Friday, August 24, 2012

Importance of being "Foreign" -Global, local or glocal?

Multi-national companies in China often wonder the extent to which they should emphasize their foreign origin to the consumers as against demonstrating roots and strength in the local market.  In general it is true that in China, as in many other developing countries, products of international origin command a certain degree of respect and are often favored over their domestic rivals. The reasons for this are not difficult to fathom - including frequent disastrous experiences that consumers have had with some miscreant local players. However, given the ascending star of China on the global stage and the emergence of a strong streak of national pride, one could also be forgiven to assume that emphasizing local roots is of paramount importance.

Like many marketing riddles in developing markets, this is a complex question and the answer depends upon many factors. First of these factors is whether the product category in question is a premium product or an inexpensive product of daily use. At one end of the spectrum are luxury product categories.  In these categories, only international brands have been able to register their prowess with the consumers so far. Consumers use such products for their exclusivity, as status symbols and as markers of success in their climb up the ladder of success. Brands are valued for their high quality, craftsmanship and heritage. Brands are often strongly associated with a country and derive their image from the perception of the country (as in case of Luxury automobiles from Germany, a country known for its craftsmanship and engineering skills, or perfumes from France, associated with romance and chic)  Clearly establishing your international origin is of critical importance in this category. Such brands normally do not need to (in fact are not advised to) adopt their core offer and brand essence  to the local markets.

At the other end of the spectrum are daily use products whose usage is in the private space. Whether you use an expensive premium product or a cheap one, may have a significant effect on how well does your bathroom floor shine, but not in terms of how are you seen by your friends and compatriots. The consumer choice of such products is based on price and basic functionality, and consumers show little concern about the origin or provenance of the brand. In fact, often the consumers are not able to correctly classify such fast moving consumer goods as local or foreign. In a research among consumers in second tier cities of China, many consumers mentioned Johnson & Johnson as coming from Shanghai!

For products which fall somewhere in between the continuum of luxury and pedestrian, the issue is a bit more involved and establishing the international origin can be a plus though not necessarily so. While being foreign may be associated with better quality, being nimble and having a strong pulse of the market and the consumers can be even more important. Marketers have to carefully decide the relative emphasis they need to place on their international origin and local roots. One important guiding factor is the specific product category. For high technology products, consumer experience suggests that international brands bring in a quality and panache that local brands struggle to achieve. On the other hand for some categories such as skin-care or apparel, understanding of local tastes and preferences can act as a plus. In this middle territory, local brands often try to disguise themselves as international ones by choosing names such as Metersbonwe ( a popular apparel brand in China) with varying degrees of success. 

The third factor guiding the brand's strategy is specific to the brand. For brands like Coca Cola and Nike, which through clever and consistent marketing investments, have built a unique narrative and aura for themselves, which has stood the test of time as well the test of geographical diversity, it makes sense to exploit their universal value in all markets. For other brands, which though still international, lack that strong narrative, localisation and ammasing local strength may be a more logical choice. Even when such brands choose to retain their global aura and persona, localization of communication themes and styles is necessary - absence of which often leads to alienation.    

Lastly, while such preferences and attitudes do determine the importance of being "foreign", certain events can suddenly change the equation. The most notable of which has been the milk contamination scandal, which drove mothers to imported milk powder to ensure the safety of their children. In a short period of time, the share of imported milk powders rose to unimaginable levels. International marketers need to be on the look out for such sudden "change of wind", which can make their provenance and heritage more valued by the consumers.

Written by Ashok Sethi