The Global-Brand Advantage

Brands associated with high quality make the most inroads among consumers around the world, according to a paper published in the Journal of International Business Studies in January 2003. “How Perceived Brand Globalness Creates Brand Value” presents research that measured, in the United States and Korea, how a brand's perception as “global” affects customers' inclination to buy. Co-author Jan-Benedict E.M. Steenkamp, a professor of marketing and international marketing research at Tilburg University, the Netherlands, summarizes the findings, “If a brand is perceived to be global, that creates value in the mind of consumers. Most of the value creation is through the fact that consumers ascribe products that are global to be of good quality.”

A second pathway is through the prestige that accompanies a global brand. But quality dominates, representing more than 90% of the increased desirability of global brands among the 247 Americans and 370 Koreans surveyed. Prestige, adds co-author Rajeev Batra, S.S. Kresge Professor of Marketing at the University of Michigan Business School, can be transient. “When [global brands] are seen as novel, they may have high prestige, but when that novelty goes away, the prestige goes down. Also, prestige is a phenomenon that certain segments, like young people, tune into, but may be less significant for the vast market.”

Marketers should understand that when global brands are desirable, it is not simply because they are global, but rather because their globalness implies other traits, such as quality and prestige. “There's a certain cachet of quality that comes with being available around the world, but it's not automatic,” says third co-author, Dana L. Alden, a professor of marketing at the University of Hawaii. “The brands that tend to be successful around the world tend to be of higher quality and are promoted as such.”

The researchers also found some “ethnocentric” consumers who eschewed global products because of their globalness. How many ethnocentrics there are in a given market, Steenkamp conjectures, would vary by nation and depend on the particular product market. Foods, for example, are a culturally important product category and would likely experience more ethnocentrism than high-tech durables or personal care products.

But quality products can also mitigate these ethnocentric attitudes. Consider McDonald's operating in France, a nation with strong ethnocentric attitudes toward its culturally important food industry. José Bové became a folk hero in 1999 when he famously trashed a McDonald's building site because of the fast-food giant's strong association with global consumer culture. Yet McDonald's same-store sales in France remain strong, especially compared to trends in other nations. What's going on? “Realistically speaking, many French probably like McDonald's in terms of ‘quality,’ or value for money. However, it is also quite likely that many French don't feel comfortable with the global positioning of McDonald's,” Steenkamp explains. “But quality, at the end of the day, is a much more important pathway than this global cultural connotation. That allows us to reconcile two things: that the French hate McDonald's, but they eat there anyway.”

Consumer attitudes toward globalness are evolving, and marketers should be wary of changes in both new and existing geographic markets. Steenkamp expects ethnocentrism to change over time. Many countries have become more accepting of nonlocal foods, for example, as the French have. And Alden says that as global brands become icons of a global consumer culture in various locales, he expects brand globalness to have a more direct impact on purchase likelihood. So global brand marketers may gain an advantage over time, even if they can't associate their brands with quality or prestige.

Local brands can still compete, however. “One viable alternative is if you are able to anchor your brand very strongly to the local culture,” says Steenkamp, offering opportunities for local companies and multinationals with both global and local product portfolios. “The losers will be the brands that are neither perceived to be global nor are strong icons of the local consumer culture.”

Though companies seem to be pushing their brands across borders increasingly, they aren't all driven by the notion that locals will embrace global brands. Businesses globalize their brands for other reasons, points out Batra, including to achieve economies of scale in production, logistics and communications. But marketers have to think about how consumers will embrace their products. And to reach consumers, quality is job one.