12 - Global Brands & Local Markets

Global Brands & Local Markets
SMIT JAIN
Definition:
• Globalization has been defined in business schools as the production and distribution of
products and services of a homogenous type and quality on a worldwide basis.
• Why?
• the fact that foreign sales account for more than 50 per cent of the annual revenues of
companies such as Hewlett Packard, IBM, Johnson and Johnson, Mobil, Motorola, Procter &
Gamble, etc..
Yesterday’s Globalism
In yesterday’s one-size-fits-all world, big companies could often migrate something

that was a hit in the U.S. or Europe by tweaking the language and advertising .
Examples:
• Mercedes-Benz, traded on its reputation for building highly engineered

automobiles to drive into foreign markets.
• Coca-Cola Co. and Marlboro cigarettes traded on their “American-ness” to create
large overseas followings.
• Sony Corp. found that compact, economical, and reliable electronics like the
Walkman, struck a chord with people everywhere.
Today’s Globalism
Things have changed.
No company can safely assume there will be viable foreign markets for an existing product.
Any company seeking to expand globally needs to ask if its offerings are culturally and socially
appropriate for its targeted market.
Problems faced by Global brands
Companies find it difficult to succeed in new markets that are culturally unfamiliar.
• They often underestimate differences in the patterns of daily life in the new markets.
• This makes it difficult to develop products and services that fit peoples’ lives,
• It is difficult to extend their brand, and manage culturally diverse teams.
Western companies are now paying a great deal of attention to the growing number of people with
expendable income in China, India, and other developing regions where the cultures are very different
from those in the West.
Coca-cola : Global is Out, Local is In
• Initial set backs in 80s the benefits of global integration are sought and the need to adapt
products to local markets is largely ignored.
• Coke is instituting a strategy of ‘think local, act local’ by putting increased decision making
in the hands of local managers.
• Make model citizen by reaching out to the local communities and getting involved in civic and
charitable activities.
Better understanding and appealing to local differences.

Disney: Learning to Say Oui Not Yes
Before :
• workers were required to speak English, even if most people in attendance were French.
• liquor was not sold in the park, they have a drink with lunch or dinner.
• many of the exhibits and rides did not have a local theme, they were the same as those in
Disneyland USA and thus did not appeal to Europeans.
After :
• began creating European-specific attractions
• Started to serve alcoholic beverages
series of changes, abandoning its global approach, and substituting one that appealed to local
tastes.
P&G: Regional Focus and Global Coordination
Procter & Gamble (P&G) with annual sales of almost $40 billion has operations in virtually every
country of the world.
Trick:
• the firm employs a strategy that combines high national responsiveness with high economic
integration.
• strategies being developed and implemented locally and/or regionally. In particular, product
delivery and marketing are local.
• the ‘back office’ of payroll, financing, human resource management and other general services
and processes is coordinated on a more global basis, in order to achieve internal economies of
scale.
Result:
• economic efficiency and localization.
Kingfisher: Where Retail is Detail
The Kingfisher Group, a British retail enterprise with annual sales of over $10 billion, was
founded in 1989.
• ‘retail is detail’ and ‘local knowledge is vital.’

• The approach that is used in managing these geographically dispersed operations
How Companies Try to Understand Consumers
Two general types of research that companies use to understand new markets
1. product-focused research: asks consumers through surveys, focus groups, interviews,

home visits and usability tests, about existing or prototypical products and services.
2. culture-focused research: uses measures like census-taking and demographic data, to look
at general patterns of daily life like value systems, social structures, and relationships
among friends and relatives.
Advantages & Disadvantages
The advantage of product focussed research is that

• it leads to specific insights about the offering, enabling the company to fix problems or add
features.
• It can be fast, practical and can lead to statistically valid conclusions about important details.
• if a prototype of a new offering is being examined by a sample group, these research
techniques can tell you if they hate it – a good thing to know early in the process.
The problem with this type of research is

• the results almost never lead to insights about possibilities that could make large-scale
improvements for users.
• The insights from focus groups and surveys are almost always limited to thecurrent
expectations of the subjects.
Advantages & Disadvantages
The advantage of culture focussed research is that

• A company can learn, for example, that increasing numbers of families have two people
earning salaries, that more people are getting high-school educations, and that people are
putting more value on the privacy of their personal information.
• This research will give deep insights into behaviors, beliefs and peoples’ goals, which can be
used, in turn, to think about the products a company is planning to launch.
The problem with this type of research is

• Findings are seldom specific enough to lead a development team to improve the offering they
are trying to create.
• research is time-consuming, and development time for companies only gets shorter,
• this is a difficult research technique to use.
• the product research that is practical but does not lead to new insights
• the culture research that leads to major insights that are difficult to apply
• Of course, the answer is that companies usually do some of both and hope for the best.
Activity focussed research

• focusing on people’s activities when they are using a product or service a company wants to
develop.
• Which market do we want to access.
• Take macro and micro data to make a segmentation decisions on these markets and choose our
priorities.
• How can we modify our product to make more attractive to each sepate group: you can
change.
– Performance levels
– Design
– Support
– Speed of services
– Packagining
– Positioning
– Price?
• Can we position ourselves as being the best where there are many others to choose from?
Tips
• Do not assume an integrated global market.

• be prepared to design strategies that take into account regional trade and investment
agreements.
• Encourage all your managers to think regional, act local — and forget global!
• Develop new thinking and knowledge about regional business networks and assess the similar
attributes of competitors, rather than always developing pure global strategies.
• The foreign market is not always the same as your home market.
• Make alliances and foster cross-cultural awareness.
• When global brands target their regional markets using the appropriate economic
integration/national responsiveness, they tend to be successful.
How it will help?
• Planning products and services for culturally divergent markets.

• Managing their brand across cultures.
• Create and managing teams of culturally diverse employees.

12 - Global Brands & Local Markets

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Global Brands & Local Markets

In yesterday’s one-size-fits-all world, big companies could often migrate something

• Mercedes-Benz, traded on its reputation for building highly engineered

Things have changed.

Better understanding and appealing to local differences.

• ‘retail is detail’ and ‘local knowledge is vital.’

1. product-focused research: asks consumers through surveys, focus groups, interviews,

The advantage of product focussed research is that

The problem with this type of research is

The advantage of culture focussed research is that

The problem with this type of research is

Activity focussed research

• Do not assume an integrated global market.

• Planning products and services for culturally divergent markets.

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