Brand Building and Marketing in Key Emerging Markets: A Practitioner’s Guide to Successful Brand Growth in China, India, Russia and Brazil PDF
Preview Brand Building and Marketing in Key Emerging Markets: A Practitioner’s Guide to Successful Brand Growth in China, India, Russia and Brazil
Management for Professionals Niklas Schaff meister Brand Building and Marketing in Key Emerging Markets A Practitioner’s Guide to Successful Brand Growth in China, India, Russia and Brazil Management for Professionals More information about this series at http://www.springer.com/series/10101 Niklas Schaffmeister Brand Building and Marketing in Key Emerging Markets A Practitioner’s Guide to Successful Brand Growth in China, India, Russia and Brazil Niklas Schaffmeister globeone – Strategy • Brand • Communication GmbH Cologne Germany ISSN 2192-8096 ISSN 2192-810X (electronic) Management for Professionals ISBN 978-3-319-19481-3 ISBN 978-3-319-19482-0 (eBook) DOI 10.1007/978-3-319-19482-0 Library of Congress Control Number: 2015949817 Springer Cham Heidelberg New York Dordrecht London # Springer International Publishing Switzerland 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer International Publishing AG Switzerland is part of Springer Science+Business Media (www.springer.com) This book is dedicated to Elmar Schaffmeister (June 10, 1944–April 28, 2013)—a great father and exceptional improvisational saxophonist who left this planet far too early ThiS is a FM Blank Page Foreword Culture eats strategy for breakfast Quote is attributed to the great Austrian-American economist Peter Drucker The financial crisis of 2008–2009, the worst crisis since the Great Depression of 1929, and the ensuing global recession marked a turning point in the way people viewed the world. While the “advanced economies” had dominated the global economic production since the industrial revolution, and the so-called “emerging” and “developing” economies had lagged behind, the financial crisis managed to completely overturn this relationship. IMF analysis found that while the advanced economies accounted for only 31 % of global GDP growth, the emerging and developing economies accounted for 69 % of global growth from 2007 to 2014. During the crisis, Western companies began seeking alternative sources of growth. Many looked beyond the USA and Europe and doubled up on their efforts in emerging markets. This drove demand for professional consulting on how to implement a BRIC-oriented brand expansion strategy. Niklas Schaffmeister’s book aims to enhance the reader’s understanding of successful marketing and brand- building in the large transitional economies. Today, some observers seem dubious about the future of certain BRICs; the “IC” clearly is more powerful than the “BR.” While China’s economy is still delivering robust growth, and India is getting ready for a major comeback, the prospects of the Russian economy appear much less positive. While Russia was still one of the “hot bets” in 2013, the military conflict with Ukraine has turned many observers critical about the economic outlook of Russia. Yet Jim O’Neill, who coined the term BRICs, remains positive about the overall prospects of the BRIC club. He told German business and financial daily Handelsblatt in January 2015, “The trend stays: That is the rise of these four nations relative to the rest of the world. Some observers are simply confusing a trend with an economic cycle.” Overall, O’Neill believes that Brazil, Russia, India, and China will jointly overtake the USA in economic power within the next 2 years. India in particular seems to be on the right track, with reforms initiated by its newly elected Prime Minister, Narendra Modi. “[Reforms] together with the low oil price and its young population could enable India to grow stronger than China in the future,” says O’Neill. However, he also agrees that the relative importance of China and India is much bigger nowadays. vii viii Foreword Since 2010, China’s economy has grown almost 50 % and India’s about 30 %. In Russia and Brazil, growth rates were just 10 % and 8 %, respectively, largely because of the falling price of raw materials. Still, most long-term trends remain intact. Urbanization, better education, youn- ger labor forces, and rising consumption in Tier 2 and Tier 3 cities as well as the vast rural hinterlands are setting up these continent-like countries for many more years of growth. Significant room to grow in the dynamic middle-income segments is only one reason to intensify international expansion with a focus on the BRICs. The other key reason is the accelerated overseas expansion of a rising number of new champions from countries like China or India, which have gone on a buying spree in Europe and the USA. Western companies need to learn how to compete with these new juggernauts on their home turfs, before being attacked in their own premium markets only a few years down the road. Global consumer electronics giants like Samsung and Sony are already feeling the pressure of Chinese brands like Lenovo and Xiaomi, and the global automotive press has started to speculate whether Jaguar (now owned by India’s Tata Motors) can challenge BMW. This book is not intended to argue in favor of the BRICs or any other combina- tion of smaller growth markets such as the MINT countries (Mexico, Indonesia, Nigeria, and Turkey) as the economic cycles simply move too fast to predict winners, and countries will always experience ups and downs. Rather, the aim of this book is to promote understanding of transitional markets in general and to illuminate the features that characterize them and the unique challenges that marketers commonly encounter when planning and implementing brand develop- ment strategies. Whether you believe that Russia will recover from its current crisis, or that Brazil will benefit from the Olympic Games in 2016, this book has much to offer. The 25 strategies outlined in Part III form the heart of successful marketing in transitional markets. Many of the impact factors and resulting implications are not unique to the BRICs; they are worth considering in any other growth market. This is especially true for the first five chapters of the strategy section, which outline the most important steps in defining your growth strategy and related market position- ing. They work in any context where brands cross borders. This book will also help to enrich understanding of, and sensitivity to, cultural traits and related motivations for consumption. We firmly believe that “culture eats strategy for breakfast,” as we have seen way too many misguided international marketing efforts which made the dangerous assumption that a single global approach would work in every market and that consumers would eventually get used to the offering. This might be true occasionally, but it goes awry more often than not. It might be reasonable to ignore local needs formed on the basis of traditional culture—but only if your target markets are of marginal relevance. However, when brands like Volkswagen sell every third vehicle in China and earn about 50 % of their profits there, it would be extremely dangerous to not to be sensitive to local tastes and preferences. As a senior executive of Omnicom Group, one of the world’s Foreword ix leading advertising and communication groups, I can say that our agencies passion- ately believe and are experts in the power of locally relevant communication. The best joke is pointless, if it is lost in translation. . . Do brands even matter in emerging markets? We firmly believe they do. Unlike technology or products that can be reverse-engineered and copied, a premium brand is one of those rare competitive advantages that cannot be easily copied. It just takes time and investment to establish a brand in the hearts and minds of new target groups. This book—the first such analysis of the BRIC countries from a brand and marketing point of view—is based on 15 years of hands-on strategy and marketing consulting experience in various industries. The strategies, frameworks, and principles outlined here will allow you to think more strategically about building your brand where it matters most. The Country Profile chapters on China, India, Brazil, and Russia will familiarize you with the main aspects of local socio- economics, income segments, cultural backgrounds, media environments, and purchasing motifs—the “software” needed to thrive in each specific market. Reading these chapters conveys the necessary background needed to reprogram your brands and to optimize their performance abroad—without contradicting their basic global values. The chapter on Commonalities and Differences highlights the fact that beyond all the cultural complexities, there are actually many similarities among the big emerging markets. The section on The New Paradigm explains the key principles and steps toward a growth market-centered “one world strategy” for brand expan- sion. It also highlights the immense importance of the country-of-origin (COO) factor in marketing to a completely new set of aspiring and status-hungry consumers (who are willing to pay a premium for quality and emotional benefits). The comprehensive Strategy Chapter, the main part of the book, describes 25 key approaches that help you, not only gain significant market share, but also win customers who stay loyal to “their” brands even as they migrate to yours. Key considerations are analyzed and solutions offered with dozens of specific answers to tough questions, such as: What are the best strategies for entering BRIC markets and positioning international brands to appeal to diverse cultures? Which are the growth drivers and consumption patterns of the new members of the emerging middle class? What does a market-driven strategy that combines the global brand positioning with clever local adjustments look like? The book is filled with examples of successful strategies and is an indispensable guide for every executive responsible for making far-sighted marketing and branding decisions in the world’s most exciting markets. New York, NY Serge Dumont March 2015
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