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Florian Haller

Culture drives consumption: Why cultural values are important in brand building

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)

Infographic cultural values

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.

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Florian Haller

Market-driven positioning: Only the best value proposition guarantees success

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.

Infographic market-driven positioning

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Florian Haller

Global, hybrid or local: 4 decision factors for the right degree of adaptation to the target market

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.

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Florian Haller

From brand image to purchase activation: 4 stumbling blocks in brand communication

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.

 

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Florian Haller

Successful internationalization of brands – It’s all about the right start!

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

Despite the protectionist demeanor in Washington D.C., German companies have realized record investments abroad in 2017, according to the German Chambers of Commerce and Industry (DIHK). The degree to which a company is prepared to adapt to local market requirements decides which path for the market entry is chosen. 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. Global strategy – Maximizing global efficiency and centralized decision-making

In industries that are characterized by high integration pressure and short innovation cycles, a globally oriented strategy is recommended. In this case, the corporate headquarter controls the operation. Economies of scale enjoy top priority, the brands are highly standardized. However, adaptation to specific local market needs is limited, which may result in problems with local acceptance.

Example: Apple applies this strategy to its iPhones and iPads. Design, production and marketing are controlled by one single unit worldwide. Market-specific adjustments are usually limited to details such as the power cable, which must satisfy different voltages varying from county to country.

2. Multidomestic strategy – Strong decentralization with significant product adaptations

In this strategy business models and products are strongly adapted to local consumer needs. Country units operate largely independently. Economies of scale are neglected in order to achieve a higher acceptance in local markets. However, the high degree of adaptation can turn out to be a problem when the brand has to hold its own against competitors in a highly globalized environment.

Example: US restaurant giant Yum! Brands, operator of Pizza Hut, Taco Bell and KFC, tailors its menus to local tastes and culinary specialties in every single market.

3. Transnational strategy – Combining the strengths of the first two strategies

The transnational strategy aims to combine the flexibility of the multidomestic strategy with the efficiency gains achieved by global standardization. This difficult undertaking is recommended when companies are equally dependent on economies of scale as well as on adaptation to local consumer needs. Despite these adjustments, brands managed under a transnational strategy can continue to use the reputation of their country of origin for their branding.

Example: The Swedish furniture group Ikea is committed to providing its global customers with a unique shopping experience that defines the global recognition value of the Ikea brand. In addition to the standardized portfolio, there are numerous local adjustments. This is why Ikea sells harder mattresses in China at a lower overall price level compared to other parts of the world.

4. Home replication strategy – Limited standardization and little local customization

The home replication strategy is applied when there is little or no need for flexibility or standardization. This strategy aims to open up additional international markets without major adaptations for products primarily developed for domestic consumers. In the long run, however, this strategy includes the risk of not completely grasping local market conditions and thus losing competitiveness.

Example: Media Markt transferred its concept one-to-one to China and ultimately failed because the chain could not prevail over its local competitors with its classic concept and without major adjustments.

The choice of the right strategy will be rewarded in any case. After a short cooling interval, the emerging markets are currently registering a new dynamic. China will outperform the US as the world’s leading retail market in 2018. India overtook China in GDP growth at the end of 2017.

 

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