Brands play for global domination

‘Globalisation’ might be the buzz marketing term of the moment but there is a school of thought which holds that present reports of brand and sales internationalisation are vastly exaggerated and that diversity will feature just as much as con

Try the following game. It’s fun. Every time you see an article expounding some company’s new global strategy, substitute “cost-cutting” and see how it reads. For bonus points, ask the following question. Does the new global strategy spread beyond the triad areas of the US, Europe and Japan? If so, you’re scoring well. If it reaches more than, say, 15 of the world’s 197 nation states, you’re really on a roll.

A cynic talking? Sure. But then the ability to distinguish between “globalisation” and “globaloney” is becoming an essential skill for marketing success. A question for starters: how far has globalisation really influenced brand strategy, companies or economies?

A recent study by US academics Betsy Boze and Charles Patton of six key globalisers – Colgate, Kraft, Nestlé, P&G, Quaker, and Unilever – shows that less than four per cent of the six companies’ combined 1,792 brands can be called global. And that’s defining global as selling in 34 countries – less than 20 per cent of the global total. Only six brands (Colgate, Lipton, Lux, Maggi, Nescafé and Palmolive) were sold in all 67 countries studied. By stark contrast, 65 per cent were marketed in three countries or less.

Likewise operations. Winfried Ruigrok, a visiting researcher at Warwick Business School, investigated the degree to which the world’s top 100 companies (as defined by the Fortune Global 500) have actually internationalised. Result? While sales have become more international, the location of production and the appointment of board members is still dominated by national links. “The great enemy of truth is very often not the lie but the myth, persistent, persuasive and unrealistic,” he says, quoting JFK.

Even the effect of sales internationalisation has been exaggerated, continues US economist Paul Krugman. Despite all the talk, for example, 70 per cent of the US economy’s wealth creation and jobs neither export nor face import competition. And it was ever thus.

But surely it’s the trend that matters – and all the evidence shows the tide flowing strongly in favour of globalisation. Previously closed markets such as China, India and the former Soviet Union are opening up. And new global strategies are unveiling huge opportunities for operational efficiencies, including marketing operations such as product formulation, packaging, advertising and media buying.

Besides, as former McKinsey consultant Kenichi Ohmae argues, the freeing of global financial flows, plus the rise of information technology and of individualism, all make a new global logic the underlying reality for all businesses.

Well, perhaps. But not necessarily. Futurologist Alvin Toffler, for example, draws an opposite conclusion from the same basic themes. A key characteristic of the new “Third Wave” economy, as he calls it, is diversity. Over the coming years, loads of micro belief systems will emerge, he predicts. The central issue will be “the tolerance of diversity… the last thing you want is runaway harmonisation.”

Support for Toffler’s view has recently come from a completely unexpected quarter. In a groundbreaking study, biologist Stuart Kauffman shows how life may have emerged from what he calls “supracritical” molecule soups. At a certain degree of soup complexity, the variety of molecules bumping up against one another creates an even greater variety of novel molecules.

Recently, Kauffman speculated about the implications of this theory. “Will the emerging global civilisation drift to homogeneity, as many suppose? Will we all speak English because the US was powerful when television became widespread? Will we all love hamburgers?” Or, he asked, is global civilisation going supracritical? “If we find Cuban-Chinese cuisine, what else will we invent, say, on the frontiers of Islam and hard rock?”

Funny he should ask that. Pop music is supposed to be one of the most global of all movements. At least it was. Now local cultures seem to be taking over. In China, singer Wei Wei easily outsold Madonna – until she started singing in English to go global. Sales plummeted.

Laura Pausini, a big star in Italy, is making a mint in Latin America. But not elsewhere. Mexico’s Luis Miguel is a big hit in Korea. One result: while US pop groups commanded 50 per cent of the worldwide music market in 1987, if current trends continue, they’ll have just 20 per cent by the year 2000.

If exploding diversity is truly as much a feature of the new economy as convergence, then marketers may need to put their thinking caps on. A many-tiered brand strategy may be needed, as some brands tap the currents of convergence and others tap the counter-currents.

Successful global brands will not be those that have harmonised and centralised because it is cheaper, but those whose very “globalness” is a crucial element of their values: they have become symbols of global unity or express a sort of human universal.

How much room is there for such brands? Obviously, there’s some. But early birds like Coca-Cola, McDonald’s, Sony and IBM have already seized much of the high ground. And a global brand whose globalness doesn’t add value is an empty shell. Worse, if people like Toffler and Kauffman are right, it will always be under threat from brands whose very strength lies in their assertion of particular groups’ micro-identities.

Of course, the drive for operational efficiency and the seizing of new opportunities must and will continue. But as Boze and Patton remark, it still takes “many brands to satisfy the markets in which companies operate”. Indeed, outside the creation of a handful of highly visible global brands, the biggest effect of globalisation may be to compound the very diversity (and cost) that so many hope it will eliminate.