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Local Vs. Global Brands - Who Will Win? Borat Vs. Kazakhstan Local Vs. Global Brands - Who Will Win?
   
 

The debate about the future of global brands is not new. Back in 1992, so-called Marlboro Friday sparked a furore about the imminent “death of the brand.” Those fears proved premature, but, last year, disappointing performances and sliding share prices from the likes of Coca-Cola, Procter & Gamble and Gillette raised the question again. Is the heyday of the global brand over?

 
 

Branding the world

The increasing spread and domination of international brands has seemed inevitable for at least the last 30 years. Coca-Cola’s advertising campaign, “I’d like to buy the world a Coke,” ringing out on TV screens all around the globe, led us to believe that one day soon the world would be united in its desire for, and satisfaction with, the same brand of soft drink. Coca-Cola dreamed of the day when the inhabitants of China would up their Coke consumption from their average 6 bottles a year to the US average of 376 bottles a year.

Investors have historically been extremely confident about the prospects for branded goods businesses, particularly those owning international brands. And the multinational branded goods owners themselves have shared that confidence. With their economies of scale, massive spending power and highly developed management structures, these behemoths have seemed invincible.

All around the world we have witnessed the disappearance of local brands and local variants. Multinationals, in pursuit of the global brand, have rationalised irrational name variants – unifying Oil of Olay around the world to just Olay, changing the much-loved Marathon and Opal Fruits in the UK to Snickers and Starburst. In the last few months, Unilever has changed the name of its leading cleaning brand in the UK from Jif to Cif, to bring the UK into line with the rest of Europe.

Local brands fight back

But despite this trend, local and regional brands still remain strong. In India, for example, protected for many years by government policy from the invasion of foreign brands, homegrown brands dominate many sectors - Thums Up cola, Tata automobiles and Titan watches, to name but a few. And though Marlboro is now available around the world, local and regional brands still account for roughly three-quarters of Philip Morris’s worldwide cigarette sales by volume.

Some argue that the multi-layered multinationals simply don’t have the agility and speed to respond to local needs in every country of the world in the way that locally grounded brands do. Nimbler, smaller competitors, who are solely focused on their home markets, can adapt more quickly.

Balancing the portfolio

Of course, none of this has gone unnoticed by global brand owners. Who is the owner today of Thums Up, that indigenous Indian cola brand? None other than Coca-Cola, who has long recognised the importance of a balanced brand portfolio. In addition to purchasing strategically important local brands, Coca-Cola’s homegrown offering has diversified into areas such as bottled water, juices and iced tea. In fact, the company has for many years marketed canned tea drinks in Japan, responding to a clear local market need. Back in India, Hindustan Lever and Zee TV, two other strong local brands, are owned respectively by Unilever and Star TV.

Another company that is keen to broaden its offer beyond the mono-brand is McDonald’s. Over the last couple of years, it has purchased a number of different restaurant brands, among them Chipotle Mexican Grill, Donatos Pizza and Boston Market in the US, and Aroma in the UK. Most recently, McDonald’s took a stake in the upmarket UK sandwich chain, Prêt à Manger.

Triumph or tragedy?

Some aficionados of the local brands see this as a corporate sell out. One disillusioned Prêt customer said, “It’s a tragedy. Prêt is about home-made value and McDonald’s is a big corporate machine.” Yet Prêt has already been spreading its branches across the UK and even into Wall Street; like all successful brands, it has espoused the same message of quality and consistency as McDonald’s – it just sold a different product.

It could be argued that the downfall of all local brands is that they have ambitions to be global brands. They may start off small, but, many would claim, most have their sights set on international expansion. For Prêt à Manger, the McDonald’s investment means stores in not only the US, but also Tokyo, Hong Kong, and Singapore. The recent anti-globalisation demonstrations in Seattle targeted, among others, Starbucks – a brand that had only recently been a local hero.

The bland brand

Books like Naomi Klein’s No Logo would have us believe that we are witnessing the start of a powerful consumer backlash against global brands. Indeed, brand critics fear that the spread of global brands will mean the loss of local cultures and identities. Moreover, reports in the media have spread the perception that some global brands are guilty of unethical practices, such as exploiting third-world workers.

A future without borders

It is clear that the fortunes of both global and local brands will wax and wane with new fashions, new governments and new technology. Perhaps, though, the question we really should be asking is what global and local mean in the new economy. Most virtual Internet brands are effectively transnational – Yahoo! and Amazon are in many ways the new model for the multinational corporation. They can be accessed just as easily by anyone with a computer, anywhere in the world.

We have had the word ‘glocal’ in our marketing vocabularies for some time now and that very coining seems to recognise that global and local brands need each other. In the end people want both global and local brands – brands that make them feel part of wider international community and brands that root them in their home culture.



 
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Local vs. Global Brands: Who will win?
 
 Frankly, i don't see how small brands can avoid being overrun by the bigger brands. There's just not enough money, talent and resources to compete if a big brand takes it into their mind to rollout into your market. 
Castor Brown, Student - April 8, 2001
 
 The question of whether local or global brands will ultimately prevail can be answered simply: yes! A brand is merely the relationship that is created between a product and its consumer. The company manages, and is responsible for, the consumers' total product experience. For its efforts, if effective, the consumer responds with his or her patronage. This is a relationship that requires consistent company investment and care to remain responsive and profitable. While global brands have some obvious scale and breadth advantages, local brands have the benefit of proximity and geographical (and often product) focus. These two variables balance each other, sustaining both local and global brands together.

In addition, consumers often look to different types of brands for different things. I'm not sure that I want consumer electronics from a neighborhood company. Sony and the like do me just fine, thank-you. At the same time, I look exclusively to local brands to deliver such things as my hometown news and perishables (milk, eggs, etc.) for example. The strength of my attachment can be equally powerful to both brands, as the opportunity for realtionship building is equally available to each type of brand.

Consumers will continue to establish relationships with relevant brands that create meaningful interaction with them without regard to geography. Both local and global brands will continue to thrive and to fill their respective consumer needs. Brand managers must be strategic about how they manage the dynamics of the product - consumer relationship to best take advantage of whatever the particulars are of their circumstance. 

Michael B. Moore, President, Infopop Corporation - April 9, 2001
 
 This is a nonsense debate. Both global brands and local brands have a role to play. What is for certain however is that global companies will not command enduring success if they simply roll out local strategies, is Starbucks. Starbucks will never work in Europe (not UK) or Australia because there is a well established coffee culture. Starbucks is a classic example of an American company satisfying an american demand, and then thinking the rest of the world needs it too. Think Global, act local. Starbucks thinks local and acts global. This is doomed for failure. 
Anonymous - April 9, 2001
 
 I feel the local brands definitely have a place in their respective arenas because of the personalized service and perceived comfort they provide. People do business with people they like and can relate to and the local ma & pa stores definitely have the big players beat on that count. Certain brands will do well but they will have to learn to co-exist with the local players to protect their brand image. 
Sanjay Gandhi, YadaYada - April 9, 2001
 
 To comment quickly on what Anonymous writes on April 9, i distinctly remember reading a whole article on Starbuck's rollout in Italy.

At the time i thought the saavy italians would say NO to such a terrible idea but it seems to have taken hold... 

Lucinda Corning, Account Manager, New York - April 9, 2001
 
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