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emerging_markets_internationalisierung_spblog

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.

Amazon Echo Voice Search

What voice internet means for the future of digital marketing

The screenless internet: A bold prediction for the future

At the end of 2016, Gartner published a bold prediction: by 2020 30% of web browsing sessions would be done without a screen. The main driver behind this push into a screenless future would be young and tech savvy target groups fully embracing digital assistants like Siri and Google assistant on mobile, Microsoft’s Cortana and Amazon’s Echo.

While 30% still feels slightly optimistic mid 2018, the vision of an increasingly screenless internet becomes more and more realistic every day. The adoption rate of smart speakers 3 years after launch is outpacing the smartphone adoption rate in the United States. And what’s maybe most surprising, it isn’t only the young early adopter crowd that is behind this success story, but parents and families. Interacting with technology seamlessly and naturally through conversation is making digital services more attractive to a wider range of consumers.

The new ubiquity of voice assistants

And it isn’t only stationary smart speakers that are growing in usage and capability, every major smartphone features its own digital assistant and consumers can interact with their TVs and cars through voice as well. The major tech players are investing massively in the field and within the next few years every electronic device we put in our homes, carry with us or wear, will be voice-capable.

So, have we finally reached peak mobile and can finally walk the earth with our chins held high again, freed from the chains of our smartphone screens? Well, not so fast.
There’s one issue many digital assistants still face, and let’s be perfectly honest here: despite being labeled “smart” they are still pretty dumb.

Computer speech recognition has reached human level accuracy through advancements in artificial intelligence and machine learning. But just because the machine now understands us perfectly, it isn’t necessarily capable of answering in an equally meaningful way and a lot of voice apps and services are still severely lacking. Designing better voice services and communicating with consumers is a big challenge, especially in marketing.

Peak mobile and “voice first” as the new mantra for marketing

Ever since the launch of the original iPhone in 2007 and the smartphone boom that followed, “mobile first” has been marketing’s mantra. Transforming every service and touchpoint from a desktop computer to a smaller screen and adapting to an entirely new usage situation on the go was a challenge. And even 10 years later, a lot of companies still struggle with certain aspects of the mobile revolution.

The rising popularity of video advertising on the web certainly helped ironing out many issues in terms of classic advertising. After all a pre-roll ad on a smartphone screen catches at least as much attention as it does in a browser. We figured out how to design apps, websites and shops for mobile, reduced complexity and shifted user experiences towards a new ecosystem. But this mostly worked by taking the visual assets representing our brands and services and making them smaller and touch capable.

Brand building in a post-screen digital world

With voice, this becomes a whole new struggle. We have to reinvent how brands speak to their consumers. Literally. And this time without the training wheels of established visual assets. At this year’s SXSW, Chris Ferrel of the Richards Group gave a great talk on this topic and one of his slides has been on my mind ever since: The visual web was about how your brand looks. The voice web is about how your brand looks at the world.

In recent decades, radio advertising has mostly been reduced to a push-to-store vehicle. Loud, obnoxious, and annoying the consumers just long enough, that visiting a store on their way home from work became a more attractive perspective, than listening to any more radio ads.

On the screenless internet, we could see a renaissance of the long-lost art of audio branding. A lot of podcast advertising is already moving in this direction, although there it is mostly carried by the personalities of the hosts. Turning brands into these kinds of personalities should have priority.

The challenges of voice search and voice commerce

We will also have to look at changing search patterns in voice. Text search tends to be short and precise, mostly one to three words. With voice, search queries become longer and follow a more natural speech pattern, so keyword advertising and SEO will have to adapt.

Voice enabled commerce poses a few interesting challenges as well. How do you sell a product, when your customer can’t see it? This might be less of an issue than initially imagined, though. “Alexa, order me kitchen towels” is pretty straight forward and Amazon already knows the brand I buy regularly. Utilizing existing customer data and working with the big market places will be key, at least for FMCG brands.

But how to get into the consumer’s relevant set? And what about sectors like fashion, that heavily rely on visual impressions? Tightly combining all marketing touchpoints comes into play, voice as a channel can’t be isolated from all other brand communication. Obviously, voice will not replace all other marketing channels, but it might become the first point of reference for consumers due to its ubiquity and seamless integration into their daily lives. Finding its role in the overall brand strategy will be crucial.

Navigating the twilight zone of technological evolution

What may be the biggest challenge of this brave new world of voice marketing is the fact that our connected world isn’t as connected as we would like it to be. The landscape of voice assistants is heavily fragmented and more importantly, the devices act in very isolated environments. While I can tell my digital assistant to turn on my kitchen lights or fire up my PlayStation when using compatible smart home hubs and devices, an assumedly simple task like “Siri, show me cool summer jackets from H&M on the bedroom TV” isn’t as easily accomplished.

Right now, it often is still up to the users to act as the interface between voice assistants and the other gadgets in their living spaces. The screenless internet isn’t the natural endpoint in the evolution of technology, it’s more of an unavoidable consequence of iterative steps in development. For now, we have to navigate through this weird, not fully-realized vision of a connected world and hope for technology to catch up and become truly interconnected. So, let’s find the voices of our brands until they regain the capability of also showing us their connected personality.

emerging_markets_internationalisierung_spblog

Authors: Florian Haller, CEO Serviceplan Group, and Niklas Schaffmeister, Managing Partner Globeone

Again and again, brand managers underestimate the simple fact that brands are first and foremost created in the minds of local consumers. The results don´t always meet the expectations of the top management at HQ. A Volkswagen may be a mid-size car in Germany, in China it is definitely a premium car for most buyers and perhaps even a luxury car in India. The development of an international positioning strategy therefore requires a thorough analysis of one’s own brand perception in the target market. This is necessary to ensure that the communication of one’s own strengths can be aligned with consumer needs. In recent years, we at Globeone and Serviceplan have advised numerous blue-chip clients and brands in international expansion projects. Based on this experience, we have identified four major stumbling blocks in brand communication that may cause an international positioning to falter. For all the details, see 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. Brand awareness: Wishful thinking should not subdue reality

It is an old truism: awareness is not everything, but without awareness almost everything is nothing. However, brand awareness cannot be achieved with the crowbar – especially not in large emerging markets, which are difficult to understand due to their enormous geographical spread and diversity. In addition, there are often horrendous costs for classic media, frequently forcing brands to switch to cheaper digital advertising channels. This, however, runs the risk of communicating below the critical perception threshold in the fight for the attention of target groups. The development of brand awareness should therefore not be based on intuitive assumptions about consumer needs, but on empirically proven facts and a well thought out communication concept.

2. Brand image: Known but without profile

If a brand enjoys excellent recognition values but is hardly bought, it usually has a veritable image problem. The brand has not been sufficiently focused on the wishes and needs of local consumers or is simply interchangeable because it is not sufficiently differentiated from competitors. In this case it is important to act quickly in order to not jeopardize the success of market entry in the long term. A clear understanding of the brand drivers – i.e. the most important decision factors for a brand – must be developed and translated into a convincing communication concept and storytelling that sufficiently differentiates from local champion brands.

3. Country-of-origin: Communicating the strengths of the country of origin correctly

Notably in the premium segment, brands can often benefit from the image of their country-of-origin. This so-called image transfer from the country-of-origin to the brand (e.g. “Made in Germany”) is an important competitive advantage that is difficult to imitate. Nevertheless, brands frequently fail to properly bring this advantage of a strong and positive country-of-origin image to bear in their communication concepts. Often there is simply no strategic storytelling that systematically establishes the connection between the brand tradition and the history of the country-of-origin. But strong brands live from exciting stories about their origins.

4. Purchase activation and loyalty: If the customer still does not show up

Even with high popularity and image values, sales figures may fall short of industry standards. Usually two things lead to this problem: either a narrow focus on an undersized target group, or an incomprehensive local sales and logistics structure. Brands must regularly ask themselves whether they are attractively priced for a sufficiently large target group and whether they are actually available everywhere. Digital sales channels may help, if a brand can’t build enough local branches.

A comprehensive brand monitor in the corresponding target country will help to identify and avoid these stumbling blocks. However, the conceptual effort should not be underestimated: careful preparation is essential in order to understand the local perception and performance of your own brand correctly.