Futures Company Future of Global Brands Walkersmith Curry Jones

7/30/2019 Futures Company Future of Global Brands Walkersmith Curry Jones

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Future Perspectives

April 4, 2011

The Future of Global Brands in an Uncertain World:

The Power of Co-Creation


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2011 The Futures Company. All rights reserved.2

We live in a time of uncertainty. Since

the shock of the 2008 economic

collapse, many people feel their

foundations have been eroded.

The 2010 Global MONITOR report

highlighted the fact that living with

uncertainty has become a key

context shaping consumer decision-

making. Correspondingly, there

has been profound questioning of

things that were previously accepted

as gospel, such as globalization.

Now, some of the key features of

globalization are being called into

question, particularly those that

affect the future of global brands.

Although many beliefs about

global brands feel more fragile

than ever, there are many beliefs

about branding and marketing that

are increasingly sure. In 2010, the

Credit Suisse Research Institute

published a report documentingthe returns enjoyed by companies

that focus on branding. Companies

consistently spending at least 2% of

sales revenue on brand marketing

substantially outperformed the

S&P 500 since 1997, according to

Credit Suisses analysis, while the

top one-fth of these businesses

outperformed the market by a huge

17% per year1. While questions

about globalization are rife, global

brand-building continues to deliver

unquestionable value.

However, the open question for

marketers remains how to manage

branding as part of globalization.

Should global brand-building push

or be pulled along? Should global

brand-building be driven by a

central strategy or by local markets?

Developments in the global

receptivity to brands demarcate a

key pathway to the future.

So, in this report, we will

Look at the development of

the idea of the global brand

1 Credit Suisse Research Institute,

Great Brands of Tomorrow, February

25, 2010, http://wpc.186f.edgecastcdn.

net/00186F/mps/Equity_Research_

Test_Account/16/129/Great_Brands_of_

Tomorrow.pdf

1

Introduction

The Future

Perspectives arethought-pieces with

concise, focused

insights into important

issues of interest

to marketing and

business strategists.

For more information

please visitwww.

thefuturescompany.

com.

The Future of Global Brands in an Uncertain World:

The Power ofCo-Creation
http://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://www.thefuturescompany.com/http://www.thefuturescompany.com/http://www.thefuturescompany.com/http://www.thefuturescompany.com/http://www.thefuturescompany.com/http://www.thefuturescompany.com/http://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdfhttp://wpc.186f.edgecastcdn.net/00186F/mps/Equity_Research_Test_Account/16/129/Great_Brands_of_Tomorrow.pdf


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2011 The Futures Company. All rights reserved. 3

Explore the continuing

tensions between the notion

of the global and the local

Identify brands which

represent new trends in

the development of global

branding

Suggest strategies which help

marketers to manage global

brands in a world of increasing

cultural complexity

In doing this, our approach will be to

combine macro perspectives with

micro insights, mixing some theory

with some examples.

Deconstructing Global-ness

What does it mean to be a global

brand? At root, of course, every

brand is local. Yet, so, too, is every

brand potentially global. For

example, if a consumer discovers a

Palestinian beer and brings six cases

back to New York where it becomes

a minor rage in Tribeca, that brand

has started to globalize. As this

simple example illustrates, for the

consumer a brands global presence

is, paradoxically, most tangible when

a brand is most deeply embedded

in a local situation. No brand has an

exclusive monopoly on global-ness,

at least not in the traditional way

in which global brands have been

understood.

To understand where global brands

are headed, it is useful to revisit the

history of global branding. There

have been four successive models of

global branding.

1stGeneration:

Export Model

This could be considered the pre-

history of global branding. This was

the way of thinking by which branded

consumer goods rst found their

way around the world. Developed

market brands were basically

unchanged from the manufacturing

country as they moved to national

colonies and beyond. The key

business objective was to keep

unit costs cheap enough to cover

transportation.

2nd Generation:

In-Country Model

In contrast to a branch ofce simply

receiving goods, this approach

involved the creation of a full-

blown parallel company structure

in expansion markets, including

production facilities and, crucially,

marketing departments to handle

in-country marketing.

3rd Generation:

Standardization Model

In reaction to the perceived costs

of prior approaches, this model

drew on convergence theories

of development that saw global

consumers becoming alike. Hence,

consumers could be targeted with

the same products and the same

branding.

4th Generation:

Glocalization Model

This model was developed

to balance the benets of

standardization with the need for

local customization. This model

works with an idea of brand

elements that need to be held rm,

like name, logo or visual identity,

versus those that can be modied

as needed, like positioning, target

audience or communications

strategy. This is the prevailing model

today.

Figure 1: The history of global brands

1st generation:Export model

Brands exportedfrom parent countryunchanged

2nd generation:In-country model

Parallel company setup in new markets

3rd generation:Standardizationmodel

Similar products andsimilar branding inmultiple markets

4th generation:Glocalization model

Core elements arestandard, with varia-tions to suit localmodels

?

Source: The Futures Company

MacroDynamics


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The Coming Era ofCo-CreationA new model is now driving the

future of global brands. It is

practiced already by many brands,

though not yet recognized or spoken

of as a true branding model. But it is

coming on strong in a world hungry

for new entry points into the global

marketplace.

5th Generation:

Co-Creation Model

This model extends the open-

ended style of glocalization into

explicit collaboration on equal

terms between brand owners and

host markets. Its not the top-down

collaboration of customizing a global

concept to a local situation but a

deep, iterative collaboration in which

the very concept of a brand arises

bottom-up across several local

situations at once.

This sort of brand model, operating

through the progression of local

market ows, can be seen today with

several innovative global brands.

dENiZEN by Levis

dENiZEN was launched last year in

Shanghai, the rst time Levis has

launched a brand from outside the

US and the rst Levis brand to have

its headquarters outside the US. The

ve-pocket jeans are aimed at 18 to

29 year-olds in China, Singapore,

South Korea, and, in the future, India.

It is a target group Levis refers to as

Asia Rising. In style and price, these

jeans are all about this new global

consumer and the local situations

that give meaning and power to its

global strategy. More importantly,

these jeans represent a ground-up

approach to building an international

presence.

Shang Xia

Shang Xia is a new Herms luxury

brand launched last year targeting

the Chinese market. Shang Xia

pitches itself squarely into the

tension over the ultimate source

of a brands identity. Historically,

Herms expanded by buying existing

brands. But Shang Xia is being

launched from the ground up, using

local know-how and materials to

build a global presence at a lower

price point for this fast-growing

market. This brand is a stylistic

hybrid of modern European design

and Chinese craft, yet a Herms

representative has insisted that it

is a Chinese brand, developed in

China with the Chinese team, based

on Chinese craftsmanship and

broadly made in China. We dont

want any confusion. This is the

heart and soul of co-creation. The

challenge for Herms, as one scholar

of the Chinese luxury market has

noted, is that products specically

targeting the Chinese market are

often less welcomed than products

that are totally foreign in the rst

place.2 Herms co-creation model

offers a resolution to this challenge.

2Justine Lau, Herms Creates

Bespoke Brand for China, July 19, 2010,

Financial Times, http://www.ft.com/

cms/s/0/31274bdc-9351-11df-bb9a-

00144feab49a.html

Figure 2: The fth generation of global branding

5th generation:Co-creation model

Collaboration betweenbrand owner and local

market to developbrand and proportion

1st generation:Export model

Brands exportedfrom parent country

unchanged

2nd generation:In-country model

Parallel company setup in new markets

3rd generation:Standardizationmodel

Similar products and

similar branding inmultiple markets

4th generation:Glocalization model

Core elements arestandard, with varia-

tions to suit localmodels

Source: The Futures Company
http://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.htmlhttp://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.htmlhttp://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.htmlhttp://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.htmlhttp://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.htmlhttp://www.ft.com/cms/s/0/31274bdc-9351-11df-bb9a-00144feab49a.html


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BonVi!

Launched in Ghana in 2009 by

Amway, BonVi! was developed

through a live prototyping project

run in rural Ghana involving in-home

interviewing and village charrettes

with feedback on everything from

product samples to the proposed

color of the brand identity. BonVi!

aims at a mass market using not

only glocalization strategies to

convert existing Amway products

to t local needs, but also co-

creation strategies to identify

additional needs, learned from

local collaborators, that can be met

by new products within the global

capabilities of Amway (e.g., water

purication tablets).

From Processes to Meaning

As brands face forward, they

will nd that meaning more

than processes will be a critical

element of success. Co-creation

puts meaning in the forefront of

engagement. In the century ahead,

global brands will nd themselves

having to straddle 150 years of past

history and the legacies that has left

for the future. Though the corporate

focus on emerging markets is

largely economic (following the

shifts in global money), these verymarkets are more exposed over the

near term to resource shortages,

pollution, and other threats to their

viability. For example, Asia is highly

vulnerable to water scarcity.

Future global brands will need to be

mindful that one of the advantages

of global brands in years past

has been a tacit guarantee that

products carrying their name would

not kill or injure their consumers.

In this sense, global brands of the

future will need to be just as mindful

of the functional bottom end of

Maslows hierarchy of needs as of

its more aspirational top end.

Global supply chains make this

harder to achieve. Consumers in

afuent markets feel secure and

distanced from risk when they read

of vigilante consumers in China

turning on a brewer alleged to

have watered down beer or when

two people are tried and executed

for their part in a powdered milk

scandal. But these risks hit close to

home when lead paint renders toys

produced in China unsafe for the

American market.

MacroDynamics


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Brand risks are amplied by the

co-creation model which, inevitably,

creates brand divergence at the

level of national or local markets.

With consumers in different

markets increasingly connected

through digital networks and social

media, inconsistencies will be

identied quickly, then shared and

publicized. Global brands will need

to speak coherently across markets

even as they speak distinctively

within them.

Global brands will be forced to

shift much of the emphasis in their

brand communications from rules

to values and from processes to

meaning, putting more pressure on

the ways in which corporate culture

is created, communicated and

internalized. This is a lesson Mattel

learned from its toy recalls. Its rst

attempts focused on procedure, but

this was not enough. Its subsequent

efforts approached the problem by

looking at the values of integrity

and safety around its productions

processes.3

3 Jonathan Dee, A Toy Makers

Conscience. New York Times, December

23, 2007, http://www.nytimes.

com/2007/12/23/magazine/23Mattel-t

html
http://www.nytimes.com/2007/12/23/magazine/23Mattel-t.htmlhttp://www.nytimes.com/2007/12/23/magazine/23Mattel-t.htmlhttp://www.nytimes.com/2007/12/23/magazine/23Mattel-t.htmlhttp://www.nytimes.com/2007/12/23/magazine/23Mattel-t.htmlhttp://www.nytimes.com/2007/12/23/magazine/23Mattel-t.htmlhttp://www.nytimes.com/2007/12/23/magazine/23Mattel-t.html


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The Future of Global Brands

Looking across the trends which

are shaping the global landscape

in which transnational businesses

operate, it is possible to pick

out some clear implications for

executives.

Emerging brands from

emerging nations

Developing markets that weathered

the global downturn better than other

markets are showing their resilience

through a urry of M&A activity.

As the BRIC countries continue to

expand, with more afuent nations

trapped in the debt overhang of the

economic crisis, we will see BRIC-

based businesses add brand assets

to their existing portfolios of natural

assets, production capacity and

manpower. March 2011 data show

that 44% of privately held businesses

in Brazil, Russia, India, and China are

planning to grow by acquisition in

2011, up from 27% last year.4

Authentic local brands from

afuent nations

Many of the brand stories mentioned

in this report have been about how

brands from the afuent world

responded to the challenges of newmarkets. The historically strong

4 Grant Thornton, BRICs lead the way

in M&A. International and Emerging

Markets Blog, March 3, 2011, http://

www.grant-thornton.co.uk/thinking/

emergingmarkets/index.php/article/

brics_lead_the_way_in_ma/

brand skills of existing global brands

will not vanish, even in this business

environment. However, global brands

will need to be more responsive

to their local circumstances,

understanding more deeply why

consumers in each particular market

seek out their brands or disregard

them. In the competitive context

of these various marketplaces,

the imperative of adaptation and

indigenization will play out as a race

against time and capital between

established brand owners and new,

acquisitive brand owners to co-create

brands that will win the loyalty of

emerging market consumers. This is

the race that will decide control of the

brand wealth of nations in the years

to come.

The decline of the iconic brand

There will be too many brands

chasing too few possibilities for

iconic brands to dominate consumer

relationships as they have in years

past. No matter how good a strategy

may be, it dunks a brand into the

red ocean of undifferentiation if

every brand adopts it. The ultimate

challenge for brands has always been

to overcome consumer indifference,

and this challenge will grow in the

global marketplace to come. In

response, brands will have to deliverever greater value to consumers who

favor them, even as brands fragment

their identities through greater locally

driven co-creation.

MacroDynamics
http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/http://www.grant-thornton.co.uk/thinking/emergingmarkets/index.php/article/brics_lead_the_way_in_ma/


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the marketplace. Uncertainty is

bringing together a conuence

of perspectives that is redening

global brands from the bottom up.

The hierarchy of established global

brands will be challenged by new, co-

created global brands.

Established brand owners have the

skill and experience to navigate

these tricky marketing waters,

and should feel condent about

their ability to create authentic

new brands of their own, thereby

appropriating some of the cultural

authority that new brands might

otherwise enjoy. Such adaptation

can be a rich source of innovation,

and thus, even as a new marketplace

unfolds, the dominion of Western

brands is not likely to be wholly

overturned by the future market

forces of co-creation.

The end of grand strategy in

global branding

An era of mixed strategies in global

branding is emerging in which what

happens at the center will be equally

matchedif not overpoweredby

what happens in local situations.

The glocalization models of the

fourth generation will be challenged

increasingly by global brands that

are co-created from the bottom up.

Local customization will give way to

local co-creation as the underpinning

of global success. A movement is

underway to shift toward toolkits to

support a mix-and-match approach

in which different elements can be

woven together to respond to locally

unique branding challenges.

The rise of the contextual

brand manager

In the marketplace ahead,

successful global brand managers

will be culturally and contextually

adept, listening to markets in order

to master and understand multiple

cultures. Increasing numbers of

global brand managers will move

from emerging nations to work

in all of a brands markets, not

just the home market. A key skill

will be assessing local factors

accurately and judging the correctelements to deploy. In todays global

marketplace, whats required is an

expedient, experimental mindset

that is open to all possibilities. Brand

judo, not brand brawn, will determine

which brands win.

Brands will have to build new

narratives

With many trades in ownership

and the invention or reinvention

of co-created brand propositions,

national or local origin will no

longer be a sufcient basis for

brand authenticity. In an age of

ever-smarter consumers, the

battle of the brands will become

a battle of narratives. Competing

brands will attempt to tell more

compelling stories about their

values and purpose, from product to

provenance to social and corporate

commitment.

Conclusion

Notwithstanding the push of market

forces to co-creation, there are

counter-forces at work as well.

Todays global brands got there rst,

giving them a huge order-of-entry

advantage which new co-created

brands will have to spend heavily

to overcome. This challenge is

intensied by the status enjoyed

by many foreign brands among

emerging market consumers.

Indeed, as developing nations

grow more prosperous, consumers

there may spend even more on

established brands.

The future of global brands of

every sort will require a new

approach to global brand-building.

The intersection of interests that

denes global market opportunities

now demands a fresh look at

Documents

Futures Company Future of Global Brands Walkersmith Curry Jones