Global Marketing Professor

What is Global Branding?

A typical definition of a global brand is “a brand that is marketed under the same name in multiple countries with similar and centrally coordinated marketing strategies” (Czinkota & Ronkainen 2006). Global brands have the goal of creating and maintaining a consistent identity with consumers all over the world. This can be accomplished in a number of ways, but it is no simple task.

Global Branding Strategies

• Solo Branding – A branding strategy under which each product that the parent company sells has its own name brand. An example of this is Coca-Cola. Each of their products such as Sprite, Fanta, Dasani, Minute Maid, etc., have their own global brand names that they are marketed and sold under individually. This strategy is beneficial for targeting specific market segments and consumer groups.
• Hallmark Branding – In this branding strategy the firm tags one brand, generally the corporate brand, to all of the products and does not use sub-brands. Examples of this include most banks, such as Wells Fargo or Chase using the same brand name for all of the services and branches the company has. This strategy keeps the branding simple for consumers to remember and allows the company to focus on one brand name.
• Family (Umbrella) Branding – This branding strategy focuses on the parent company brand name, and everything the company sells is under that brand name, no matter the product. An example of this is the Virgin Group, which includes Virgin Atlantic, Virgin Galactic, Virgin Mobile, Virgin Voyages, and more. This is a corporate brand name focus so that consumers associate one of the company’s business units with the quality and reputation of the all-encompassing brand.
• Extension Branding – A company with a pre-existing established brand enters a new product category using the same branding, now over multiple product categories, by extending the brand to the new markets. An example of this is Samsung, who have extended the brand from televisions to cell phones, washers and dryers, refrigerators, and more. Having established their name with a strong reputation, they extended the corporate brand name from the original product of TV’s to all of the products the company offers today. This is a good strategy for a company with a pre-existing good reputation entering a similar market that people will perceive well.

Is Global Branding Worth It?

When it comes to global branding, there are as many, if not more stories of failures than successes. Companies must make many considerations before deciding on a global branding strategy. However if a company succeeds in creating and maintaining a global brand, the great level of exposure and sales that comes with a global brand make all of the marketing expenditures and difficult decisions worth it. Just make sure you are aware of the various strategies available and conduct adequate market research to improve the chances of success.

The authors of the last blog post talked about optimal international pricing strategies. Companies face many different challenges, outside of culture, language, and government policies, when deciding which strategy to implement. These challenges mainly revolve around currency.

Export Price Escalation: Prices are often higher in foreign markets in order to ensure that export costs, such as shipping, tariffs, and insurance, are covered.

Inflation: When inflation rates are constantly fluctuating, it can be difficult to set a price in order to continuously make a profit. Companies can attempt to modify their components so that the raw materials and packaging are lower-cost. A great example of fluctuating inflation rates is Mexico. Due to the Coronavirus, inflation rates in Mexico are currently higher than expected for the year, which is leading to difficulty in buying products.

Currency Movement: Exchange rates are effected by political and economic conditions. The gains and losses by the change in exchange rate can be transferred to customers.

Anti-Dumping laws: This occurs when imported goods are sold at an unfair price. Countries are switching to anti-dumping laws due to the removal of trade barriers; these laws are supposed to protect local industries.

Countertrade: Non-cash compensation that can be used to barter (ie. exchange of raw materials). This is the largest way of indirect export and a good way to stimulate industries. However, companies can run into legal difficulties.

These factors above should be included in analysis of pricing. While a company may not change the type of pricing strategy, it could change the price points that are picked for each country, or the lowest sales price possible.

Information from: https://blog.blackcurve.com/global-pricing-issues-and-how-to-solve-them

Why is an international pricing strategy essential?

According to Dr. Eckhard Kucher, the primary objective of an international pricing strategy is to maximize total profitability across countries, while reducing the opportunity for potential global issues to arise. One such issue is parallel trade, where identical products are sold at significantly different prices in different countries, and therefore traded without approval of the owner. The threat of such parallel trade is especially prevalent in intellectual property-intense industries such as pharmaceuticals. In an effort to prevent this, a successful international pricing strategy should maintain an optimal price that is equitable with the consumer’s perceived value of a good or service.

Finding the optimal international pricing strategy for your business:

A number of different international pricing strategies exist, so it is important to find one that is the best fit for your particular business model. Below, we have summarized some of the most relevant characteristics of each.

• Penetration Pricing: The primary focus of this strategy is entering a new market and obtaining significant market share with a low price upon introduction of your good or service. You should ideally have the financial stability to face reduced profit margins for a period of time before economies of scale are established.
• Flexible Pricing: This strategy works best when your good or service appeals to a multitude of consumer groups in the same market, where a different price is optimal for each group. For instance, some segments may place higher importance on quality and accept a higher price point, while another segment may be seeking the greatest value for their money and therefore not willing to pay a premium. This strategy should be employed when there is demand for your product in nearly every corner of the market, whose unique needs can only be satisfied through flexible pricing.
  • Example: A company that may choose to utilize this strategy for international expansion is Levi’s. They offer jeans through luxury retailers priced as high as $278, while they also distribute through lower-end department stores with a pair of jeans starting around $40. This flexible strategy allows them to cater to segments of the market that place significant importance on premium quality and brand image, while still servicing those looking for value at a low price.
• Static Pricing: When a company faces high costs upon entering a new market, they may be inclined to implement a static pricing strategy, or one single price throughout a market, due to its ability to reduce administrative and operating costs. However, this can be a risky strategy due to competitors’ ability to easily identify and beat your pricing – in an industry with low switching costs, this could prove detrimental to your ability to establish significant market share.
• Price Skimming: This strategy is optimal for a business introducing a good or service that has incurred high costs and has intentions of efficiently and effectively gaining a return on investment. A high price is charged initially, but is likely not sustainable in the long-term as competitors begin to understand and replicate similar offerings at lower prices. This practice is common in high-tech industries where extensive and costly research is conducted during the inception of a new product.
  • Example: Apple charges high prices for new iPhone models in each market they enter, until competing brands introduce comparable technologies and prices are eventually driven down.

Why is Global Branding Important?

• Improved effectiveness in products or services over time
• Greater advantage against competitors
• Increased customer awareness

Having a brand that is immediately recognizable has many benefits – especially if this is a favorable reputation. Increased revenue and loyal customers are some of the many benefits a firm may experience.

Being recognized globally also gives you an edge over competitors; this is especially true when new firms are trying to enter the market. A firm that is associated with stability, quality and success will have strong market share that would be hard to compete with.

Strategies to Build a Global Brand

• Differentiate yourself
• Understand your customers
• Know how your brand is perceived outside of the home country
• Build a team with consistent views and goals

It is important for a firm to differentiate themselves outside of price. If price is a basis of competition then customers will be fickle. Furthermore, differentiation will allow companies to form a deeper connection with customers as customers see that their needs are being attended to. Technology has made the world smaller. The ability to communicate with your customers and address their wants and needs is very crucial in this day and age.

Understanding the customer is also critical to the success of global branding. Factors such as culture and language are important. A company would not want certain terminology to be misinterpreted. For example, Chevrolet created the Nova. It is considered a classic car in the United States. However, when Chevrolet tried to introduce the car in Mexico it did not sell very well. This is because “no va” translates to “does not go” in Spanish. That is not a very effective name for a car.

Another instance of failure was Target’s attempt to enter Canada. They assumed they could simply set up in shop in Canada. They thought that cultural similarities between Canada and the United States were good enough reasons. What they did not take into account was for language differences such as French. Target also failed to realize that there were already existing department stores that Canadians preferred. This case study shows how important it is to study consumer behavior and preferences.

Another element to global branding is consistency. Companies such as Apple, McDonald’s and Starbucks have been able to create a standard that is consistent globally. This is achieved through having consistent views and goals at all levels of business.

What is Global Branding?

Global brands are brands that are recognized throughout much of the world. Many companies intend to create global brands through various marketing and branding efforts. This global branding strategy is when a company effectively offers a product or service where the advertising, positioning, strategy, personality, that successfully look and feel are the same from one country to another!

This approach essentially means utilizing standardized global advertising and global marketing strategies. This method allows for a company to gain a sustainable competitive advantage by developing a product or service that is recognized worldwide, regardless of the country, continent or region where it is marketed. There are many brands which do a great job at this, such as Apple, Coca-Cola, Starbucks, Nike, and McDonalds. These products and services, or brands, are relatively the same whether they are being sold in China, Japan, Russia, Europe, or many other countries or regions worldwide. These companies are able to use a very similar marketing strategy successfully in order to promote the brand everywhere the brand is offered, regardless of the country or region.

Benefits of Global Branding 

There are many benefits of global branding. First of all, it can greatly help a company’s profit margins. Brands with a strong, well-known global presence create strong brand awareness and brand loyalty, which allows companies to charge a premium because consumers are willing to pay more for products they perceive as dependable, of high quality, and that provide consistency. It also can create a stronger competitive advantage for companies. Once a company is able to successfully compete locally, or even within a nation, it makes sense to expand globally. It increases customer awareness for a company, improving and creating a cohesive customer perception of a brand on a global scale. Some other advantages to creating a strong global brand include improved perceptions of product performance, economies of scale, less vulnerability to competition, greater trade cooperation, and increased marketing communications effectiveness.  

Using a standardized global branding approach may be cheaper and more effective for companies to create ads locally than to import ads and then adapt them for each market, but could prove to create many challenges if not executed perfectly. Cultural differences may make it hard to pull off a global campaign, proving it to be extremely important to find the perfect balance between a standardized and adaptive global branding strategy. For example, a brand’s image may not be the same throughout the world. Honda means quality and reliability in the United States, but in Japan, where quality is a given for most cars, Honda represents speed, youth, and energy.

Starbucks & Their Global Branding Success 

Starbucks was founded in 1971 in the city of Seattle, and is responsible for creating the concept of a third place between home and work where people can relax, enjoy a cup of coffee and experience the inviting ambience. Global branding has been one of the pivotal elements of Starbucks strategy over many years, with the company investing significantly in creating a standardized look and feel of its stores, merchandise and food and drinks. The Starbucks logo has become one of the most recognizable logos in the world and their global expansion strategy has a key objective of recreating the Starbucks experience in every new country the company enters. The consistency of Starbucks branding and experience is what has made it an internationally recognized brand. Starbucks’ consistent brand message spans every communication medium, every piece of branded collateral they create, and every aspect of their in-store design and experience.