Editorial: The local, national and global communities: Identifying with one or all

Consider the following list: Bhutan, own politicians seem to want to take us Brunei Darussalam, Burkina Faso, in the opposite direction. They are Cape Verde, Comoros, Guinea-Bissau, working to draw the member nations Kiribati, Kyrgyzstan, Marshall Islands, of the European union into an ever Nauru, Palau, Sa˜o Tomé, Tajikis- closer, ever more integrated body. At tan, Turkmenistan, Uzbekistan and thesametimetheyresistthepressures Vanuatu. What do they all have in of Globalisation as far as they are able. common? I think even the most This of course means that there are sophisticated readers could be forgiven very few European companies that can if they did not immediately come up describe themselves as global in the with the answer. The fact is that each way that the giant American and Asian of these sovereign states is a fully corporations can. fledged member of the United In Europe there are 15 member Nations.1 nations of the European Union but Since the end of the Cold War and there are 45 official languages spoken the fall of the Berlin Wall, the main by their peoples, and that is not geopolitical trend on the planet has including the dialects of their in- been for the acceleration of one of the digenous populations such as Geordie principal purposes of the United Na- nor the tongues of their more recent tions; that is self-determination. There immigrants such as Gujerati. In the UK are now 188 full-member states in the this dichotomy has led to the process United Nations, and that still excludes of devolution, ostensibly a return Switzerland, which remains an ob- of power to local and regional as- server. semblies. Atthesametime,theprincipal Remember the extraordinary scenes economic trend on the planet has been at the WTO round in Seattle?2 On the Globalisation and largely for the same 30th November, 1999 the mayor of reason. As the market system has Seattle was forced to declare a state of largely won there are new markets for emergency as a result of violent the world’s multi-national corporations Anti-WTO street protests. The mission to conquer and new media, which pay of the WTO is to create a prospering scant attention to the political bound- global economy, increasing the flow of aries, to help them in the process. Fifty goods and services around the world. of the world’s largest economies are, in Butcriticsarguethatmostofthe fact, corporations. planet’s population will not benefit Here in Europe it is sometimes dif- from WTO actions and may, in fact, be ficult to recognise these trends, as our harmed by them. This is a subject of

᭧ HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL. 8, NO. 1, 5–10 SEPTEMBER 2000 5 EDITORIAL

huge importance but, whatever the restaurant chains, McDonalds and Pizza merits of either argument, this is the Hut and a few clothing retailers — political and economic background Marks & Spencer and The Gap. They against which brand owners have to were not selling other brands except as manage their assets. accessories to the central purchase. But now the giants who have to expand beyond their home markets are flexing THE NEW AND EVOLVING CHALLENGES their muscles. Is this just a continuation TO THE WORLD’S GREAT BRAND of the same inevitable consolidation OWNERS that started when an owner manager There is a new factor at play, and that opened his second store? Or are their is the Internet. While much of the fundamental barriers that frustrate this impact of the Internet has been exag- process at the local, regional, national gerated, it is certainly going to change or international level? the way we work in a fundamental One important barrier is people. way. It is possible that the role of the When an owner-manager opens his middleman will change forever or even second store he needs to trust the disappear. The supply chain will be person who looks after it. That is why streamlined; inventory collapsed and this is so often a family member. But much quicker response to real market the size of the family will be a con- demand will be possible. These are straint to growth. If he solves this his factors that encourage Globalisation. next barrier will be geography. He will We are told that it will be possible want to visit each of his stores every to hold one-to-one relations with the day, checking on his staff, motivating consumer.3 Here I am more sceptical. them and transferring success around While I acknowledge that interactive his stores. When this is physically im- communication between a manufac- possible he will need a second tier of turer and his consumer is theoretically management. If he solves that he can possible, the reason why these big grow quickly if his finances permit. In companies developed in the first place the UK and the USA public funding was that they could achieve economies or equity has usually assisted progress of scale that the local producer could through this barrier. In Germany it has not match. Once these are sacrificed been more normally by bank finance the advantage of the large producer is or debt. The German system of bank- lost. This tension is particularly inter- ing has also provided a degree of esting in the retail arena. I used to protection to the local operator. believe that there were no global If we contrast the models of a retailers. Often national champions retailer developing his organisation from the USA would come over to through the barriers of management, Europe and fall flat on their fascia. geography and finance with a manufac- Some brave Brits tried the reverse but turer it is clear that the manufac- with the same result. Then those turer has an advantage. First, the retailers who controlled most of their manufacturer can access the benefits of product supply chain in a vertical economy of scale without complexity model had some success. These in- in his organisation. Second, he can cluded petrol retailers, Esso and Shell, distribute through available channels

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wherever they may be without equiv- million people. Most of the brands that alent investment. Thus he can invest figure in any list of global brands are the proceeds of economy of scale in American. This is the result of their widening the brand franchise. When in inventiveness; the strength of their his history he chooses to take his brand home market; their success in brand overseas, he can do this initially in a development. It may also be the result low risk way by export and then, when of the pervasiveness of their culture and he has built up economy of scale in the the fact that a business career is seen as new market, he can begin to invest in attractive and therefore attracts the best local production either by acquisition graduates from their schools. or by start-up. He will certainly have a Any non-US-based corporation brush with local politicians at this stage. must succeed in the USA if its His locally based competitors will ambition is global. The extraordinary accuse him of dumping and eventually success of Sony as a truly global brand he will choose to invest in local is probably based on the fact that Akio production, partly to avoid these Morita recognised this truth early in tedious accusations and partly to be the company’s history. He established seen as a good corporate citizen. Of his family home in New York and course personally supervised the business. The he will exact a price for his beneficence products were exported from Japan to in terms of tax holidays or grants. America but the reputation of the company was exported from America to the rest of the world. CHARACTERISING THE WORLD A distinguished professor from Har- MARKETS: UK, USA, EUROPE AND vard told me recently that there is JAPAN nothing happening in Europe. Per- haps this is harsh and not true in Lessons to be learned some specific industries, such as motor To what extent does this vary by the cars and fashion, where the European major regions of the world? I have gift for design stimulates . worked for American, Japanese and But certainly the USA and Japan lead British brand owners and I can as- the new industries of information and suredly say that there are marked varia- technology. An exception has been tions between them. But there are cellular telephones where an unusual variations among different companies combination of deregulation, led by from the same region. I can tell you the UK, and agreement on a stan- what it is like to work for Sony but I dard has created a vibrant market led am not sure that I can tell you what it by worldclass producers, Nokia and is like to work for the Japanese. Ericsson, and service providers such as The regional variations are certainly Vodafone and Orange. as marked. The USA is pivotal to many But the reality is that there are few markets. It is a vast market though global brands and practically no global within it there are massive variations. corporations. To examine the truth of There are no truly national newspapers this let us consider some of the leaders but a single spot on the Superbowl can whenever there is any consideration of announce a new product to over 100 this question.

᭧ HENRY STEWART PUBLICATIONS 1350-231X BRAND MANAGEMENT VOL.8,NO.1,5–10 SEPTEMBER 2000 7 EDITORIAL

SUCCESS CRITERIA FOR MANAGING Or consider another European food GLOBAL BRANDS giant, Danone.5 Again, a visit to their ‘ is dedicated to meeting the web-site reveals that they regard them- everyday needs of people everywhere’, selves ‘as a global corporation’,but according to their website.4 ‘Around ‘DANONE approaches the world with the world people use its products respect for diversity of cultures deeply 150 million times a day.’ There is rooted in solid, fundamental values. no question, that in most people’s Around the globe, Danone represents minds, Unilever would figure as a healthy eating, well-being, quality and global company. But consider what good times shared with family and they go on to say: ‘Unilever has friends. Danone’s dynamic incorporates identified five food categories of key a people-oriented consideration of the importance: culinary, frozen foods, ice culinary preferences and habits that cream, tea and yellow fats. Each of define cultures right down to the these will benefitfromtheguidance details of their everyday life.’ So far, so of its core category team, through good, but later on we find: ‘The enhanced strategy, improved manage- Danone Group’s leading brands are ment of brand equity, and the careful Danone, LU and Evian, which repre- promotion of innovation and excel- sent nearly 40 per cent of our lence.’ sales. They share a strong world- Foods Category director Lex Kem- wide presence, well illustrated by the ner explains: Danone brand: originally a dairy-food brand, it now represents babyfood in Russia and China, a natural spring water in the ‘In terms of world markets, these categories United States, and cookies in Asia and represent businesses of enormous size and Brazil’ (my italics). No doubt all of this importancewherewehaveexcellentcom- adds up to a very successful business petence. This is especially true in ice cream, with wide international reach, but is it tea-based beverages and yellow fats, in which Unilever holds high market shares global? around the world. The Americans express it better. Look at Colgate.6 ‘Colgate’,weare The opportunity for leveraging lies in the told, ‘serves global consumers with fact that market share is so inevenly dis- products in five major categories — tributed (my italics), with more than 75 per oral care, personal care, household cent of the foods business concentrated surface care, fabric care, and pet in Europe and North America. In some nutrition.’ On fabric care, ‘Washing regions only two categories are represented clothes is a universal part of life around and there is a striking mismatch between the world. But the methods vary Unilever’s food sales and the growth markets of widely from area to area. That’swhy the developing and emerging countries.(Again, Colgate produces a multitude of deter- my italics.) Inevitably different categories require different categories require different gents in many forms. They include approaches: ice cream and tea have a global laundry bars for hand washing in rivers quality and can ‘‘travel’’ easily, but tastes or tubs, and powders and liquids in yellow fats vary enormously from one for automatic machines. In many region to another and culinary is also very countries, ‘‘Fab’’ is the word consumers much driven by regional needs.’ use when they ask for detergents.’

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‘In addition to detergents, Colgate be anything but successful there.’ And also markets fabric softeners on six they were. continents. In many countries, Col- The key was a rigorous adoption gate has created the category with the of the much-quoted maxim: Think ‘‘Soupline’’, ‘‘Suavitel’’ and ‘‘Softlan’’ Global, Act Local. In the case of P&G brands and is the worldwide leader this is facilitated by the strong cul- ‘outside the USA where we compete.’ ture that has been successfully exported To my mind a much more convincing around the world. case for globalisation and the key is the In the words of John Smale, another management structure. CEO, ‘Procter & Gamble people all Consider how the Daddy of them over the world share a common bond. all, Procter & Gamble approached In spite of cultural differences, we this. P&G has been an international speak the same language. When I meet marketer for more than half a century. with Procter & Gamble people — But until the mid 1970s, P&G did not whether they are in sales in , really think on a global basis. Most of Product development at the Ivorydale their international business consisted Technical Centre, or the management of US brands transplanted to other committee in Rome — I feel I am countries, or local brands created by talking to the same kind of people. P&G subsidiaries.7 People I know. People I trust. Procter The company began to think about & Gamble people.’ P&G now has leveraging brands and technology on about a thousand expatriates from a transnational basis in the European different countries working in loca- marketplace in the late 1970s. This tions outside their countries. These was a significant shift in thinking that managers help to internationalise and was a precursor to true Globalisation homogenise the P&G culture around about ten years later. To create global the world as they move from country brands required a change in the way to country. the company was managed across bor- But recent downgrading of P&G’s ders. The mini-fiefdoms of the country profits and market capitalisation sug- managers that replicated the US struc- gest that even these efforts are not a ture, but duplicated resource and led to panacea. slow rollout of new products had to In Sony there is similar emphasis be dismantled. Instead cross-functional on international experience. The new and cross-regional teams were formed. markets were invariably opened up by This became the pattern for the world. young bright aggressive Japanese with Developing the business on a global the pioneer spirit and the ability to basis is now a strategic objective of the inculcate the culture in the nationals company. Japan is the largest consumer that they hire to succeed them when market outside the USA and arguably they returned. My first Japanese boss the toughest, most competitive, fastest- spent over 20 years of his life outside moving consumer market in the world. Japan. He spent a full day with me Ed Artzt, the CEO of P&G at that shortly after I joined explaining the time said, ‘Compete with them in their culture. How many bosses give that own backyard, for you will eventually much of their time? have to compete with them at home to In a recent Marketing Society Mas-

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terclass, Professor , Dean of One of these is that if a brand has , coined Isaac enjoyed a glorious history in Country Newton’s Law of Global Marketing, ie Athentoachievesimilargloryin ‘to every global action there is an equal Country B it will have to go through and opposite reaction’.8 He was par- the same stages of development. It is ticularly thinking of Coca-Cola who possible that this process can be perhaps took the cause of Globalisa- quickened because of the reflected tion further than any other corporation glory from Country A or because of but after some unfortunate experiences the confidence of a success story, but in 1999, has given a mandate to its the consumer still needs to see the film new Chairman and Chief Executive, of the book in the right order. Douglas Daft to localise the company.9 He now says, ‘think local, act local ... In — 3 People make the difference. every community, we must remember we do not do business in markets, we True as in everything, but you will do business in societies.’ need people to develop international I have recently joined NXT plc as experience to manage global brands CEO. Our vision is to establish a new and you will probably have to create global standard for loudspeakers by them. licensing our flat panel loudspeaker technology. Originally a British HiFi — 4 Accountability. manufacturer, our scientists made a breakthrough invention and it was Do not complicate the structure. clear that we had to transform our- selves into a global operation. As a David Pearson small company with global reach we Editorial Board can learn the lessons that I have espoused and seek worldwide brand recognition from the start. References (1) United Nations Website. (2) http://Cnn.com/Us/9911/30/wto.03/ (3) Peppers, Don and Rogers, Martha (1996) SUMMARY OF THE KEY SUCCESS ‘The one-to-one future: building business CRITERIA FOR MANAGING GLOBAL relationships one customer at a time’,Judy BRANDS Piatkus (Publishers) Ltd. (4) Unilever Website: www.unilever.com/Unilever’s Foods — 1 Brands are brands are brands. Business. (5) Danone Website: www.danonegroup.com/Meet The Danone By which I mean that the rules of Group/Danone Worldwide/. brand management are fundamental (6) Colgate Website; www.colgate.com/Our and apply equally whether a brand is Global brands. (7) Decker, C. (1998) P&G 99-99 ‘Principles local or international. There are then and Practices of Procter & Gamble’s some additional rules that apply to success’, Harper Collins Business. international brands. (8) Marketing Society Masterclass, Professor John Quelch, 16th February, 2000. (9) Daft, Douglas (2000) ‘Back to Classic — 2 Respect the evolution of brands. Coke’, , 27th March.

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