Setting up business or manufacturing globally


Global organizations while setting up business / manufacturing in different regions of the world must consider local aspects to be successful in the area.

The danger when a big multinational brand in another country is taking shortcuts because the brand is so developed in the home country, the temptation is to hurry in establishing the product in that area. So companies tend not to build a strong foundation of awareness of who they are and what they do.

The companies must really go about building global brands by staying consistent while also catering to cultural subtleties. This is a huge challenge even more so because different markets are at very different stages of development. The conditions with regard to consumers, competition, infrastructure and channels of communication are very different. This is more applicable to brands from developed countries coming to countries like India and China.

Pepsi was on a global expansion spree and entered the Taiwan market some 3 decades ago. Among other things, it launched a high-decibel ad campaign to make its presence felt. “Come alive! You’re in the Pepsi generation,� said the campaign. It sounded perfect in English, but when translated into the local language, it meant “Pepsi will bring your ancestors back from the dead.� Needless to say, it left the people rather cold.

Pepsi’s Taiwan foray is an example of the marketing gaffes companies commit when they try to cross national boundaries.

A recent survey by The Economist revealed that maintaining brand consistency is becoming harder as companies enter new markets. Consistency is not so much about execution, but it’s in terms of positioning.. Branded products like Coca Cola, McDonalds, Nike, Virgin, must have different programs of advertising and products but the promises need to be consistent across markets.

But he is quick to point out that there are also some rare exceptions to the consistency rule. Some brands have higher strengths in other markets than their home markets. For instance, in some countries Heineken beer is seen as a super premium brand. In the US it is not.

The grassroots approach:

Many companies stumble when they try to ‘transplant’ a successful brand into a new market. Nike did that with its Europe foray some 20 years ago. It did not invest enough in marketing and branding activities in Europe and thought what worked in the US would work there as well. Nike went into Europe with too strong an American perspective. It didn’t work. They tried to build the brand by just ‘airdropping’ ads in the new markets and that proved to be its biggest blunder. The aggressive, individualistic image that everyone associated Nike was in sharp contrast with Europe’s comparatively collectivist culture.

A company’s branding approach has to be bottom-up, very grassroots-level and very local. The marketer has to go out there and find out exactly what consumers want.

Issues of cultural embedded ness:

There are subtle differences with regard to product categories. Creating relevance is harder in categories which have high levels of ‘cultural embedded ness’ particularly those that have more of a cultural or social essence to them. Food and drink are typical examples and Coca Cola has some element of this. During its initial years in India, for instances, Kellogg’s Cornflakes ignored a lot of these issues only to discover later that many Indians are averse to eating cold cereal for breakfast.

On the other hand, creating relevance is easier in product categories like technology brands and luxury brands because there are no cultural dimensions to them. For example, Intel can create a lot of relevance. The best chips in microprocessors have been able to go around the world easily. In Luxury brand categories, at the very high end of the market and high incomes across the world, there are more similarities.