Why Global Brands Can't Depend on Their 'International Halo' in Local Markets
This piece was originally published by WARC.
From Ogilvy’s perspective, how much more complex has it become to manage and govern global brands?
I don't know if it has become more complex but for sure it has become a priority. During periods of economic recession, like the one that we are entering now the importance of global branding is emphasized. Why is that? Because marketers need to create economies of scale. They have less money to spend, and they need to find one singular solution for every challenge that they are facing.
On the contrary, in times of economic prosperity marketers are seeing every local difference and nuance as an opportunity; Therefore, they eagerly create a cornucopia of local initiatives that aren’t being held together by a common thread and as a result we dilute the equity of global brands.
Like in everything in life, the truth always lies somewhere in the middle. Managing global brands done right exists at the intersection of global coherence and consistency and local relevance and meaningfulness.
On one hand everything you do on a global brand must stand for the same reasons, serving the same purpose and following the same strategy. On the other hand, you need to be equally respectful of local peculiarities – the differences in consumer behaviours and expectations – that the brand faces in every different market. Understanding the special meaning that your brand has in each market and respect the socio-economic conditions in which your brand competes.
When it comes to respecting sub-brands in local markets, how do you find the best way to build respect and understand it effectively? Does Ogilvy have a particular way to do this or is it based upon your relationships?
The existence of sub-brands in a local market is an effort to create multiple entry points in consumer's repertoire of choices. These entry points, if they are being managed well, grow incrementally a global brand's salience and sales in each market. On the contrary, if they are being managed poorly, they create confusion and cannibalization.
To build a global brand's portfolio architecture in a local market we examine the three Cs – culture, commerce and communications, explained below:
- Culture – How consumers use and understand a given brand or a sub- brand in the local cultural context. What is the relevance or the meaning that the brand has in people's lives.
- Commerce - What is the brand’s availability and go-to-market strategy in a market? Understanding the commercial proposition of the brand and its sub-brands and how it can be improved or changed based on the existing economic conditions.
- Communications – Finally, assessing the promotional efforts of the brand and how communications have contributed to the growth of the brand or its sub-brands in each market.
We use these three filters to acquire a clear understanding of the situation in a local market and based on this understanding we create a classification of markets (i.e., Anchor, Grow, Build, Scale) and we model the suggested portfolio architecture for each cluster of local markets.
Is there any particular type of model that works better than others? Or is it about mindset and structure?
You know what they say, "All models are false, but some models are useful" - However, don't expect me to reveal the useful ones here for free...Seriously now, no kind of model, not even the most sophisticated ones can completely cover the differences between local markets, nor they can predict the impact of those differences in a brand's growth.
Models are useful but what is essential for a global marketer is a specific kind of mindset. A mindset able to discover commonalities while respecting differences at the same time. If you look at the globe and you are fixated on discovering differences, you will lose the thread that is needed for growing a global brand. The world is vastly different, and no situation is like another. But if you have the mindset to identify similarities, you can create scalable solutions.
Ideas travel. Executions don't. You need to elevate the conversation on the idea level and not on the level of execution. For executions to be successful they need to be culturally sensitive and market specific. Ideas, however, can be humane, therefore universal. Here’s an example: The idea of a place to worship the divine. The execution of it, is different all over the world. We have pagodas, cathedrals, shrines, temples and churches. But the idea that we need a place of worship travels across the world.
Similarly, in global brand management you need to have a mindset that understands that ideas that can travel, ideas can be universal and at the same time is having the sensibility to drive executions with topicality and relevance.
What are some of the kinds of pitfalls that people should watch out for when thinking about global brand governance?
Global brand governance needs to be a system by which local markets are directed and supported. It needs to be concerned with processes for decision making, budget allocation and accountability, portfolio management, creative expansion and behaviour in accordance with the brand's global purpose and strategy.
The pitfalls appear when we go to the extremes, either trying to apply a Draconian consistency that wants to make everything the brand does around the world look and be the same. Often based on an ill-conceived assumption that somebody in New York or London can know everything that the world needs from a brand. Or when our system is so open to interpretation that allows every local marketer to interpret a global brand as they wish. Creating a cacophony that is neither purposeful nor manageable.
Every governance system should create "freedom within a framework" - allowing local marketers to develop their creativity and intuition to drive purposefully local innovation and initiatives.
What's missing from the way global brands are currently managed, particularly from an in-house or agency perspective?
The difficulty comes in when you scope global brand management work; there is a lot there that doesn't directly impact your sales or figures. This always comes with a global price tag that no one wants to pay; nobody can attribute the ROI to that kind of cost. So you have, especially during an economic recession, people requesting to keep the global orchestration minimal.
Anything else on this topic that will be useful for marketers?
This is probably a bit difficult to explain in the limited time that we have, but I will try because I consider it very important...
In order to successfully run global brands, you need to aspire to become a global citizen. Simply put, you need to be in love with humans irrespective of where they are coming from, how they behave and what they believe. Please notice that I purposefully use the word humans and not consumers because in my opinion global brand management is firstly a cultural act and then a commercial plan.
I have been working for global brands almost my whole career. I was born in Greece, and I worked there for several years being at the receiving end of global mandates without local meaning. Since then, I’ve spent time in global hubs like London, New York and Chicago and I have been the author of global mandates, hopefully with some meaning. I have experienced the tension of global vs. local from both ends and in my experience the only thing that can make it productive and creative is the ability and willingness of marketers to understand people intimately.
Being in a grocery store in a 3rd tier city in China is an experience that I recommend to everybody; it's mind altering, seeing brands that look familiar (because they are) communicating in ways shapes and forms that you cannot recognise. Going to a Latin American bodega and see how people select brands and what that means for them. Finding yourself in India, in small shops to understand how traditional trade operates - this is global brand management, and it really opens your horizons.
We have identified some trends that might affect global brands. The four we've got are: Gen Z and the radical democracy for brands; AI-driven and the automation of marketing; digital wastage and the carbon emissions on the sustainability side of things, and the role metaverse will play for brands. From your perspective, and also from the wider Ogilvy perspective, what resonates most for you?
Allow me to say that while these trends are ‘trending’, they aren’t necessarily going to determine the future for global brand marketing. Of course, these are trends that global brands should embrace and find the best use for them. But I don't believe that the future of global brands will be judged in the metaverse or by the use of AI. In my opinion we are experiencing a seismic shift that will determine the nature of global brands in the future and has a lot to do with radical democracy.
This is what I call the democratisation of branding.
Let me explain what I mean; If you think about it, the archetypical strategy that global brands use in entering a market is to position themselves as premium (i.e., of a higher quality) than the existing local brands. That’s how global brands grow. Local consumers assume that the global nature of some brands is what makes them better, a proof of ‘premium-ness’ - if the whole world deems them "experts" they must be. One can observe this strategy being applied in almost every product category in almost every market. However, this strategy doesn't seem to work anymore. Because there is vast democratisation of everything; ‘global premium-ness’ isn’t necessarily something that people are willing to pay more for. Global brands are losing that 'halo' they had simply because of their international footprint.
Transparency and authenticity are the new 'halos' that make people, especially the younger generation, to select a brand and global brands need to work twice as hard to wear them and make an impact.