Global Branding Strategies PDF

Chapter 9 Discuss four (out of five) types of global brands and their value positioning. ○ Value brands have acceptable quality at lowest prices. For example, Uniqlo and Ikea ○ Fun brands have lifestyle, enjoyment, and stimulation targeting global youth. For...

Chapter 9 Discuss four (out of five) types of global brands and their value positioning. ○ Value brands have acceptable quality at lowest prices. For example, Uniqlo and Ikea ○ Fun brands have lifestyle, enjoyment, and stimulation targeting global youth. For example, Zara and H&M ○ Mass brands have high quality with above average pricing targeting the middle class. For example, L’Oreal and Levis ○ Premium brands have top notch quality tailored for high engaged customers, delivering emotional benefits at a premium price point. For example, Lululemon and Athletica Discuss the STP strategy based on target market and positioning from Figure 9.2. ○ STP stands for segmentation, targeting, and positioning. The STP strategy allows companies to choose a different segment yet position it as the same. So as shown in figure 9.2 there are 2 target market segments (similar and different) and 2 positioning appeals (similar and different). This allows brands to have 4 possible scenarios such as, similar targets and similar positioning, similar targets but different positioning, different targets but similar positioning, and different targets and different positioning. Discuss the consumer culture position strategy of positioning the brand as a symbol of a global, foreign or local culture. ○ Global: positioning the brand as a symbol of a global culture let’s companies emphasize unity and not focus on the home country’s image. For example, Nike emphasizes athletic bodies and high profile athletes and doesn’t focus on connecting its brand to the American image. This allows global consumers to think anyone can purchase their product. Global CCP is more effective in developing countries because the global image suggests enhanced status for them. ○ Foreign: positioning the brand as a symbol of a specific foreign consumer culture allows companies to associate the brand’s users, use occasions, or product of origins with a particular foreign country or culture. For example, Ikea emphasized the brand as Swedish by having their brand's colors representing the Swedish flag and offering Swedish cookies within the store. ○ Local: positioning the brand as a symbol of a local culture means companies reflect the local culture’s norms and identities, and portrays it as consumed by local people. Companies use local culture and history in brand naming and position it as locally produced with local ingredients. A good example of this is L’Occitane, they use the local French language to emphasize their french product with French ingredients. Chapter 10 Discuss four ways of how product and global market fit can be addressed. ○ Culture: companies can address host country’s cultures with product changes or new developments this way they can effectively appeal to the consumers of that area. Certain objects and symbols have cultural meaning so companies  implementing or respecting cultural connotations can help bring in more customers. For example, a Danish jewelry company found that amber is a gem that is believed to bring luck and happiness to Chinese consumers. So the company developed a new product incorporating amber to get their Chinese consumers to purchase more. ○ Season: Companies need to consider what’s suitable for a season in the host country they’re marketing in. A company based out of the US can’t keep the same inventory for their stores in Australia because they have opposite seasons as us. ○ Religion: Companies need to be well diversified in countries' religions and how those people go about their day to day with their religion. Religion isn’t the same throughout all countries. Companies need to know how each group of people celebrate their religions in each country. Women Muslims in Saudi Arabia cover their entire bodies on the other hand women Muslims in Indonesia wear colorful dresses. ○ Economic development level: Consumers in mature economies tend to be fickle and expect more for their money which means it’s harder to satisfy them with just good designs. The key satisfaction from those consumers is emotional or hedonic factors. Which means brands need to focus on the experience their consumers are going to have while shopping at their stores. This all comes from word of mouth. Consumers in emerging markets are more likely to pay attention to well-known brand names. Foreign products are preferred and viewed as a status symbol. Companies need to develop more symbolic features for these markets. For example, in India Ikea created a “On site assembly service” because the “Do it yourself” concept was new to Indian customers. The less economically developed the market is the greater degree of product change may be needed for consumers acceptance. Chapter 11 Discuss table 11-1 and how costs may be escalated through exporting. ○ Cost can be escalated through exporting by tariffs and taxes. ○ Tariffs are taxes the government imposes on goods when they cross borders. They are levied on both imported and exported goods, meaning import tariffs are imposed on imported goods from other countries and vice versa with exported goods. ○ Duties are a form of tariffs but are indirect taxes that are levied on the consumer of imported goods. Indirect means the taxes paid by the consumer are passed on to the government which is why we see “duty free” stores and not “tariff free” stores. ○ Another form of taxes that escalate the final cost are value added tax, VAT. When a product is being produced, at every point in the supply chain where value is added to it’s assumed it’s adding to the value of the price of the product which is what the VAT is. Mostly EU countries have VAT and the US doesn’t.  ○ As shown in the table, Brazil imposes various taxes on goods to increase their prices in their country, tariffs and taxes being the main elements that cause this increase in price. Because of this, fashion items can cost 50% more in Brazil than in the US. Discuss “cross-border shopping” and how it benefits consumers. ○ Cross border shopping is referred to as, consumers who live on the borders of countries will cross over to shop in different countries for lower prices. This shopping benefits consumers because of the de minimis tax. This is described as a tax imposed by an importing country for cross border activities. This tax eliminates duty or tax charges and clearance procedures to make the prices lower. This is why most Americans will buy luxury goods in Europe. Discuss three ways to lower price escalation. ○ Lowering the cost of goods sold is one way to lower price escalation. If the manufacturer's price can be lowered the effect will hold throughout the chain. For example, fashion industries can manufacture in countries where labor costs are cheaper. Firms can choose to manufacture products in free trade zones in a country where local taxes, surcharges, etc are waived and reduced. ○ Lowering tariffs can lower price escalation. Tariff rates vary by product category so if companies find a category that imposes lower tariffs they can save on costs. For example, tariffs imposed on cotton are cheaper than childrenswear so if companies reclassify “boys cotton pants” as just a cotton product rather than boy’s pants it will be cheaper. ○ Lastly, lowering distribution costs can lower price escalation. Companies should eliminate their middleman because each time goods pass through an export agent margins can be added up. Export agents are one of the elements that escalate price so by paying a lower margin price escalation can be lessened. Discuss three (out of four) pricing approaches for global markets. ○ Cost plus pricing is a pricing approach for global markets. This is a basic approach in that it adds all costs incurred when goods cross national borders. Those costs are travel distance, mode of transportation, tariffs, various fees, handling charges, and documentation costs. ○ Flexible cost plus pricing is another approach for global markets. This is a variation of cost plus pricing in which it ensures that prices are competitive in their particular market environment. It adjusts the price by analyzing competitors' prices and other factors. ○ Lastly, penetration pricing is an approach for global markets. This is used to stimulate market growth and capture market share by deliberately offering products at a lower price. Discuss how costs and company goals may affect pricing decisions. ○ Company costs may affect pricing decisions because price should cover at least all costs needed to make and sell products in other countries. Tariffs, VAT, intermediaries and transportations are costs that arise that are not included in the  domestic market. Any company costs should be lowered in order to increase profits. ○ Company goals may affect pricing decisions because the goals can differ between countries. One country may focus on penetration of the market whereas another country may focus on building brand reputation. Firms need to reflect their strategic goal for each market when deciding pricing because if they set their prices too low in one country consumers will associate the brand with low quality and vice versa with high prices. Discuss how market factors can affect pricing. ○ Customer demand is a market factor that can affect pricing because prices should be good enough to create demand. If a company makes their prices too high without justifying the value of their products it often fails to create demand and results in failure in the market. For example, Gap closed all 81 stores in the UK and Ireland because they set their prices too high and no one was purchasing their products. ○ Competition is another market factor that can affect pricing because a firm that introduces innovative products or services for the first time in a host country can command a higher price by leveraging first mover advantages. If there are other competing international or local brands, firms should be mindful to set the price right to create demand for their product. The number and extent of competitors greatly influence pricing strategy in any market. For example, the fast fashion brand Mango in Australia had to shut down 2 out of 3 of their stores because they set their prices too high and there were other competitors that had lower prices for the same quality of products. ○ Product life cycle stage in the host market can also affect pricing because if a firm entering a market in the early growth stage can possibly maintain a relatively high price it can charge what the market wants. On the other hand, in the introductory stage customers are relatively insensitive to price because there are limited brands or products to compare with. Depending on where the company is at in their life cycle stage can alter the prices they are allotted to give. ○ Lastly, economic conditions of the host market can affect pricing because companies need to consider the country's income level. Companies cannot just assume what they should price their products based on the country because in emerging markets high prices show a status of newly found wealth that people want to show off. Companies would usually see emerging markets and assume they have to set their prices lower. Discuss parallel importing and its implications for global fashion companies. ○ Parallel importing happens when an unauthorized middleman imports identical products and brands from countries where prices are lower and diverts them to countries where the price is higher. These are called “gray products.” Some companies will directly sell their products to these gray market players to boost their short term sales. This is good for consumers because they can buy authentic products for cheaper prices. This however creates many issues for luxury brands such as, dilution of exclusivity, damaged channel relationships, and  hamper luxury brands local pricing strategies. If companies choose to set their prices too high it forces consumers to purchase these “gray products.” This happened to Zara in Korea, they had such high prices that consumers started posting them on social media and no one was buying the products forcing Zara to lower their prices. Chapter 12 Discuss how distribution strategies play a crucial role in conveying brand image. ○ The number of channels is a factor that plays a crucial role in conveying a brand image because the number of channels should be aligned with their branding strategies. A mass brand needs a greater number of channels to succeed. For example, Coca-Cola’s strategy is, the more consumers see it through multiple channels the greater the chances to buy it. If there are more places that sell these products it will result in higher sales. ○ Intermediary type should be aligned with the target marketing. A premium brand should be distributed through high end department stores or standalone stores. If a brand is trying to target younger consumers they should focus on online branding as opposed to brick and mortar stores. ○ Location of stores also communicates the brand image because if you see a certain brand store located on a country’s major fashion street like Madison Avenue in New York you will naturally consider the brand as a global fashion brand or well known brand. Having a flagship store in a prominent location can strategically create a fashion brand’s image. On the other hand, if you see a brand at JCPenney you'll think of the brand as a mid range brand. Discuss why channel localization is needed ○ Channel localization is needed because the international distribution channel decision involves complex issues that do not exist in domestic distribution because of varying channel environments. Certain channels may not be available in other countries and dominant channels vary for example, shopping malls are common in the US but not in small European countries. M-commerce is more prevalent than e-commerce in emerging countries. Social media also varies because in China the leading social media company Facebook and Instagram are banned but equivalent social media play the same function. Distribution channels need to be localized when moving into another country. Discuss the advantages and disadvantages of working with local distributors. ○ Advantages include that fashion brands can capitalize on distributors’ local market knowledge, including language, physical distribution and communication. They can also save time and capital they might otherwise have spent if they did not work with a local distributor allowing them to expand into countries faster. ○ Disadvantages include losing control over their brand’s strategy which can hurt their brand image. Since local distributors would be taking ownership of the merchandise and sell it via their distribution channels the companies have no say in what they’re doing. For example, Korean brand On & On ended quickly in  China because local distributors copied their design and sold it under their brand name. Discuss the important points to keep in mind when looking for the right local distributor. ○ Select your distributors; don’t let them select you. Fashion companies should choose to work with a distributor who approaches them at a trade show or via other venues. Companies need to select local distributors that suit their needs and don’t already work with their competitors. ○ Look for distributors capable of developing markets, rather than those with a few good customer contacts. Distributors with a willingness to invest and accept an open relationship with the fashion company in marketing their products will be the better choice for the long term goals. Distributors with good customer contacts in the product category are good for immediate return and revenues but you need more. So a distributor’s capability or willingness in developing markets is more critical. ○ Maintain control over the marketing strategy. Local distributors should know the local market but it’s not prudent to give them too much autonomy. Fashion companies should lead as to what products sell and how those products are positioned in the market. ○ Regard intermediaries as long term partners, not as temporary means of market entry. Usually a contract with local distributors addresses exclusive rights which is good for the purpose of entry into the market but doesn’t motivate them to undertake long term business development. They should create an agreement that includes strong incentives for appropriate goals like customer acquisition so distributors have an understanding of the company’s long term perspective. Compare the three digital distribution options for global brands as outlined in Table 12.3 ○ Popularity of online shopping has increased which allows global brands to distribute their merchandise to international consumers. For example, US companies can supply their products to Amazon to then deliver them to foreign customers. This is the easiest way to reach customers since brands do ot need to dispatch products or people to other countries. It also saves time so they do not have to create their own website. ○ Selling via a fashion brand’s own website is another digital distribution option. This involves allowing international consumers to order directly from the company’s website. Companies will handle delivery to foreign customers themselves instead of another company. Companies that sell directly to customers off their own websites allow them to create a specific experience for that customer for example, Nike’s website asks you what language you speak and what country you're from to help customers shop easily. They can control the content and prices featuring their desired brand images. Gross margins will also be higher since there is no middleman involved. ○ Lastly, fashion brands can choose to open a brand store on foreign online marketplaces that provide the brands with online platforms. Global fashion brands choose to have their website in a foreign online marketplace to reach  consumers in that country specifically. This can create customer traffic without much difficulty. Chapter 13 Discuss the barriers that deter advertisement standardization. ○ Cultural differences among countries is a barrier because advertising is created with the assumption that the consumer is going to receive the message as the creator intended them too. Advertising created in one culture may not transfer well to other cultures. Values and purchase motivations differ by culture thus using the same appeal and execution styles across cultures can be ineffective. ○ Legal constraints are barriers because advertisements cannot be used in some countries due to laws and regulations in host countries. Fashion companies must modify their advertisements to respect the host country's laws and regulations. ○ Linguistic limitations are also a barrier because advertising messages, taglines, or slogans may need to be translated into the local language. It’s not as easy as it sounds because some languages don’t have direct translation to what the company is trying to say. So, visuals have been used for standardizing print advertisements so the same message can be read throughout different languages. ○ Media limitations are a barrier because every country has different popular social media platforms so you can’t assume that the same platforms are popular in the US and Europe. The same goes with celebrities; every country has their own top influencers. Assuming that the same social media platform is used across nations is impractical, and the particular platform, celebrities, and influencers should be carefully selected to fully utilize the power of social media. Discuss five fashion industry examples of adaptation for advertisements. ○ Translating textual information into local languages. Global fashion brands and jewelry brands that appear in fashion magazines are mainly in English with limited textual information other than brand or company names. Seeing the English brand name and English slogans is more effective because it naturally creates a global image and is perceived as cool. For cosmetics it’s different because you need to know the information about the product before you use it. ○ Substituting models for local celebrities. Caucasian models dominated in ads and Asian models served only for Asian markets. For example, Puma’s Run the Streets campaign in 2017 featured a Canadian singer for the North American market but changed to a South Korean singer for the Korean market. ○ Changing the verbal message slightly to reflect the cultural values of the countries entered. Individualistic cultures use singular pronouns while collectivistic cultures use plural pronouns. For example, L’Oreal “I am worth it” campaign was modified to “We are worth it” in Asia. ○ Adapting local media for communication. Fashion brands can choose popular local media for their ad campaigns. Burberry and Montblanc launched an account in WeChat which is a major social networking media in China. Adopting the local  social media spread their brand further throughout the country because that social media platform is so well used. ○ Developing a new advertising campaign to reflect the cultural values of the country entered. Fashion brands create a new advertising campaign in a host country. Burberry featured 3 generations in its new Lunar New Year campaign in China starring Chinese actresses. The campaign celebrated family traditions of the Lunar New Year festive period. Discuss how differences in cultural characteristics (i.e., individualistic versus collectivistic, high versus low context, masculine versus feminine) may shape how advertisements are created. ○ Individualistic cultures appeal to individuality, personal benefits, and achievement are prevalent. Brands attributes and advantages are the focus in advertising. Their goal is to persuade. They emphasize consumer message and consumer market interactivity in their websites. Collectivistic cultures appeal to group benefits, harmony, and conformity. More people are featured in these ads than individualistic ads. Their goal is to build relationships and trust between sellers and buyers. They emphasize consumer interactivity and consistency with the cultural values in their website. ○ High context cultures include Japan and Saudi Arabia. They use implicit and nonverbal communication, more animation and visual layouts on their websites. Low context cultures are direct, informative, logical information, and a heavy text layout works well. ○ Masculine cultures emphasize winning, competitiveness, mastery, bigness, success, achievement, and assertiveness. They are consistent with the cultural values. Feminine culture’s values are caring for others and quality of life. Advertisements can use understatements such as “probably the best in the world” and showing off is viewed as negative. Discuss five regulations and challenges related to advertising across countries. ○ Comparative advertising is directly comparing one brand’s function over another competing brand. This Is legal in major markets such as the US but forbidden in many other countries like collectivistic and feminine cultures. It’s largely used in individualistic and weak to medium uncertainty avoidance cultures. It helps consumers choose the right product by providing contrasting information. ○ Women can only be in commercials in Arab countries that relate to the advertised product like womens apparel. They still have to cover their bodies, for example the H&M ad in Dubai had to be photoshopped to fit their culture of women. She was showing too much skin in the ad so they had to cover it up. ○ European countries strictly control TV commercial time and content. Advertisements cannot interrupt TV more than once for each scheduled period of at least 30 minutes. Some countries are stricter than others like the EU members so fashion companies should not assume that all European countries have the same regulations and need to develop marketing communication programs with a proper understanding of such differences. ○ UK ads can be banned if they are deemed as unhealthy or socially irresponsible. Young girls will look at magazines and think they need to change their bodies to look like the ones on the magazines which isn’t right so the UK is trying to stop that. For example, YSL’s advertisement on Elle UK magazine was banned because the model was severely underweight and you could see her ribcage. This would create body image problems for viewers. ○ Restrictions against potentially false and misleading claims vary by country. For example, Reebok’s ad on their EasyTone walking shoes and RunTone running shoes. They were trying to say that their shoes will help you tone your leg muscles but the US and UK said they didn’t so they made Reebok take their ad down.