How to Compete Globally, an opinion article written by Martin Roll, was featured in the November 2019 edition of Singapore Management University (SMU)’s bi-annual business magazine, Asian Management Insights.
Launched in May 2014, Asian Management Insights aims to develop a body of knowledge and a narrative of innovation and creativity for trends in Asian management. It brings together some of the best and brightest of Asia’s thought leaders and their solutions to address current Asian challenges.
The orientation of brand management has undergone substantial changes over the last decades to become an integrated and visible part of corporate strategy. Branding has evolved from being just an addendum to advertising campaigns, fancy ideas of the marketing department, or an optional function of the elite few, to being recognized as a boardroom discipline, which contributes to the top and bottom line of the company. It also aids in enhancing shareholder value by contributing to the market capitalization of the company.
Research has shown that a large part of the market capitalization of companies listed on the global stock exchanges is made up of intangibles, of which brand equity is the important element. Another study examined the casual linkage between branding and creating shareholder value. By evaluating the risk factor of a portfolio of strong brands against the benchmark portfolio, the study concluded that the strong brand portfolio is much less risky than the benchmark portfolio. This proves branding’s contribution to a company’s financial health and performance.
Luxury brands such as Rolex are built on heritage, style, class, and energy. Rolex has been around for over a century and has maintained its high-end brand identity and attractiveness. Such longevity comes from constantly working on the brand and creating unique value that customers want. Equally, we have brand bubbles like Nokia that were highly successful but did not survive the test of time. Nokia’s leadership in the mobile phone industry was displaced by Apple’s iPhone; the key difference being the smart phone technology that Nokia had, but did not prioritize effectively. The need to follow market trends closely and be open and amenable to change cannot be overestimated. Often, arrogance and complacency become the lethal enemies of strong brands.
Experience, skills, and resources have been the key success drivers for Western brands maintaining their value and operating globally, especially when they expanded into uncharted Asia. Some of the key principles for their success are:
Culture: Strong brands have learnt to see Asia as a mosaic of markets and cultures (as opposed to a homogeneous market). McDonald’s does not sell beef burgers in India and ensures that it offers menu items that appeal to local tastes, while also strongly holding on to its brand entity. In China and South Korea, Walmart worked around attracting customers who were used to buying daily groceries from traditional wet markets. These companies took the time to understand the culture, history, spending and buying habits, and tastes and preferences of consumers in each market.
Consumers: Nike acknowledges the differences in consumer mindsets between Asia and the West. In China, faced with fierce resistance from local player Li-Ning, Nike fought back by getting into the minds of consumers to best cater to their needs. Nike started out in China by getting close to rural areas with a grassroots strategy that eventually allowed them to gain traction and brand awareness in larger cities. It learned about Chinese consumers by observing them in soccer fields, baseball pitches, and local playing fields.
Brand positioning: While localization is important, many retail brands in the West have successfully established themselves in Asian markets by staying true to their brand’s core values. Similarly, Coca-Cola, a company that represents the American culture and free spirit that becomes an aspiration for consumers’ the world over, views its Western origin as a competitive advantage.
Market: An attractive product offering and a unique brand positioning must be accompanied by a strong and robust distribution model. Taking into account the different levels of urbanization and the difficult-to-access consumers in remote areas, Procter & Gamble has developed an enviable distribution network that relies on local partners. The same strategy was used by Volkswagen when it entered China by creating a local partnership.
Looking at the successes of these global brands, two questions naturally comes to mind: How can a company create a client-centric brand? What does it mean for a brand to be successful globally?
Strategic Intent: Before a company can identify the drivers of enhanced customer experiences, it needs to define its strategy, brand, and target customer. A distinct, strong, and differentiated strategic intent will include knowing: who your customers are, what they want, what you will give them, what you communicate to them, how you will service them, and how you will make money.
Once all parameters of strategy have been identified, the board’s role is to plan the internal and external execution of the strategy. This requires striking a balance between the company’s internal and external focus; among people, time, and resources; and between risk and rewards. It is easier to strategize on expanding markets, geographies, and product lines and solutions, but it is harder to make tough decisions on what lines to drop and what geographies to exit from.
A brand must be built on authenticity and must be able to tell a convincing story that target consumers can relate to. The Jim Thompson Company from Thailand is a well-known Asian brand with great potential to become a strong international lifestyle brand. The brand is primarily built on three pillars. The first is the legend surrounding the founder Jim Thompson, an American soldier who settled in Thailand and his eventual mysterious disappearance. The second is the unique blend of Eastern tradition and heritage with Western contemporary designs based on traditional Thai symbols and patterns. And the third is the elevation of the brand from a cottage industry product to a fashion and lifestyle concept. By developing the brand on these three pillars, Jim Thompson has been able to maintain its differentiation and build a strong brand. The brand is perceived to be highly authentic, and of high quality and a strong heritage.
Communicating the brand message: Having a strong brand message must go hand in hand with the ability to consistently communicate and live up to that message. Since 1973, Singapore Airlines’ primary message, ‘A Great Way to Fly’, has been consistently conveyed through the iconic Singapore Girl in different themes and settings.
When Singapore Airlines launched its comfortable SpaceBed seats in business class, it ran a 60-second commercial of a highly emotional and mythical character to underline the aspiration of the brand and the Singapore Girl. Singapore Airlines chose to focus on one aspect – the in-flight hospitality and warmth featured by the Singapore Girl – rather than communicate all the brand benefits through its messages: a dangerous trap that many brands often fall into in their efforts to communicate all at once. This has led to a focused and consistent message for Singapore Airlines for almost half a century, a great achievement for any brand.
Learning from customers: Developing a customer-centric brand requires learning how customers feel about your company and brand. In an effort to inspire and design more personalized, human-oriented vehicles, the now Chinese-owned car brand, Volvo, created a Facebook app called ‘You Inside’, which asked drivers to share how they used the space inside their cars. By uploading images of items inside their cars and describing how they were organized, the app inspired a number of subtle innovations for later Volvo models and, more importantly, resulted in a notable boost in customer appreciation and overall brand affinity.
When the Fullerton Hotel opened in Singapore, the cleaning lady observed than one particular customer, an elderly lady from Hong Kong, had telephone books stacked up in front of her bed. Upon realizing that their beds were very high, the hotel then made steps out of Indonesian wood and put up a sign that read ‘Welcome back’. Such small efforts have huge impact and create total loyalty.
Innovation: Complacency is not an option for even the strongest of brands. Innovation, be it in its products, processes, or experiences, is the hallmark of all leading companies. Consumers the world over are constantly looking for something new and are willing to pay a premium for it. A prime example of this is when LG Household & Health Care introduced Frostine, the luxury chilled cosmetic, in South Korea. Since the ingredients required cold storage, LG also introduced a specialized cosmetics fridge called an Icemetic Cellar, which was the first of its kind. Despite the exorbitant price tag, LG’s overall cosmetic sales recorded a 300 percent growth in a single month after its launch.
Adaptability and agility: To create a globally competitive customer-centric brand, adaptability and agility are two key factors. Nespresso built a global brand by reinterpreting how consumers connect to and consume coffee. It created an entire new category, as the brand adapted to the home environment and brought a professional feel to coffee consumed at home.
There are very few Asian brands on the global stage. This is partly because a large part of Asia’s economic development, until now, has been attributed to low-cost advantages and outsourced manufacturing. While Asia’s cost advantages have enabled home-grown Asian companies to gain market share, low cost alone no longer provides a significant long-term advantage. The intense cutthroat competition in global industries has resulted in tremendous pressure on margins, forcing companies to look for additional measures to survive and grow their businesses. High-quality service and innovation are by far the bigger sources of competitive advantage compared to low-cost operations.
To break out of this shell and see the emergence of strong Asian brands globally, customer centricity must become the core of Asian brand strategy. Three aspects of branding are clear. The first is that the role of branding has grown beyond the narrow definitions of marketing. The second is that, for a company to fully realize the potential of a brand, it must create an environment and support system that would enable the brand to fulfill its multiple roles. The Asian boardroom and executives need to step up to the challenge and let marketing take center-stage in their companies. And finally, understanding consumers is the key to future strategy, improved design processes, marketing effectiveness, and financial profitability.
A constant dialogue with customers and paying attention to their needs is the next frontier for Asian companies that will enable them to compete globally, sustain competitiveness, and command customer loyalty.
Samsung, Hyundai, Amorepacific, and Singapore Airlines are prime examples of Asian brands that are customer-centric and brand-driven, but many more Asian companies need to follow. It would be the strong initiatives from CEOs and corporate boards that would anchor and sustain brands in the highly competitive global market.
This article appeared in the November 2019 publication of Asian Management Insights.
Read the article: How To Compete Globally – Martin Roll – November 2019
About the author: Martin Roll – Business & Brand Strategist
Read more: Customer-centric and Consumer-driven Brands
Read more: The Essential Features of a Global Asian Brand