Developing an effective international brand strategy is crucial for companies looking to expand their reach into new markets abroad. But what are the key ingredients for building and growing a great brand strategy? How can Chinese companies make it happen?
In the recent China Brand Economy (Shanghai) Forum, CEIBS President (European) and Professor of Marketing Dominique Turpin shares five steps for building a global branding strategy and lessons from Brazilian footwear brand Havaianas.
Every business survives by consistently creating value for its customers; without that perceived value, customers won't keep coming back. However, in today's business world, it is becoming increasingly difficult for companies to differentiate themselves from their competitors. Competing on price and convenience offers diminishing returns for companies, as emerging technologies will inevitably cut costs and distances for all. Building a brand, and with it an emotional connection with the customer, is the best way to create a lasting form of competitive advantage.
While China has plenty of outstanding global brand-building efforts to point to in recent years (Alibaba, Haier, Huawei, Tsingtao, to name a few), Chinese companies still lag behind their Western counterparts in terms of the size, range, scale, and sophistication of their global brands. To help propel China's economy into a new "quality-driven" phase of development, several issues must be considered.
01
Brands over assets – The Ultimate source of competitive advantage
Today, it's arguably more important to own markets than it is to own factories. The ability to reach into a given market and dominate it has greater value than the ability to supply it. Factories, or general assets that allow to produce goods and services, can be quickly built or borrowed, but building a brand that consumers identify with is a much longer, trickier, and sometimes costlier process.
This is the inherent difference between a product and a brand. A product might be a t-shirt, for example, a physical item made in a factory that offers its user functional value. Such a non-branded item might retail for as little as 30RMB. However, the same t-shirt with the added branding of a global giant like Nike can retail for 300RMB or even much more. This vast increase in price is generated by the emotional value the branded item brings to its wearer, even though its functional value remains the same.
This added emotional value is created in the mind of the customer. It represents the positive association they make between wearing the t-shirt and the way it makes them feel, or the way others see them. This is what leads them to make the initial purchase, despite the vast price difference. It also leads them to continue to connect with the brand, deepening their emotional and commercial link with it over time.
Factories making t-shirts can be established within a matter of months. Building a brand with this level of influence often takes years, if not decades. This is why businesses and investors worldwide recognise brands as being the ultimate source of differentiation, and therefore competitive advantage. This, in turn, makes it a company's most valuable asset.
02
Better Branding – Five steps for building a successful branding strategy
For Chinese brands to compete globally, then, they must learn how to create brands that can compete with established Western brands and resonate globally. To do so, there are five key steps that they must follow.
Establish a clear, meaningful, and differentiated (top of mind) identity
Brand-building must go beyond the purely functional aspects of the product. Consistent, coherent brand positioning means having restraint: knowing not only what your brand is, but also what it is not. Don't try to be all things to all people, and instead pay great attention to details and aim to be the best, most instantly recognisable brand for a more limited set of needs or circumstances.
Innovate proactively on every possible dimension of the business model
Even Coca-Cola and Evian still need to surprise and delight their loyal customers. Innovating on every aspect of the product and its creation, even down to the packaging, allows you to keep the brand dynamic and engaging. Keep in mind that innovation should not be just about product but every aspect of the customer experience, from the choice the choice of your business model to all the details of the after sales service.
Build a strong emotional link with customers though simple storytelling
Emotional value can only be established when a customer understands and believes in the story that the brand is telling. They are bombarded with hundreds of branded messages daily, so yours must be simple and effective enough to cut through the noise.
Communicate a consistent message over time
Customers put their faith in brands that reliably satisfy them and align with their own interests and perspectives. Consistency of messaging over time lets customers know that you understand and represent them.
Keep in touch with customers to remain humble and avoid complacency
A brand can always convey its messaging, but it must also be flexible enough to accommodate the changing needs and priorities of its customers. Constant, honest communication lets you fully appreciate who your audience is, and what they think of you.
03
A case study: Havaianas, a brand near bankruptcy that bounced back to a booming business footing
Brazilian footwear brand Havaianas is a perfect illustration of the value of branding, and how to build and maintain it.
The brand began in 1962 selling simple sandals. They offered just one product, in one style and five colours, sold at USD$3 per pair. After a rapid rise and 30 years of dominating the low-end market, Havaianas' sales began to plummet as their offering became increasingly tired and unattractive to the majority of customers. No differentiation, low prestige, low profitability – the brand had fallen into a classic "commodity trap", and it nearly bankrupted the company.
Determined to turn things around, Havaianas quickly and decisively innovated. First came product innovations, with new premium models, new colours and materials, and enticing display strategies. The brand also recalibrated its storytelling, focusing on the emotional and aspirational benefits of the footwear. This radical change in business model, product design, distribution, and storytelling all contributed to the turning around of Havaianas' fortunes and laid the groundwork for an incredibly successful international expansion.
Today, Havaianas is present in over 80 countries worldwide, offering 90 styles (including premium and luxury models) and selling 250 million pairs per year. Eight out of ten Brazilians buy a new pair annually, demonstrating the "top-of-mind" position the brand occupies in its home country.
04
What Chinese companies can learn from Havaianas
Given the past few decades of China's economic development, Havaianas' success offers indispensable learning for Chinese companies looking to build the next big global brand, one that occupies the invaluable top-of-mind position in international target markets. Like Havaianas, Chinese brands abroad have often been associated with functional, low-cost products. As they try to build brands based more on quality and innovation Havaianas can teach the following lessons:
Ensure your product offers both meaningful emotional and functional value.
Don't fall into the commodity trap; price competitiveness and functional value are not enough to build a viable long-term brand.
Don't copy the competition. Instead, constantly consider what can make your brand different.
Don't think purely in terms of the product; the brand is the sum of the elements of the whole customer experience.
Innovate on every dimension of the value proposition. Product, sales channels and experiences, customer interactions, storytelling; keep surprising and delighting your customers.
The more iconic your brand, the stronger Tell your story in a way that cuts through the noise and is impossible to ignore.
This article is based on a speech entitled " Why does China need to develop and nurture global brands? And how to do it?" by Dominique Turpin at the 10th China Brand Economy (Shanghai) Forum.
Dominique Turpin is President (European) and Professor of Marketing at CEIBS. Prof. Turpin is a marketing expert and Japan specialist. He was IMD's Dentsu Chaired Professor of Marketing and the Dean of External Relations until 2022 and served as IMD President, Dean and Nestlé Professor from 2010 to 2016.
Recommended Reading
Successful Sino-French cooperation must be based on innovation |
Want to learn more about CEIBS programmes? Click 'Read more' below
Comments
Post a Comment