International Marketing Strategy.
International Marketing Strategy
Assignment Question
One important decision in the international marketing is branding. Discuss the role and important of branding in international markets, with appropriate examples.
Executive Summary
In this report, we will attempt to address the importance of the relationship between consumers, businesses and the key brands.
In the first part of the report, we will introduce branding and its relationship with the consumers. By defining the idea of 'brand', we can understand what is brand made up of and how it has the ability to affect the consumers.
Next we will explain the 'county of origin' effect. Country of origin effect exists when the product choice is influenced by the producer's source country or country of manufacturer. Through this, we explain how consumers are affected by this effect.
Following, we will proceed to explain the types of branding in the market. Branding has been divided into 3 mains categories, namely: Private branding, National branding and Global branding. In the different sub-sections, we explain each type of branding and the effect of each type of branding.
Next, we will describe the importance of brands, how it interacts with the consumers and how it can affect the market place. We will also illustrate the importance by providing examples.
Lastly, we will go into the 5 different benefits and advantages of branding. Through these illustrations, we can understand why branding is critical in international marketing.
Introduction
Branding is the blend of art and science that manages associations between a brand and memories in the mind of the brand's audience. It involves focusing resources on selected tangible and intangible attributes to differentiate the brand in an attractive, meaningful and compelling way for the targeted audience with customer loyalty being the key to the long term success of a brand and business.
Branding and its Relationship to Marketing
In business, everyone is focused on creating and delivering the product or service that customers want, at a price they are willing to pay. However, in modern organisations, one of the main functions of marketing is to focus on brand management.
Branding is the foundation of marketing and is inseparable from business strategy. It is more than putting a label on a fancy product. Nowadays, a corporation, law firm, country, university, museum, hospital, celebrity, and even you in your career can be considered as a brand.
As such, a brand is a combination of attributes, communicated through a name, or a symbol, that influences a thought-process in the mind of an audience and creates value, A strong brand acts as an ambassador when companies enter new markets or offer new products. Its shapes corporate strategy, helping to define which initiatives fit within the brand concept and which improve market competitiveness.
Definition of Brand
Brand is an identifying mark, image or concept which distinguishes a product or service. A brand is a symbol created by a marketer to represent a collection of information about a product or group of products. A brand name is part of a brand if it consists of words or letters that can be verbalized. A brand is often associated with product's promise, the product or service's point of difference among its competitors which make it special and unique. Consumers look at brand as an important aspect of a product and which adds value to a product or service. It also carries the reputation of a product or company. For a customer to be loyal to a company brand, he / she must be able to easily understand what the company offer in products and services.
In the world of brands, it is the word association and at a glance view of all industry of the company, subsidiary, division, product, services, technology and other related branded names and how they are related to one another. For example, a branded laundry detergent is usually sold twice as much as a store brand detergent. Most consumers think that the branded product is better because it's more expensive and has a better quality. Likewise to a house of brands or a brand house companies may find themselves in an interesting mish mash of proprietary and non-proprietary brands that may or may not be related to the parent company brand. (http://brandchannel:naming names)
This situation can exponentially increase the complexity when the company has a large number of divisions and operating companies. Therefore these companies have to be able to distinguish themselves and understand how brand works.
The concept of branding applies to any individual, organization, product, or service, as long as there is a transaction between human beings. As branding relies on fundamental principles of psycho-sociology - it is essentially the way our memory processes, stores, and recalls information. Not to actively manage one's brand name is the equivalent of putting one's head in the sand and wishing for ...
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This situation can exponentially increase the complexity when the company has a large number of divisions and operating companies. Therefore these companies have to be able to distinguish themselves and understand how brand works.
The concept of branding applies to any individual, organization, product, or service, as long as there is a transaction between human beings. As branding relies on fundamental principles of psycho-sociology - it is essentially the way our memory processes, stores, and recalls information. Not to actively manage one's brand name is the equivalent of putting one's head in the sand and wishing for the best.
The value of a brand resides in the audience mind with the promise of what the product or service will deliver. Clearly, a brand can also assist an audience in recalling memories of a bad experience. The value for that audience then would be to avoid purchasing that brand.
Country of origin effect
The country of origin (COE) effect exists when product choice is influenced by the product's source country or country of manufacturer. Usually brands are used as an external cue to taste, design, performance, quality, value, prestige, and so forth. In other words, the consumer normally associates the value of the product with the brand. The brand can be conveyed either as a positive or a negative message about the product to the consumer and can be affected by past advertising and promotion, product reputation, and product evaluation and experience. In short, many factors can affect brand image. One major factor that is of great concern to multinational companies and manufacturer worldwide is the country of origin effect on the market's perception of the product.
In today's market, companies competing in global markets will manufacture products worldwide and when the customer are aware of the country of origin, there is the possibility that the place of manufacture will affect the product / brand image. The country, type of product, and the image of the company and its other brands will all influence whether or not the country of origin will create a positive or negative reaction. The customer tend to have stereotypes about specific countries and specific products categories that they judge "best": English tea, French perfume, Chinese silk, Italian leather, Japanese electronics, Jamaican rum, and so on.
In the previous paragraph, we have an overview of the role of brands. We will now discuss the different types of brands and how it works.
Private Brands
Private branding which also sometimes known as own-label or store brand is when a large distribution channel member (usually a retailer), buys from a manufacturer in bulk and outs its own name on the product. This strategy is only practical when the retailer does very high levels of volume. The advantages to the retailer are:-
> More freedom and flexibility
> More control over product attributes and quality
> Higher margins (or lower selling price)
> Eliminates much of the manufacturer's promotional costs.
Private label goods are bought by retailers at low wholesale prices from manufacturers under contract, and then sold in the retailer's store for 10 ~ 40 percent less than similar, higher-priced name-brand products. Private-brand and name brand goods usually appear next to each other on the same shelves. They may sometimes even be made by the same manufacturer, although consumers seldom know it. Giants companies such as Unilever, Nestle and Procter & Gamble make private-label goods, for instance.
Retailers like private label goods because they increase their profit margins, and give shoppers cheaper options to expensive name-brands. However, name-brand manufacturers hate them because they steal their market share, cut their pricing power, compete for shelf space and erode name-brand loyalty
National Brands
National branding consists of developing an image and communicating it, both internally and externally, based on a country's positive values and perceptions that are relevant to export development.
National branding have become more important in recent times as a means to differentiate products that are becoming more homogenous, and to create awareness of the relationships between country, brand and product images influencing purchasing behaviour.
The brand concepts, once researched, tested and defined, are then used as the basis of targeted promotional campaigns, when encouraging trade, tourism and inward investments. Eg: Tourism is a fast-growing business and developing a national brand can be part of an effective strategy in managing national growth in tourism.
National identities can be an advantage, Marlboro benefits from its 'American-ness', just as Gucci is aided by its origins in Italy or Chanel by its origin in France. Being German is one of the strongest traits of the Mercedes-Benz car brand.
Developing a national brand and managing it to increase export revenues is usually not the core objective, but a positive national image is an essential ingredient for export promotion, and also for investment promotion. National branding can be represents as a considerable investment. Nestle Company who adopted a different strategy has a stable of global and country-specific national brands in its product line. The Nestle name itself is promoted globally but its global brands expansion strategy is two-pronged. In some markets it acquires well-established national brands which it can build on their strengths - there are 7,000 local brands in its family of brands. In other markets where there are no strong brands it can acquire, its uses global names. The company is describe as preferring brands to be local, people regional, and technology global. It does, however, own some of the world's largest global names; such as Nescafe.
Global Brands
A global brands is defines as the worldwide use of a name, term, sign, symbol, design or communication thereof intended to identify goods or services of one company and to differentiate them from those of competitors.
Strong national brands may be export-handicapped due to differences in taste and style of other countries. Harley Davidson, for instances has trouble selling its brash, burly brand of motorcycles in Britain, where riders favour sleek, sporty bikes. In a global economy, corporation must reach customers in markets far from their home base. A strong brand acts as an ambassador when companies enter new markets or offer new products.
In today rapidly changing business world, global communication is more or less forcing brand builders around the world to adjust their approaches.
The purpose of global brands management is to manage and control a brand's global direction, and it is done by defining and communicating the brand's core values. The execution of this communication lies in devising and consistently applying a specific style, tone and image.
The core business approach of many large businesses is to consolidate their brands portfolio into fewer, stronger, global brands. Unilever, the Anglo-Dutch FMCG group, has recently announced that it will be cutting its brand portfolio by 35 percent in order to concentrate on developing 10 global brands. Unilever believes that in 5 years' time the market will be dominated by a few key global brands per category.
Kellogg's is a great example of how to successfully dominate a market category: its Cornflakes, Coco Pops and Special K cereals are the market leaders in many countries. (Ellwood, The essential Brand book, 2001)
Importance of brands
Brands are important because they act as the communication tool between increasingly globally separated businesses and consumers. A brand is the aura that surrounds a product or service that communicates its benefits and differentiates it from the competition for the consumer.
Companies that once measured their worth strictly in terms of tangibles such as factories, inventory, and cash but have realised that a vibrant brand, with its implicit promise of quality, is an equally important asset. A brand has the power to command a premium price among customers and a premium stock price among investors. It has the ability to boost earnings and cushion cyclical downturns. (http://business week: the best global brands) Basically, strong brands have the power to increase sales and earnings.
A strong brand not only helps customer understand an organisation but it can also imparts a sense of mission inside the organisation. Since employees embody the brand to consumers, it is vital that they understand and embrace the brand values. This is so as in the statement 'Once an enterprise understands what the brand is all about, it gives direction to the whole enterprise'
Business models have always driven the brand development model, from the early Romans, through the industrial revolution, to the current new media businesses.
An example is as below:
The cosmetics brand that Estée Lauder Inc. is developing specifically and exclusively for Kohl's Corporation which do not even have public names. Estée Lauder has agreed to become the exclusive beauty-products supplier to Kohl's stores, creating three new brands that the cosmetics company still will own - unlike most private-label brands sold by retailers - but which Lauder will be bound to provide only to Kohl's in the United States.
The essence of greatness is in the capacity of a brand to foster the sales of a product/service by creating an emotional link with its audience. As such, a great brand balances the delivery of functional benefits with emotional ones.
In the case of Marlboro, for instance, many smokers buy that cigarette because it makes them feel independent and free like a cowboy, not because they are cowboys. As it appears, great branding is deeply rooted in psycho-sociology aspect on the consumers and proves that great brands sell, and sell repeatedly!
Another example is as below:
Most people are discovered to prefer the taste of Pepsi, and yet the majority still buy Coke. Montague, Director of the Human Neuroimaging Lab at Baylor College of Medicine, has provided proof that branding plays with our brains. When Montague gave a taste of an unnamed soda (Pepsi) to his volunteers, he found that more people preferred Pepsi through the scan images of the ventral putamen, one of the brain's reward centres, it has a response that are five times stronger in people who prefer Pepsi than for people who preferred Coke. The difference is shown when Read repeated the experiment. He told volunteers which brand they tasted and nearly all the people said they preferred Coke.
Great brands are always more than the sum of their parts. Coke is more than water, syrup, and bubbles. As a matter of fact, nobody really cares about what Coke is made of; what matter is: Coke is Coke. When the memory is gone, the emotion remains
A great brand is a valuable asset for the company. In the case of Coca-Cola, for instance, Interbrand values its brand at a whopping US$ 68.9 billion, ranking it "most valuable global brand." The Pan Am name was sold for over US$ 40 million and the Rolls-Royce brand for US$ 66 million.
Building a great brand is therefore serious business, albeit it being a blend of art and science. Whatever the brand and its specific situation, the path to greatness remains the same and are almost entirely based on the way the brain stores, recalls, and processes memories. Considerable progress has been made in the last 15 years in this research field, to the great benefit of marketing and branding.
The fundamental reason for building a great brand is essentially to increase revenues. However, while branding can be tremendously fun, it is easy to lose focus. But as it is focus that creates successful brands and helps businesses grow, first and foremost, by increasing sustainable sales and price premiums, it can also attracts and retains the best talent, and facilitates relationship with employees, suppliers, vendors, shareholders, and the community. A well focused brand helps the business internally as it creates alignment at all levels of the organization.
Important of Branding to Company
While we understand how important branding is to today businesses, branding has also helped the company in the following ways:-
(i) Recognition and Loyalty
The main benefit of branding is that customers are much more likely to remember the business. A strong brand name and logo/image helps to keep the company's image in the mind of potential customers.
If the business sells products that are often bought on impulse, a customer recognising its brand could mean the difference between no-sale and a sale. Even if the customer was not aware of a particular product from the company, if they trust the company's brand, they are likely to trust the unfamiliar product. This is especially if a customer is happy with the product's lines or services. Thus, branding helps to build customer loyalty across the business.
(ii) Image of Size
A strong brand will project an image of a large and established business to the potential customers. People usually associate branding with larger businesses that have the capacity to spend on advertising and promotion. If the company can create effective branding, then it may create the image of being a much bigger operation than it really is.
An image of size and establishment can be important especially when a customer wants reassurance that the company will still be around in a few years time.
(iii) Image of Quality
A strong brand can also project an image of quality in business as many people see the brand as a part of a product or service and help to show its quality and value.
It is commonly said that if you show a person two identical products, one of which is branded; they will almost always believe the branded item is of higher quality.
By creating effective branding, then over time the image of quality will usually go up. Of course, branding cannot replace good quality, and bad publicity can also damage a brand (and the businesses image), especially if it continues over a long period of time.
For example:
The Sunny Delight drinks brand was one of the biggest in the UK just a year after its launch. However, constant bad publicity about the quality of the product has severely damaged the image of the brand, and sales have dropped for each of the past several years.
(iv) Image of Experience and Reliability
A strong brand creates an image of an established business that has been around for long enough to become well known. A branded business is more likely to be seen as experienced in their products or services, and will be seen as more reliable and trustworthy than an unbranded business. This is due to the fact that most people will believe that a business would be hesitant to put their brand name on something that was of poor quality.
(v) Multiple Products
If a business has a strong brand, it will enable the company to link together several different products or ranges it carries. The company can put its brand name on every product or service it sells, so that customers of one product will be more likely to buy another product from the same company.
For Example:
Sony sells televisions, music equipment, consoles, camcorders, DVD players, video players, and etc all under the Sony brand name.
Some companies create separate brand names for their product ranges, allowing people to see the 'core' brand name, and then use the range brand name to work out what they wish to buy.
For Example:
Cadbury's makes a range of confectionary under many different sub-brand names such as Dairy Milk, Boost, Flake, and Time Out. All of these are sold under the product brand, but all feature the Cadbury's brand name on the packaging.
Conclusion
At the core of all successful business, relationship between consumers and brands has become one very important factor. In today's market, the role of brands can not be underestimated, as most products and services are sold on the basis that the consumers recognized the brands labelled on them. In depth, the consumers recognise the perceived quality and advantages of the brands. In this report, we have discussed the various types of brands and the country of origin effect. Taking in consideration the different advantages of branding mentioned in the report, we determined that branding is important especially in the global market.
References:
Books:
) Drawbaugh Kevin, Brands In The Balance. Publisher: Pearson Education, 2001
2) Ellwood Iain, The Essential Brand Book. Publisher: Kogan Page Limited, 2001
3) Moser Mike, United We Brand. Publisher: Harvard Business School Publishing, 2003
WebPages:
) Edwin Colyer - " The science of Branding", Website: http://www.brandchannel.com
2) Martin Lindstrom - " Global Branding versus Local Marketing", Website: http://www.clickz.com
3) Natalie Domeisen - "Is there a case for National Branding", Website: http://www.tradeforum.org
4) Jack Yan - "Branding in the 2000s", Website: http://www.allaboutbranding.com
5) Ron Irwin - "Made Where", Website: http://www.brandchannel.com