BRAND VS GENERIC STRATEGY
Should the firm adopt a brand or a generic product strategy and promote the product in world market on other attributes like the firmâ€™s competencies and country image?
Japanese cars entry into U.S. market is a good example of generic product. Their low cost, light weight, reduced fuel consumption and driving ease due to smaller sizes has enabled them to penetrate the U.S. and for that matter European markets in addition to developing countries.
Though global brand dominance is the key to global marketing, the marketer is confronted with the daunting task of creating a global brand. Today it is an expensive proposition particularly when one considers the costs and tasks involved in it. The cost of creating a global brand can run into millions of U.S. dollars. To this is added another dimensions of media, where one finds customer fragmentation occurring with multiple print media and T.V. channels. Increasingly, the marketer finds that there is no single media vehicle and option that can deliver the goal of helping him or her reach to the top of the mind awareness.
The global brands are under increasing threat from private and store brands in countries like US, Canada, Europe and even Japan. The store or the shelf space is at a premium and the retail organizations in these countries gain bargaining power over the manufacturers. Added to this is the fact that the customer is becoming indifferent to the brand. Brand equity is diffused. Brandâ€™s life cycle also is getting shorter as technology progresses and competitors have access to the same technology in the world market.
A way out of this is, today, shown by China, Taiwan and Hong Kong by promoting garments as generic products in their Global marketing. Likewise Tea exports from India & Sri Lanka are made through the strategy of generic product and are not branded. The strategy is based on the following competencies of the firm:
1. Adherence to buyersâ€™ time schedule.
2. Ability to be in the market when the buyer wants the product.
3. Conformance to quality and other product specifications lay down by the buyer.
4. The inter-relationships between producing firms and the international trading houses or buyer organizations.
The generic strategy succeeds only when the firm and country create a credible image in the customerâ€™s mind. This will only be successful when there is no conflict between the buying organization and the manufacturing firm Generic strategy works only the market is characterized by product as opposed to brand loyalty as in case of tea and coffee.
This strategy will deliver results in a highly price sensitive but brand indifferent markets for example office-going shirts and cutlery sets fir home etc. These are not features based product and one does find that customer awareness of brands here is low and often price becomes the basis for purchase.. In such kinds of situations, the most important watchword for the marketer is â€œdeliver quality and performance at the lowest priceâ€?. Strong inter-relationships with retail chains world over is another key component to generic strategy.
Global Competitive Strategy
It is based on the strategic intent of a global firm. Hari and Prakash found that their sample firms had three strategic intents, as mentioned below:
1. Building a global presence.
2. Defending a domestic position
3. Overcoming national fragmentation.
The Japanese firms focus on building a global presence, US firms wanting to defend their domestic position in the US markets against the Japanese onslaught; and the European firms fighting to overcome national fragmentation. They also found that in each of these firms different strategies had flexibility which helped them to achieve their goals.
In this strategy, the firm needs to adopt an innovative approach to valuing the market share in different countries. Competitiveness of a firm will vary in different markets. The firm needs to expand its concept of a product line. The firm can then map up all competitive offers in the channels and evolve either a frontal attack, retaliatory or defensive strategy. It can also help the firm understand resources requirement to build up a competitive muscle in the market.
Today Japan dominates the state of the art technology of electronics in world markets and their sophisticated gadgets or appliances in the field are in demand all over the world. In this case it is both generic as well as branded. Sony, National Panasonic, Mitsubishi etc., are now household names even in India. The firm has to decide on what strategy to be followed depending upon the customer perceptions of their product in different countries. This is possible when the product is superior in terms of advantage over the existing products already in the markets.