branding strategy of mncs

Upload: sunil-kumar

Post on 07-Apr-2018

233 views

Category:

Documents


0 download

TRANSCRIPT

  • 8/6/2019 Branding Strategy of MNCs

    1/117

    A

    PROJECT ON

    BRANDING STRATEGIES OF MULTINATIONAL

    COMPANIES IN INTERNATIONAL MARKET

    (Submitted in the partial fulfillment of the requirement ofMaster of Business

    Administration, Distance Education Guru Jambheshwar University Of Science &

    Technology, Hisar)

    Research Supervisor: Submitted By :

    Amit Kumar Sahu

    Sr. VP- Business Development

    Sobha Developers limited

    Vikas P. Hingnekar

    Enrollment No.- 07061140050

    Semester MBA. IV sem

    Session 2007-09

    Directorate of Distance Education

    Guru Jambheshwar University Of Science & Technology, Hisar (India)

    1

  • 8/6/2019 Branding Strategy of MNCs

    2/117

    CERTIFICATE

    This is to certify that Mr./ Ms. VI KAS P. HI NGNEKAR Enrollment No.

    07061140050 has proceeded under by supervision his/ her project report on

    BRANDI NG STRATEGI ES OF MULTI NATI ONAL COMPANI ES I N

    INTERNATIONAL MARKET in the specialization area International Business.

    The work embodied in this report is original and is of the standard expected of an

    MBA student and has not been submitted in the part of full to this or any other

    university for the award of any degree or diploma. He / She has completed all

    requirements of guidelines for Research Project Report and the work is fit for

    evaluation.

    Signature of Supervisor/Guide (with seal)

    NAME

    DESIGNATION

    ORGANIZATION

    : Amit Kumar Sahu

    : Sr. VP- Business Development

    : Sobha Developers limited.

    Forwarded by Head/Director of study Center

    (With signature, name & SEAL)

    2

  • 8/6/2019 Branding Strategy of MNCs

    3/117

    Declaration

    This is to certify that, I VI KAS P. HI NGNEKAR the student of M.B.A. I V

    (International Business) Enrollment No. 07061140050 done a reaserch project

    on BRANDI NG STRATEGI ES OF MULTI NATI ONAL COMPANI ES I N

    I NTERNATI ONAL MARKET partial fulfillment of the degree Master of Business

    Administration to Guru Jambheshwar University of Science & Technology Hissar

    (Haryana). Solemnly declare that the work done by me is original and no copy of it

    has been submitted to any other University for awarded of any other degree ,

    diploma, fellowship of similar tital and topic.

    Signature of Guide (with SEAL) Signature of student

    Amit Kumar Sahu Vikas P. Hingnekar

    3

  • 8/6/2019 Branding Strategy of MNCs

    4/117

    ACKNOWLEDGEMENT

    Gratitude cannot be expressed or seen. It can only be felt in heart and is beyond

    description. Although thanks one is a poor expressed of deep depth of gratitude ones

    feels, yet there is no better way to express it.

    This thesis has been constructed during a limited period of time, and these weeks

    have been instructive and fun, but also very intensive, and have demanded hard

    work and commitment in order to make this thesis something to be proud of. We

    have had the chance to develop our skills within the field of business and marketing

    and we hope that this thesis will contribute to already existing research as well as

    ideas for further research. There are several persons that have made this thesis

    possible.

    It gives me immerse pleasure to express my sincerest gratitude s toward Mr. Amit

    Kumar Sahu, who has guided us throughout the whole time and given me a

    constructive feedback in order to improve the thesis.

    I would like to thank Andreas Wagner, Assistant Brand Manager, at Procter &

    Gamble and Andrew Warner, Director of Brand Management at Sony Ericsson, who

    have provided us with valuable information during the interviews.

    I would particularly like to thanks all my friends and the respondents who spared

    their precious time and helped me to filling the Questionnaires

    Last but not the least its with the grace of God that I could complete my project and

    gain so much of practical insight..

    (Vikas P. Hingnekar)

    4

  • 8/6/2019 Branding Strategy of MNCs

    5/117

    Table of Contents

    1 Introduction1.1

    1.2

    1.3

    1.4

    Background

    Problem Discussion

    Purpose

    Thesis Outline

    08

    2 Literature Review

    2.1

    2.1.1

    2.1.2

    2.1.3

    2.1.4

    2.2

    19

    2.2.1

    2.2.2

    2.2.3

    2.2.4

    2.2.5

    2.3

    2.3.1

    2.3.2

    Branding Strategies of MNCs in International Markets

    Standardization versus Customization

    Corporate Branding

    Product Branding

    Differences between Corporate Branding and Product Branding

    Factors Determining MNCs Choice of Branding Strategies in International

    Markets

    Stakeholder Interest

    Corporate Image and Reputation

    Market Complexity

    Marketing Costs

    Product Characteristics

    Conceptual Framework

    Branding Strategies of MNCs in International Markets

    Factors Determining MNCs Choice of Branding Strategies

    3 Methodology

    3.1

    3.2

    3.3

    3.4

    3.5

    3.6

    3.7

    Purpose of Research: Explore, Describe and Explain

    Research Approach: Qualitative Research

    Research Strategy: Case Study

    Data Collection Method: Interviews

    Sample Selection: Subjective and Convenience

    Analysis of Data

    Quality Standards

    52

    4 Data Presentation

    4.1

    4.1.1

    Case One: Procter & Gamble (P&G)

    Branding Strategy of Procter & Gamble in International Markets

    59

    5

  • 8/6/2019 Branding Strategy of MNCs

    6/117

    4.1.2

    4.2

    4.2.1

    4.2.2

    Factors Determining Procter & Gamble s Choice of Branding Strategies in

    International Markets

    Case Two: Sony Ericsson

    Branding Strategy of Sony Ericsson in International Markets

    Factors Determining Sony Ericsson s Choice of Branding Strategies in

    International Markets

    5 Data Analysis

    5.1

    5.1.1

    5.1.2

    5.2

    5.2.1

    5.2.2

    74

    Within- Case Analysis

    Within- Case Analysis of Procter & Gamble (P&G)

    Within- Case Analysis of Sony Ericsson

    Cross- Case Analysis

    Branding Strategies of MNCs in International Markets

    Factors Determining MNCs Choice of Branding Strategies in International

    Market

    6 Discussion, Findings, Conclusions and Implications

    6.1

    6.2

    102

    6.3

    6.4

    6.4.1

    6.4.2

    6.4.3

    Discussion: Reflections on Past Research

    RQ 1: How can the branding strategies of MNCs in international markets be

    described?

    RQ 2: How can the factors determining MNCs choice of branding strategies in

    international markets be described?

    Implications and Recommendations

    Implications for Theory

    Implications for Practitioners

    Implications for Future Research

    7 References 114

    APPENDIX- Interview Guide, 116

    6

  • 8/6/2019 Branding Strategy of MNCs

    7/117

    Any damn fool can put on a deal,

    but it takes genius, faith and

    perseverance to create a brand

    David Ogilvy

    7

  • 8/6/2019 Branding Strategy of MNCs

    8/117

    CHAPTER 1

    INTRODUCTION

    8

  • 8/6/2019 Branding Strategy of MNCs

    9/117

    1 Introduction

    Many firms have realized the potential of globalization and new markets in different

    locations of the world. When expanding globally a global brand strategy has to be

    developed and when entering international markets different strategies have to be

    considered. This chapter will start with a brief background to the thesis topic and is

    followed by a problem discussion which leads to the overall purpose and the research

    questions of the study.

    1.1 Background

    In today s global marketplace, MNCs need to set up effective branding strategies in

    order to be competitive. Depending on the structure of the company and the

    products offered, MNCs can use different strategies. There are certain characteristics

    that will affect the type of strategy chosen. In order to reach economies of scale and

    scope, many MNCs standardize their branding- and marketing activities. However,

    MNCs are often required to adapt to local preferences and cultures. There has been a

    lot of research within the area of branding strategies; however there is limited

    research on how MNCs choose which strategy to adapt in different international

    markets and therefore this thesis will handle this issue.

    Brands

    A brand is defined as a name, term, sign, symbol, or design, or a combination of

    them, intended to identify the goods or services of one seller or group of sellers and

    to differentiate them from those of competitors (Kotler & Keller, 2006).

    Ind (1997) proposes that a product is something that is made, in a factory; a brand

    is something that is bought, by a customer. A product can be copied by a

    competitor; a brand is unique . Branding has the purpose of separating a brand from

    other competitors and to identify a product or a service and to build customer

    awareness (Kay, 2004). According to Albaum, Duerr and Strandskov (2005) a brand

    is anything that identifies a seller s goods or services and distinguishes them from

    others . A trademark is a part of the brand and is protected by law (ibid).

    Van Gelder (2003) states that when defining a brand; everything is carefully

    prepared and planned in order to create value for the customers that will benefit the

    9

  • 8/6/2019 Branding Strategy of MNCs

    10/117

    organization.

    Functions of a Brand

    When moving from the concept of a brand, there is a need to explain its functions.

    Kotler and Pfoertsch (2007) discuss that branding is a very intangible concept and is

    often being misunderstood as to forming an illusion that the product is better than it

    really is. The authors state that, what brands actually do is that they facilitate the

    identification of products, services and businesses, and differentiate them from

    competition. Similar findings are made by Czinkota and Ronkainen (2004) and they

    state that branding has importance to customers, because it simplifies the buying

    process in the way that it reduces complicated buying decisions and

    emotional benefits, and offer a sense of community .

    provide

    According to Hollensen (2007) the basic purposes of a brand is universal, and these

    are:

    to distinguish a company s offering and differentiate one particular product from its

    competitors

    to create identification and brand awareness

    to guarantee a certain level of quality and satisfaction

    to help with promotion of the product

    Holensen (2007) further states that these purposes have the function of creating

    new sales

    (take market shares from competitors) or to create a demand for repetitive sales (to

    get loyal customers).

    According to Kotler and Keller (2006) a brand can also give signals of a certain

    quality of the product. Brand loyalty can create barriers of entry to other companies

    because the brand is placed in the consumers minds and it can create competitive

    advantage and a willingness to pay a higher price. It creates brand identity through

    its brand name, but also teaches the customers what the product does and why the

    customer should choose that specific product ( ibid).

    According to Yu Xie and Boggs (2006), branding means more than just naming a

    product; brands are a result of market segmentation and product differentiation.

    10

  • 8/6/2019 Branding Strategy of MNCs

    11/117

    Importance of Branding

    A brand has several functions as stated above. Furthermore, brands are important,

    and the reasons for that will be discussed below. Kotler and Keller (2006) state that

    a brand is needed because it identifies the product, and the responsibility of the

    product hence lies in the hands of the makers or producers of the product. After a

    customer has been in contact with the brand and the product through its marketing

    activities, the customer has created a perception of the brand. After that, the brand

    can be identified by the customer (ibid).

    The increasing growth of globalization has forced companies to consider the

    importance of branding (Yu Xie & Boggs, 2006). Yin Wong and Merrilees (2007) state

    that branding has a remarkable potential for international marketing. According to

    Kotler and Pfoertsch (2007) brands are gradually more vital for companies in just

    about all industries since customers face a great number of different suppliers.

    Hence, the need for companies to differentiate themselves through branding is very

    important (ibid).

    Czinkota and Ronkainen (2004) state that brands are important because they shape

    customerdecisions and, ultimately, create economic value . Brands are important in

    both consumer and business-to-business situations, where a decision of purchase is

    needed. A strong brand can create sufficient higher total returns to shareholders

    than a weak brand (ibid).

    The Value of a Brand

    Branding is important because of different reasons, and furthermore it generates

    value in different ways. Czinkota and Ronkainen (2004) state that a strong brand

    allows the company to take advantage of the brand awareness in other new markets

    as well, because the brand might be known in countries where the brand has no

    physical activity.

    Kotler and Keller (2006) mention that a strong brand creates higher profits which in

    turn create higher value for the shareholders.

    Motameni and Shahrokhi (1998) state that new brands in a global marketplace have

    a tiny chance of competing against established brands, and creating a brand from

    scratch involves enormous investments. The return on the investments spent on

    branding is converted into brand awareness, image and loyalty and the concept

    11

  • 8/6/2019 Branding Strategy of MNCs

    12/117

    summarising the value of the brand is referred to as brand equity (ibid). According to

    Keller (2007) different marketing programs must be created to satisfy different

    market segments in building brand equity:

    Differences in consumer behavior have to be identified

    The branding program has to be adjusted accordingly through the choice of brand

    elements, the nature of the actual marketing program and activities, and the

    leveraging

    If secondary associations.

    International Branding

    The concept of branding, its functions, the importance of branding, and its value

    have now been discussed. When turning towards foreign countries there are certain

    factors to consider. Bradley (2002) states that it is usually a process when brands

    are turning internationally; it often develops from being a local brand and after a

    while, when the brand is known, move into foreign markets. Palumbo and Herbig

    (2000) state that in today s global market, brands compete not only with regional

    and national competitors, but also with international

    strategies.

    competitors marketing

    Yin Wong and Merrilees (2007) state that developing brands on an international

    basis provides opportunities to exploit economies of scale, develop global markets

    and explore various market segments. The authors further claim that international

    marketers need to organize their marketing strategies to match the characteristics

    of diverse external environments. Another opportunity with acting on international

    markets is that companies can take advantage of their country-of-origin, and acquire

    other companies in order to enter a market (Bradley, 2002).

    Keller (2007) states that the reasons for going international are:

    Perception of slow growth and increased competition in domestic markets

    Belief in enhanced overseas growth and profit opportunities

    Desire to reduce costs from economies of scale

    Need to diversify risk

    Recognition of global mobility of customers

    Global Brand

    When a brand has entered international markets, many companies recognize the

    benefits with global brands. According to Kapferer (1997), a global brand has two

    functions; to distinguish different products from each other , and to indicate a

    12

  • 8/6/2019 Branding Strategy of MNCs

    13/117

    product s origin .

    Albaum et al. (2005) state that many companies adapt a global strategy. Global

    brands are usually positioned and marketed similarly throughout the world; however,

    slight modifications may occur (ibid). A global brand reflects the same set of values

    around the world, and the key in global brand strategy is formed by those values or

    brand character forms (Palumbo & Herbig, 2000). In order to succeed, global brands

    have to foresee cultural trends and consumer values (ibid).

    Van Gelder (2003) states that various markets have different internal and external

    factors that influence societies around the world, a brand is perceived differently in

    different cultures and countries. For a global brand it is needed to carefully consider

    the factors that influence customers behaviors (ibid).

    The benefit of a global brand is according to Czinkota and Ronkainen (2004), higher

    acceptance of products by consumers and intermediaries, and the drawbacks are

    loss of local flavor .

    Quelch (1999) states that industrial products and services, luxury products, and

    pharmaceuticals are groups of products that are suited to be global brands. This is

    because they are identical all over the world, and the marketing activities are also

    similar (ibid). Quelch further states that global brands have gained popularity

    because of telecommunication and youth. People are more and more mobile in their

    habits, and more people are traveling, or moving to other countries, and the

    easiness of internet has boosted globalization. With these opportunities, people learn

    what is going on around the world more than before. Furthermore, global brands are

    more common in urban areas, than in rural areas (ibid).

    Quelch (1999) states that what the ten strongest global brands have in common and

    what distinguishes global brands is that they; are strong in home market, have

    geographical balance in sales, addresses similar consumer needs worldwide,

    consistent positioning, consumers who value the country-of-origin, product category

    focus, and they have the corporate name that is the same as the brand name.

    According to Bradley (2002) there are very few brands that are known all around the

    13

  • 8/6/2019 Branding Strategy of MNCs

    14/117

    world, and the products that are sold by these global companies are similar

    worldwide, they are also positioned in the same way all around, and have the same

    product line worldwide.

    Strategic Decision

    When acting on international and global markets, the importance of a solid strategy

    emerges. Strategy is according to Ind (1997) concerned with positioning a company

    so that it can meet its long-term objectives .

    Albaum et al. (2005) state that the first choices a company has to make is to select a

    good brand, and to choose how many brands that should be included in the product

    line. Furthermore, it has to be decided whether the brand should be a single/family

    brand, an individual (local) brand, or multiple brands (ibid).

    According to Bradley (2002), when developing an international brand strategy, the

    company has to decide; which markets to act on (new or existing), new products or

    modifying existing products, and also the accessibility of the products in the

    international market. Bradley further states that companies can gain competitive

    advantage in international markets through quality and performance. Furthermore,

    the companies have to sustain competitive advantage in their branding strategy, and

    they make that achievement through; brand equity, financial strength and

    international distribution (ibid).

    A brand can gain popularity in other countries by creating popularity in one country

    (Bradley, 2002). Brands that stem from the same country are perceived similarly

    because of stereotyping. By building the brand on the same brand values as in the

    domestic market a brand can succeed internationally as well (ibid).

    When dealing with the concept of global branding, several researchers have raised

    the dilemma of whether to standardize or adapt to the local market (Alashban,

    Hayes, Zinkhan and Balazs, 2001; Hsieh & Lindridge, 2005; Yu Xie & Boggs, 2006).

    According to Hsieh and Lindridge (2005) the diversity of markets defend the view

    that a customization approach should be emphasized, but on the other hand a

    company can reach economies of scale by approaching a standardization strategy.

    They further state that the balance between standardization versus customization

    14

  • 8/6/2019 Branding Strategy of MNCs

    15/117

    has to do with to what degree the existing brand image is similarly or differently

    perceived across different nations. The same conclusion is made by Bradley (2002)

    who discusses that when global companies use a standardization strategy, they

    decrease unit costs. However, some authors, for example Hsieh and Lindridge

    (2005), have argued that it is necessary to customize the marketing mix since there

    are very few markets that are similar (ibid).

    Cervino and Cubillo (2004) discuss that instead of assuming that different nations

    are totally heterogeneous, or the other extreme that nations are totally

    homogeneous, a possible assumption may be to find a middle ground and assume

    that nations are partly homogenous and partly heterogeneous. Hence, there is a

    possibility that many MNCs use a hybrid strategy where some parts of the branding

    strategy is adapted to the local market, whereas other parts are standardised (ibid).

    Palumbo and Herbig (2000) claim that standardization of both the product and brand

    are not inevitably consistent: a regional brand may have local features or a highly

    standardized brand may have local brand names . That means that the actual

    product may be standardized, but the brand name may be adapted to the local

    market. Many researchers have highlighted that firms should act global, think local

    in order to exploit the benefits of globalization, but still adapt to the local market

    (ibid).

    Quelch (1999) states that one pitfall of global branding is that companies standardize

    everything, and assume that all marketing activities have to be standardized when

    managing a global brand. Adaptation is costly, whether to adapt or standardize has

    to be chosen from how much that is gained from the adaptation, if the overall profits

    exceeds the cost that stems from the adaptation.

    According to Czinkota and Ronkainen (2004) there are three choices of branding

    within global, regional, and local dimensions that a global manager has to make. It

    can have solely the corporate name, have family brands for a large range of

    products, or have specific product names for each item in the product line. Similar

    findings are made by Kapferer (1997) who states that some companies market their

    products under the same brand name as the company name, while others have

    different brand names on different products. McDonald, de Chernatony and Harris

    15

  • 8/6/2019 Branding Strategy of MNCs

    16/117

    (2001) state that a company has to decide if the brand should be built around its

    products or its corporate identity.

    Branding is a broad area and consists of several dimensions. Along with globalization

    MNCs face the challenge of creating a strong brand and create competitive

    advantages against competitors, hence the importance of choosing the best suited

    branding strategy is vital for global firms.

    1.2 Problem Discussion

    According to Yu Xie and Boggs (2006) several brands, corporate brands as well as

    product brands, are competing in today s international markets. Corporate branding

    is defined as the strategy in which brand and corporate name are the same ,

    whereas product branding

    (ibid).

    builds separate brand identities for different products

    Yu Xie and Boggs (2006) state that the function of a corporate brand is to simplify

    the communication with governments, the financial sector, the labour market, and

    society in general. The base of a corporate brand consists of organisational values,

    core values and added values (ibid). The corporate identity, which is represented by

    the firm s ethics, goals and values, is a vital corporate asset and differentiates the

    firm from its competitors (Yu Xie & Boggs, 2006). The advantage with a corporate

    brand is according to Yu Xie and Boggs (2006) that it can increase the firm s

    recognition and reputation to a larger extent than a product brand can.

    The advantage with product branding is that the corporate branding will be exposed

    to less harm to its corporate image if one of its individual brands fails (Yu Xie &

    Boggs, 2006). A product brand is also more flexible, and can be targeted towards

    different segments in different markets. However, a product brand may be more

    expensive to market due to the fact that different smaller segments are targeted

    (ibid).

    When entering emerging markets, it has been argued that MNCs should adapt to the

    local market in order to succeed, but the questions is whether the strategy should be

    corporate branding or product branding (Yu Xie & Boggs, 2006). According to Urde

    (2003) there are four brand architectures that firms may use:

    1) Corporate branding

    2) Product branding

    16

  • 8/6/2019 Branding Strategy of MNCs

    17/117

    3) Corporate-and-product (with dominant use of the corporate brand)

    4) Product-and-corporate (with dominant use of product brands)

    Some MNCs, for example IBM, may put emphasis on their corporate brand, whereas

    other MNCs such as Procter & Gamble (P&G) put most emphasis on their product

    brands (Yu Xie & Boggs, 2006). Other MNCs choose to set up their strategies by

    focusing on corporate- and product branding simultaneously (ibid). Yu Xie and Boggs

    (2006) state that corporate branding is on the firm-level, whereas the product

    branding is focused on the actual productor service.

    According to Hatch and Schultz (2003) many MNCs shift focus from product brands

    to corporate brands as they move towards globalization. Yu Xie & Boggs (2006)

    claim that firms which are successful in building a strong corporate brand is more

    competitive than firms which rely simply on their product brands (ibid).

    According to Quelch (1999), emerging markets are not homogeneous, and they vary

    in economic development and financial stability; they even vary in the same

    geographical areas. Yu Xie and Boggs (2006) state that there are several factors

    influencing a firm s initial choice of branding strategy (corporate versus product

    branding) when entering an emerging market. These consist of: stakeholder interest,

    corporate image and reputation, market complexity, marketing costs, and product

    characteristics. The authors further state that choosing branding strategy is a very

    important concern for MNCs operating in an international context. However, there is

    not a single branding strategy that will work for all organisations (ibid).

    Several researchers have discussed branding strategies, especially corporate

    branding, however there is limited research on how and why MNCs adopt specific

    strategies. Furthermore, there is limited research on MNCs branding strategies in

    international markets. These factors have motivated the present study.

    1.3 Purpose

    Based on the discussion above, we will aim at gaining a deeper understanding on

    MNCs choice of branding strategies; hence our purpose is to investigate the

    branding strategies of MNCs in international markets. The purpose will be reached by

    addressing the following research questions:

    RQ 1: How can the branding strategies of MNCs in international markets be

    described?

    RQ 2: How can the factors determining MNCs choice of branding strategies in

    international

    17

  • 8/6/2019 Branding Strategy of MNCs

    18/117

    markets be described?

    1.4 Thesis Outline

    This thesis consists of six chapters, which is shown in figure 1.1. The thesis starts by

    an introduction of the thesis topic and a brief background is outlined followed by a

    problem discussion which finally ends in the purpose and the research questions are

    presented. In chapter two, literature review, relevant secondary literature concerning

    the research questions are presented. In the end of chapter two, a conceptual

    framework is presented in order to narrow the information down and this helps to

    get an overview over the main issues. In chapter three, methodology, an explanation

    of the procedure and the method for collecting the empirical data on the research

    questions is presented. Chapter four, data presentation, consists

    of a presentation of the results collected from the empirical data collection in the

    case study.In chapter five, data analysis, we will compare our empirical results from

    our research with previous literature and theories regarding the thesis topic. These

    empirical results will be compared against each other in a cross-case-analysis. In the

    last chapter, discussion, findings and conclusions, our overall findings of the thesis

    topic are presented as well as our conclusions where the research questions are

    answered and our purpose fulfilled.

    Figure 1.1 Thesis Outline

    18

  • 8/6/2019 Branding Strategy of MNCs

    19/117

    CHAPTER 2

    LITERATURE REVIEW

    19

  • 8/6/2019 Branding Strategy of MNCs

    20/117

    2 Literature Review

    In the previous chapter an introduction of the thesis topic as well as a brief

    background and a problem discussion was provided. The research questions were

    also outlined. In this chapter previous research on the thesis topic is presented. This

    chapter is divided into three sections; in the first two sections, selected literature in

    connection with research question one and two are reviewed. Finally, a conceptual

    framework regarding the thesis topic is provided.

    2.1 Branding Strategies of MNCs in International Markets

    In this section the literature collected is connected to branding strategies, product

    branding, and corporate branding in international markets, as well as literature

    dealing with the strategy of standardization versus adaptation. A lot of research has

    been done related to these topics, and we have been selective in our choice of

    literature and picked out the most relevant writings that are connected to our

    research topic in order to provide an extended view of branding strategies in

    international markets. In the beginning of this section general branding strategies

    are presented, followed by a discussion about standardization versus adaptation. In

    the following two sections corporate branding and product branding are presented.

    Finally a discussion about the differences between corporate- and product branding

    is provided.

    The Concept of Branding

    According to Albaum et al. (2005) a brand is anything that identifies a seller s goods

    or services and distinguishes them from others . A trademark is a part of the brand

    and is protected by law. It is common that companies have more than one

    trademark. The function of the brand is to identify the owner of the brand. By this

    the consumer knows the origin of the brand as well as the quality. Branding is

    important because otherwise it might be hard to advertise the products (ibid).

    Bradley (2002) states that it is common to confound a brand with a product. What

    distinguishes a brand is:

    Brands give the consumer a reference point, during the purchasing process and

    afterwards.

    A brand is a product or service that provides functional benefits and added values

    that some consumers value sufficiently to buy.

    Brand values arise from the experience gained from using them - familiarity,

    20

  • 8/6/2019 Branding Strategy of MNCs

    21/117

    reliability, risk reduction.

    Brands provide information as a sophisticated form of value added - the form this

    provision varies from market to market and time to time.

    Successful brands are balanced between functional benefits and discriminating

    benefits

    .

    Branding Decisions

    Albaum et al. (2005) state that the first choices that have to be made by companies

    are: to select a good brand, and to choose how many brands that should be included

    in the product line. Furthermore, there are different decisions that have to be made:

    A single/ family brand, this strategy indicates that all products under the same

    brand name have the same quality, and also simplifies the advertising.

    An individual (local) brand, which is a strategy that adapts to local preferences.

    Multiple brands, is a strategy to have the same product but within different

    segments in one national market. This strategy differentiates products from its

    quality or characteristics (ibid).

    A strong brand has to a have long-term perspective; the company has to decide how

    the brand should be perceived by customers and stockholders. In this way the

    company creates a brand promise and a platform for the brand (DI: s

    varumrkesskola, 2007). Furthermore, the brand has to be managed effectively and

    professionally in order to keep the brand alive and interesting through innovations,

    and to fulfill customer needs (ibid).

    Country- of- origin Effects

    Countries can take advantage of their country-of-origin, and acquire other companies

    in order to enter a market (Bradley, 2002). It is important to have a stable

    international distribution system when acting in international markets in order to

    keep the costs low. However, a large well organized distribution system can create

    barriers to entry. Especially in emerging markets where incumbents can often deny

    access to international competitors (ibid).

    Branding in the International Marketplace

    Consumer product brands are mainly targeted towards the consumer markets and

    are hence mostly known among the mass market (Bradley, 2002). It is usually a

    21

  • 8/6/2019 Branding Strategy of MNCs

    22/117

    process when brands are turning internationally, it often develops from being a local

    brand and after a while, when the brand is known, move into foreign markets (ibid).

    According to Bradley (2002), when developing an international brand strategy, the

    company has to decide:

    1. Which markets to act on (new or existing)

    2. New products or modifying existing products

    3. Accessibility of the products in the international market. Brands that are exclusive

    are demanded because of their uniqueness. However, if they become too

    inaccessible, the products can prevent brand growth. But in the other way, if the

    products can be bought everywhere, they loose their uniqueness, and hence the

    demand is reduced. Many companies use brand extensions or umbrella branding as a

    tool to control brand accessibility, and many companies also control the whole

    distribution system (ibid).

    Yin Wong and Merrilees (2007) state that the development of brands on an

    international basis offers opportunities to exploit economies of scale, developing

    global markets and pursuing multiple market segments. However, branding is not a

    guarantee for succeeding on the global market (Palumbo & Herbig, 2000). A firm

    may be a great marketer in one country, but the brand cannot literally be transferred

    to another country with the expectation of the brand becoming a success (ibid).

    According to Bradley (2002), companies gain competitive advantage in international

    marketsthrough quality and performance. By transferring customer goodwill, the

    customers recognizeand identify the brand with a certain image. Furthermore, the

    companies have to ustaincompetitive advantage in their branding strategy, and

    according to Bradley, they make thatachievement through:

    1. Brand equity

    Differentiation that meet the customer needs

    Innovation - continuous and relevant

    Effective marketing communication - cross-cultural

    Focused product portfolio - balanced and relevant

    2. Financial strength

    Cash flow in domestic market

    Dominant shares in large domestic markets

    Unique challenge of international markets facing smaller countries

    3. International distribution

    Comprehensive distribution system; international networks

    22

  • 8/6/2019 Branding Strategy of MNCs

    23/117

    Bradley (2002) has identified two concepts that are essential in a sustainable success

    for brands in international markets; brand popularity and country image. A brand

    can gain popularity in other countries by creating popularity in one country. A brand

    achieves brand popularity when it is accepted internationally through advertising but

    also word-of-mouth. When the popularity is sustaining over a period of time, the

    brand can take advantage over this because it boosts brand loyalty, brand image and

    brand equity, it also has a positive relationship with performance in the long-run.

    Brands that stem from the same country are perceived similarly because of

    stereotyping. By building the brand on the same brand values as in the domestic

    market a brand can succeed internationally as well (ibid).

    According to Yu Xie and Boggs (2006) branding strategy is a crucial issue for firms

    operating in an international environment. The authors state that both several

    corporate- as well as product brands are competing against each other in the global

    market. Hatch and Schultz (2003) state that among the changes that firms make

    when they move toward globalization is shifting focus from product brands to

    corporate brands. The authors further state that the reason for shifting focus

    depends on the fact that it is difficult to keep the products differentiated and markets

    become more complex as the firm is moving towards globalization. Competition

    increases, hence firms need to position not only products but the whole corporation

    (ibid).

    Global Brands

    Quelch (1999) states that global brands have gained popularity because of

    telecommunication and youth. People are more and more mobile in their habits, and

    more people are traveling, or moving to other countries, and the easiness of internet

    has also boosted globalization. With these opportunities, people learn what is going

    on around the world more than before. It is shown that global brands are more

    appealing to the younger segments. Furthermore, he states that global brands are

    more common in urban areas, than in rural areas. Consumer behaviors are more

    similar between large cities in different countries, than in a large city and an area in

    the same country. However, this differs between products; food is for example more

    culturebound and heterogeneous than electronic equipments (ibid).

    Bradley (2002) states that there are very few brands that are known all around the

    world, and the sales of those global brands are minimum. The products that are sold

    by these global companies are similar worldwide and they function as to serve the

    23

  • 8/6/2019 Branding Strategy of MNCs

    24/117

    need of the customers globally. Global brands are positioned in the same way all

    around the world and the consumers take country-of-origin in consideration when

    buying a global brand. Most of the global firms have the same product line all around

    the world; this is because it is difficult to be too diversified when acting on a global

    scale (ibid).

    Albaum et al. (2005) state that many companies adapt a global strategy. When

    handling a global brand, certain issues such as languages has to be taken into

    consideration, because a brand may mean one thing in one country and may have a

    totally other meaning in another, the brand may even be highly inappropriate. Global

    brands are usually positioned and marketed the same throughout the world;

    however, slight modifications may occur (ibid).

    Characteristics of Global Brands

    Quelch (1999) lists the top ten global brands of 1997, these were:

    1. Coca-Cola

    2. Marlboro

    3. IBM

    4. McDonald s

    5. Disney

    6. Sony

    7. Kodak

    8. Intel

    9. Gillette

    10. Nike

    Furthermore, Quelch (1999) states that what they all have in common except for

    their easiness to pronounce and what distinguish a global brand is that they:

    Are strong in home market; the cash flow gained in domestic markets give

    advantages in global markets.

    Have geographical balance in sales; the global brand is more or less known all

    around the world.

    Addresses similar consumer needs worldwide; the products are somewhat the

    same all over the world, with some local adaptations in few areas.

    Consistent positioning; the values are communicated the same all around the

    world, and the products are positioned the same as well.

    Consumers value the country-of-origin; country-of-origin is important for global

    brands because all consumers around the world associate products with different

    24

  • 8/6/2019 Branding Strategy of MNCs

    25/117

    countries.

    Product category focus; to focus simply on one product category.

    Corporate name; the corporate name and the brand name are the same. However,

    Quelch discusses that no brand could have the same name on provisions, so Unilever

    and P&G could never use one single brand name (ibid).

    When looking at the top ten global brands today, almost the same brands are stated

    as in Quelch s (1999) research of the top ten brands of 1997. Businessweek (2007)

    lists the 100 strongest brands in the world, and the top ten are:

    1. Coca-Cola

    2. Microsoft

    3. IBM

    4. GE

    5. Nokia

    6. Toyota

    7. Intel

    8. McDonald's

    9. Disney

    10. Mercedes-Benz

    In all cases, except for one (Daimler Chrysler s Mercedes-Benz), the corporate- and

    product name are the same (see appendix A which lists the 100 strongest brands in

    the world). As much as 80% of the brands listed among the strongest hundred

    brands in the world are corporate brands and about 50% of the brands are from

    USA. Many of the brands that are listed have about the same ranking as the year

    before and the value of the brands have not changed much either from previous year

    with some exceptions.

    Benefits of Global Branding

    The benefits of global branding are that it gives the customers added value, it lower

    the costs, provides cross-border learning, and give cultural benefits for companies

    (Quelch, 1999).

    Brands Suited to be Global Brands

    Quelch (1999) states that industrial products and services are suited to be global

    brands because their customers are mainly multinationals and hence not culture

    bound. Luxury products are another group that is suited to be global brands, this is

    because the customers are often young and rich, and live in urban areas. These

    products are positioned to a niche group and can spend more money on marketing

    25

  • 8/6/2019 Branding Strategy of MNCs

    26/117

    activities. Pharmaceuticals are also suited to be global because the formulas are

    consistent worldwide, although some adjustments are needed to fulfill customer

    needs (ibid).

    Branding as a Strategic Tool

    Balmer (1995) states that there are different approaches to brand management:

    Brand Dominance does not relate the corporate brand name and the product name

    Equal Dominance links the product brand with the corporate name, for example,

    British Broadcasting Corporation (BBC) has different names for different products ;

    BBC Radio 1, BBC World Service

    Corporate Dominance uses the corporate name in all activities and on all products

    (ibid).

    Yin Wong and Merrilees (2007) claim that branding should be considered as an

    integrated business approach and that branding goes beyond marketing

    communications. The authors further state that the brand should be part of the

    firm s total business strategy. A brand can be used as a corporate strategic tool to

    improve a firm s performance (ibid).

    Brand Architectures

    According to Urde (2003) it is important for a company to choose brand architecture

    because this affects how the brand is used, the number of brands used, what type of

    brand etcetera. Furthermore he states that core value and the choice of brand

    architecture are linked together. According to Urde (2003) there are four types of

    brand architectures (shown in figure 2.1):

    1. Corporate brands

    2. Product brands

    3. Corporate and product brands (with dominant use of the corporate brand), and

    4. Product brands and corporate brands (with dominant use of product brands)

    Urde (2003) discusses that in the corporate brand box all the products share the

    core values of the corporate brand, but the brand is individual. Different from the

    corporate brand, the product brand s core values are individual for each product and

    have its own identity.

    Furthermore Urde (2003) states that a corporate brand and a product brand can

    have different roles but still be linked together, shown in figure 2.2.

    26

  • 8/6/2019 Branding Strategy of MNCs

    27/117

    Categorizing the Brand

    27

  • 8/6/2019 Branding Strategy of MNCs

    28/117

    McDonald et al. (2001) state that there are different ways of categorizing a brand.

    First, a company can use company as brand name where the corporate name and

    the product name are the same, and second, a company can use individual brand

    name where the products have individual brand names and are not related with the

    corporate name.

    Ind (1997) suggests that within corporate branding, there are monolithic corporate

    brands, i.e. all products are branded with the corporate name. The advantage with

    this strategy is thatevery time someone sees the specific brand, the corporate image

    is reinforced. However, this can also be a disadvantage, if the brand is put in

    unpleasant attention, then the corporate

    image will be damaged. Furthermore, Ind mentions endorsed corporate brands,

    which is when companies mix their branding strategies. Some parts of the

    organization might be linked together, while other can be kept separately or the link

    might not be obvious (ibid).

    Strategy Approaches

    Kapferer (1997) presents a model for branding strategies shown in figure 2.3. This

    model shows different forms of strategy approaches that a company can undertake.

    The more differentiated a product is, the more the strategy is aimed towards a

    product brand, and the more the brand functions as an indicator of origin, the more

    the strategy is aimed at a corporate brand strategy.

    At one extreme, product brand strategy can be found. This is according to Kapferer

    (1997) where one individual product has a specific name and a specific positioning;

    every new product gets its own brand name and positioning. At the other extreme

    the corporate umbrella brand strategy can be found, this means that a company has

    different products that share the same brand name (ibid). Between these, there are

    other strategies that functions differently. The companies might have a mix strategy

    of a corporate and product brands.

    Yu Xie and Boggs (2006) state that some MNCs, for example IBM, almost entirely

    focus on their corporate brand, whereas other MNCs, such as P&G, focus their

    strategy on their product brands. Another option is to focus the strategy on

    corporate branding and product branding simultaneously (ibid).

    2.1.1 Standardization versus Customization

    28

  • 8/6/2019 Branding Strategy of MNCs

    29/117

  • 8/6/2019 Branding Strategy of MNCs

    30/117

    liquid - in several countries, but the product name is adapted to the local market.

    They further claim that brand names are typically very difficult to standardize on a

    global basis (ibid).

    Arnold and Quelch (1998) state that some companies such as Unilever have created

    a demand by developing products that suits local preferences in emerging markets.

    According to Palumbo and Herbig (2000) many MNCs have tried to follow the

    standardization strategies created by successful global brands such as Coca-Cola,

    Nike and McDonald s due to the benefit with economies of scale. However, there are

    very few successful global brands that are fully standardized (ibid).

    Hsieh and Lindridge (2005) argue that a standardization strategy may not be suited

    due to the fact that nations are different. However, a customization strategy may

    overlook the factors that are homogenous across nations which may result in

    diseconomies of scale (ibid).

    Alashban et al. (2001) mention that global corporations benefit from a

    standardization strategy due to large-scale production instead of dividing the world

    into a large number of customized markets. However, brands may increase revenue

    by adapting to the needs of each specific segment (ibid).

    According to Keller (2008) some companies choose to customize to local preferences,

    whereas others execute a more centralized branding strategy, and more and more

    companies are adapting a hybrid strategy. Furthermore Keller states that because of

    new technology, firms have the ability to customize and tailor products to local

    preferences and the need for standardization is decreasing (ibid).

    Quelch (1999) states that one pitfall of global branding is that companies standardize

    everything, and assume that all marketing activities have to be standardized when

    managing a global brand. There has to be a balance on what to standardize and

    what to adapt to local preferences. Adaptation is costly, whether to adapt or

    standardize has to be chosen from how much that is gained from the adaptation, if

    the overall profits exceeds the cost that stems from the adaptation. Furthermore,

    Quelch states that it is easier to standardize in the beginning of the product launch

    (ibid).

    2.1.2 Corporate Branding

    Corporate Branding Defined

    30

  • 8/6/2019 Branding Strategy of MNCs

    31/117

    According to Yu Xie and Boggs (2006) corporate branding is defined as the strategy

    in which brand and corporate name are the same . They further state that corporate

    brand simplifies communications with government, the financial sector, the labor

    market and society. Some examples of corporate brands are according to Yu Xie &

    Boggs are IBM, Nike, Virgin and Sony. The base for corporate branding consists of

    organizational values, core values and added values (ibid).

    According to Ind (1997) a corporate brand is not just a logo, a name and a visual

    presentation; it is also the values that define it. A corporate brand can be defined by

    three areas; intangibility, complexity, and responsibility. What distinguishes thecorporation is its complexity;

    that it must interact with

    it is larger, more diverse and has several audiences

    than a brand. It is important to effectively communicate the values of the core brand

    and build

    relationships with the stakeholders and meet their needs (ibid).

    Characteristics of a Corporate Brand

    Corporate branding is characterized by the way a company communicates its identity

    (Kay, 2004). A corporate brand is according to Knox and Bickerton (2000) the

    visual, verbal and behavioural expression of an organization s unique business

    model . According to Balmer (2001) corporate brands differentiate the

    organization from its competitors and aim to be loyal

    towards the stakeholders.

    Balmer (2001) outlines five characteristics of corporate brands:

    Cultural. Corporate brands have cultural roots that stem from the sub-cultures that

    are contained within the corporate brands. The personnel have responsibility since

    they are the key stakeholder group since they communicate the organization s values

    by everything they say or do.

    Intricate. Corporate brands are intricate because they are multidimensional and

    multidisciplinary, have a range of stakeholders, both internal and external, they also

    have controlled or uncontrolled communications through for example, word-of-

    mouth.

    Tangible. Corporate brands encompass tangible elements such as business-scope,

    geographical coverage, performance-related issues, profit margins, pay scales,

    recruitment etc.

    Ethereal. The stakeholders of the corporate brand are subjective and emotional

    when judging the brand; this can be for example, country-of-origin or the type of

    31

  • 8/6/2019 Branding Strategy of MNCs

    32/117

    industry.

    Commitment. The total organizational commitment is very essential and the CEO

    and the board-level is the prerequisite for corporate branding. Commitment is hence

    the core and the cornerstone in corporate brand management.

    Yu Xie and Boggs (2006) state that corporate branding consist of two very essential

    core concepts, namely corporate identity and corporate associations. Corporate

    identity is defined as the characteristics or associations that strategists in an

    organization want to implant in the minds of their internal and external

    constituencies and corporate associations is defined as the beliefs and feelings that

    an individual has for an organization (Yu Xie & Boggs, 2006).

    Different Types of Corporate Brands

    Kapferer (1997) proposes the umbrella strategy which means that a company has

    different products that share the same brand name. For example, Yamaha, that sells

    both motor bikes and guitars, and all the products are branded with the Yamaha

    brand. Even though the products have different communication tools, they still have

    the same umbrella brand. The advantage with this strategy is that the company can

    take advantage of economies of scale on

    an international level. This simplifies the entering on different markets since the

    brand is well known and it also reduces the costs. Kapferer further states that this

    strategy is useful where the products need little marketing investments. The

    drawback of this strategy is that if one product under the umbrella brand is

    damaged, the whole brand is affected (ibid).

    Van Gelder (2003) states that corporate-, umbrella- and banner brands are master

    brands and drive consumers purchase decisions and transfer brand value to new

    product or service sub-brands . These brands provide a structure and a brand value

    that is supposed to infuse trust among the customers and this is in general hard to

    accomplish with individual brands (ibid).

    Ind (1997) suggests that within corporate branding, there are monolithic corporate

    brands, i.e. all products are branded with the corporate name. Ind further states that

    a monolithic structure should be suited when:

    An emphasis on organic growth

    A need to emphasise the points of commonality within an organization

    The need to communicate globally

    A tightly defined identity built around closely related businesses or a clearly defined

    32

  • 8/6/2019 Branding Strategy of MNCs

    33/117

    idea.

    The potential for economies of communication

    The parent brand has a strong reputation

    Managing the Corporate Brand

    Balmer (2001) states that a corporate brand and its relationships can be explained

    as A corporate brand involves, in most instances, the conscious decision by senior

    management to distill, and make known, the attributes of the organization s identity

    in the form of a clearly defined branding proposition. This proposition underpins

    organizational efforts to communicate, differentiate, and enhance the brand vis--vis

    stakeholders groups and networks. As such, a corporate brand proposition requires

    total corporate commitment from all levels of personnel. It particularly requires CEO,

    and senior management fealty as well as financial support . Furthermore Balmer

    states that there are three virtues that should help managing the corporate brand. A

    corporate brand should:

    Communicate clearly the promises of the corporate brand

    Differentiate the corporate brand from its competitors

    Enhance the esteem and loyalty of the organization that is given by the customers

    and stakeholders

    Stakeholders

    Hatch and Schultz (2001) outline three key aspects of corporate branding: vision

    (managers), culture (employees) and image (stakeholders). They further state that

    these three have to be aligned in order to have a strong corporate brand. The vision

    which is put up by the managers of the company has to be clearly communicated to

    the stakeholders, the stakeholders also have to be defined, and the expectations of

    those have to be outlined. The culture is how the values, behaviors, and attitudes of

    the company reflect the employees behaviors and how they act. This has to do with

    if the company acts accordingly with its values, if the vision inspires all its

    subcultures i.e. if the values are adapted in all units, and if the vision and culture are

    different from the company s competitors. Image is how the brand is perceived by

    the outside world, including all stakeholders. This has to do with the associations of

    the brand, how the stakeholders and employees are interacted and if the employees

    care about how the image is perceived by the stakeholders (ibid).

    According to Ind (1997) the corporate brand is the image that the stakeholders get

    33

  • 8/6/2019 Branding Strategy of MNCs

    34/117

    of the corporation that includes the communication and behavior and the values of

    the company hold the stakeholders and the corporate brand together. McDonald et

    al. (2001) state that corporate branding focuses on the brand s positioning and is

    consistent with its activities and it also facilitate the understanding of the

    organization s activities and communicates a clearer message to the customers.

    Knox and Bickerton (2000) state that corporate branding strives to

    create differentiation and preference for a product or service in the mind of the

    customer which relates with product marketing.

    Urde (2003) states that the corporate brand might have a role of building

    relationships with the government, the financial sector, and the rest of the society;

    by that infuse credibility towards the corporate brand.

    Motives for Creating a Corporate Brand

    Yu Xie and Boggs (2006) argue that the motive for creating a corporate brand is to

    differentiate the firm from its competitors. They further state that the corporate

    identity, represented by the firm s ethics, goals and values, works as an important

    corporate asset to differentiate the firm from its competitors. Due to the fact that

    products are rapidly imitated, the corporate values and images appear as important

    in differentiation strategies (ibid).

    The benefits of a corporate brand is according to Balmer (2001) increased public

    profile, customer attractiveness, product support, visual recognition, investor

    confidence, encapsulating organizational values, and staff motivation .

    There are advantages to link the brand name with its corporate name (McDonald et

    al. 2001). This tend to create trust and confident in the brand within its consumers.

    Furthermore they state that this strategy creates other advantages as well such as

    economies of scale. However McDonald et al. state that the benefits of this strategy

    might be exaggerated when entering new markets. This is because this strategy

    often inhibits the company s ability to enter a new market because the products do

    not fit in with the existing customer base (ibid).

    Hatch and Schultz (2003) state that a strong corporate brand has a major impact in

    creating a positive consumer attitude towards new products and services. They

    further state that corporate branding is important in the selling process corporate

    branding brings to marketing the ability to use the vision and culture of the company

    explicitly as part of its unique selling proposition .

    It has been argued that corporate branding involves the total corporate

    34

  • 8/6/2019 Branding Strategy of MNCs

    35/117

    communication mix, and needs integration of both internal as well as external

    communication (Hatch & Schultz, 2003).

    Balmer (1995) states that in order to achieve a successful corporate brand

    management depends upon; having a clear corporate mission and philosophy;

    understanding the company s corporate personality and corporate identity; and

    having accurate information regarding perceptions held of the organization by its

    stakeholders .

    Companies that undertake a corporate brand need to have strong linkage between

    the products and services and the corporate name (Kay, 2004). Some companies

    that have corporate brands connect the products to a social corporate mission, and

    the company s values and identity is reflected in the brand (ibid).

    Bradley (2002) states that Japanese companies use corporate brands to a larger

    extent rather

    than product brands. The Japanese companies have specialized in products like

    electronics and motorcars. However, Japanese companies have now started to brand

    Japanese food, cosmetics, and clothing which are available in western markets as

    well (ibid).

    2.1.3 Product Branding

    Product Branding Defined

    Product branding is defined as the strategy of building separate brand identities for

    different products (Yu Xie & Boggs, 2006). According to Hatch and Schultz (2003),

    product brands are short term and live in the present. The ambition of product

    brands is to attract customers and boost sales (ibid). Examples of product brands

    include Sprite and Mr Pibb under the Coca- Cola Corporation, Lux and Dove from

    Unilever and Toyota and Lexus from Toyota (Yu Xie & Boggs, 2006).

    A product brand strategy is according to Kapferer (1997) where one individual

    product has a specific name and a specific positioning; every new product gets its

    own brand name and positioning. Thus, a product brand strategy has a strategy of

    product differentiation. This strategy is undertaken by for example, P&G. The product

    is at focus and the only way to extend the product is by a renewal of the product,

    and to improve the product in order to adapt

    to customer needs. This can be for example an improvement in packaging. By using

    multiple brands the same company can have different sorts of for example shampoos

    35

  • 8/6/2019 Branding Strategy of MNCs

    36/117

    with different brands and positioning that targets different consumers. In that way

    the company can achieve a greater market share. When adapting a product brand

    strategy, mostly the name of the company is not visible for the public (ibid).

    Characteristics of a Product Brand

    A characteristic of a product brand, stated by Yu Xie and Boggs (2006), is that it is

    flexible which allows firms to position themselves against different segments in

    different markets. However, there might be very high marketing costs when a

    product brand is targeted towards

    different small segments through different brands (ibid).

    Different Types of Product Branding

    Van Gelder (2003) states that product and service brands are not master brands, but

    function ndividually from the corporate brand. The product/ service brand and the

    corporate brand are positioned separately in the minds of the customers. This

    strategy might be suited if there is a need for a distance between the corporate

    brand and the product/ service brand. The corporate brand might be weakly

    developed or that might be very different from the product/ service brand (ibid).

    Ind (1997) suggests that a more branded structure should be suited when:

    The emphasis is on acquisitive growth

    The organisation s strength is in its brands

    There is a need to segment audiences

    There is a wide diversity of businesses within the corporate portfolio

    According to Knox and Bickerton (2000) as with corporate branding, product

    branding also strives to create differentiation and preference for a product or service

    in the mind of the customer. They further state that product branding is

    characterized by added value to the core functionality of a product or service and

    this differentiate the product or service from other brands (ibid).

    Yu Xie and Boggs (2006) discuss that customers perception of a brand typically

    comes from its advertising, distribution, and communicated image.

    When targeting new markets McDonald et al. (2001) suggest that product specific

    brands should be used. This strategy is also appropriate for new products and

    services as well, since the customers then expect something new and fresh, and do

    not relate the product with previous products and values. Furthermore they suggest

    that the benefit with an individual brand name is that if one product should fail, it

    would not affect the rest of the products or the

    36

  • 8/6/2019 Branding Strategy of MNCs

    37/117

    company name.

    The same conclusions are drawn by Kapferer (1997), who states that the advantage

    of a product brand strategy is that a failure of one brand does not affect another

    brand, or the company name, that is because every brand is individual. However,

    this can also be seen in a

    reversed way; that the individual brand does not benefit from another brand s

    success. The disadvantages of a product brand strategy is the economic issues, since

    a new product launch is also a new brand launch, more costs are put into the process

    (ibid).

    Urde (2003) states that the product brand might have the role of fulfilling

    expectations and added value to the customers by flexibility and both are linked

    together with the core values.

    2.1.4 Differences between Corporate Branding and Product Branding

    Firms that are successful in building a corporate brand are also more competitive

    than firms relying solely on product branding (Yu Xie & Boggs, 2006). However,

    corporate branding is more complex than product branding since it requires

    simultaneous interaction of strategic vision, organizational culture and images (ibid).

    According to Hatch and Schultz (2003) the main difference between product

    branding and corporate branding is that focus is shifted from the product to the

    corporation. Corporate branding has a much wider perspective than product branding

    and as stated by Hatch and Schultz the broader scope of the corporate brand

    pushes brand thinking considerably beyond the product and its relationship to the

    consumer or customer (ibid).

    Other differences between product branding and corporate branding identified by

    Hatch and Schultz (2003) are:

    The product brand is managed by the middle manager, whereas the corporate

    brand is managed by the CEO.

    The product brand attracts attention from customers, whereas the corporate brand

    attracts attention from several stakeholders.

    The product brand is delivered by the marketing function of the firm, whereas the

    corporate

    brand is delivered by the whole company.

    The product brand has a short life cycle, whereas the corporate brand has a long

    life cycle.

    Product brands are more functional, whereas corporate brands have a strategic

    37

  • 8/6/2019 Branding Strategy of MNCs

    38/117

    importance to the company.

    Balmer (2001) states that there are differences between a corporate brand and a

    product brand

    which is shown in table 2.1.

    When it comes to corporate brands, all personnel within the company have

    responsibility for the brand and the management is run by the CEO (Balmer, 2001).

    Table 2.1 Comparison between a Corporate and a Product Brand

    Factors Product Brands Corporate Brands

    Management

    Responsibility

    Cognate Discipline(s)

    Communications Mix

    Focus

    Middle Manager

    Middle Manager

    Marketing

    Marketing Communications

    Mainly Customer

    CEO

    All Personnel

    Strategy/ Multi-Disciplinary

    Total Corporate Communications

    Multiple Internal and External

    Stakeholder Groups and Networks

    Values Mainly ContrivedThose of founder(s) + mix of

    corporate + other sub-cultures

    The corporate brand has a range of stakeholders, both internal and external, and the

    corporate brands need to fulfill their expectations, in difference from product brands

    that are more customer focused. The corporate brands have multiple channels of

    communication to get the brand known, but focus

    is on total corporate communication rather than marketing communications.

    Corporate brands are also multi-disciplinary instead of a doctorate of marketing.

    Finally, the values of corporate brands are held by the personnel and the

    organization s sub-cultures (ibid).

    Yu Xie and Boggs (2006) state that a corporate brand differs from a product brand in

    its strategic focus and implementation which include corporate strategy, corporate

    communications and corporate culture. They further state that generally, corporate

    38

  • 8/6/2019 Branding Strategy of MNCs

    39/117

    branding has a much more strategic focus than product branding. The focus of

    product branding is on the customer and the focus of corporate branding is on the

    stakeholders (ibid).

    Product branding as well as corporate branding attempt to create added value to the

    product or service, however, corporate branding is yet more complex since the

    corporate brand strategy has to be at the organizational level and not at the

    individual product or service (Knox & Bickerton, 2000). Knox and Bickerton (2000)

    further discuss that different from the product brand the corporate brand does not

    only consider customers, but all stakeholders, hence when managing a corporate

    brand, interaction with the stakeholders is very important.

    According to Ind (1997) corporate brands are different from product brands in the

    way that they are focusing on different audiences. While product brands are focusing

    on consumers and the corporate brands are focusing on all the stakeholders.

    However, a corporate brand should not only focus on one of these, because focusing

    solely on the shareholders would lead to an obsession on profits and solely focusing

    on the consumers will lead to an obsession with market shares. Hence, Ind suggests

    that there should be a balance between these in order to have a complete corporate

    brand (ibid).

    Kay (2004) states that a strong corporate brand is different from building a strong

    product brand since the corporate brand targets different segments. P&G has a large

    portfolio of products, but the corporate name is unknown among its customers.

    Corporate brand communications are directed towards the shareholders, employees

    and other stakeholders, and a corporate brand have little impact on its customers

    and have little influence over demand for products and services (ibid).

    Kapferer (1997) states that when companies are selling in different markets at the

    same time,

    an issue of whether to choose between a product brand strategy or a corporate

    brand strategy

    should be used. When deciding this, a case-by-case analysis is often used; this is

    shown in table 2.2.

    The table shows which strategy that focuses on which target groups. For example, a

    product brand s main target group is the customers (number 1), different from a

    corporate brand whose main target is the stockholders (number 12). From number 2

    (trade associations) and up to and including number 12 (stockholders), list all the

    39

  • 8/6/2019 Branding Strategy of MNCs

    40/117

    stakeholders.

    Table 2.2 Shared Roles of the Corporate and Product Brand

    Targets Product Brand Corporate Brand

    1. Customers

    2. Trade associations

    3. Employees

    4. Suppliers

    5. Press

    6. Issues groups

    7. Local community

    8. Academia

    9. Regulatory authorities

    10. Government commission

    11. Financial markets

    12. Stockholders

    + + + + +

    + + + +

    + + +

    + + +

    + + +

    + +

    + +

    + +

    +

    +

    +

    +

    +

    +

    + +

    + + +

    + + +

    + + + +

    + + + +

    + + + +

    + + + +

    + + + +

    + + + + +

    + + + + +

    . + = level of importance

    2.2 Factors Determ ining MNCs Choice of Branding Strategies in

    International Markets

    In this section the most relevant literature dealing with the factors affecting firms

    choice of branding strategies will be presented. There has been limited research on

    what factors that determine the choice of branding strategies in emerging markets.

    Therefore, the main factors that will we will concentrate on is taken from Yu Xie s

    and Bogg s (2006) frame of reference , but these factors have been supplemented

    40

  • 8/6/2019 Branding Strategy of MNCs

    41/117

    with additional literature found from other researchers

    Branding Strategies in Emerging Markets

    Yu Xie and Boggs (2006) state that MNCs should adapt to the local markets in

    emerging markets in order to succeed. The MNCs can choose between using a

    product branding strategy or a corporate branding strategy (ibid).

    Kapferer (1997) suggests that choosing an appropriate branding strategy should be

    determined from three factors; the product or service, consumer behavior and the

    firm s competitive position. He further suggests that if the purpose is to personalize

    the product, a product brand strategy should be chosen, and if the purpose is to

    indicate the manufacturer, a corporate branding strategy should be chosen (ibid).

    According to Yu Xie and Boggs (2006), the development of brand strategy in an

    emerging market should be based on an understanding of its economic,

    technological, socio-cultural, and competitive conditions. All those factors mentioned

    may have a significant impact on the firm s operations and performance (ibid). Other

    factors that may influence the MNCs initial branding strategy when entering an

    emerging market are according to Yu Xie and Boggs (2006): stakeholder interest,

    corporate image and reputation, market complexity, marketing costs, and product

    characteristics . Each of those factors will be described one by one.

    2.2.1 Stakeholder Interest

    As stated by Hatch and Schultz (2003), the image of the corporate brand is formed

    by the firm s stakeholders including employees, customers, investors, suppliers,

    partners, regulators, and local communities. As mentioned previously, the focus of

    product branding is on the customer and the focus of corporate branding is on the

    stakeholders (Yu Xie & Boggs, 2006). According to Hatch and Schultz (2003) the

    firm s visibility, recognition and reputation can be increased more by the corporate

    brand than the actual product brand. The image of the corporate brand is formed by

    the firm s stakeholders including employees, customers, investors, suppliers,

    partners, regulators, and local communities. Hatch and Schultz further state that

    corporate branding is successful when the values of the corporation are attracted by

    the stakeholders. An advantage with a strong corporate brand is that the company

    may attract

    investors, and potential employees (Yu Xie & Boggs, 2006). A corporate brand can

    better increase the firm s visibility, recognition and reputation to a greater extent

    than a product brand can (ibid).

    41

  • 8/6/2019 Branding Strategy of MNCs

    42/117

    According to Dagens Industri (DI: s Varumrkesskola, 2007) a strong brand affects

    the quotation positively, and result is a strong market position which leads to the

    ability to charge a higher price, which in turn leads to an increasing profit.

    Furthermore it has been discussed that a company can increase its authority by

    having good relationships with the stakeholders: customers, investors, government,

    and etcetera. A strong brand is also appealing to collaborators, which makes the

    brand even stronger (ibid).

    Yu Xie and Boggs (2006) state that it is rather difficult for an MNC entering an

    emerging market if it does not have a good relationship with the host government,

    since the most considerable difference between emerging economies and developed

    economies is the variations in regulations, rules and policies.

    Another important aspect when entering an emerging market is to create a

    partnership between manufacturers and dealers (Yu Xie & Boggs, 2006). Yu Xie and

    Boggs (2006) argue that it is very important to set up an efficient sales and

    distribution system, hence different organizations have to be integrated in order to

    reach efficiency. They further state the most optimal strategy is to use a corporate

    branding strategy under such conditions (ibid).

    Harris and de Chernatony (2001) state that what distinguishes a corporate brand is

    its focus on the organization. Furthermore they state that the employees play a great

    role when creating a perception of the corporate brand in the mind of the consumers

    and the rest of the stakeholders. The employees values have to be interrelated with

    the values of the company (ibid).

    Arnold and Quelch (1998) state that within emerging markets, national and local

    government have a great impact on country specific issues. Hence it is important to

    have established relationships with government when entering an emerging market.

    This can influence to what extent a company can get benefits such as licences or

    permits, or joint ventures. They discuss that companies with longer experience in the

    market have an advantage (ibid).

    2.2.2 Corporate Image and Reputation

    Yu Xie and Boggs (2006) define corporate image as the sum of impressions and

    expectations of an organization built up in the minds of its stakeholders and the

    public . The authors discuss that a strong corporate image is the most useful way of

    product differentiation.

    They further mention that branding has to be managed in order to create alignment

    42

  • 8/6/2019 Branding Strategy of MNCs

    43/117

    between

    the internal culture and the external image of the firm.

    Abratt (1989) states that firms should make a rigorous effort to manage their

    corporate images and the corporate image should be managed in order to maintain

    public trust. He further states that the image is not what the company believes it to

    be, but the feelings and beliefs about the company that exist in the minds of the

    audiences and which arises from experience and observation .

    Knox and Bickerton (2000) propose that the brand is developed from corporate

    image, to corporate personality, to corporate identity, to corporate reputation, to

    finally corporate branding. The process starts by a focus of the customer to a wider

    perspective and aims at the

    employees further towards an understanding of the importance of the perceptions

    from people

    other than customers and employees. Focus is more and more put on all the

    stakeholders. Hence the corporate reputation is very important in order to satisfy the

    needs of the stakeholders (ibid).

    Corporate names can be applied to products and services since they carry a message

    about the brand, however the corporate name can be damaged if it is violated by

    negative press, and problems can occur if the corporate vision and the stakeholders

    vision are not the same (Kay, 2004). Ind (1997) states that global corporate brands

    have to have a consistent naming

    approach and communicate the same brand globally. Otherwise costumers might be

    confused

    about the organization structure (ibid). Urde (2003) states that a corporate brand

    needs to have a brand personality that is inline with the core values of the company.

    The corporate brand s mission is to get the customers to identify with the brand and

    its values; hence this creates trust (ibid).

    Balmer (1995) states that the benefit of corporate branding is its consistency and it

    provides added value to products and services; contributes to a company s financial

    margins; affords protection from competitors and attracts top-notch personnel and is

    seen as having a financial worth . If the company has a good reputation it can

    benefit from that, and the strength of the company is visible to investors, the city

    and the government (ibid).

    Yu Xie and Boggs (2006) discuss that customers perception of a product brand

    typically comes from the communicated image and advertising, whereas the

    43

  • 8/6/2019 Branding Strategy of MNCs

    44/117

    corporate image is derived

    from the customers interaction with the firms employees, physical presence and

    overall marketing efforts.

    According to Yu Xie and Boggs (2006), MNCs have to create positive customer

    perceptions. However, that is much more complicated in emerging markets due to

    heterogeneity in the market structure (ibid).

    According to Roth (1992) it is very important for firms to develop and manage a

    brand image.

    He further argues that in order to reach market success, it is vital with a clearly

    defined brand

    image. If a brand is well-communicated, the consumers will more easily be able to

    identify the needs associated with the brand and hence differentiate the brand from

    its competitors (ibid). Roth (1992) stated that an effective brand image helps build

    and maintain brand equity.

    Brand equity is defined as a set of brand assets and liabilities linked to a brand, its

    name and symbol, that add to or subtract from the value provided by a product or

    service to a firm and/ or to that firm s customers (Aaker, 1991, p.15). According to

    Aaker (1991, p. 16) brand equity is based on five categories of assets and liabilities:

    brand loyalty, name awareness, perceived quality, brand associations in addition to

    perceived quality, and other proprietary brand assets such as patents, trademarks,

    channel relationships, etcetera. If the brand name would change, some or all of the

    assets and liabilities could be affected (ibid).

    According to Yu Xie and Boggs (2006) there are different benefits for firms to use

    product branding instead of corporate branding. One example is that a firm using a

    product-brand strategy instead of a corporate branding strategy may experience less

    harm to its corporate image if one of the individual brands fails (ibid).

    2.2.3 Market Complexity

    Yu Xie and Boggs (2006) state that branding strategies become difficult to set due to

    complex

    international environments. There are some barriers that MNCs have to face

    according to Yu Xie and Boggs (2006):

    On a macro environment

    o Consumer characteristics and behaviours

    o The legislative infrastructure

    o Existing competition

    44

  • 8/6/2019 Branding Strategy of MNCs

    45/117

    On the task environment

    o Inter-institutional relationships

    o Behavioural norms and channel structures

    On the organizational environment

    o Cost structures and operational flexibility

    o Management styles and cultures

    Alashban et al. (2001) propose five environmental factors that may influence brand-

    name standardization/ adaptation strategy: religion may affect certain items in

    society which may be perceived as taboo; language, translation blunders may occur;

    education, the degree of illiteracy within a society has to be considered; technology,

    technological differences across nations may affect marketing; and the economy,

    standardization is more practical in markets that are economically comparable.

    Yu Xie and Boggs (2006) state that economic growth and liberalization generate

    great new opportunities for MNCs, but there are structural uncertainties created due

    to market transition

    and transformation.

    According Yin Wong and Merrilees (2007) a firm has to adapt to its environment

    which may consist of a combination of physical, social, cultural and technological

    factors. The authors further argue that the cultural aspect is a structural influence

    which will have an impact on a firm s marketing strategy. Culture is the main reason

    why domestic brands are modified to fit

    into a foreign market (ibid).

    Roth (1992) defines three international market characteristics that may impact the

    importance

    of brand image strategy:

    1. Level of economic development

    Consumer demand and attitudes towards goods and companies offering them are

    affected by a country s stage of economic growth. Different markets have different

    economic and social condi