regionalize or globalize product development? Would global products and brands really lower the costs of local introduction? What was the financial leverage for developing such products?
Diversity in local tastes and preferences has urged many multinationals to develop products that cater to local tastes. But Unilever Butter beater case indicates that this is not entirely a good strategy because there are such massive differences in each market that the development and advertising cost alone can eat up the profits for the local company in the first year of launch. Hence it is much better to develop a product which is a strong global brand and allow people to “love it or leave it.”
But for a brand to be truly globalized and work in each market, it must remove visible cultural associations. This is important and can be seen through such strong brands as Levi’s jeans, Sony’s Walkman, and Pepsi or Coke. These brands do not evoke precise cultural or ethnic association and hence they work well in each market they try to capture. For example strong Japanese brands are not marketed “on the back of a Japanese way of life” (Featherstone 1995, p. 9).
This gives each country the freedom to decide if they would want such a product after they have been educated about the benefits and advantages of using or adopting the new product’s global brand is defined as one where all elements are standardized without any local adaptation for packaging, design, brand name and advertising etc. However there are hardly any brands which are 100% standardized in each and every element. But by keeping the most important elements the same for every market, a strong global brand can emerge even though a few changes may be needed like in advertising or packaging. (Mooij, 2009, p. 29)
In the case of Butter beater, we understand that Unilever might need some time to educate people about the benefits of using an alternative to both margarine and butter. But this education will be much less costly than product development process that is tries to please people in each new market. Adapting to local preferences and tastes is a risky choice because it is very much possible that people might not like what is offered to them even after it has been supposedly adapted to their tastes. This happens for variety of reasons. But the cost to the company is enormous and the product may never be able to attract the people later on when it is presented in its original form. It is thus important to develop a strong regional or global brand that would be introduced “as it is” in various markets. The response may be good or bad depending on people’s choice but it would make it easier for the company to focus on multinational brand development without worrying about the cost of local adaptation. But for a globalized brand to be truly accepted in each market, it must be consistent everywhere as Reibstein (2005, p. 176) states that “for a global brand to be a true global brand, it must also be consistent, not just in name, but in position and what it offers.” Similarly, Interbrand (2007) agrees with this view and say that the “best brands achieve a high degree of consistency in visual, verbal, auditory, and tactile identity across geographies.”
By making several changes to meet the local tastes and preferences, a company can dilute its brand which may eventually lose its identity. This dilution may not work because people do not see it as a strong brand. Secondly it places a huge financial burden on the company to create several variation of the same brand. A globalized or regionalized brand is thus highly recommended as it tends to have a strong identity, it has a strong brand image and the product development and management process becomes cheaper and easier for the company. Coco-Cola and Pepsi can be seen as examples of highly globalized brands. The variations produced are not to cater to local tastes or preferences’, instead they are just line extensions that originate in the U.S. And are then introduced to the world. Unilever Butter beater needs to adopt similar strategy and turn Krona into a strong globalized brand.
When company can find ease of entry and acceptable through standardization of globalized brands, they can use this goodwill to achieve economies of scale. This benefit can then be passed on to the customers in the form of lower prices. Financial leverage that comes from standardization of products can be used to “artificially lower process to enter new markets or to increase market share in existing ones.” (Ajami, Goddard, 2006 p.13)
Marieke K. de Mooij. Global Marketing and Advertising: Understanding Cultural Paradoxes
Reibstein, David (2005), “House of Brands vs. Branded House,” Global Agenda, 3 (January), 175 — 77.
Featherstone, Mike (1995), Undoing Culture: Globalization, Postmodernism and Identity. London: Sage Publication
Interbrand (2007), “Lessons Learned from Global Brands,” (accessed March 24, 2011), [available at http://www.brandchannel.com].
Ajami, R. Goddard, J. (2006) International business: theory and practice. M.E. Sharpe
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