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.