Invariably as the globe continues to shrink and industries consolidate so the world of branding is effected. Brands are bastions of people’s culture, ideals, and desires. The psychological pact between a brand and consumers provides brand owners with the relationship and loyalty that generate future revenues. Cultural differences have meant that whilst large corporations have come to dominate the global business scene, a plethora of brands remain. Consolidating brand portfolios further is difficult without harming customer loyalty and profits.
Yet inevitably brands will merge and consolidate. A favoured route to forming a global brand is through acquisition. This is highlighted by HSBC’s strategy of recent years. It has bought a number of strong local financial service brands across the globe and then subsumed them within the HSBC name.
This transformation does not occur overnight. Indeed transferring brand equity from a local brand to a global brand requires subtlety and tact.
The first stage of transformation is usually in the form of secondary branding or endorsement branding. So, for example, Midlands Bank in the UK initially became ‘Midlands Bank, a member of the HSBC Group’. Later the HSBC corporate colours and logo were added and finally the Midland brand was dropped entirely.
This strategy is often successful. However, each scenario is unique and brand architecture reviews need to be conducted to determine appropriate strategy in each case. Often local sensitivities or the strength of the local brand make using the global brand unattractive. Even the transformation of Marathon to Snickers resulted in a sales downturn and people today still look at that name change with some sense of cynicism. Of course the blatantly US targeted adverts that accompanied the new re-branding did not help.
Sharing global marketing and production costs are key benefits of a single global brand, although local sensitivities and cultures again need to factored before pursuing single global ad campaigns. Raising awareness maybe enhanced for global brands, i.e. the sponsorship of international events, such as the Olympics, becomes more feasible. All potential benefits need to outweigh costs. These include losing local knowledge as a result of centralised planning. Consumer mistrust of large corporations must also these days be a consideration.
As the backlash against global corporations grows amongst consumers, the arguments for establishing a unified global brand appear less assured.
Global brands such as McDonalds, Nike and Shell appear to be valuable and strong but equally vulnerable to consumer backlashes and protests.
The current campaign against Esso is an example of such an attack, whilst the negative publicity surrounding Nike and child labour issues has undoubtedly tainted their brand value on a global basis.
Global brands are clearly here to stay, but joining that elite remains intensely difficult. The majority of the key global brands remain long-established companies such as Coca-Cola, McDonalds, the BBC and Ford.
However, some relatively new brands have managed to join the group and achieve global status. Principally new economy brands they arguably include, Microsoft, Intel and Nokia. However, many of the new economy stocks actually suffered through over ambitious attempts to build international brands in a short period. Whether global, pan-european or multiple select markets, the money needed to create a powerful brand was too great.
Building a global brand is a long-term and costly exercise. Companies with ambitions to join that elite will need to ensure that the brand proposition, culture and personality are understood, not only by the various PR, marketing and advertising consultancies employed to promote that brand, but also by everyone within the organisation. High profile campaigns coupled with more subtle means of promotion are but a starting point.
Undoubtedly most companies will harbour ambitions to be a global brand. Indeed there is no higher accolade for a company than being a global brand. Not only does it aid management’s egos but it also motivates all employees.
However, being a global brand is not essential. The benefits of having a global brand versus a portfolio of strong regional brands needs to be understood from the outset.
Having a global brand does not mean having a wide distribution network, it is much more than that. There are many international brands created in one territory and then expanded into new areas but this, many would argue, is not a truly global brand.
To be a truly global brand you need one single proposition, adapted locally and sensitive to local marketing and distribution channels. It must have not only awareness internationally but relevance. Relevance that is not just attached to a country of origin or a product specification but something more than that, a culture, a personality and values of its own. While global branding will continue, the elite group will not expand in the short term. Still, that doesn’t stop you dreaming.
For more information visit www.brandfinance.com
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
In our latest managing partner Q&A looking towards 2017, CVR Global's Richard Toone talks about recruitment, and the potential threat of competition from the legal sector, as key issues for the firm in the coming year
Deloitte to avoid tendering for government contracts over the next six months, to appease Theresa May following consultant's report that painted a less-than-flattering picture of Brexit plans
In our first Q&A looking towards 2017, Menzies senior partner Julie Adams flags up increasing digitisation, aligned with more hands-on consultative services, as the key mix for her practice