The Concept of a Global Brand

 

The term global brand has been defined in various context and statements in the literature. After close analysis, it was found that the definitions belong to two different schools classifying the concept. The first one is related to the standardization of marketing, that describes the main motivation of building global brands, and that is the economies of scale and the concepts associated with them. In that context, a standardized brand can greatly save on the costs in research and development (R&D), marketing, manufacturing, and purchasing (Craig & Douglas, 2000, Porter, 1986).

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Aaker and Joachimsthaler (1999) state that global brands are brands whose positioning, advertising strategy, personality, appearance, and sensations are nearly the same in approximately all situations in all countries where a company functions. Adding to that, Lopes and Casson (2007) comment that global brands are those with parallel and/or coordinated marketing strategies, that consumers can find under the same name in several countries.

Standardization research has outlined the concept of global brands as the ones that use identical brand names, marketing mix, positioning strategies in many of its markets (Özsomer & Altaras, 2008).

However, until now, there is still no agreement on how to standardize global brands. While some researchers such as Levitt (1983), focus on a complete standardization of brand strategy and elements of the marketing mix when they define a global brand. Other examinations have shown that complete standardization is not achievable (Alden, Steenkamp & Batra, 1999), and occurs at different levels, therefore, it is observed that there are brands that are more globalized than others depending on their level of standardization.

With regard to the second school, global brand has been defined from the viewpoint of consumer perception (Alden, Steenkamp & Batra, 2006, Batra et al., 2000, Steenkamp, Batra & Alden, 2003). In this research, a Global brand is defined as the extent in which the consumer perceives the brand as being global and marketing in domestic markets and in several foreign markets. Thus, this definition implies that the brand is perceived as present in multiple markets, which generates an increase in their perception of globalization (Steenkamp, Batra & Alden, 2003). Kapferer (2003, p.355) states that “the legitimate will of globalization cannot forget the realities of the different cultures and their perception.” Thus, more features are added to this perspective; therefore, a global brand is constituted by its wide international availability, recognition; and not only for its standardization (Apaydin & Köksal, 2011).

The two schools also show a difference in the form of management in the international markets, while Townsend, Cavusgil and Baba (2010) have a tendency towards the second school, homogenized global demand is not full and considers that there must be strategies that mix the needs of local demands with global strategies. For Levitt (1983), representative researcher of the first school, there is no dichotomy, so talk about the permanence of the corporation global market dominance, which is not adapted to local markets, but it is imposed thanks to the high standards of quality, low cost, which allow the creation of homogenized global demand.

Özsomer and Altaras (2008, p.5), in the search for a global brand definition that consolidate both schools, they make a first approximation, defining it as “Brands that consumers perceive as having broad availability regional / global, knowledge, acceptability, and desirability and, an abstract sense of consistency in all markets.” So, they consider the definition as partial, so which elaborate a more holistic approach to analysis.

This holistic approach, in the vision of Özsomer et al. (2012), distinguishes the reality of the two previously discussed schools and shows that many times it was attempted to define global brands, however, this caused a lot of confusion in the field. The first school focuses on the offer, and when researchers analyze it, they define that the global brand is based on the degree to which the specific studied brand uses standardized marketing strategies in the market in general. The second school focuses on demand and the perspective of the consumer, and defines a global brand based on the extent to which the brand is perceived by current and potential consumers as global and being marketed abroad. Both of these definitions seem to be valid and complete each other when it comes to defining the global brand, and framing it thus depends on the context and the market studied. It is quite clear however that the second school focuses on the level of the brand recognition and its globalism.

After close examination of the literature, one cannot but conclude that the concept of the global brand is not clearly defined since scholars are divided between two schools: (1) marketing standardization (Craig & Douglas, 2000, Levitt, 1983, Porter, 1986), and (2) consumer perception (Alden, Steenkamp & Batra, 2006, Batra et al., 2000, Steenkamp, Batra & Alden, 2003). Thus, the search for a definition would best be the meeting of the two schools in an attempt similar to the one in the work of the key scholar in this field Özsomer et al. (2012). So, the definition should be created interdisciplinary (Fetsccherin & Heinrich, 2015).

Another consideration is to recognize the relevance of cultures and subcultures around the world, one cannot study global brands and formulate strategies without understanding how consumers in different markets behave and perceive global brands (Fetsccherin & Heinrich, 2015).

 

Managing a Global Brand

 

It certainly is different and more complex to manage a global brand. A global brand management involves the work of several units and responsibilities assigned to the different teams. Thus, a lot of elements of criteria should be applied in order to avoid failures especially internally, that could greatly impact the results and the consumer perception.

The Global Brand Management (GBM) world has somewhat agreed on a common definition of a global brand, incorporating the several definitions presented by the scholars cited above: “Global brands are those that have global awareness, availability, acceptance, and desirability and are often found under the same name with consistent positioning, image, personality, look, and feel in major markets enabled by standardized and centrally coordinated marketing strategies and programs” (Özsomer et al. (2012).

After having provided a working definition of global brands, a crucial point now is to understand how these brands are developed and managed within the company. To go along with the emerging concept of globalization, many multinational companies (MNCs) have adopted the global approach of marketing their products on global level with limited works in the local markets, instead of the traditional approach of marketing locally to the local population (Kotabe & Helsen, 2010).

One has to ask here about the change that takes place in a firm to implement a global brand. Matanda and Ewing (2012) studied this shift in the approach and provided a theory depicting the process of global brand strategy development and regional implementation in an MNC. They concluded that the shift will be successful after the empowerment and capacity-building that is done on both global and regional levels. This process transforms the organization by enhancing its local marketing strategy while introducing improved disciplines centrally. Their paper is so important to the research here as it also studies the global brand strategy cohesiveness and how it is maintained in a decentralized structure.

Balancing between the autonomy of regional managers, and the importance of consistent global planning systems and processes is crucial for the strategy success. The paper identifies a process of change that doesn’t have to involve major organizational restructuring— “…its less about boxes and reporting lines. We’re changing the nervous system and the social system, not the skeleton”. Matanda and Ewing (2010) article is very theoretical, however it worked on linking the global brand management process with the performance of the brand. The methodology used in this paper is similar to the one in this study, as the conceptual framework tends to examine the view of senior global and regional managers, and then conclude with a best practice grid to solve the issues emerging internally when the brand is thriving to have a consistency between the regional and local adaptations.

 

Centralization vs. Decentralization

Along the years, many argued that standardization of marketing across the different markets enables companies to have a consistent image and thus increasing their revenues (Buzzell, 1968), Hovell and Walters, 1972).  Others such as Peebles et al. (1977), and Sorenson and Wiechmann (1975), viewed that standardization makes customers accustomed with the products and services of a certain brand, thus enabling the development of an even corporate image. Customers become aware of the company’s management strengths, product diversity, and its competitive advantage. Gray and Smeltzer (1987) tried to associate the personnel and the corporate image benefits of financial performance. They discussed that having a clear and consistent corporate identity makes it easier to recruit internally, increasing morale and lowering employee turnover, leading to achieving a high price/earnings ratio. Measuring communications effects is one of the least tractable problems facing management.

These benefits above are based on their constructive impact on customers, employees, and financial market. Conversely, much of the written literature relates global standardization and communication elements to the corporate structure of the brand and not to the external perception from consumers for instance. On has to ask a question now about the relationship between standardization and centralization and if they go together. Wiechmann’s (1974) argued the marketing activities of multinational companies and found that 17 out of 20 companies the perception of standardization is the same on as centralization. These companies believe that standardized global marketing is directly linked to the firm’s competitive strength and their marketing strategies were globally integrated in order to create a uniform product identity. Roostal (1963) hypothesised that an international marketer with a centralized business can more easily pass through standardization than one with a decentralized business. The larger the centralization of power for establishing strategies and allocating resources, the more effective the execution of standardization (Jain, 1989). These studies suggest that centralization emerges from the necessities of globalization. Standardized strategy manages to enable or lead to centralization in the planning and management of international activities, whereas highlighting on local management autonomy twigs from the rewards associated with decentralization (Douglas and Wind, 1987). According to Pilditch (1970), corporate identity and strategies are impossible to be decided upon in an exclusively delegated and democratic way. Someone has to decide on an approach and then enforce firm central control. “Subsidiaries in highly decentralized structures are likely to have identities of their own” (Ind, 1992). Instead, in the companies that operate with a highly centralized organization, and denying local autonomy and control all the activities at the center, the identity will be similar and standardized in the parent and the different subsidiaries. which deny local autonomy and control all key functions at the center, the identity will be strongly similar in both the parent and the subsidiary. Standardization of corporate identity does not necessarily mean rigid control of overseas subsidiaries. Gorb (1980) claims that in attempting for full flexibility and creativity, corporate guidelines should be centrally managed. This arises because corporate identity is crucial for a management by an “authoritarian force” within the structure. “The degree of centralization of control influences the degree of standardization of corporate visual identity of a multinational corporation” (Topalian, 1984). Whether the origin of the decision and vision starts with centralization to global standardization or vice-versa, many observers and scholars suggest that these two are linked.  is from centralization to global standardization or vice versa, observers suggest that they are linked. Standardization and centralized control are to be even more closely connected. Does a globally standardized company reflect centralization in general?