Building Brand Equity In The Global Marketplace (global Marketing Context)

Global Marketing – B6747 The Nanyang MBA

BUILDING BRAND EQUITY IN THE GLOBAL MARKETPLACE

NANYANG BUSINESS SCHOOL THE NANYANG MBA Submitted By: Chong Sheng Jiat, Corey December 7, 2009

NANYANG TECHNOLOGICAL UNIVERSITY

B6747 – Global Marketing Individual Written Assignment Course Instructor: Dr. Khoo Hong Meng

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Global Marketing – B6747 The Nanyang MBA

INTRODUCTION Globalization 3.0 is not a new concept - Thomas Friedman’s bestseller book on “The World is Flat” alerts reader to a new phenomena at the turn of the millennium that have evolved on how the world do business on a global scale, affecting countries’ positioning in the global arena as the center of the world shifts to the East. As corporations grapple with the fast-changing global dynamism, several new C-suite appointments, such as the Chief Information Officer (CIO) and Chief Marketing Officer (CMO), were created to steer and manage high-level corporate global strategies in disciplines such as Information Technology (IT) and Marketing. Clearly, marketing management from a global perspective is essential for corporations to succeed in this ‘global village’. Issues that specifically challenged the CMO include building brand equity that is acceptable globally, or even selecting the appropriate marketing strategies according to the corporate strategy. However, Cavusgil & Zou (2002) commented that there are different academic views on global marketing strategies and such views propose frameworks or propositions without empirical support, further confusing global marketers. Saykiewicz (2006) postulates that an important issue in international marketing management is the creation of a distinct competence and in contemporary global marketing would be building, managing and maintaining brand equity. A related question should be how far should we coordinate and harmonize different elements of the marketing mix across national boundaries with a focus on brand equity; whether, for example, to move to greater product standardization across countries, to adopt regional or global branding policies, or globally standardized advertising campaigns. Page 2 of 10

Global Marketing – B6747 The Nanyang MBA

Hence, this paper seeks to list the issues, analyze and provide recommendations to build a successful brand equity strategy in the global marketplace for a multi-national corporation with a core focus on the global marketing context.

LITERATURE REVIEW ON EXISTING BRAND EQUITY FRAMEWORKS As mentioned in the course assigned textbook (Keegan & Green), brand equity represents the total value that accrues to a product as a result of a company’s cumulative investments in marketing of the brand, and strengthens this relationship between brand and customers over time. In applying conceptual frameworks to brand equity, grocery manufacturers are using the quality dimension of brands so as to distance themselves from the retailer brands through differentiation and building strong brands (Hoch, 1996). Brand equity is typically synonymous to customers’ willingness to pay for similar products but with different brands (Sethuraman, 2003), or typically referred to as the price premium, commanding a higher price than competitors (Chernatony & McDonald, 2003). This is especially true for the consumer high end luxury goods segment, where brand equity affects and waivers consumer choices in a competitive market. Aaker (1996) proposed “The Brand Equity Ten” that include ten sets of measures grouped into five categories of Loyalty, Perceived Quality, Associations, Awareness and lastly Market Behavior. These individual measures are:

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Loyalty: price premium, satisfaction.

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Perceived Quality: quality, leadership.

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Global Marketing – B6747 The Nanyang MBA

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Associations: perceived value, brand personality, organizational associations.

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Awareness: brand awareness.

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Market Behavior: market share, price and distribution indices.

Anselmsson, et cl. (2006) proposed a brand equity framework (for consumer packaged food) that could be used by multinational companies to identify strategic brands dimensions in their quest to build a strong global brand. The framework proposed ‘uniqueness’ as a single important dimension at the core of brand equity, balanced by a combination of dimensions, originally proposed by Aaker (1996), between perceived quality, brand associations, loyalty and awareness (see Figure 1). They also suggest that the brand building process should start by improving the brand associations and image associated with the brand, and the corporate goal must be to allocate, the often limited resources, to those brand dimensions where the impact on the price premium is strongest.

BUILDING A GLOBAL BRAND EQUITY Global marketing management concept states that firms with a certain stage or degree of involvement in international markets need to have a marketing strategy that extends beyond regional focus to a geocentric focus, and having processes in-place to use key

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Global Marketing – B6747 The Nanyang MBA

analytical and decision-making frameworks concerning the global marketing environment. The global marketing mix for such firms would be based on a global view of its positioning, hoping to achieve a standardization and thus low cost manufacturing and/or marketing across all global sites, and still able to build in localization strategies hence achieving “global localization”. With the proliferation of consumer electronic devices and improvement in the communications infrastructure of countries worldwide, people are 24/7 connected to the latest information and up-to-date news. Hence global localization has become even more so important due to fast information travel and consumers’ thirst for instant gratification. With limited resources, firms need to focus their efforts and identify directions for future growth in terms of countries and regions on a global scale. Products, services and business systems that will form the core of the firm's internal capabilities to enter international markets have also to be determined. This entails building a balanced portfolio of countries, product line and business systems to position the firm for growth in the markets of the 21st century. Key target segments have to be identified and decisions made whether to focus on specific demographic or income segments, or alternatively to target the mass market. For example, Apple Inc. has been a focus differentiator in the Personal Computer or Macintosh industry, emphasizing on the publishing, graphics and education markets. Tim Berry (1999), a consultant for Apple Computer in the mid-1980s, mentioned that he helped Apple divided the markets into workable categories, including home, education, small business, large business and all others. Some other groups in Apple also focused on government as a specific market segment. A global strategic intent, however, will increase the complexity for firms in building their brand equity globally and sustaining it. Spurred by advances in technology and media

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Global Marketing – B6747 The Nanyang MBA

communications across national boundaries, the new marketing mix in economic, political and social realities are therefore constantly challenging global firms. As with the case of Apple Inc., its corporate culture that imbues product design with up-to-date technology wishlist of the mass market is a key branding success factor. As mentioned in the previous section, an individual’s combination of brand dimensions further complicates a firm’s global strategies balancing standardization, new marketing mix and focusing on creating uniqueness experience for the individual. Through careful market segmentation as a starting point, Apple created a strong inimitable branding through modern, aesthetically pleasing, technologically-centric and consumer-centric design that appeals to fashion and publishing professionals in the global marketplace. Apple’s strong creation of a brand personality (Aaker 1997) provides the means for an individual to self-express themselves and thereby gain emotional benefits, which allows Apple products to command a price premium. Aaker (1996) questioned what is a stronger brand name and how do brand strengths vary by country, markets and why? This is a simple yet profound question. We as individuals have varying loyalty, perceived quality and awareness tied to certain brands, but what really makes us discriminate one brand from another? A simple answer would depend on one’s experience with that brand, skewed by individual dimensions like our country of origin, culture, family background, peer influence and what do we associate this with, et cetera. The next logical step would simply to expand this individualistic answer onto a global scale. Clearly, firms would have on-hand a very difficult business problem on how to build brand equity at that granular level.

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Global Marketing – B6747 The Nanyang MBA

A BRAND EQUITY FRAMEWORK FOR A GLOBAL FIRM There are several academic suggestions for future research to look into implementing global point of view into the brand equity measures. Based on our literature review, a brand equity framework in measuring its brand and by individual product offerings is currently insufficient from the perspective of a global firm. For example, Anselmsson, et cl. (2006) states that grocery firms are spending millions into quality management programs like Total Quality Management (TQM). However, given a firm’s resource constraint, we have to ask if such a program is aligned with the firm’s overall strategic positioning, is this maximizing shareholder value, what is the product-to-market strategy and does this build brand equity. Therefore, leveraging on the work of Aaker (1996-97), Anselmsson, et. cl. (2006), Hambrick & Fredrickson (2001), and Kish, et cl. (2001), we postulate a merging of strategy formulation, financial management, and marketing management concepts to integrate with existing brand equity framework so as to guide the firm in its path to global success, as defined in Figure 2. The inner framework from Anselmsson, et. cl. (2006) suggests that the uniqueness metric represents a product’s salient attributes that require internal and external balance of a firm’s resources allocated to brand equity improvements in order to make an impact on consumer or customer mindshare. We have further extended this framework to include a firm’s strategic placement and execution in its Marketing 4Ps, Differentiators, Supporting Organizational Arrangements and Financial Status strategies have a strong logical impact on a firm’s product offerings in terms of its brand equity attributes Awareness, Loyalty, Perceived Quality and Associations respectively. Marketing 4Ps: Undeniably, a firm’s decision on a product’s location to sell, features incorporated as unique selling points, advertising avenues and pricing relative to Page 7 of 10

Global Marketing – B6747 The Nanyang MBA

competition has a strong impact on generating awareness in the marketplace. Differentiators: A successful firm, such as Apple Inc., would place emphasis on its product’s overall image, customized features, styling, robustness (representing quality in customer’s mindshare), before-sales service and after-sales support. Hence, such differentiators attract a strong customer following, as we can observe from Apple’s products. Supporting Organizational Arrangements: We believe that quality perceived can either be an opinion of its customers or by its internal staff, and relatively each person’s opinion affects others and counts towards perceived quality. Therefore, first the firm needs to have in-place policies, structure and a good reward system that takes care of its own people. Only then, would quality be infused into the products, either knowingly or unconsciously, by the very own people who built them and hence overall brand equity of a firm would be raised by the people within, most likely through word-of-mouth and generate a strong effect on perceived quality. Financial Status: For a successful firm is not fraught with bad financial news. Given today’s digitally connected world, up-to-date financials news is well propagated to the masses. A financially troubled firm would therefore reflect badly, and spread widely, on its product, people and overall brand equity at a global scale. Hence, we believe that a firm’s financial status would affect people’s association of its offerings and have a strong impact on brand equity. Once the external balance of firm’s strategies is achieved, the entire corporation would have a higher likelihood of steering towards an invisible and internal goal of innovating and generating a truly unique product in the global marketplace. Such framework is applicable to global companies such as GE which uses a single brand to distinguish its product lines. Page 8 of 10

Global Marketing – B6747 The Nanyang MBA

Figure 2: Brand Equity Framework for a Global Firm

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Global Marketing – B6747 The Nanyang MBA

APPENDIX - BIBLIOGRAPHY Aaker, D.A. (1991), Managing Brand Equity, The Free Press, New York, NY. Aaker, D.A. (1996), “Measuring brand equity across products and markets”, California Management Review, Vol. 38, No. 3, pp. 102-20. Aaker, J.L. (1997), “Dimensions of brand personality”, Journal of Marketing Research, Vol. 34, No. 3, pp. 347-56. Anselmsson, J., Johansson, U., Persson, N. (June 19, 2006). A conceptual framework for understanding customer-based brand equity and price premium in grocery categories. Lund Institute of Economic Research. Berry, Tim. (December 10, 1999). Segment the target market in your business plan. Inc.com, Mansueto Ventures LLC. Available on the World Wide Web (Retrieved on September 17, 2009): http://www.inc.com/articles/1999/12/15966.html Hambrick, D.C. and Fredrickson, J.W. (2001) ‘Are you sure you have a strategy?’ Academy of Management Executive, Vol. 15, pp.48–59 Hoch, S.J. (1996), “How should national brands think about private labels?”, Sloan Management Review, Vol. 37, No. 2, pp. 89-103. Kish, P., Riskey, D. R., Kerin, R. A. (2001). Measurement and tracking of brand equity in the global marketplace: The PepsiCo experience. International Marketing Review, Vol. 18 No. 1, 2001, pp. 91-96. # MCB University Press, 0265-1335. Saykiewicz, Jan Napoleon. (June 30, 2006). Current Issues in International Marketing Management. The International Conference. Innovation in Management. Zou, Shaoming & Cavusgil, S. Tamer. (2002). The GMS: A Broad Conceptualization of Global Marketing Strategy and its Effects on Firm Performance. American Marketing Association. http://www.jstor.org/pss/3203357

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