BrandLoop #5, November 1997

Best Practices for International Brands

As part of the BrandLoop Knowledge Development Programme, Through the Loop has been conducting an on-going study of best practices for international brands. This has included the analysis of two different leader brands operating in the same market. The brand pairs include: Levi's/Diesel, Adidas/Nike, Coca-Cola/Pepsi-Cola, McDonald's/Burger King. In addition a number of brands are also referenced where appropriate. The following covers some of what has been learnt from this research.

The nature of international brands is changing. There are now different ways of doing business, new and different distribution systems as well as evolving communications channels. This means that during the 1990s, companies have had to reappraise how they market their brands in different countries. Consumer convergence and divergence co-exist.

Target Audience Segmentation

There tends to be either a highly focused or a multi-faceted target audience. For example, a company such as McDonald's or Coca-Cola will target diverse groups including a family target audience, a single person eating or drinking on the run, older people, children of all ages and teenagers. Within the different groups, they may segment further to develop more sophisticated marketing programmes. The development of an umbrella brand strategy provides the marketer with a core set of brand values. This umbrella can then be layered with specific initiatives to reach distinct target audience segments.

A highly focused brand would include Nike, Adidas, Levi's, Diesel or Benetton. In these cases, there is a far more precise target market. However, there is evidence that a brand will widen its target market as it reaches a greater level of maturity. In the case of Nike, for example, there was a move into new sports areas away from the running heritage. Nike's target audience has moved from more masculine towards female and even third agers. Reebok has also moved away from its original core sports areas towards numerous sports including football, rugby and cricket. This has moved Reebok away from women's interests towards more general sports.

Brand Timing

This refers to the creation of a marketing opportunity. Equally it can be the ability to recognise and exploit a shift of some kind. Shifts may result from a number of factors such as technology, consumer changes, etc. International brands look to implement central developments very quickly. As a result of the acceleration of the product development cycle, marketers must maintain competitive advantage for their brands with a rapid roll-out of new developments. The importance of strategic innovation is highlighted.

Examples of this strategy are McDonald's vegetable burger, Adidas' Feet You Wear communications or Levi's Dockers. The use of global communications media facilitate the rapid roll-out of initiatives across countries.

Positioning

Consistency of positioning appears to be an essential criterion for success in this area. Some of the more successful brands are able to translate and adapt a central guiding theme such as Just Do It or Always Coca-Cola. The central theme allows the brand values to be maintained and updated or refreshed regularly. In this way, they act as a guide for the brand. Nevertheless, there is still the possibility to express the positioning locally but within the framework of a central strategy.

In many cases, a brand such as Levi's or Nike is able to set the tone for the category. A challenger brand will either have to accept this vocabulary or compete in a new field. An example of the latter is Diesel, a brand that is defining itself rather than mimicking the brand leader. However, even leader brands have to be refreshed and updated. Both Nike and Adidas have been in this position in recent years. In both cases, they were revived by a return, not just to the core sporting values but with a premier sports positioning.

Localisation

In the past, brands were often global through a central strategy or they were very decentralised. The former was more efficient but insensitive to local conditions, the latter far more sensitive but less able to take advantage of economies of scale. In the 1990s, we can observe a greater degree of localisation whereby a brand conforms to a central strategy but one that can be adapted locally. This tends to be more efficient and responds to local market opportunities and needs. Brand consumption tends to be local. This strategy is particularly evident for Coca-Cola, MTV and McDonald's. In these cases, the principal offer remains the same but is more tailored to local tastes. McDonald's, for example, may offer different menu items, Coca-Cola's advertising will be more appropriate to the market or it will offer different ranges of soft drinks according to country. For example, Coca-Cola recently launched Smart, the first carbonated soft drink from an international company specifically designed for the Chinese market. MTV offers local or regional programming that will appeal more to viewers.

Sports brands such as Nike and Adidas are in a strong position to market locally. This is most visible through the sponsorship of local athletes and events. Adidas' Streetball events are very much targeted and developed at a local level. This behaviour can be enhanced through its adoption in regional or global communications. In this way a local initiative can become magnified.

Communications and Distribution Channel Diversity

The brands analysed tend to use a wide spectrum of communications channels. Aside from above-the-line advertising, this may include event marketing, on-line presence, database marketing, institutional marketing, etc. This varied media mix is a result of the greater media fragmentation. Furthermore, it also enables the brand values to be communicated to a more diverse audience with appropriate messages. A halo effect will be integrated with specific, narrow initiatives.

There are also indications of brands looking to develop additional distribution channels. Diesel, Nike and Levi's have a retail presence. This acts as not only a distribution channel but also a way in which the brand values can be enhanced. McDonald's has looked to develop specific types of stores such as drive-through and on ferries or in hospitals.

Summary

Through the Loop's analysis of a number of international brands has shown that within the same marketplace, two leader brands can operate in many different ways. The exercise has demonstrated a number of central best practices for international brands and, crucially, has shown where strategies should converge and diverge.

The key best practices can be summarised as follows:

• Target audience understanding, segmentation, manipulation

• Communications programmes direct to the consumer

• Developing retail presence

• Exploiting opportunistic shifts

• Consistency of positioning, utilising local expression

• More holistic use of varied communications channels