefits that brand consumption promises must be linked to the brand identity in a way that reflects the self-image of the target group. Like people, brands have an identity consisting of personality traits, values, a vision, competencies and brand origin. It is important to integrate the emotional personality traits into the functional benefits associated with a brand. The ideal watch should not only look beautiful, fit and function reliably, but also emphasize the personality of the owner. The ideal handbag for women should not only be easy to wear, but also underline the fashionable individuality of the woman. Particularly in industries where functional differentiation is more or less exhausted, emotional differentiation can make all the difference compared to the competition.
How Adidas increased its market share in the women´s category
As one of the leading sports brands in China, Adidas was faced with the challenge that Chinese consumers felt less and less addressed by the more masculine-oriented brand communication of sporting goods manufacturers. Market surveys had shown that Chinese consumers rather rely on the factor of fun and bonding power – i.e. the shared experience with friends and acquaintances – during sporting activities. With the “all in for #mygirls” campaign, Adidas therefore developed a campaign aimed at using this high value of friendship in brand communication. The campaign communicated the fun, the bonding power and the “coolness” factor of sport. Messages that brought the sense of togetherness to the fore were at the heart of the campaign. With the well-known Chinese singer Hebe, Adidas was also able to win a high-profile brand ambassador, whose passion for sport and dancing was well received by the target group. In the campaign commercials Hebe was staged with her “sisters”, i.e. with women practicing sports together. The TV commercials all ended with Hebe speaking directly into the camera: “These are my sisters, what about your sisters?” The campaign, which was played out cross-media and accompanied by various events, led to an increase in sales of 40% in the Adidas women’s category and, in addition, actually inspired Chinese consumers to more sporting activities (studies have measured an increase of 3.45%).
Opportunity for prestige brands
In general, foreign brands enjoy an advantage particularly in larger growth markets. Due to their reputation, they are generally more likely to serve the emotional needs of consumers. A pronounced self-confidence or the will for self-expression and self-development promote an emotional expectation among consumers towards these brands. Durability, good quality and functionality are still important criteria, but they are increasingly complemented by factors such as attractive design and other aspects that serve personal enjoyment. This phenomenon varies from consumer segment to consumer segment: This individualization trend and the growing need for an emotional appeal can be observed especially among younger generations who have grown up with social media, as well as in higher income households.
The worldwide trend towards individualization marks a paradigm shift in brand communication. Ideally, the strongly fact-oriented product communication is supplemented by a fascination level that appeals to the emotions of consumers. Against this background, more and more companies are defining a purpose – a higher corporate purpose – for their brand communication that is intended to cover exactly this level of fascination.
Authors: Florian Haller, CEO Serviceplan Group, and Niklas Schaffmeister, Managing Partner Globeone
The rapid changes of our time lead to conflicts between cultural traditions and new ways of life. Career advancers spend more time in the office, they often go on business trips, they have less time for themselves and their families. The lack of time changes everything from eating habits to family orientation, the way of communicating and consumer behavior. And in many international markets, foreign influences, industrialization or massive urbanization are turning even ancient traditions upside down. Individualization is increasing and consumer behavior is spreading, particularly in the middle classes around the globe, which is intended to showcase the newly acquired status.
There can be no question: culture is and remains a decisive factor for consumer behavior and thus also for brand positioning. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group) therefore explain why an intensive examination of the culture and cultural values in the target markets is indispensable for successful brand development or repositioning. Read more in detail in our new Springer publication “Successful brand development in the major emerging markets”, written in German, by Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
Powerful factors: culture and cultural values
The definitions for the term culture have become as diverse as the cultures of this world. Things may become clearer if the term culture is separated from cultural values: Culture then refers to the totality of human behavior in a society, while cultural values refer to a series of beliefs about certain behaviors that are considered particularly desirable in a society. In marketing, the conviction has therefore developed that cultural values are a powerful factor that has a decisive influence on the motives of consumers. This applies to their lifestyle as well as their product selection.
In the jungle of values: What is decisive for brand development
Foreign brands that want to address these different cultural preferences must therefore familiarize themselves well with the cultural environment in the local target market. In view of the diversity of values and moral concepts, however, this is easier said than done – brand managers are often faced with the challenge of identifying the consumer-relevant value dimensions for brand development. In such cases, so-called catalogues of values have proven to be a helpful instrument. Sociologist Shalom Schwartz, for example, has developed a catalogue of values that identifies seven important cultural value dimensions on the basis of data from 73 countries. On the basis of these dimensions, it is not only possible to differentiate between the essence of cultures worldwide, but also to record individual, culturally specific and consumer-relevant value dimensions.
According to Schwartz, the most important dimensions of value include:
- Harmony (harmony with the environment)
- Social embedding (social order, obedience, respect for tradition)
- Hierarchy (authority, social power, orientation towards wealth)
- Ability (ambition, daring, success)
- Intellectual autonomy (open-mindedness, curiosity, freedom)
- Affective autonomy (joy of life, pleasure, tension)
- Egalitarianism (social justice and responsibility, equality)
It quickly becomes apparent that there are enormous differences along these value dimensions, for example between European countries and the major emerging markets such as China and India. While in China and India hierarchical values are given high priority (e.g. in the form of the caste system), in Europe the focus is on egalitarian values and intellectual autonomy. Put simply: people want to enjoy their freedom, work creatively and realize their full potentials.
Significance for brand communication: cultural values and consumer motives
Besides the family, society, religion and educational institutions, the mass media – not least digital and social media – have developed into important carriers and mediators of cultural values in the post-industrial age. However, it has been shown time and again that advertising also has a great influence on the representation and communication of cultural values. Advertising is based on linguistically powerful images and metaphors. These, in turn, are strongly influenced by cultural values which have an influence on culture, insofar as they are received by a broad circle.
The “similarity acceptance hypothesis” is regarded as a rough compass for successful brand communication in the local target market. Its message: The more similar the values communicated by a certain brand are to the values of a certain social class, the higher the probability that the brand is attractive for this grouping.
Conclusion: culture has a strong influence on consumption. In marketing you have to find the most effective levers to use this influence. This requires a profound knowledge of local cultural values.
Authors: Florian Haller, CEO Serviceplan Group, and Niklas Schaffmeister, Managing Partner Globeone
Insiders have known it all along: When foreign companies succeed in growth markets, half of the success factors are directly related to the adaptation or localization of key elements of the brand strategy. The key question is how best to adapt a brand to local expectations and requirements. Based on multiple years of consulting experience, we at Globeone have developed the so-called market-driven positioning process. This multi-stage process ensures that all relevant internal and external factors are taken into account in the analysis and development of the positioning strategy. The result is a positioning concept that is actually tailored to the needs of consumers and at the same time protects the brand itself from overstretching. The six steps can be read in detail in our new Springer publication “Successful brand development in the major emerging markets”, written in German, by Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
1. Market analysis: Gaining an overview
The problem many companies are facing is not that they miss information, but often the available information is simply not prepared in a way that makes sure it promotes the development of meaningful and realizable strategies. The first step is therefore to collect all relevant data within the organization and – if necessary – to supplement it with additional market and consumer research. From the available company data, competition analyses, market statistics and relevant media reports, an overview of the target market and initial positioning options can then be obtained.
2. Relevance analysis: Understanding what is important to consumers
The prerequisite for a successful positioning is always the local relevance of a brand or product. Therefore, in a second step, the most important decision drivers for the brand are identified. It needs to be analyzed how the brand can best support the development of certain preferences. The evaluation does not only need to take into account the functional brand drivers. It is important to include those that appeal to the customer at the emotional level as well. In our experience, many foreign companies do not begin with this relevance analysis, but instead assume a much narrower starting position from the outset. However, this carries substantial long-term risks.
3. Feasibility: Not every consumer wish fits the brand
Recognizing the needs of consumers is one thing – but serving them successfully is another. If a company has analyzed the local target market and the target group without bias, it must of course decide which consumer needs and wishes it can satisfy best. What can actually be achieved may depend not only on the portfolio but also on the current image of the brand. The image must match the brand offering, otherwise there is no convincing basis for consumers to buy. If the company or brand lacks the relevant image associations for certain products, systematic brand development is necessary.
4. Consistency analysis: Beware of excessive adjustments
Balancing the global brand promise and local positioning is incredibly important in order to avoid brand dilution. Adaptation to the local target market must not conflict with global brand positioning, because otherwise there will most likely be conflicts in brand management. In this fourth step, the consistency of the positioning route with the global brand promise must be checked. If the adjustment to the local target market threatens to be too strong, companies are generally well advised to build up a separate brand.
5. Differentiation: How to draw the best distinction
In a further step, the positioning strategies of local and global competitors must be analyzed because the composition of competitors in individual markets can vary greatly. More importantly, however, competitors themselves sometimes choose different positioning strategies for each country. Therefore, brand managers cannot blindly rely on a competitor’s positioning in one market corresponding to its positioning in another. The communication between competitors must also be scrutinized: How is positioning implemented in print media, advertising campaigns, digital channels and elsewhere? Based on this analysis, a positioning chart can then be created. It can be used to identify the positioning gaps.
6. Positioning: Finding the best value proposition
The remaining options resulting from the previous steps can now be validated for their attractiveness through detailed quantitative and qualitative tests. This last step should not be underestimated, because only the truly optimal market-driven positioning helps the brand to remain relevant in the local target market in the long term. This process can also be used to develop similarly convincing product and service concepts.
Authors: Florian Haller, CEO Serviceplan Group, and Niklas Schaffmeister, Managing Partner Globeone
The successful positioning of a brand is part of the high art of marketing. Based on complex factors, a concept needs to be developed that supports branding in the minds of consumers in the local target market. In the first part of our blog series we explained the most important strategies for the global expansion of brands. Against this backdrop, brands basically have the possibility to choose between a global, hybrid or local positioning. It is therefore important to determine the right degree of adaptation to the local market on the basis of suitable criteria. Following, we briefly present the four most important strategies. For more detail see the new Springer publication “Successful brand development in the major emerging markets”, written in German, by Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
1. Product category: How much culture is in my product?
Every consumer is familiar with that: certain products are more closely linked to cultural ideas and habits than others. This becomes particularly apparent in the case of food or clothing, where local consumer perceptions have evolved over centuries. Contrary to that, products such as vehicles or electronic devices have a weak cultural component. Before deciding on a local positioning, it must therefore be clarified whether the product has a realistic chance of sufficiently reflecting the local culture and thus prevail over local competitors.
2. Status relevance: Does my product serve the right status factors?
In major growth markets, foreign brands are often used to demonstrate a certain status. Newly-rich Chinese, for example, like to display their prosperity with luxury watches. According to research, wealthy Chinese own six luxury watches on average. But be careful: too much adaptation to the local target market can dilute the global brand promise of premium brands. Against this background, they are generally better advised to play to the strengths of their country of origin image that serves the status needs of local consumers. Before entering the target market, they need to ascertain that the brand meets the local status requirements and whether this might be jeopardized by too much adjustment.
3. Consumer patriotism: How big is the political influence on purchasing decisions?
Patriots can still have a soft spot for foreign brands. In times of political tension, however, solidarity with one’s own country can be a serious obstacle against the purchase of foreign brands and thus prove to be a huge risk for a successful positioning in the target market. This risk needs to be thoroughly examined before entering the market: What kinds of conflicts are lurking, which ones can be anticipated? Traditional elites, low-income consumers and the elderly tend to be more patriotic than other social groups. In addition to conflicts that go back a long way in history, current political tensions, such as Donald Trump’s protectionist agenda, can also have a negative impact on foreign brands.
4. Income level: What can consumers afford after all?
The income level is another decisive determinant of a positioning strategy. The rule of thumb for most emerging markets is that with higher prosperity more consumers prefer foreign brands. This reflects the tendency to demonstrate one’s prosperity by buying foreign brands. Before entering a local target market, brands must therefore analyze the income level of their target groups, because the extent to which they need to adapt to local market conditions ultimately depends on that.
All four factors must be carefully weighed against each other. The most important principle is to avoid conflicting positioning goals: Once you have decided on a global or local positioning, you must carefully avoid inconsistencies. The difficulty with a hybrid positioning, on the other hand, is to separate the global brand core from those aspects that are adapted to the culture in the local target market.