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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)
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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)
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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
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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)
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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
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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
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Any damn fool can put on a deal,
but it takes genius, faith and
perseverance to create a brand
David Ogilvy
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CHAPTER 1
INTRODUCTION
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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
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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.
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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
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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
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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
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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
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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
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(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
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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
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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
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CHAPTER 2
LITERATURE REVIEW
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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,
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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
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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
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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
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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
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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
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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.
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Categorizing the Brand
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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).
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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
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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
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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
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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