Brand Breakout: How Emerging Market Brands Will Go Global

Choice is good. Too much choice means that the consumer needs to find a way to choose. As choice increases consumers choose based on intangible elements such as their perceptions and emotional connect with a brand and go beyond cost and quality. The purpose of branding is to differentiate and eliminate choice.When the image of a country gets associated with the product it becomes even more complicated. If someone sold you a pair of shoes made in Italy, it would have connotations of high quality, whereas a precision machine made in Italy may be perceived to be inferior to, one made in say, Germany. If products have to compete globally they can do so only on the power of branding.China’s GDP is as large as that of the next four largest emerging economies combined (Brazil, India, Russia, and Mexico). China is the world’s manufacturing hub. Yet the term “made in China” has negative associations. Even though Western consumers are surrounded by products made in China (just think Apple’s products), there is little to no recall of any Chinese brand. J Walter Thompson study of US & UK consumers showed that Chinese companies ranked near the bottom in consumer perceptions of quality, ethical behavior, and environmental consciousness.“Branding is not only about differentiating products; it is about striking an emotional chord with consumers. It is about cultivating identity, attachment, and trust to inspire customer loyalty.”This insight comes from “Brand Breakout – How Emerging Market Brands Will Go Global” from Professors Nirmalya Kumar (London Business School) and Jan-Benedict Steenkamp (University of North Carolina). The book shares a framework that brands from emerging countries can leverage for creating global brands.The country of origin automatically has connotations of six dimensions: quality, innovativeness, aesthetics, prestige, price value and social responsibility.The Incredible India campaign perhaps now needs to appeal to these six dimensions if the feel good factor can go beyond attracting tourists to creating brands that win in the global marketplace. Indian brands have to be seen by the consumers and customers as global brands at par with others.http://youtu.be/_qBE_Z8JbzYThe company could be operating across the globe and have listings in global stock exchanges and yet be perceived as a local brand. That is where brand building assumes importance. Emerging market products are generally associated as low price point (read cheap). So how can the emerging markets build their brands to address this problem?The authors suggest eight possible routes:

1. Migrate to higher quality and brand premium (Haier, China)
2. Leveraging the B2B strength in B2C (Huawei, China)
3. Follow the emigrants into the world (Dabur, India)
4. Buying global brands from Western multinationals (Tata Motors, India)
5. Overcoming negative country of origin association (Chang Beer, Thailand)
6. Positioning on positive cultural myths (Havaiana, Brazil)
7. Branding commodities in four steps (Natura, Brazil)
8. Leveraging strong support from the state (Emirates Airlines, Dubai)

The place where the framework wobbles is how the authors have defined “emerging economy”.The Economist defines the developed economies as Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States. “Emerging economies” also account for 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions.The Economist magazine had said in 2011, “Real GDP in most rich economies is still below its level at the end of 2007. In contrast, emerging economies' output has jumped by almost 20% over the same period. The rich world's woes have clearly hastened the shift in global economic power towards the emerging markets.”In the recent book Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform the approach taken by Haier in transforming their culture is documented. While the authors have suggested several obstacles to overcome, I believe that in this brand breakout the companies need to first globalize their top leadership pool and make it more diverse. Remember how so many global brands have fumbled as they first entered the Indian or the Chinese market. The brands have to connect emotionally with the consumers in each market. Only a diverse talent pool can help them create a global brand.Only then can a brand appeal to the head through its tangible features and to the heart of the consumers through its ability to resonate emotionally to create a “Lovemark”. Lovemarks refer to those brands that reach your heart as well as your mind, creating an intimate, emotional connection that you just can’t live without. These are products and services that not only evoke respect but also have an emotional connection with the consumer. Lovemarks generate loyalty beyond reason.Here's a good example of how Virgin airlines (a "lovemark") connects emotionally with customers.http://youtu.be/UpCsp1u1i88Overall, I loved the central idea of the book and the eight ideas on brand building. I wish the authors had not restricted themselves to a marketing framework but had used the core differentiator of global brands ie their ability to tap and nurture leaders across the globe. These leaders in turn create a culture where the people are able to tap into local nuances. Building local leadership talent pools in every country is a big step for companies from emerging economies. Transparency in accounting or being environmentally conscious is table stakes today. Like consistent quality these are not differentiators.Brands are after all more about human appeal than just being a product or service with great features. They need to have mystery and enigma to be able to get consumers to love them. That is the secret sauce - at least for the brands from the developing markets. Without a diverse talent pool they will not be able to turn their brands into lovemarks.Overall: I recommend this book for all those who dream of crafting global brands - especially for large Indian firms that operate globally.---------Join me on twitter @AbhijitBhaduriRead my take “Do you have a Lovemark?”Guess who is the no 1 lovemark across the world?