Praise for Global Brand Strategy

“Global Brand Strategy strongly resonated with my own experience man-

aging brands on a global basis. It is packed with examples from around
the world and includes many actionable frameworks and tools. A must-
read for any global brand manager and business leader wanting to take
their brands overseas.”
– Global President of Sales at a leading CPG company
(name witheld due to company policy)

“While many marketeers ignore globalization, and some pretend that

it means that customers everywhere want the same thing, Steenkamp
provides a much more granular—and practical—discussion about how
much and how to standardize different elements of the marketing mix
within an integrated framework.”
– Pankaj Ghemawat, Professor of Global Strategy at IESE and
New York University, and author of World 3.0: Global Prosperity and
How to Achieve It

“Global Brand Strategy offers a refreshing and comprehensive exploration

of global marketing that addresses ‘what, so what, and now what.’ It
addresses ‘what’ with substantive foundational global marketing insight
that benefits both experienced and new global marketers. ‘So what’ or
why should you care is made clear with relevant and intriguing examples.
ii Praise for Global Brand Strategy

‘Now what’ drives practical action with valuable tools and managerial
takeaways.”
– Mary Garrett, former vice-president of marketing and communica-
tions at IBM, Director of Ethan Allen Global Inc., and chairperson-
elect of the American Marketing Association

“Drawing on his 25 years of international experience, Jan-Benedict

Steenkamp’s Global Brand Strategy provides extraordinary insight, and
useful, practical guidance on how to build and maintain strong global
brands. This work is particularly helpful for attorneys dedicated to pro-
tecting the intellectual property of clients around the world, as it details
how and why trademarks, geographical indications, and other forms of
intellectual property create value for global companies and their consum-
ers, including through the use of insightful examples of corporate suc-
cesses and failures.”
– Partner at a top international law firm
(name withheld due to company policy)

“Jan-Benedict Steenkamp takes us in this book into a very profound

knowledge adventure, showcasing his extraordinary wisdom and experi-
ence in global brands and global marketing. With vivid and practical
examples, he is capable of teaching and demonstrating how global brands
have emerged in the global scenario, their trends, characteristics, features
and future in digital challenge. With figures, tables, grids, matrices, and
guiding scorecards in all the chapters, he offers a very practical guide for
decision makers to facilitate their tasks.”
– Mauricio Graciano Palacios, Corporate Affairs
Director Coca-Cola/FEMSA Group

“Jan-Benedict Steenkamp’s Global Brand Strategy achieves one milestone

that most business books miss these days—it encourages you to think
and draw your own conclusions, this time about the journey of building
and nurturing global brands. And to help you in this challenging journey,
Steenkamp provides you with very pragmatic frameworks, tools, and real
examples of brands that have successfully become global.”
– Jorge Meszaros, former Vice President Hair Care,
Procter & Gamble China
 Praise for Global Brand Strategy iii

“At a time when globalization is the name of the game at corporate head
offices, and we are all witnessing the expansion of global brands, this
book is a must-read for anyone who would like to pursue a career in
global marketing or in managing global brands. After a thorough analysis
about the current trends, based on his renowned expertise in branding,
the author has crafted probably the best toolkit a global brand manager
can have today, including the COMET Scorecard and different a­ ssessment
tools for both one’s organization and for the customers served. Last but
not least, the author makes an effort in identifying managerial implica-
tions and take-aways for global brand managers.”
– Josep Franch, Dean of ESADE Business School (Spain)

“Few would argue with the idea that we live and do business in a branded
world. Yet, traditional notions of brand building and brand value today are
in flux due to globalization, the rise of the emerging markets, and the advent
of the digital age. Amidst these changes, Steenkamp’s work is a welcome
re-interpretation of how to build value through brands that will be very
useful for any organization operating in today’s global, digitized markets.”
– Victor Fung, Group Chairman of Fung Group (Hong Kong)

“Building and keeping a successful global brand in a world in disarray

leads us to the perennial paradox of motivation arising from fear or aspi-
ration. Jan-Benedict Steenkamp’s masterpiece Global Brand Strategy
shines a light of brilliance on your aspirations.”
– Luis Niño de Rivera, Vice Chairman of
Banco Azteca (Latin America)

“This is a remarkable book on global brand strategy, not only written skill-
fully but with a rare mix of knowledge, passion, and practical wisdom. A
must-read for managers and executives in all industries facing a dynamic
marketplace and branding challenges.”
– Zhao Ping, Chairman of the Marketing Department,
Tsinghua University (China)

“This book takes you into a journey of great intellectual perception and
holistic understanding of the term ‘brand’ and its intricate ubiquitous-
ness in our daily lives. It fundamentally paves the way to a better appre-
iv Praise for Global Brand Strategy

ciation and comprehension on the cruciality of a cohesive global brand

strategy. It is indeed the launchpad of brand monetization!”
– Moustapha Sarhank, Chairman Emeritus, Sarhank Group for
Investment (Egypt)
“Global Brand Strategy is a reference on the power of brands, old and new,
and a joy to read. It is an enthralling journey that makes a reader value
branding as a competitive tool. This is particularly true in a fast-­changing
global economy, where competitors have instant access to markets
through the Internet and ever-evolving digital technologies.”
– Raja Habre, Executive Director Lebanese Franchise Association
“Anyone involved in the development of brand strategies will treasure
this book because it provides an organized framework that makes sense in
current market conditions of intensive competition. Companies and
brand managers will gain a strategic perspective on the Brand Value
Chain that helps to understand processes, structures and strategies
required to build a brand on the global context.”
– Maria Elena Vázquez, Dean School of Business and Humanities,
Tecnologico de Monterrey (ITESM), Mexico
“Global Brand Strategy represents the best combination of theory and practice.
The book clearly indicates how a well-defined brand strategy can allow firms to
leverage their resources in an increasing competitive global business context.”
– Dheeraj Sharma, Chairman of the Marketing Department,
Indian Institute of Management Ahmedabad
“Steenkamp presents useful insights and a thoughtful framework that
outlines the ways that global brands can create value. Global Brand
Strategy should prove to be a very useful read for any executive aspiring to
build a great and lasting global brand.”
– Richard Allison, President of Domino’s Pizza International
“Each day more companies are becoming global; as a result the global
community is becoming smaller. Nevertheless, it is important to under-
stand the differences of each culture and how global brands need to adapt
to them. This is exactly what Jan-Benedict Steenkamp does in his book
transmitting novel concepts that can apply to any organization.”
– Alejandro Romero, Latin America Marketing Manager, Alltech
 Jan-Benedict Steenkamp

Global Brand
Strategy
World-wise Marketing in the Age of Branding
Jan-Benedict Steenkamp
Kenan-Flagler Business School
University of North Carolina at Chapell Hill
North Carolina, USA

ISBN 978-1-349-94993-9    ISBN 978-1-349-94994-6 (eBook)

DOI 10.1057/978-1-349-94994-6

Library of Congress Control Number: 2016955973

© The Editor(s) (if applicable) and The Author(s) 2017

The author(s) has/have asserted their right(s) to be identified as the author(s) of this work in accordance
with the Copyright, Designs and Patents Act 1988.
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.

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Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

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The registered company address is: The Campus, 4 Crinan Street, London, N1 9XW, United Kingdom
To the loving memory of my parents: to my father, Prof. dr. Piet Steenkamp,
Founder of the Christian Democratic Party, Chairman of the Senate,
Commander in the Order of the Netherlands Lion, Holder of the Grand
Cross of Merit of France and of Germany, and Commander in the Pontifical
Order of St. Gregory the Great; and to my brilliant and iron-willed mother,
Constance Steenkamp. I am deeply grateful for their support, wise counsel,
and inspiration during my entire life.
 Also by the Author

Product Quality (Assen: Van Gorcum, 1989).

Private Label Strategy: How to Meet the Store Brand Challenge (with
Nirmalya Kumar; Cambridge: MA: Harvard Business School Press,
2007).
Brand Breakout: How Emerging Market Brands Will Go Global (with
Nirmalya Kumar; New York: Palgrave Macmillan, 2013).

ix
 Contents

1 The Cambrian Explosion of Brands   1

Part I Global Brand Building   15

  2 The COMET Framework: How Global Brands Create Value  19

  3 Customer Propositions for Global Brands  45

4 Global Marketing Mix Decisions: Global Integration, Not

Standardization  75

5 Global Brand Building in the Digital Age 111

Part II Structures and Processes for Global Brand Building 149

6 Organizational Structures for Global Brands 151

xi
xii Contents

7 Global Brand Management 181

8 Corporate Social Responsibility 209

Part III Global Brand Performance 239

9 Global Brand Equity 243

10 Global Brands and Shareholder Value 275

11 The Future of Global Brands 291

Appendix: Country Scores on Culture Map Scales 297

Index 301
 List of Figures

Fig. 1.1 Global brand value chain 12

Fig. 2.1 Dimensions of value creation by global brands—the COMET
framework20
Fig. 3.1 Value map for global brands 53
Fig. 3.2 The value of a strong customer proposition 71
Fig. 4.1 Global marketing mix strategy options 78
Fig. 4.2 Product adaptations within a global framework 83
Fig. 5.1 Internet’s share of ad spending 118
Fig. 5.2 Digital channel options for global brands 123
Fig. 6.1 Global organizational designs 156
Fig. 6.2 Geographical model 163
Fig. 6.3 Functional model 165
Fig. 6.4 Matrix model 167
Fig. 6.5 Network model 170
Fig. 7.1 Elements of effective global brand management 182
Fig. 7.2 Global brand strategy coordination matrix 198
Fig. 8.1 Framework for CSR branding 212
Fig. 8.2 Cognitive consistency and brand transgressions 231
Fig. 9.1 Global brand equity triangle 244
Fig. 9.2 Components of customer-based brand equity 245
Fig. 9.3 Brand awareness waterfall 247

xiii
xiv List of Figures

Fig. 9.4 Customer equity power grid 252

Fig. 9.5 Drivers of global brand profitability 261
Fig. 10.1 Global brand equity and shareholder value 276
 List of Tables

Table 1.1 Worldwide media spending for selected MNCs 5

Table 2.1 Innovativeness of selected countries 35
Table 3.1 Customer proposition for five types of global brands 47
Table 4.1 Major marketing mix options for the global brand 79
Table 4.2 Global brand names in China 81
Table 4.3 Trust in advertising around the world 89
Table 4.4 Advertising theme appeal around the world 91
Table 4.5 Global marketing mix decisions: managerial practice
and recommendations 106
Table 5.1 Global brand building in the digital age 113
Table 5.2 Trust in Internet advertising media across generations 119
Table 5.3 Consumer preferences for distribution channel 124
Table 5.4 Crowdsourcing by eYeka 130
Table 5.5 EWOM and global brand sales 138
Table 6.1 Organizational models 157
Table 6.2 English proficiency around the world in 2015 175
Table 8.1 CSR reputation and stakeholder support 210
Table 8.2 Companies with the best CSR reputation in the world 211
Table 8.3 Use of on-pack CSR claims in 13 consumer packaged
goods categories 224
Table III.1 Equity of the most valuable global brand in selected
industries240
Table 9.1 Global price premium of brands over private labels 258

xv
xvi List of Tables

Table 9.2 Sales equity of Coca-Cola and Pepsi Cola 259

Table 9.3 Sales equity for selected global brands 260
Table 9.4 Typical performance of global brand types on drivers of
profitability262
Table 9.5 Brand profitability at the Volkswagen Group 265
Table 9.6 Global brand equity estimates by brand valuation agency 270
Table 10.1 Global brand equity as percentage of firm market
capitalization by brand valuation agency 277
Table 10.2 Global brand equity in the acquisition of Gillette Co.
by Procter & Gamble 284
Table 10.3 Effect of global brand equity on shareholder value 287
Table A.1 Country scores on culture map scales 298
 List of Tools

Tool 2.1 The COMET diagnostic test 41

Tool 4.1 Sales management control systems in different cultures 97
Tool 4.2 Scorecard for evaluating multinational customers as prospect
for GAM 101
Tool 6.1 Diagnosing the use of coordination mechanisms
by your company 161
Tool 7.1 Culture map 192
Tool 7.2 Assessing a manager’s local and global identity 203
Tool 8.1 Classifying customers on their CSR attributions 227
Tool 9.1 Tracking instrument for customer equity 256

xvii
 Preface

Not since our species emerged from Africa have we seen such integration
of human commerce as we do today. When I was born in Amsterdam,
the Netherlands had no free flow of goods and people across the German
border. The Dutch government restricted the convertibility of the guilder,
few people had journeyed to other countries, and even fewer had traveled
by air, while entering China was all but impossible. The Iron Curtain
divided Europe, and the wind of change had yet to sweep through colo-
nial Africa. Making a telephone call from Amsterdam to New York City
cost several US dollars per minute and knowledge of far-away events was
sketchy.
We ate the typically stern Dutch meal: potatoes, meat, and cabbage.
If your family ate zucchini, pasta, and olive oil, whatever those were, we
eyed you with mild suspicion. People drove DAF Variomatics, owned
Philips televisions, spread Blue Band margarine on their bread, drank
Raak soda and Heineken beer, ate Royco soup, De Hoorn smoked sau-
sage, and Campina ice cream, rode Gazelle bikes, dreamed of flying on
KLM Royal Dutch Airlines, rooted for Amsterdamsche Football Club
Ajax, and banked with the Boerenleenbank. Koninklijke Hoogovens
delivered its steel to Stork machinery on DAF heavy trucks and shipped
steel overseas through Verolme dock and shipyard. Many filled their gas
tanks at a Royal Dutch Shell station, unaware of its global stature.

xix
xx Preface

In my youth, my brand awareness was local because the products I

could buy were local, even though I lived in one of the world’s most
open economies at the time, an economy that even in 1960 depended on
global trade for over half its national wealth.
How different is the brandscape of today’s youth. Not even Dutch
children would recognize half these brands. Many have disappeared from
the marketplace (e.g., Fokker, Raak, Royco, DAF cars) and others are
but a pale image of their former glory (Philips, Ajax). Still others sold
themselves off to foreign firms (Hoogovens to Tata Steel, DAF trucks to
Paccar) or merged with them (KLM with Air France). At the same time,
several (largely) local Dutch brands became powerful global brands, not
just Shell and Heineken but ING bank, Grolsch beer, KPMG profes-
sional services, and Omo laundry detergents.
Of course, Dutch brands are not unique in this respect. You can prob-
ably think of several retail or consumer brands, maybe even your child-
hood favorites, that did not survive the arrival of the global economy.
Britain’s storied car brand Rover went bankrupt, while once proud British
Steel—now part of India’s Tata Steel—is fighting for survival. Germany’s
renowned consumer electronics brands Schneider and Dual were sold
to China’s TCL and all but disappeared from the marketplace. France’s
Simca was acquired by Chrysler and afterwards taken from the market
and Belgium’s SBR went bankrupt. Chrysler bought American Motors
Corporation only to be eliminated later. General Motors’ car brands
Oldsmobile, Pontiac, Hummer, and Saturn ceased operations, the vic-
tims of the onslaught brought on by foreign car brands and the global
financial crisis of 2008–2009.
Brands would not have emerged from their country of origin without
the dramatic drop in the costs of international connectivity. A turning
point was 1989: people everywhere watched the Berlin Wall come down.
Goods, services, capital, and ideas move freely about the cabin of planet
Earth. Via the Internet, people follow local weather and global news.
Before I graduated from college, I had the privilege of traveling widely
across the world because my father served as an independent (non-­
executive) director of KLM. But my travels were nothing compared with
my daughter’s. Before her 25th birthday, she had traveled from Argentina
to Zimbabwe: that is, not just the countries of the European Union but
 Preface xxi

also Botswana, Brazil, Burma, Chile, Ethiopia, India, Namibia, Nepal,

South Africa, Thailand, the United States, Uruguay, and Vietnam.
It’s a small world after all. People around the world covet the prestige
of Gucci, the reliability of Toyota, the taste of French Haut-Médoc wine
or Coca-Cola, the soccer played by Real Madrid, the café experience of
Starbucks, Hollywood blockbusters, McDonald’s French fries, the latest
iPhone, and Zara’s fashion.
In corporate headquarters around the world, many purchase manag-
ers prefer the technological prowess of Caterpillar machinery, Honeywell
process controls, John Deere tractors, General Electric medical equip-
ment, and Airbus aircraft over any local manufacturer; the expertise of
McKinsey consulting services, Deloitte accounting services, Sodexo hos-
pitality services, and FedEx logistics services. Along with their market
success, global brands have become immensely valuable assets. While the
total value of the world’s 100 most valuable global brands was $1.4 tril-
lion in 2006, the global top-100 was worth a staggering $3.4 trillion in
2016, according to brand consultancy Millward Brown. Few, if any, firm
assets exhibit a compound annual growth rate of 8.8 % year after year.
Yet, more than a few firms stumble in taking their brands global while
others misjudge market developments or cut corners with scandalous
results. Chrysler’s efforts to go global have failed, Walmart flopped in
Germany and South Korea, Sony rose and faded in global consumer
electronics, BlackBerry misread the consumer market, and Volkswagen’s
emission testing fraud has scandalized the brand.
Why do some brands succeed in all the big markets of the world and
others never make it beyond their own borders? What can executives
learn from their successes and failures in building and managing their
global brand? These questions inspired me to write this book.
Drawing on my own research in branding and global marketing over
the last 25 years, the work of my academic peers, interviews with senior
executives, trade publications, and my consulting work, I analyze brand
strategies in a global economy where the forces of globalization are strong
but not friction free: national and cultural differences cause turbulence,
even resistance. I lay out actionable strategies for executives to launch
and fly strong global brands, no matter the headwinds. My book con-
tains many examples, visuals, and tools for you to use in analyzing your
xxii Preface

situation and discussing your aspirations with fellow executives, board

members, and direct reports. My goal is to enable heads of business units
and managers to navigate effectively and profitably in today’s global
marketscape.
 Acknowledgments

Many colleagues, companies, and marketing practitioners have made an

invaluable contribution in making this book a reality. I am deeply grate-
ful to all executives who shared their unique experiences during my long
odyssey. I owe special thanks to Ramzi Abou-Ezzeddine (Bank Audi),
Vindi Banga (Unilever), Giuseppe Caiazza (Saatchi & Saatchi), Peter
Dart (WPP), Arvind Desikan (Google), Annick Desmecht (Samsonite,
Wedgwood), Mark Durcan (Micron Technology), John Edwards (Jaguar
Land Rover), Rebecca Enonchong (AppsTech), Vaughan Ensley (P&G),
Brian Feng (SUMEC), Juliet Guo (Sand River), Raja Habre (Lebanese
Franchise Association), Peter Hubbell (P&G), Rob Malcolm (Diageo),
Anna Malmhake (Pernod Ricard), Kathrine Mo (Telinor), Franck
Moison (Colgate), Sunil Nayak (Sodexo), Paul Polman (Unilever), Raji
Ramaswamy (JWT), Yannig Roth (eYeka), Riad Salame (Banque du
Liban), Moustapha Sarhank (Sarhank Group for Investment), Eric Solovy
(Sidley Austin LLP), Paulus Steenkamp (Royal Dutch Shell), Pierpaolo
Susani (Barilla), Luca Uva (Barilla), C.K. Venkataraman (Titan), Zhang
Jianhua (SAIC Motor Corp.), and Peter Zhang (Volvo).
I have had the privilege to test and refine my ideas in lectures to par-
ticipants at conferences on all continents and in various MBA and execu-
tive programs. I learned as much from them as they learned from me. I
also owe much gratitude to a number of colleagues whose insights have
sharpened my thinking over the years. The contributions of David Aaker
xxiii
xxiv Acknowledgments

(Berkeley & Prophet), Kusum Ailawadi (Dartmouth College), Dana

Alden (University of Hawaii), Rajeev Batra (University of Michigan),
Steven Burgess (University of the Witwatersrand), Yubo Chen (Tsinghua
University), Martijn de Jong (Erasmus University), Marnik Dekimpe
(Tilburg University), Pankaj Ghemawat (IESE & NYU), Justin He (East
China Normal University), Kevin Keller (Dartmouth College), Miguel
Angel López Lomelí (ITESM), and Dheeraj Sharma (Indian Institute
of Management Ahmedabad) were especially helpful. I am grateful for
the help and suggestions I received from my colleagues at UNC-Kenan-­
Flagler Business School, especially Barry Bayus, Isaac Dinner and Katrijn
Gielens. I thank Erin Mitchell for preparing the art work—tables, fig-
ures, and tools.
A very special word of thanks to my friend and colleague of 25 years,
Nirmalya Kumar, who left academia in 2013 to join Tata & Sons.
Academia’s loss is India’s gain. His insights over the years have signifi-
cantly influenced my thinking. I sorely miss the countless hours we spent
discussing ideas in his London apartment, fueled by excellent French
wine from his personal cellar.
I am grateful for the support of my wife, Valarie Steenkamp. She is my
sounding board, not only for many of the ideas in this book, but for all
my life’s decisions.
Finally, I want to acknowledge all those executives who work hard
every day of their lives to enrich our lives with high quality global brands.
If they find this book useful, it will be worth all of my efforts.
 1
The Cambrian Explosion of Brands

Imagine a world without brands. Perhaps it is the world before language,

before mankind could distinguish earth from sky, flora from fauna, or
dreams from reality. Or it is the world before money, at the dawn of
specialization, where people were called by what they did best—fisher,
farmer, baker, barber, sailor, smith—and bartered for what they needed.
Or it is the world before industry, where the rich coveted Florentine
wool, Venetian glass, and Toledo steel, all from artisanal communities.
Their products were relatively unsophisticated, rivals were few, and most
sales were local. If consumers weren’t satisfied with their purchases, word
got out quickly, and a craftsman’s reputation took a hit.
Then came movable type, electricity, the steam engine, railroads, the
light bulb, the telegraph, mass production, and unprecedented choice.
Technological progress in the late nineteenth century outstripped the
average consumer’s ability to understand the products, let alone know
their producers personally. Copycats sprung up to exploit the popularity
of certain goods. Which product was the genuine article? Which pro-
ducer was trustworthy? In response to this customer uncertainty, firms
started to introduce brands in various industries, ranging from steel
and armaments (Krupp, Vickers), automobiles (Mercedes, Ford), and

© The Author(s) 2017 1

J.-B. Steenkamp, Global Brand Strategy,
DOI 10.1057/978-1-349-94994-6_1
2 Global Brand Strategy

banks (Barings, Rothschild) to toothpaste (Colgate), soap (Ivory), and

soft drinks (Coca-Cola). In what we might call the “Precambrian” era of
branding, a diversity of brand-savvy entrepreneurs emerged.
Take the Lever brothers, William and James. In 1884, they launched
Sunlight, a soap for washing clothes and cleaning house. The chemist
who invented the Sunlight formula, William Watson, used glycerin and
vegetable oils instead of animal fat (tallow). The resulting soap was a free-
lathering product of uniform high quality. Where most soap makers were
selling big blocks of soap, the Lever brothers had the marketing insight to
cut their product into small bars, wrap them in bright yellow paper, and
brand them Sunlight to appeal to sun-starved housewives of Victorian
England. Over time, the Lever brothers started to advertise their brand.
In one World War I advertisement, they claimed that the British Tommy
was the cleanest fighter in the world because he used Sunlight. The Lever
brothers were also among the first to understand the brand as an assurance
of quality. They offered a £1000 guarantee of purity on every bar. That’s
£71,570 in today’s terms. Sunlight quickly became one of the world’s first
consumer brands.1 In 1930, Lever Brothers merged with the Dutch com-
pany Margarine Unie (Margarine Union Ltd.), led by the brand-savvy
Van den Bergh and Jurgens families, to become Unilever, still one of the
largest consumer packaged goods firms in the world.

The Global Branding Phenomenon

With the advent of mass media in the 1960s, immortalized in the TV series
Mad Men, the pace of brand introduction, sophistication, and impor-
tance accelerated dramatically. The world has witnessed a “Cambrian
explosion” of brands.2 The digital revolution of the twenty-first cen-

1
https://en.wikipedia.org/wiki/Sunlight_(cleaning_product); accessed October 14, 2015.
2
The term Cambrian explosion of brands was first used by Marc de SwaanArons; http://www.the-
atlantic.com/business/archive/2011/10/how-brands-were-born-a-brief-history-of-modern-mar-
keting/246012/. It is inspired by one of the greatest—if not the greatest—explosion of species in
the history of the world, which took place in a relatively short time (geologically speaking) of about
20–25 million years in the Cambrian era, which started 542 million years ago; http://burgess-shale.
rom.on.ca/en/science/origin/04-cambrian-explosion.php; both sites accessed January 21, 2016.
 1 The Cambrian Explosion of Brands 3

tury with cheap mobile, big data, social media, and global connectivity
has further accelerated this process. Brands have become ubiquitous in
today’s marketplace. And when you look at annual rankings of the world’s
most powerful brands by consultancies Brand Finance, Interbrand, and
Millward Brown, you will notice that the strongest brands in about any
industry are almost invariably global brands.3
In this book, I define a global brand as a brand that uses the same name
and logo, is recognized, available, and accepted in multiple regions of the
world, shares the same principles, values, strategic positioning, and marketing
throughout the world, and its management is internationally coordinated,
although the marketing mix can vary.4
I do not include a market share criterion in my definition as that con-
founds strategy with its outcomes and restricts me to proven successes as
opposed to emerging successes. In principle, a global brand has broadly
the same positioning around the world. If the brand is a premium-priced
brand, it is premium-priced around the world. If it is positioned vis-à-vis
an income segment of the market (e.g., global elite), its positioning must
be consistent in every market. Of course, this is an ideal that manag-
ers cannot always realize because the competitive environment of mar-
kets may vary and companies need to adapt positioning. For example,
Heineken has a premium positioning in most of the world, but it is a
middle-of-the-road brand in its home market. For most global brands,
the marketing mix will vary (somewhat) to meet local needs and com-
petitive requirements. For example, Coca-Cola is sweeter in the Middle
East than in the USA. However, its brand name, logo, and packages are
similar worldwide, and consumers can easily distinguish Coke from its
competitors worldwide. The issue is not exact uniformity; rather, it is
whether the company is offering essentially the same product.

3
Millward Brown: http://www.millwardbrown.com/brandz; Brand Finance: http://brandirectory.
com/; Interbrand: http://interbrand.com/best-brands/. A notable exception is banking, where the
average value of a top ten regional bank (e.g., Wells Fargo, ICBC) is more than twice the average
value of a top ten global bank (e.g., HSBC, Citi), according to Millward Brown. This is due to the
great complexities in running global banks in a context of ever stricter, but country-specific legisla-
tion (think about compliance officers).
4
My definition is based on De Mooij, Marieke (1998), Global Marketing and Advertising:
Understanding Cultural Paradoxes, Thousand Oaks, CA: Sage.
4 Global Brand Strategy

The rise and dominance of global brands is a logical consequence of

one of the axial principles of our time, the globalization of the market-
place, accelerated by rapidly falling transportation and communication
costs. For example, a three-minute telephone call from New York City
to London cost $1004.78 in 1927 and $0.06 in 2014 (both in 2014 US
dollars). Transporting a single container via ship from Los Angeles to
Hong Kong cost $14,365 in 1970 and less than $1500 in 2014 (in 2014
US dollars).5
Other factors contributing to global integration of markets include
falling national boundaries, regional unification (EU, ASEAN, NAFTA),
global standardization of manufacturing techniques, global investment
and production strategies, rapid increase in education and literacy levels,
growing urbanization in developing countries, free(er) flow of informa-
tion, labor, money, and technology across borders and the World Wide
Web, increased consumer sophistication and purchasing power, and the
emergence of global media.
Brands help consumers everywhere in the world to determine which
product or service to choose – which baby formula is safest for our
newborn, which cars have airbags that will inflate properly, which
consultancy has the experience we need without conflicts of inter-
est, or which excavator is the most durable with the best warranty.
Firms invest massive amounts of money to build, nurture, and defend
their brands. In 2014, global advertising spending alone exceeded half
a trillion dollars (see Table 1.1). And brand advertising is only part
of brand investment; think about brand-related R&D, distribution
channel cultivation, personal selling, and market research. Why do
firms spend so much money on building their brands? Because brands
perform several functions that make them valuable to companies.
Read on.

5
US Department of Commerce; https://cps.ipums.org/cps/cpi99.shtml.
 1 The Cambrian Explosion of Brands 5

Table 1.1 Worldwide media spending for selected MNCs

Media
Global spending
rank Company Home country Industry ($ millions)
1 Procter & USA Consumer packaged 10,125
Gamble goods
2 Unilever UK/ Consumer packaged 7394
Netherlands goods
3 L’Oréal France Personal care 5264
4 Coca-Cola USA Beverages 3279
5 Toyota Motor Japan Automotive 3185
Corp.
6 Volkswagen Germany Automotive 3171
7 Nestlé Switzerland Food 2930
8 General Motors USA Automotive 2849
9 Mars Inc. USA Snacks/pet food 2569
10 McDonald’s USA Restaurants 2494
13 Sony Japan Electronics 2346
18 Pfizer USA Pharmaceuticals 1984
21 Samsung South Korea Technology 1905
30 Apple USA Technology 1390
35 Disney USA Entertainment 1256
36 Walmart Stores USA Retail 1236
40 Bayer Germany Chemicals/ 1161
pharmaceuticals
46 Vodafone Group UK Telecom 1020
48 LVMH France Luxury 994
61 Sanofi France Pharmaceuticals 688
63 Amazon USA Retail 672
66 IKEA Sweden Retail 647
74 Novartis Switzerland Pharmaceuticals 552
84 American USA Payments 451
Express
86 Mattel USA Toys 447
Source: Adapted from Advertising Age (December 7, 2015); reported is
worldwide measured media spending
Note: Throughout the book, unless noted otherwise, $ refers to US dollars
6 Global Brand Strategy

Why Consumers Value Brands

We live in a branded world. The average number of brand exposures
per day per person exceeds 5000.6 For comparison, the average male
speaks about 7000 words a day.7 Five thousand brand exposures per day
seem rather overwhelming, although the average person only consciously
notices a fraction of them. Nevertheless, the sheer ubiquity of brands has
led so-called critical thinkers to suggest that brands are in some way not
real, that they are mere ploys to mislead consumers, and that the world
might be better off without them.8 I have met executives with engineer-
ing, finance, or accounting backgrounds who are equally unsure about
the importance of brands. When I was working with a major player in
the infant formula market, the chief financial officer asked me openly:
“The marketing department tells me all the time that brands are impor-
tant. Can you explain that to me? I don’t really get it.” Why do brands
matter? Brands perform three important functions for consumers.

Brands Make Decision Making Easier

First, brands ease consumer decision making. The human brain stores prod-
uct knowledge in associate networks largely organized around the brand.
If you recognize a brand and have some knowledge about it, then you can
easily access and use related product knowledge in your decision making.
You need not engage in additional thought or data processing to make
a purchase decision. Absent brands, you need to study each offering,
and analyze product detail for multiple offerings before you can choose
among them. Most people do not want to expend this time and effort
on their everyday purchases. For example, on average, consumers take

6
http://sjinsights.net/2014/09/29/new-research-sheds-light-on-daily-ad-exposures/; accessed
October 15, 2015.
7
http://www.dailymail.co.uk/sciencetech/article-2281891/Women-really-talk-men-13-000-
words-day-precise.html; accessed January 21, 2016.
8
Boorman, Neil (2007), Bonfire of Brands: How I Learned to Live Without Labels, Edinburgh, UK:
Canongate; Klein, Naomi (2000), No Logo: Taking Aim at the Brand Bullies, New York: Knopf;
Ritzer, George (2004), The McDonaldization of Society, Thousand Oaks, CA: Pine Forge Press;
Ritzer, George (2007), The Globalization of Nothing 2, Thousand Oaks, CA: Pine Forge Press.
 1 The Cambrian Explosion of Brands 7

four to five seconds to make a purchase decision in a local supermarket.9

Compare that with, say, the amount of time you’d need to shop for gro-
ceries while vacationing in another country, where you’d recognize few of
the brands on the shelves. From personal experience, I know that it easily
takes three times as much time to reach a decision. And grocery shop-
ping is not cognitively very demanding. Imagine selecting a car—new or
used—in a world without brands!

Brands Reduce Risk

A second function of brands is to reduce consumer risk. Brands signify

the source or maker of the product. As the former chief marketing officer
(CMO) of Unilever, Simon Clift said, “a brand is the contract between a
company and consumers. And the consumer is the judge and jury. If (s)
he believes a company is in breach of that contract either by underper-
forming or reducing quality service rendering, the consumer will simply
choose to enter a contract with another brand.”10 Executives who invest
in brands know these investments would yield poor returns if the brands
failed to fulfill their promises. Therefore, companies have a strong incen-
tive to deliver on quality. Consumers intuitively understand this connec-
tion and use brand name as an indicator of product quality. Consider
how a Chinese consumer, Wang Weixin, searched for a new smartphone.
Although he contemplated buying the Xiaomi brand, he went with a
Huawei Honor 7 because of the company’s reputation. He explained,
“To be honest, regular folk don’t know that much about specs [mobile
phone specifications]. But Huawei phones have a good name among my
friends, and I know it’s an international brand.”11
The link between a strong brand name and perceived quality is such
that it can affect consumer judgments even if consumers are verifiably

9
Hoyer, Wayne D. (1984), “An Examination of Consumer Decision Making for a Common
Repeat Purchase Product,” Journal of Consumer Research, 10 (December), pp. 822–829.
10
https://www.linkedin.com/pulse/power-brand-building-your-own-personal-corporate-world-
onyebuchi?forceNoSplash=true; accessed January 21, 2016.
11
Osawa, Juro and Eva Dou (2015), “Huawei Catches Up To Xiaomi in China,” Wall Street Journal,
October 23, p. B1.
8 Global Brand Strategy

wrong. In one study of customer perception, consumers could not dis-

tinguish the taste of ten beer brands when the bottles were unlabeled.
However, when they could see the labels, they could differentiate the
flavors of the beers.12 Consumers use a well-known brand name to infer
product quality; that is their most important mechanism to reduce pur-
chase risk.
If the brand does not fulfill its promises, if the company reneges on its
implied contract with consumers, then consumers will feel betrayed, even
violated; so violated that they may sue the company for false advertising,
misleading brand statements, and other transgressions. Consider what
then-CEO Martin Winterkorn said, after the September 2015 revelation
that Volkswagen had been cheating on emission tests of its diesel cars: “I
personally am deeply sorry we have broken the trust of our consumers
and the public.”13 Apologies may not be enough—according to branding
consultancy Brand Finance, its brand stature declined significantly and
lawsuits are in the making.14

Brands Provide Emotional Benefits

A third important function of brands is to fulfill consumers’ emotional

needs. Marketers have long known that consumers can attach emotional
meaning to brands. People value Tide laundry detergent not only because
it removes stains effectively but also because it makes them feel better
caretakers of their family. Jaguar does not give consumers the best func-
tional quality per dollar paid—Lexus would be a more rational choice on
that deliverable—but it does convey British heritage and royalty. Harley-
Davidson stands unequivocally for rebellion, machismo, freedom, and

12
Allison, Ralph I. and Kenneth P. Uhl (1964), “Influence of Beer Brand Identification on Taste
Perception,” Journal of Marketing Research, 1 (August), pp. 36–39. Steenkamp, Jan-Benedict E.M.
(1989), Product Quality, Assen: Van Gorcum.
13
Rieger, Bernhard (2015), “The End of the People’s Car: How Volkswagen Lost Its Corporate
Soul,” Foreign Affairs, October 4 https://www.foreignaffairs.com/articles/germany/2015-10-04/
end-peoples-car; accessed October 10, 2015.
14
http://brandfinance.com/news/press-releases/vw-risks-its-31-billion-brand-and-germanys-
national-reputation/; http://www.hgdlawfirm.com/vwemissionslawsuit/#top; both accessed
January 21, 2016.