2008:005 MASTER'S THESIS Branding Strategies of MNCs in International Markets Hanna Häggqvist Camilla Lundkvist Luleå University of Technology D Master thesis Business Administration Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce 2008:005 - ISSN: 1402-1552 - ISRN: LTU-DUPP--08/005--SE Acknowledgement Acknowledgement This thesis was written for the program of International Business and Economics at the Division of Industrial Marketing and e-Commerce at Luleå University of Technology and was completed in January, 2008. This thesis has been constructed during a limited period of time, and these weeks have been instructive and fun, but also very intensive, and have demanded hard work and commitment in order to make this thesis something to be proud of. We have had the chance to develop our skills within the field of business and marketing and we hope that this thesis will contribute to already existing research as well as ideas for further research. There are several persons that have made this thesis possible. We would first like to thank our supervisor, Manucher Farhang, Associate Professor at the Division of Industrial Marketing and e-Commerce, Luleå University of Technology, who has guided us throughout the whole time and given us constructive feedback in order to improve the thesis. Secondly, we would like to thank Andreas Wagner, Assistant Brand Manager, at Procter & Gamble and Andrew Warner, Director of Brand Management at Sony Ericsson, who have provided us with valuable information during the interviews. We would also like to thank Ulrika Köbin, Assistant at Content Planning & Management, Sony Ericsson Mobile Communications AB, and Katarina Willig at Procter & Gamble, for handling valuable contacts. Luleå University of Technology, 2008 Camilla Lundkvist Hanna Häggqvist ___________________________ ___________________________ 5TÇç wtÅÇ yÉÉÄ vtÇ Ñâà ÉÇ t wxtÄ? uâà |à àt~xá zxÇ|âá? yt|à{ tÇw ÑxÜáxäxÜtÇvx àÉ vÜxtàx t uÜtÇwA5@ Wtä|w bz|Ääç Abstract Abstract In today’s global marketplace, MNCs need to set up effective branding strategies in order to be competitive. Depending on the structure of the company and the products offered, MNCs can use different strategies. There are certain characteristics that will affect the type of strategy chosen. In order to reach economies of scale and scope, many MNCs standardize their branding- and marketing activities. However, MNCs are often required to adapt to local preferences and cultures. The purpose of this thesis is to investigate the branding strategies of MNCs in international markets. Two research questions were addressed: how can the branding strategies of MNCs in international markets be described and how can the factors determining MNCs’ choice of branding strategies in international markets be described. Two qualitative case studies of well-known MNCs, Procter& Gamble and Sony Ericsson were conducted; the first an example of a company with a product brand strategy and the latter one with a corporate brand strategy. Our findings show that MNCs use either a product brand strategy, or a corporate brand strategy. However, there may be mixtures of the two types, but emphasis is typically on one of them. A product brand strategy is characteristically used when a company offers multiple products within different business segments, and when there are several different target groups. With a corporate brand strategy, the corporate name and the brand are the same. There is typically a master brand which has the same name as the corporation, and which may have additional sub-brands. It was found that the factors determining the branding strategy in international markets are stakeholder interests, corporate image and reputation, market complexity, as well as marketing costs. Sammanfattning Sammanfattning På dagens globala marknad är multinationella företag tvungna att skapa effektiva varumärkesstrategier för att kunna hålla sig konkurrenskraftiga. Beroende på företagets struktur och på de produkter som företaget erbjuder, kan olika strategier användas. Vissa kännetecken avgör vilken strategi som företagen väljer att använda sig av. För att uppnå stordriftsfördelar och samproduktionsekonomi väljer många multinationella företag att standardisera sina varumärkes- och marknadsaktiviteter. Dock är många företag tvungna att anpassa sina aktiviteter till lokala preferenser och kulturer. Syftet med denna uppsats är att undersöka multinationella företags varumärkesstrategier på internationella marknader. Två forskningsfrågor lades fram: hur kan multinationella företags varumärkesstrategier beskrivas samt hur kan faktorerna som avgör multinationella företags varumärkesstrategier beskrivas. Två kvalitativa fallstudier utfördes av väl kända multinationella företag, Procter & Gamble och Sony Ericsson; det första är ett exempel på ett företag som använder sig av en produkt- varumärkesstrategi, och det senare är ett företag med en företags-varumärkesstrategi. Våra studier visar att multinationella företag antingen använder sig av en produkt- varumärkesstrategi eller en företags-varumärkesstrategi. Men, det kan dock finnas blandningar av de nämnda strategierna, men tonvikten ligger oftast på en av dem. En produkt- varumärkesstrategi används karakteristiskt när ett företag erbjuder ett stort antal produkter inom olika affärssegment, och när det finns flera olika målgrupper. När en företags- varumärkesstrategi används, är både företagsnamnet och varumärket lika. Det finns vanligtvis ett dominerande varumärke som har samma namn som företaget, och under detta varumärke kan det finnas under-varumärken. Det framkom att de faktorer som avgör varumärkesstrategin på internationella marknader är intressenter, företagets image och rykte, marknadskomplexitet, och marknadskostnader. Table of Contents Table of Contents 1 Introduction ........................................................................................................................ 1 1.1 Background ................................................................................................................ 1 1.2 Problem Discussion.................................................................................................... 5 1.3 Purpose....................................................................................................................... 7 1.4 Thesis Outline............................................................................................................ 7 2 Literature Review............................................................................................................... 8 2.1 Branding Strategies of MNCs in International Markets............................................. 8 2.1.1 Standardization versus Customization ............................................................. 15 2.1.2 Corporate Branding.......................................................................................... 16 2.1.3 Product Branding.............................................................................................. 19 2.1.4 Differences between Corporate Branding and Product Branding.................... 21 2.2 Factors Determining MNCs’ Choice of Branding Strategies in International Markets ……………………………………………………………………………………...24 2.2.1 Stakeholder Interest.......................................................................................... 25 2.2.2 Corporate Image and Reputation...................................................................... 25 2.2.3 Market Complexity .......................................................................................... 27 2.2.4 Marketing Costs ............................................................................................... 28 2.2.5 Product Characteristics..................................................................................... 29 2.3 Conceptual Framework ............................................................................................ 30 2.3.1 Branding Strategies of MNCs in International Markets................................... 30 2.3.2 Factors Determining MNCs’ Choice of Branding Strategies........................... 31 3 Methodology .................................................................................................................... 34 3.1 Purpose of Research: Explore, Describe and Explain.............................................. 34 3.2 Research Approach: Qualitative Research............................................................... 34 3.3 Research Strategy: Case Study................................................................................. 35 3.4 Data Collection Method: Interviews ........................................................................ 35 3.5 Sample Selection: Subjective and Convenience ...................................................... 35 3.6 Analysis of Data....................................................................................................... 36 3.7 Quality Standards ..................................................................................................... 37 4 Data Presentation.............................................................................................................. 38 4.1 Case One: Procter & Gamble (P&G) ....................................................................... 38 4.1.1 Branding Strategy of Procter & Gamble in International Markets .................. 38 4.1.2 Factors Determining Procter & Gamble’s Choice of Branding Strategies in International