Brands operate on a global scale. Brand names such as Nike, Coca-Cola, McDonald’s, Gillette, Adidas, Disney, Marlboro, Sony, Budweiser, Microsoft and Pepsi are now recognized across the world. The dismantling of trade barriers, combined with the rise of global communications technologies such as the Internet, has meant that companies can expand into new markets faster than ever before.
However, many companies have confused the era of globalization with an era of homogenization. If they have had success with one product in one market they assume they can have equal success in another. All they believe they have to do is set up a Web site in the relevant language, run an ad campaign and set up a similar distribution network. What they forget to understand is that there is more to a country than its language, currency or gross domestic product.
The cultural differences between, and often within countries can greatly affect the chances of success for a brand. Companies which fail to accommodate and acknowledge these vast cultural differences face a long battle in replicating their success at home in other markets.
However, understanding cultural differences is not just about international markets. It is also about understanding the specific culture of the brand. When companies acquire a brand that wasn’t theirs to begin with, they can often make similar errors as when they move into a foreign market. Instead of making the mistake of misinterpreting the market they misinterpret the brand.
Companies can spend millions on marketing, in markets that they do not understand, did not bother to research and hence their products lose market share and as a result they weaken their brand.
Below are three examples of brand gone culture wrong. These are documented examples of how not to enter into global markets and what not to do when you buy a new company, but there are many , many more examples out there that missed the news and academic researchers, of companies that just did not get it when they decided to go global or decided to enter into regional markets.
Kellogg’s in India
Kellogg’s is, of course, a mighty brand. Its cereals have been consumed around the globe more than any of its rivals. In the late 1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the US ready-to-eat market from its cereal products alone. However, due to rising competition, the company’s performance began to stagnate and it didn’t take Kellogg too long to decide that India was a suitable target. After all, here was a country with over 950 million inhabitants and a completely untapped market potential. And thus the company’s number one brand , Corn Flakes was introduced into the India market.
However, what the folks at Kellogg did not realise forehand was that the Indian population found the whole concept of eating breakfast cereal a strange one . Indeed, the most common way to start the day in India was with a bowl of hot vegetables. While this meant that Kellogg’s had few direct competitors it also meant that the company had to promote not only its product, but also the very idea of eating breakfast cereal in the first place. And this is not what they had come to India to do.
Even if they liked the taste, many potential India consumers found the product was too expensive. A 500-gram box of Corn Flakes cost a third more than its nearest competitor. However, Kellogg’s remained unwilling to bow to price pressure and decided to launch other products in India, without doing any further research of the market. Furthermore, the company’s attempts to ‘Indianize’ its were disastrous. Its Mazza-branded series of fusion cereals, with flavours such as mango, coconut and rose, failed to make a lasting impression.
Acknowledging the relative failure of these brands in India, Kellogg’s came up with a new strategy to establish the company’s brand equity in the market. If it couldn’t sell cereal, it was going to try and sell biscuits. All this to no avail and certainly no profit. Millions of dollars were spent in marketing products that were not palatable to the Indian people.
Hallmark in France
Hallmark greeting cards are immensely popular in both the UK and the United States and indeed many other countries. Catering for every special occasion – from birthdays to weddings and from Mother’s Day to passing your driving test – the cards are sent by thousands of people every single day of the year. The signature (or ‘hallmark’) of Hallmark cards is the ‘special message’. The advantage of buying from Hallmark is that you don’t have to think about what to write – it is usually all written for you. ‘Thank you for being such a special daughter.’ ‘These birthday wishes are especially for you,’ and so on, normally followed by a rather sentimental poem inside.
While this formula may be successful in many countries when Hallmark tried to introduce their cards in France, no-one bought them as people preferred to write in the cards themselves. Furthermore, the syrupy sentiment inherent within the pre-printed messages did not appeal to the French.
Quaker Oats’ Snapple
In 1994, food giant Quaker Oats Company bought a quirky soft-drink brand called Snapple for US $1.7 billion. The company felt confident that the drink brand was worth the price tag, because Quaker Oats had already achieved an astounding success with the sports drink Gatorade.
However, in terms of brand identity the two drinks couldn’t have been further apart. Gatorade was about sports and a high-energy, athletic image. Snapple, on the other hand, had always been promoted as a New age and fashionable alternative to standard soft drink brands. Quaker Oats simply didn’t understand what the Snapple identity was all about.
Specifically, there were two main reasons why Quaker’s three years in charge of Snapple diminished the brand’s value. Reason number one had to do with distribution. Before 1994, most Snapple drinks were sold at small shops and petrol stations. However, Quaker deployed its usual mass marketing techniques and placed the brand in supermarkets and other inappropriate locations.
The other problem was the way Quaker decided to promote the product, abandoning eccentric advertising campaigns in favour of a more conservative approach. The end result was a counterproductive advertising campaign which succeeded in ‘normalizing’ Snapple’s previously quirky identity. As sales started to slide, Quaker believed it held the solution – send sales reps out on to the streets to ask people to try the product for free.
The day after Quaker announced that it would sell the Snapple drink business for US $300 million (over five times lower than the price they had bought it for), the New York Times pointed the finger at the misguided Culture failures and advertising campaigns. Quaker Oaks had assumed that it could treat one brand the same as another.
Lessons to be learnt
- Brands need to understand different cultural backgrounds in the markets where they are entering.
- Companies should accept that different brands need different distribution because of their different target markets.
- Companies acquiring a brand need to understand the brand as this will guide the marketing campaign.
- .Before going into a foreign market, do your homework.
- Don’t underestimate local competition. Local people may find your company exciting at first, but they are usually tied to the things they know.
- Remember that square pegs don’t fit into round holes. If your product does not fit the culture, change the product.
- Don’t try to make customers strangers to their culture. It won’t work.
Adapted from Brand Failures, by Matt Haig.
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