Brands in a number of sectors are facing a dilemma between whether to adopt a global or local marketing strategy. Local brands are determining whether to expand into international markets, while global organisations must decide whether to concentrate on leveraging strong local brands, or maintain a global focus with consistent branding.
Moving a local brand into international territories can bring success through having a presence in fast-growing markets, achieving economies of scale, and the powerful awareness and reputation that comes from globally communicated messages. Local brands, meanwhile, can develop steadfast consumer loyalty through a responsiveness to needs and cultural differences that gives them laser-like relevance.
The pros and cons of global versus local vary depending on the category. The 2013 ranking of the BrandZ Top 100 most valuable global brands produced by Millward Brown Optimor shows that local strategies have proved successful for top telecoms providers AT&T, China Mobile and Verizon, who all grew their brand values in the last year.
China Mobile increased 18% in value, winning more 3G subscribers than its rivals with an aggressive marketing strategy. Primarily focused on China and parts of Asia, this state-owned mobile giant responded to a dramatic increase in mobile data transmission by launching its Wireless City Wi-Fi data plan in more than 300 cities, and is also expanding its 4G network.
Globally-biased Orange and Vodafone, however, saw a decline in their brand value after Europe’s stagnant economy affected their financial performance.
On the other hand, global presence drove growth in categories such as luxury, fast food and soft drinks. Collectively, luxury brands grew 6% in value as they successfully met the needs of consumers across the world who continued to spend on luxury items – but wisely, buying an affordable dress but matching it with a luxury accessory, for example, and investing in classic pieces.
Luxury brands excelled at making themselves globally accessible, with omni-channel marketing that democratises luxury fashion while expressing a strong, consistent brand promise. Already available online in 27 countries, Gucci announced its first mobile app earlier this year, while Burberry broadcasts live fashion shows on its website. At the same time, brands create personalized experiences: a customer buying an accessory might receive a thank you on Twitter, while a couture customer might be invited to an exclusive fashion show.
The best of both worlds
When it comes to global or local, it’s not always an ‘either/or’ choice. The Top 100 ranking has examples of categories in which both strategies seem to be paying off. In banking, for example, global banks have risen 23% in brand value in the last year, while regional banks are worth 15% more.
Global banks were helped by economic recovery in the US and a presence in fast growing markets. They have also strived to rebuild the trust lost during the banking crisis – refocusing on the basics, and strengthening attributes that will create advocacy and loyalty such as transparency, simplicity and flexibility. In other words, they are thinking like regional banks, who deliver those things really well.
Regional banks enjoy higher trust levels than global banks: the Top 10 are well ahead in levels of both trust and recommendation. They have the ‘home advantage’ when it comes to developing relationships, and also targeting products and services to local consumers: in India, for instance, banks have very successfully introduced investment products for members of the rising middle class.
The entire beer category grew by +36%, the sharpest brand value increase of all. The world’s two largest brewers, AB InBev and SABMiller, own several of the highest value brands. They used the weight of their global operations, marketing and distribution to develop worldwide brand awareness for brands such as Stella Artois, which grew in value by 40%. Heineken and Guinness also grew, helped by a global reputation as a premium beer.
The super-brewers also invested in leveraging the appeal of the local brands in their portfolio, addressing the importance of emotional connection with consumers and the increasing thirst for differentiation. Local brands enjoyed the greatest year-on-year increase in value across all categories, with Brazilian brands Antarctica and Brahma rising 51% and 61% respectively.
Be strong locally first
A brand needs to be strong in its local market first, before expanding internationally. The top half of the BrandZ ranking is made up of strong regional brands and strong global brands – those that are ‘in limbo’ halfway between the two are weaker in terms of brand value. The strongest global brands all bided their time and ‘played strong’ in their home market before expanding.
Specialist sportswear brand Lululemon, which operates in North America and Australia, is a brand that looks poised for global success on this basis. It has built a very strong presence and reputation in its home market – each year it selects a city and stages an enormous sale in a major venue that draws considerable publicity, attendance and sales. It also has a well-developed proposition, based on transforming functional apparel into the uniform of health-conscious, fashionable women.
Whatever its strategy, a company must nurture the power a brand has to increase its value by understanding consumers in the markets they choose to enter. All the brands mentioned in this article are relevant and well differentiated, as well as present – they’ve discovered important customer needs, and they fulfil them in ways that make them stand out and keep customers returning.
By Peter Walshe, global BrandZ director, Millward Brown