24 Jul 2000  Research & Ideas

Global Brands: Connecting With Consumers Across Boundaries

What's in a name? Plenty if you're a consumer marketer trying to build a brand.

"They are road signs that help people find orientation in the jungle of supply", said Hans G. Gueldenberg, CEO of Nestlé Deutschland AG. According to Ingo Klauss, chairman of Saatchi & Saatchi Germany, "They are like personalities," whose strength is their consistency of quality and service. "They are the source of a reputation that customers can trust," added Jeanette Sarkisian Wagner (HBS AMP '90), vice chairman of the Estée Lauder Companies Inc.

Global Alumni Conference 2000: Berlin

All three executives were panelists at a Global Alumni Conference session addressing the topic "Global Brands: Connecting with Consumers across Boundaries," chaired by HBS associate professor Nancy F. Koehn, a business historian and author of the forthcoming book Brand New: How Entrepreneurs Earned Consumers' Trust from Wedgwood to Dell.

Before leading a wide-ranging discussion that dipped into topics such as cultural literacy, the impact of the Internet, and the continuing importance of traditional communications channels, Koehn provided an historical perspective.

Although records from the 13th century indicate that casks of whiskey and farm animals were "branded"—or seared—with some kind of mark to identify ownership, she pointed out, the word didn't take on its current commercial connotation until the 18th century and the First Industrial Revolution. The prime example of the period, which saw significant advances in technology and productivity, was the pottery firm founded by Josiah Wedgwood in 1760—"the first example I can find," said Koehn, "of a company using a brand as a strategic tool to interest consumers in goods, distinguish their products from the competition's, and create a market."

But those looking for these activities on a much grander scale must fast forward about a hundred years to the coming of the railroad and the advent of the Second Industrial Revolution. Between 1870 and 1920 alone, Koehn pointed out, "an astounding number of brands were born that are still household names," including Coca-Cola, Pepsi-Cola, Mercedes, Sears, Nestlé, Marks & Spencer, and Bayer. To reach that level of success, she asserted, is extraordinarily difficult, demanding great diligence, exceptional execution, and the concerted efforts of many people throughout an organization, not just those in the marketing department. The benefits, of course, are commensurate with the amount of effort required, providing a competitive advantage that's hard for anyone else to emulate.

In a global economy, of course, the task is even harder, the stakes much higher. Ignoring the nuances of language, for instance, can doom a product from the start, Jeanette Wagner observed, noting that the Chevrolet "Nova" didn't sell well in Latin America, because the brand name of that vehicle in Spanish means "it doesn't go." And with a plethora of products filling world markets, truly unique selling propositions—the staple of advertisers for decades—are now few and far between, according to Ingo Krauss. "The venerable USP [unique selling proposition] has become the unique communication proposition," he said, where the message creates the benefit of the product in the mind of the consumer.

Krauss also observed that most product advertising on the Internet fails to complement campaigns being carried out in the traditional media. "The reason is simple," he stated. "The people who are creating the Web site have nothing to do with those who are in charge of marketing communications. As a result, the various channels of communication are out of alignment, and the negative impact on a brand can be considerable. If a product changes the way it talks to consumers too often, they lose trust in the brand and look elsewhere." Going forward, he predicted, as the television screen and computer monitor converge into one "box," the banner ads that dominate the Web—but do little to engage the attention of consumers—will disappear.

Another reason Internet customers are particularly susceptible to disappointment, Wagner added, is that a Web site raises their level of expectation with just its message, promising such advantages as speed, convenience, and a better price. But logistics can be the rub. "If expectation isn't balanced by brilliant execution, you've lost much more than one sale," she declared. "All businesses want customers for life, but that happens only if they never fail to deliver what they promise."

Amidst all the talk of the importance of communications and the pros and cons of the Internet, Nestlé's Hans Gueldenberg urged the audience not to ignore the other elements of the marketing mix when it comes to brand building. Developing new products provides an edge in product differentiation, he said, and pricing should be as important to marketers as it is to retailers. As for distribution, in a global market availability should be synonymous with ubiquity.

The panelists found themselves in separate camps when the discussion turned to the reality of the truly global brand. Wagner, who headed Estée Lauder International for twelve years, noted that while her company's seventeen products take into account regional preferences and characteristics, they maintain a worldwide consistency in packaging, quality, advertising, and service. One of the keys to her success in the international division, she said, was an ability to "walk the narrow path between thinking globally and adjusting locally."

Saatchi & Saatchi's Krauss, on the other hand, found this more of an American phenomenon than a European one. "There is not a single German brand being communicated in the same way around the world," he said. For multinational Nestlé, the truth fell somewhere in between. Preferences in food and drink are very localized, Gueldenberg explained, but for the flagship line of Nescafé coffee, even with its some 100 different blends worldwide, the company's strategy is to make sure that "the perception of that product is always the same" wherever it is sold.

Asked by Professor Koehn to identify consumers' most important priorities at the beginning of the new century, the participants pointed to a variety of items that resonated in their organizations. Gueldenberg referred to a continuing emphasis on convenience, service, and product information. In Krauss's view, the Internet has indeed changed everything, leading to different ways to access information, spend one's leisure time, and purchase goods and services. According to Wagner, "We're living in the time of the experience economy; we need to turn everything into an adventure, with an emphasis on quality and value to the customer."

Above all, perhaps, global marketers must realize that their job is never done. As Wagner put it, "You can never maintain a brand; you have to keep building it."