The article discusses the prerequisites and conditions of globalization in conjunction with the characteristics and features of international, global, multinational and transnational brands. The conditions for the effective implementation of global brand management are analyzed and the factors of brand perception on the international market are indicated.
Keywords: brand, globalization, strategy, world market, norms, management, economic relations.
In the 90s of the 20th century, global market liberalization began, which allowed large Western companies to enter the global market. With the increasing role of leading transnational corporations, as well as competition between them, one of the effective measures to increase the competitiveness of companies on world markets and the way to quickly optimize tangible assets in accordance with the changing market situation remains the policy of mergers and acquisitions.
In the context of global competition, the company's leadership is ensured by its activities in all markets, but it is especially important to gain an advantage in strategically important countries where the market capacity is the greatest and there is a developed infrastructure. It is in strategically important markets that competition achieves the greatest sharpness.
Global competition arises when a company has a global view on competition and decides to maximize profits, using sources of its creation around the world . Globalization makes the competitive environment highly mobile. With global competition, companies penetrating new international markets will affect firms entrenched there by bringing various competitive advantages to the competition field, expanding and combining several sources of differentiation and cost leadership. These often globally oriented companies go beyond simple strategies and try to develop multiple sources of advantage using business opportunities around the world.
Thus, at a certain stage of development of international economic relations, we can talk about global marketing, which views world space as a single market, which is built on the uniformity of national, cultural, behavioral and other characteristics of the world market, and not only on account of national characteristics .
To increase the efficiency of brand portfolio management, leading corporations focus on global brands, which are a source of additional value for companies in the long run, and apply international brand management policies, focusing on the requirements of the largest world markets (USA, Japan, China, EU countries).
Globalization as a form of business internationalization
The spread of globalization as a form of internationalization of business, and the growing popularity of global (global) brand policy are promoted by a number of factors presented in Figure 1.
Fig. 1. Factors of world (global) brand policy
A truly international activity can be based on:
– technological development;
– basic concept;
– relevant marketing.
Strategies for entering the international market
Different dimensions of the brand determine its essence and strategic orientation, the comparative characteristics of which are presented in Table 1.
Comparative characteristics of brand strategies
The most extensive and efficient use of time, resources and investment in the brand. High stability, less complexity. Supports complex solutions. Maximum market impact
General brand profile. The ability to transfer bad reputation to all products
Brand investment covers the entire product line. Transfer of a positive image and brand to all products (synergistic effect). Using brand related relationships
The possibility of blurring the brand. Restrictions for the positioning of individual products
Brand profile, focused on the product. The lack of transfer of bad reputation. Creating a variety of growth platforms
The high cost of creating a brand for a particular product. A wide variety of brands weakens the perception of some of them.
High quality, high-quality positioning. High premium price
The high cost of creating a brand. Poor compatibility with the brand family
Can be used in the mass market. Generates high brand credibility
Requires ubiquitous presence. High brand awareness required (costly)
Multinational (local) brand
Lack of language problems. Adapted to national requirements
May become useless with subsequent internationalization. May be too costly (less room for standardization)
The possibility of standardization. Cost effective (economies of scale). Use of international media
The need to comply with various legal requirements. The possibility of blurring the image. Language / Cultural Issues
Any brand that is sold in at least two different countries can be called international. Nevertheless, companies that want to implement internationalization and are looking for a suitable branding strategy to reach the international level have several possibilities for this .
- The strategy of an international brand. Companies that operate in international markets, without widely adapting their market offerings, brands and marketing activities to various local conditions, use the strategy of an international brand. This strategy is suitable for companies whose brands and products are truly unique and do not encounter any serious competition in foreign markets, for example, as happens in the case of Microsoft. These companies have valuable competence that is difficult to imitate. Thus, in this case, internationalization is not related to price pressure and economies of scale — the main driving forces of the global brand strategy.
- Global brand strategy. This strategy is characterized by a strong focus on increasing profitability by reducing costs based on standardization, the effect of the growth curve of overall productivity and local savings. Companies that use a global strategy do not adapt their branding concept to possible national differences, but use the same brand name, logo and slogan all over the world, for example, as Intel did at the beginning of its operations.
Market offer, brand positioning and communication are also identical in all global markets. Standardized brand performance leads to significant economies of scale in terms of brand investment. Most industrial companies comply with the requirements associated with the global brand strategy, and therefore often use it in practice.
The global brand bears an emotional advantage for the consumer; it is associated with strength, proven product quality . Therefore, a very important point in branding is the integrity and consistency of the promotion policy, and inconsistency undermines trust and weakens the brand.
To implement a global strategy, it is important to clearly identify profitable market segments. This goal is served by a global segmentation, the essence of which is to define “paired” country markets with similar characteristics.
Depending on the specifics of the products underlying the brand, there are three approaches to global branding:
1) for products of natural and natural universality, the standardization of which occurs without the production of human participation — raw materials, fuel, energy;
2) for goods and services resulting from human production, which are easy to standardize on uniform requirements;
3) for goods sold in countries with unsatisfied demand, and any unsuitable goods are bought (for example, without instructions in Russian, electrical equipment unsuitable for the country's electrical networks, goods with inappropriate packaging, etc.).
Ways to enter the world market: can be divided into three blocks: «inhaling», «jumping» and «joining».
The first path is the longest (may take years) and is typical for companies operating in traditional industries. In this case, companies consistently go through a series of stages that allow them to gain more and more experience in foreign markets, which, in turn, helps reduce perceived risks of activities in the business environment of foreign countries and increase the transfer of resources to foreign markets (making foreign direct investment).
The second way allows companies to almost immediately become noticeable players in the global market. This approach to international expansion is called «born global». Companies in this category usually do not have the resources necessary for globalization and global marketing, and obtaining these resources from traditional sources is very difficult due to the fact that these companies have not yet proved their reliability and ability to make a profit (they do not have serious positions in the domestic market and financial history).
The third path is the most common in today's practice and is associated not only with domestic but also with international mergers and acquisitions policies.
To identify the possible global potential of the brand, you can imagine a typology of goods (Fig. 3), which is based on, on the one hand, the degree of their technicality (Hi-Tech high technology products), and, on the other hand, their degree of emotional impact (high «touching» — Hi-Touch). Common to these categories are considerable inner potential, as well as an appeal to the universal language.
Brands «Hi-Tech» use a specialized technical language, understandable to all potential buyers. This applies to technicians, electronics, financial services, musical instruments, etc. Having a professional language facilitates globalization, although it does not guarantee its success, as technical adaptation can be very important.
Brands «Hi-Touch» appeal rather not to information, but to images, but rely on universal themes that are understandable to all potential buyers. Such universal themes can be, for example, materialism, play, heroism, love. Similar topics are attracted to the sale of perfumes, jewelery, watches, garments, etc. [five].
Due to the fact that global brands may occupy different positions in local markets, for example, be leaders in some markets and have minimal market share in others, one of the tasks is to correctly position the brand in the local market.
The same brand in different markets can be positioned differently. There are the following types:
– global — implies the cosmopolitan brand and the use of similar advertising companies in all countries where the brand is promoted;
– foreign — assumes that the brand identity, its use and consumers are associated with foreign culture, most often found in countries with weak economies;
– local positioning is the positioning of a brand as part of local life.
Fig. 2. Matrix of determining the competitive status of brands in the global market
The best from the point of view of competitive advantages position is taken by the «kings», which gives them the opportunity to expand the business. The worst position in the «mediocre» brands that need a strategy of marketing niches. «Barons» have the opportunity to expand, but are concentrated in a limited number of countries. “Crusaders”, although they work in many countries, but their position is vulnerable due to the weakness of the product portfolio.
To implement global (global) branding, a firm must have qualified specialists in the field of international marketing, experience in foreign markets, a well-functioning marketing service, financial capabilities, and appropriate corporate culture. In other words, even with competitive products, a firm cannot always sell it in many markets without the corresponding costs and efforts to organize a complex of international marketing.
Current trends are such that with the growth of market uniformity, the homogeneity of needs in different countries, international standardization, individualization of goods, strengthening of national traditions, the desire of buyers to have a familiar product is typical.
In addition, global support increases the prestige of the brand and often allows it to be positioned in the upper price segments of the market, increasing the company's profit. This, in turn, allows geographically diversifying the risk of brand marketing failure.
The global brand management policy proves the effectiveness of the practice of the largest corporations. When compiling the globally recognized annual ranking of the most expensive brands, Interbrand takes into account that the globalization factor of a brand (when the company receives about a third of its revenue outside its own country), along with six other factors (stability, development trends, leadership, market position, support and legal protection of the brand), determines its value.
Speaking about the shortcomings of global marketing communications, the following should be noted.
– Complicating the coordination and reporting of a firm can lead to a significant increase in management costs, staff expansion.
– Over-centralization of power and control can adversely affect staff motivation and business morale.
– Global strategies are dangerous due to the globality of possible errors. Premature entry into a foreign market, unreasonable expansion of market coverage, etc. are possible.
– Standardization and unification of products can lead to the fact that it will no longer satisfy consumers, no matter in which country they live. In addition, the global standard product is developed for the global (slightly virtual) market and is not always able to meet the specific needs of consumers in all its member countries.
– Concentration, standardization and rationalization of activity deprives international marketing of its true nature — focusing on meeting specific requests of specific consumers, that is, loss of flexibility and slower response to market demands with its diversity of demands and preferences. Unified marketing reduces the ability to adapt to the behavior of local consumers.
– Risks of international activities are increasing, including currency risks associated with differences in costs and revenues in different countries. Currency revenue in this case requires a special insurance system.
– Integrated competitive actions can lead to a decrease in revenues, profits, deterioration of competitive positions in local markets, including in a relatively long-term plan. In this case, individual divisions of the company have to sacrifice themselves for the sake of the interests of the company as a whole (considerable effort is spent on fighting a global competitor, rather than a direct competitor in this local market).
– The excessively high role of the communication policy of global international marketing (especially for consumer goods), when there is an active influence not only on consumer decision-making by consumers all over the world, but also influences his feelings, emotions, and convictions with the aim of imposing an idea about a certain product.
The following measures provide effective leadership in the field of global brand management of the company.
Sharing knowledge and experience in global markets. The most important element of the global leadership strategy in the field of branding is a communication system that covers the entire company. Managers in all branches of the company located in different countries should have wide access to information about all programs, their successes and failures, as well as about consumers in different markets. Creating such a system requires a climate conducive to the free flow and exchange of information, and above all, appropriate incentives, including in the form of direct remuneration for the provision of information. An effective method can serve as regular meetings and conferences. An important role is played by electronic means of communication, first of all, intra-company information networks and data banks. The management of the network monitors the movement of information, its presentation in a user-friendly form. Another means of sharing experiences is site visits. For example, Honda sends teams to learn the best experience; in some firms, top executives do. Procter & Gamble uses strategic planning groups of 3 to 20 people who study local markets and specific marketing methods that are effective in these markets, develop global strategies and recommendations for the use of their elements. Finally, information is transmitted in the process of conducting research and sharing their results.
The overall process of brand planning on a global scale. Leading companies in the field of global brand management use a planned process common to all markets and products, a single terminology, a common data structure for strategic analysis, and uniform international strategic models and programs. Any model of strategic brand development should be characterized by a clear definition of individuals or groups responsible for the brand and strategy, using standard processes that define target segments and brand identity.
In the process of strategic planning carried out for the purposes of global brand management, it is necessary to conduct:
– consumer analysis, giving the opportunity to catch consumer associations with the brand, as well as to develop an associative brand field and a platform for its positioning;
– competitor analysis needed to create brand identity, give the communication program specific features that are different from competitors;
– analysis of the brand itself, including its past stratifications, image, strengths and weaknesses, the idea that it gives about the company.
When implementing the process of planning world brands, it is necessary to avoid narrow fixation on the properties of the product, leading to the fragility of the brand's advantages, ease of copying, and superficial consumer perceptions. The strategy of a company that is aware of the purpose of its brand should include individuality, a user's perception, distinctive features of the company, its intangible assets (for example, reputation for innovation and quality), attributes that are symbols of the brand .
In addition, it is important to bring the brand identity to the personnel and partners of the company. Reference books, newsletters, books and videos serve this purpose. The planning process should also include the measurement of brand value and achievements.
As part of the strategic process, a mechanism for coordinating global strategies with country strategies is needed. Here two approaches are possible:
1) “top-down” coordination, when a country strategy complements or modifies the global one. Any departure from the global strategy must be justified by the country strategy developers;
2) “bottom-up” coordination, when the world strategy is a synthesis of country strategies. The latter are grouped according to similar defining features (for example, by the nature of the market or the competitive situation) with the selection of common elements.
Definition of management functions and responsibility in the field of brands. Managers on the ground, actually having knowledge of the country, the competitive situation and consumers, as a rule, are convinced that it is their strategy that best suits the local conditions, and they are afraid of imposing any other. With the decentralization of management, now dominant in most companies, there is no mechanism for overcoming this resistance and the conscious and voluntary use of the best strategy options. Therefore, it is necessary to clearly distribute managerial functions and responsibility for the development and implementation of a global strategy.
There are four types of organization of international strategic management in the field of branding:
– management teams by product. Procter & Gamble, where senior management pays great attention to marketing, has 11 management teams — by the number of product categories, each of which consists of four managers responsible for research and development, production and marketing of relevant products within their own region, and vice president of the company, who directs their work. Teams meet 4–5 times a year and solve global branding issues. The high position of team members makes it easy to overcome organizational barriers and implement decisions;
– leadership by a senior official. At the same time, the manager takes upon himself the approval of all strategic decisions in the field of branding and monitors their implementation, both on a global scale and in individual countries, and often he himself makes specific proposals. This concentration of authority contributes to the coherence and globalization of brand strategies;
– global brand manager. In many firms, especially in high technology and service industries, where senior management is less familiar with marketing problems, effective management of this process requires the appointment of a special manager. The authority of the brand manager is usually limited, so he needs the support of top management. The tasks of a global manager include the development and implementation of a world strategy: the organization of international cooperation, the development of uniform planning standards and a communication system. He must have global experience, authority and product knowledge;
– global team. Such teams usually consist of representatives of regional (country) services and functional areas of marketing (advertising, market research, sales promotion, etc.). They can specialize in divisions or market segments. These segments are coordinated by the global brand council.
Achieving the highest quality work when creating brands. The main task in this area is to balance the overall strategy and take into account local requirements and peculiarities. Its decision is connected with the determination of the most effective way to promote a brand, the choice of the best advertising agency and developers, and constant monitoring. The system of global control, in addition to financial indicators, should take into account such parameters as consumer awareness, consumer commitment (loyalty) to this brand, its individuality, and public reaction, which lay the foundation for developing brand creation programs that hold strong positions in all markets.
- Multinational brand strategy. This strategy is characterized by a comprehensive and complete adaptation of brands, market offers and marketing activities. It targets various domestic markets — nations or regions. Companies sometimes have to use a multinational brand strategy under the influence of market regulation and external circumstances. In certain markets, full adaptation to local conditions is inevitable. For example, in some countries legal services can be promoted using communication tools, while in others it is prohibited. The use of a multinational brand strategy is most appropriate in cases where a company is faced with high pressure, seeking to meet local requirements.
- Transnational brand strategy. Companies using this strategy develop individual branding concepts for all foreign markets in which they operate. Not only the brand, but also the market offer and marketing activities are specifically adapted to local conditions. However, the corporate brand concept remains visible and acts as the basis for guiding local adaptation within its boundaries. At the same time, the company can position its brand in different ways and use adapted pricing and product policies. An example of a transnational advertising campaign can serve as a standardized advertising with the participation of national celebrities. The transnational strategy is designed to best meet national needs. The negative points in this case are the high investment required to meet these requirements, as well as the lack of advantages of standardization. Thus, transnational branding combines the properties of multinational and global branding. Brands must be globally competitive, but must be modified and adapted to meet the requirements of local markets .
Changing conditions and expanding the boundaries of markets require constant adaptation of strategies, so in reality there are hybrid forms.
To successfully launch a brand in the international market, it is necessary to understand the differences in consumers' perception of the brand, which is influenced by many factors. Such factors can be conventionally called norms (rules defining the perception of a brand by consumers). According to the system concept of the essence of the process of perception, the norms can be divided into three types:
– norms of the product category;
– norms of needs;
– cultural standards.
Norms of product category (category conventions). For each category of products or services there are customs and unwritten rules that most players adhere to in the market. Smaller players and foreign brands try to attack such norms in order to expand their market share. The norms of categories often are or become flexible — they undergo changes in the minds of consumers or gradually disappear. Therefore, new brands most often attack precisely the norms of the category.
There are three types of norms of the product category:
- The norms of representation (representation) describe how and where a brand manifests itself. They consist of factors such as advertising, packaging, brand name and its logo. Performance standards often reflect consumer preferences that are not so obvious to foreign brand managers. These include, for example, historical motifs and plots, which emphasize that the production of brands is carried out by traditional methods.
- The norms of experience in using a product are dictated by the way the consumer is accustomed to using a product or service. The user experience is often determined by the benefits these products and services offer.
- The norms of the used media and distribution channels determine which media (media) and distribution channels are considered acceptable for brand promotion. The norms of the distribution channels used determine how the product is distributed and where it is sold.
Standards of needs (needs conventions). Consumers create relationships with a brand based on their personal needs and requirements. It is very important to understand that although a certain need may be common to all people, it can be met differently in different countries. Before launching your brand in a new country, a brand manager should be well aware of exactly what needs his brand satisfies in a new market. From this depends largely on the positioning of the brand and the choice of the target group.
Cultural norms (cultural conventions). Each society has its own cultural norms that influence the way people in this society think and act. Brands are also perceived by consumers in the context of cultural norms. It is much more difficult to struggle against the norms of culture (and most often it is meaningless) than with the other two types of norms, as they have been developed for centuries. Therefore, it is especially important for brand managers to understand the impact these norms have on the perception of their brands.
Culture norms have a large number of varieties. However, beliefs have the greatest effect on brand perception.
Beliefs are the views that members of society consider correct. Beliefs may concern various spheres of the individual’s life activity, for example, health, the general structure of the world, etc. The most typical example of the influence of beliefs on a brand is the effect of the country of origin of the brand. Consumers often have a number of beliefs about a country that can positively or negatively affect the brand produced in it.
Thus, the article discusses the prerequisites and conditions of globalization, describes the characteristics and features of international, global, multinational and transnational brands, and analyzes the conditions for the effective implementation of global brand management and identifies the factors of brand perception on the international market.
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