Article

Think globally, market locally

In real estate, the mantra is 'location, location, location.' For global brand managers, it might well be 'localise, localise, localise.'

Di Orit Gadiesh

First published on agosto 01, 2005
Tempo di lettura min.


In real estate, the mantra is 'location, location, location.' For global brand managers, it might well be 'localise, localise, localise.' Today corporations face a mosaic of markets where once there were stable brands spreading across the globe, or at least the illusion of them. As a result, they now need to balance global scale with local responsiveness and local brand identification. And in the current international climate, multinationals increasingly find themselves under attack because of their home countries' foreign policies. How can firms protect themselves? In essence, by 'localising'. Though companies cannot localise their roots, they can build strong national and regional companies. They can produce, distribute, package, brand and communicate on a local basis. Consider Coca-Cola. Not long ago Coke found its brand being negatively recast by its association with the American way of life. In 2002 a French-Tunisian entrepreneur began exploiting the emotional gap between France's estimated six million Muslims and US products, launching a new product called Mecca-Cola. The packaging is the familiar cola red and white. The message says: "Ne buvez plus idiot, buvez engagé." ("Don't drink stupidly, drink with commitment.") He has topped that off with a promise to use a portion of profits to for the welfare of oppressed Muslims in Afghanistan, Iraq and Palestine. Mecca-Cola has caught on, and has since been launched in 56 countries. Recently, the company announced its intention to establish eight bottling plants in Indonesia, the world's largest Muslim country, by 2008. But Coke has bounced back. After a slight dip during the early hostilities in Iraq, Coke sales in the Middle East rose by double digits. Coke's best defence: weaving itself into the fabric of the places where it is sold. The company uses the equity of local bottlers and the local culture to drive its marketing. In Turkey it produces bottled water under the brand name Turkuaz. Sold in bottle embossed with dolphins - which symbolise friendship—Turkuaz is one of the country's best-selling bottled waters. This, despite the fact that, according to a 2003 survey, 84% of Turks have an unfavourable opinion of the US. This 'country of origin' phenomenon hurts non-US brands as well. Take French wines, whose sales had risen 9% annually in the US from 1998 to 2002. When the US and France began exchanging political recriminations after the invasion of Iraq, Americans began deserting French wines. But other brands immediately took up the slack, including a number of French-owned labels that produce for customers beyond French borders. One wine called 'Fat Bastard' re-engineered its branding, adopted the look and feel of the New World and more than doubled its US sales. Multinationals need to produce locally, brand locally, and shout about it. CNN, for example, has taken a localised route in Turkey and Spain, producing news with local journalists and local anchors via a locally branded service. Procter & Gamble had been making Tide washing powder in Saudi Arabia for decades. The company just hadn't told the Saudis. Recently, however, with rising anti-American sentiment, P&G has protected its local sales by redesigning the box to advertise 'Made in Saudi Arabia,' which is printed in Arabic along with the rest of the packaging. There are many other examples. Boeing hires local country presidents with strong links to government, to sell its aircraft. Not long ago WPP announced that it was creating country managers in countries such as Holland, Italy and China. First, because its clients are doing the same thing. Also, because it believes it is necessary to have someone leading the business locally in order to get the right level of government and political contacts. Multinationals that get involved with local communities also effectively reduce risk. Consumers are more likely to overlook foreign ownership if a company plays a positive role in local development. In China, for example, Seattle-based Starbucks positions its coffee shops as members of the local neighborhood. It has developed affordable snacks for local celebrations, like the annual mid-Autumn Moon Festival. When protests broke out in 1999 in response to a mistaken U.S. bombing of a Chinese embassy in Belgrade, Beijing protestors took a short cut through a Starbucks to the US Embassy, and bought coffee en route. David Sun, then chairman of Starbucks' Beijing franchise, said that sales actually rose that day. Companies also bring genuine value, especially in developing countries, by transferring technical skills and training employees. In India, for example, Pepsi's agri-scientists helped contract potato farmers to improve their yields from nine tons per acre to 20 tons, boosting their incomes and Pepsi's supply. Nestlé, with roughly half of its factories and people located in developing countries, invests millions to educate local employees, tailoring programs by country. In short, operating from both a global and local perspective requires much of today's multinationals. They must master many roles to serve many markets. To succeed on the world's new stage, they must ensure that their businesses have the experience, improvisational skills, and sense of purpose to build their brand power—and also risk-proof it. Orit Gadiesh is Chairman of Bain & Company.

In real estate, the mantra is 'location, location, location.' For global brand managers, it might well be 'localise, localise, localise.'

Today corporations face a mosaic of markets where once there were stable brands spreading across the globe, or at least the illusion of them. As a result, they now need to balance global scale with local responsiveness and local brand identification. And in the current international climate, multinationals increasingly find themselves under attack because of their home countries' foreign policies. How can firms protect themselves? In essence, by 'localising'. Though companies cannot localise their roots, they can build strong national and regional companies. They can produce, distribute, package, brand and communicate on a local basis.

Consider Coca-Cola. Not long ago Coke found its brand being negatively recast by its association with the American way of life. In 2002 a French-Tunisian entrepreneur began exploiting the emotional gap between France's estimated six million Muslims and US products, launching a new product called Mecca-Cola. The packaging is the familiar cola red and white. The message says: "Ne buvez plus idiot, buvez engagé." ("Don't drink stupidly, drink with commitment.") He has topped that off with a promise to use a portion of profits to for the welfare of oppressed Muslims in Afghanistan, Iraq and Palestine. Mecca-Cola has caught on, and has since been launched in 56 countries. Recently, the company announced its intention to establish eight bottling plants in Indonesia, the world's largest Muslim country, by 2008.

But Coke has bounced back. After a slight dip during the early hostilities in Iraq, Coke sales in the Middle East rose by double digits. Coke's best defence: weaving itself into the fabric of the places where it is sold. The company uses the equity of local bottlers and the local culture to drive its marketing. In Turkey it produces bottled water under the brand name Turkuaz. Sold in bottle embossed with dolphins - which symbolise friendship—Turkuaz is one of the country's best-selling bottled waters. This, despite the fact that, according to a 2003 survey, 84% of Turks have an unfavourable opinion of the US.

This 'country of origin' phenomenon hurts non-US brands as well. Take French wines, whose sales had risen 9% annually in the US from 1998 to 2002. When the US and France began exchanging political recriminations after the invasion of Iraq, Americans began deserting French wines. But other brands immediately took up the slack, including a number of French-owned labels that produce for customers beyond French borders. One wine called 'Fat Bastard' re-engineered its branding, adopted the look and feel of the New World and more than doubled its US sales.

Multinationals need to produce locally, brand locally, and shout about it. CNN, for example, has taken a localised route in Turkey and Spain, producing news with local journalists and local anchors via a locally branded service. Procter & Gamble had been making Tide washing powder in Saudi Arabia for decades. The company just hadn't told the Saudis. Recently, however, with rising anti-American sentiment, P&G has protected its local sales by redesigning the box to advertise 'Made in Saudi Arabia,' which is printed in Arabic along with the rest of the packaging.

There are many other examples. Boeing hires local country presidents with strong links to government, to sell its aircraft. Not long ago WPP announced that it was creating country managers in countries such as Holland, Italy and China. First, because its clients are doing the same thing. Also, because it believes it is necessary to have someone leading the business locally in order to get the right level of government and political contacts.

Multinationals that get involved with local communities also effectively reduce risk. Consumers are more likely to overlook foreign ownership if a company plays a positive role in local development. In China, for example, Seattle-based Starbucks positions its coffee shops as members of the local neighborhood. It has developed affordable snacks for local celebrations, like the annual mid-Autumn Moon Festival. When protests broke out in 1999 in response to a mistaken U.S. bombing of a Chinese embassy in Belgrade, Beijing protestors took a short cut through a Starbucks to the US Embassy, and bought coffee en route. David Sun, then chairman of Starbucks' Beijing franchise, said that sales actually rose that day.

Companies also bring genuine value, especially in developing countries, by transferring technical skills and training employees. In India, for example, Pepsi's agri-scientists helped contract potato farmers to improve their yields from nine tons per acre to 20 tons, boosting their incomes and Pepsi's supply. Nestlé, with roughly half of its factories and people located in developing countries, invests millions to educate local employees, tailoring programs by country.
In short, operating from both a global and local perspective requires much of today's multinationals. They must master many roles to serve many markets. To succeed on the world's new stage, they must ensure that their businesses have the experience, improvisational skills, and sense of purpose to build their brand power—and also risk-proof it.

Orit Gadiesh is Chairman of Bain & Company.