From launching KFC across Europe to setting up B&Q stores in China, the pitfalls of global marketing were laid bare last week at Marketing Week’s annual Brands Summit.
Under the heading “Delivering global, local and regional growth through tactical brand strategy”, delegates heard a great deal about the problems that await brands as they expand around the world. They were also treated to some pearls of wisdom from those who have managed it.
Coca-Cola Great Britain & Ireland president Tom Long distilled the problems down to a central question. “‘Global versus local’ is irrelevant – I wish everybody would quit talking about it. It is not about strategy versus tactics. The question is really: ‘Why the hell should I buy your product today?’ That’s all that matters.”
Long holds that marketing is a battle, fought day by day in a variety of settings. He told the conference: “You have to make yourself relevant every day. So, every day I think: ‘Today is election day. What is my message and how am I going to be relevant today?'”.
For Coca-Cola, all-round relevancy is particularly important, as the product is consumed in different settings throughout the day. It has to be relevant in different situations and different cultures. Long believes that the most important thing for any brand is to have a clear point of view – to make a promise and to keep it. He concluded by telling marketers to spend more time out of their offices. “There’s nothing happening in there,” he said, entreating them to go and meet consumers.
Procter & Gamble UK & Ireland vice-president Chris de Lapuente revealed in his presentation that he spends two hours a week doing just that – going round supermarkets and talking to people in the laundry detergent aisle or the feminine care section. He says this helps in P&G’s quest to understand the “two moments of truth” in a brand experience. In the past, P&G concentrated on one of those moments – when a consumer opens the packaging at home and uses the product. Now, it also focuses on the moment when a consumer chooses a product in the store. Lapuente explains: “We now recognise there is another critical moment of truth – the first moment of truth – when the consumer stands in front of the shelf and decides which product to buy. If we don’t win there, we don’t even get to the second moment of truth.”
The in-store environment also proved to be crucial when it came to B&Q’s experience in China, as recounted by international director Steve Gilman and international commercial controller Justin Lees. The company’s first Chinese store – with 6,000 sq m of space and 25,000 lines – opened in Shanghai in June 1999.
Gilman explained that in China, newly bought flats tend to be empty shells without wiring, plumbing, kitchens, bathrooms or even dividing walls. Although B&Q’s store was advertised as a “one stop shop for home improvement”, it did not offer designers, a decoration service or furniture, and this left customers disappointed. As Gilman said: “We didn’t supply that service, so people were saying: ‘Why don’t you do that?’ We got some things right, but quite frankly we got a lot of things wrong.”
The store failed to achieve higher margins than its competitors in Shanghai, so B&Q altered the layout. Subsequent Chinese stores were designed to overcome the problems: floor-space was doubled by adding a top floor with furniture and soft furnishings, and decorating and building services were offered. Gilman revealed that a new two-storey store in Sutton has been inspired by the company’s experience in China.
Further problems of international expansion were revealed by Graham Allan, managing director of Yum! Europe – the holding company of Pizza Hut and KFC. While KFC and Pizza Hut have successfully expanded in the UK, Europe has been a tougher nut to crack.
Allan admitted: “We figured all we had to do was take the same strategy and reproduce it on the continent. The reality was pretty different.” Television advertising in Germany, for instance, is not bought regionally, so it is difficult to get a brand known in one area at a time; real estate rules vary across countries; and consumers behave in different ways in different markets. He added: “We naively assumed that pan-European meant the same across Europe. That is a recipe for failure.”
HSBC head of group marketing Peter Stringham talked about how the bank had managed to rebrand all its businesses across national markets under the HSBC name. He explained how differentiation is the most essential asset of a brand, and said that nowhere is this more true than in financial services. In his opinion, HSBC has achieved this through its global advertising campaign.
It is hard to draw lessons on global branding from so many different categories. Selling soft drinks across borders is one thing, but setting up superstores on the other side of the globe is another. Everyone agreed, however, that while ensuring the brand is tweaked for each market is a delicate, precision task, understanding the consumer and getting the operational side right are the most fundamental factors.