This historical period is in fact fascinating, also because of the new brands we are getting to know.
The relationship between us and the newcomers is totally different compared to the one we had with the majority of brands we know.
These brands already existed or were launched when we were children, and in most cases have accompanied us for many years.
Try to recall the list of brands you know, I did it: I was born in February 1971, at that time there were already 88 out of 100 brands that are today very popular. Among the 12 which did not exist yet, two are fashion brands (Armani and Zara, founded in 1975), the other 10 concern computer and technology industries born in the 80s and 90s.
In the emerging markets, local companies with a national and international market horizon are trying to establish global brands.
In the last few years big companies of foreign markets others than EU and USA have been acquiring European brands. For example, major Indian company Tata acquired Jaguar. The process is clear and wise too. Acquiring a well renowned brand costs less than creating a new one, besides, if this brand is related to an excellent product, the business is even better. In many cases the European brands acquired by companies based in emerging countries were experiencing serious financial problems. High investments have allowed Asian entrepreneurial groups to acquire the best
on the market regarding the history of the brand and the products. You will all agree that a brand like Jaguar is not to be found easily and to build up a brand with equal reputation takes years, and you cannot be sure to achieve your goal. In this case, it is much better to buy the original brand.
Today, we are facing a new phase. After purchasing interesting brands, it is time for national proud and the businessmen of merging markets are willing to reinforce their own brands.
In the past July, the agreement between Chinese computer company Lenovo and the National Football League raised some uproar in the USA. Of course, it wasn’t the first important international operation promoted by Lenovo. At the end of 2004 it had acquired the PC unit of IBM.
But that was a “commercial” operation, the focus was on the business and moreover Lenovo had declared the intention to keep using the IBM brand for the sale of the PCs.
With the National Football League sponsoring, the company gets into a new era: from business matters to communication, and this is a serious game. Lenovo is trying to become a global brand and needs visibility. Sponsorships of sport events are a classic in order to get it. They are relatively inexpensive, the brands are visible without distractions and the matches are broadcast on TV and the Internet, thus accessible to a very wide and diversified population.
Becoming a global brand is a very difficult operation though. It is necessary to fight against historical brands which are rooted in people’s minds.
In the different rankings of the most renowned brands in the world (there are so many ones, just visit www.rankingthebrands.com) brands coming from developing countries are starting to get noticed.
A common feature of these brands is that of having relied on (low) prices and on a questionable quality of the products. Today, these assumptions are still alive in the consumers’ minds, but are not true in reality. Businesses in emerging countries have overtaken the time of copying high quality products and started a new phase of creative qualitative production.
In that sense, the lawsuit of Apple against Samsung is interesting. Apple affirmed that Samsung had copied its products. After being considered guilty, in a letter to its employees Samsung declared that “we trust in those consumers who consider innovation (and not controversies) their priority; Samsung demonstrates this attitude beyond any doubt”.
This is quite exceptional. Between the lines, Samsung sets the limit between the economy of copying and that of the respect of copyright, and as a consequence stresses the importance of creative and technological innovation.
Other brands push on the fame factor, such as two really strong Turkish brands: one is Arçelik, leader in household appliances in the Turkish market that is rapidly expanding in Europe, and the other is Evyap, local major cosmetics company.
Which are the strategies used by brands of emerging countries to grow their popularity, with the aim of replacing brands as Coca-Cola, McDonald’s, Disney and Nokia in our minds, just to name a few?
The common “weaknesses” to almost every brand from emerging countries, from the point of view of Western consumers, who are experienced and demanding, are:
Focusing. We want to understand well what these new brands do and where they are specialized. In many cases, because exotic names are difficult to understand, or because in fact we have never heard them before, as consumers we have some difficulties when trying to understand what these brands exactly do.
Second critical point is innovation: which are the ideas, the style, what are they exactly proposing us, and why are they better than others? As already mentioned above, in people’s mind there is still the idea that products coming from faraway countries are necessarily copies of European or American products, often recurring to child labour with poor or no regulations and with no respect towards the environment. If this was true in many cases, today the situation has got much better.
Fair Labor Association (fairlabor.org) has been monitoring for years the status of many countries at risk, and has given a great impulse to the improvement of the labour conditions, offering as another consequence guarantees to consumers who can nowadays know the effective respect of rules by the companies.
Third critical point, and a pain in the neck for new brands, is communication. Creating and establishing a new brand, as we said, can take several years. New brands must spend a lot and for a long time in order to be seen and recognized.
Brands coming from developing countries are properties of business groups that have enriched themselves with production, and not always the owners are ready to invest on the sometimes weird communication system, because they perceive creativity as an investment that doesn’t have direct positive effects on the turnover.
Moreover, the ways in which communication investments are managed (developed by English and American) are changing. This is absolutely clear. Internet and the social networks, an evolving TV and more and more demanding consumers have changed the rules of the game. Investments are always more risky and the benefits go to the already well-known brands.
In the next years, besides seeing brands coming from emerging markets on the shelves of the supermarkets, we will get used to see them on TV and they will slowly but steadily conquer our trust. It will take time, because consumers need time before trusting a new brand, but new brands will be able to communicate massive, and probably convincing, messages.
by Mirko Nesurini, CEO GWH Swiss SA