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The Changing Face of Globalization

Not so long ago, brands sought to create global uniformity. The same product, promoted in the same way in every market was thought to be the best and most efficient way of building business.

The most powerful brands however have found a new and more sophisticated way to make globalization work in a way that celebrates brands from around the world and ensures they remain distinctive.

The success of this new approach can be particularly seen in Millward Brown Optimor’s BrandZ™ Top100 Most Valuable Global Brands analysis of the beer and beverages category.

In the past, the acquisition of a small and successful local brand would be a death knell. The assets of the business would be redirected to promote the new parent’s global brands.

In the UK, consumers of a certain age can still talk about the death of Marathon and Opal Fruits, for example.

The result would be that a once thriving local business would effectively disappear, it’s expertise used to promote one of the big global names.

That approach is now changing rapidly and the same brewers and drinks businesses are retaining many of the local brands they acquire.

But more than that they are also assessing these assets to see if they too can become jewels either on a regional or even global basis.

One of the key adopters of this new approach has been SABMiller. In 2005 it purchased Colombian pilsner brand as part of the takeover of Grupo Empresarial Bavaria’s Aguila and has since grown the brand by not only supporting it in its home market, but extending it into other regional markets as well. It’s now valued at nearly $3.7bn and is a key “local jewel” for the company.

Similarly, AB InBev’s Stella Artois was a top riser in the beer category, growing by +30% to $8.2bn on the back of campaigns that featured temperature sensitive advertising on key out of home sites as well as introducing the ability to gift drinks via Facebook

In this new model of globalization, it’s is the brand building expertise of big multinationals rather than their assets and a uniform offer that management provides. But at the same time they also need both local knowledge and assets to make it work.

The same pattern can be seen in the automotive industry where Ford, one of the strongest performers in this year’s BrandZ Top100 with a +56% increase in its brand value to $11.8bn has bounced back due to its use of globalized technologies combined with a product that is localised and tailored to the specific needs and requirements of each regional market.

The success of such approaches illustrates the irony of globalization. The more we know about each other, the more many consumers want to retain what makes their region or their country special.

For big global brands that means adapting their products, their presence and their communications in each market to suite local cultures and tastes. This approach makes them more meaningful to local consumers , which in turn drives strong business performance.

Increasingly successful examples of this will be brands that seem to be local in every country, companies that transcend their origins to become part of the community.

Ironically the best models of this approach can be seen in two companies that use the same brand wherever they go, McDonald’s and Coke.

Despite being blue-eyed American brands by origin they have become local brands wherever they operate by becoming part of the community wherever they operate and using universal truths such as Coke’s Happiness message.

This strategy has helped both brands retain top 10 positions (and further gain places) even as the brand value required to stay in the Top 10 has increased by 18%.

The future of globalization is head office expertise and resources, combined with local knowledge and engagement to create a softer, but more meaningful brand in key markets.

Delivering this promise presents challenges for marketers because what’s acceptable in one country might cause offense elsewhere (and we can all see every effort thanks to the globalizing force of digital). But then again no one ever said globalization was going to be easy, whatever form it took.

Nick Cooper
Managing Director
Millward Brown Vermeer

First published in the May 27, 2014 edition of M&M GLobal