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October 25, 2008

Asia Brand: Five Questions for SCHMITT

Catherine New
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Prof. Bernd Schmitt moderated the panel “How to Build an Asian Brand into a Global Brand” at the Pan-Asian Reunion in Hong Kong on Oct. 24. The panel included Yuzaburo Mogi ’61, Chairman and CEO, Kikkoman Corporation; Dong Bin Shin ’81, Executive Vice Chairman, Lotte Group; and Daniel Mingdong Wu ’96, CFO, Focus Media.

Public Offering: What differentiates a global brand from a local one?

SCHMITT: A global brand is planned and marketed on a global scale. A global brand is also available in all key markets around the world. Moreover, there is a high level of consistency to a global brand. The product will be largely the same (except for minor local variations), the visual identity (logo, signage and name) will be identical and communications will be designed for a global market. The classic global brands — which mostly come from the U.S., like Coca Cola, McDonald’s or Starbucks — exemplify such global branding. Local brands, in contrast, are only known in certain markets. They may have close connections to consumers in those markets but frequently they are seen as being of lower quality and not as contemporary as global brands.

PO: What is the best way a brand can build from local to global?

S: Professional management and a clear vision are needed. Brand builders must have a global vision and global aspirations for the brand and then set up the right organizational structures for managing a global brand. In addition, the company must understand consumer preferences. People in different markets differ in values, attitudes and behaviors. For understanding consumers in different markets, consumer research is key. Commissioning a global segmentation study is a good starting point.

PO: What is an example of an Asian brand that has transformed successfully into a global one?

S: One of the participants in my panel at Columbia Business School’s Pan-Asian Reunion in Hong Kong, Mr. Mogi, has such a brand: Kikkoman. Originally, Kikkoman was a local Japanese brand. Now, the brand stands for soy sauce worldwide. When you produce a soy sauce, it helps, of course, to be from Asia. A Western soy sauce brand would not have the same credibility.

PO: What are some other successful Asian brands?

S: There are numerous other Japanese brands in consumer electronics and in the car business, for example, and other businesses. In cosmetics, beauty and fashion, the global consumer knows Shiseido, or Issey Miyake and Yohji Yamamoto. In Korea, there is Samsung, which, by the way, has outperformed Sony in brand value according to the latest brand valuation studies. Then, there is Singapore Airlines, one of the greatest airlines in the world. So, by now, there is no shortage of Asian brands that are known globally — and more will be coming soon.

PO: Which brands should we look out for in the future?

S: Mr. Shin, the executive vice chairman of Lotte, another executive on my panel in Hong Kong, is currently building Lotte, which recently entered China and Russia, into a global brand. I also expect more global brands coming out of China soon, and not just brands like Lenovo that that were bought but brands that were home-grown, so to speak. In China, executives from established companies, entrepreneurs and the government are all strongly focused on building global brands.

Photo credit: Peyri Leigh

Comments

by Marianna Macri | October 30, 2008 at 5:05 PM

Are purely local brands really characterized by lower status, or not taken as seriously, as a rule? Wouldn't it be easier for strictly local brands to maintain a sense of authenticity? Is it the sheer ubiquity of a brand or some intangible quality that allows it to be successfully global? Maybe my thinking is faulty, but if I was traveling through Asia, I'd want to buy a soy sauce brand I'd never heard of. And if I saw two soy sauces side by side in Zabar's, I'd probably buy the one with the least amount of English on the label.

by Matthew Schilken | August 21, 2010 at 3:48 PM

By definition, a consumer cannot have a wrong opinion; I would point out to Marianna that while unfamiliarity can have its appeal, i still think that the primary value of a brand is to reduce uncertainty. The scenario in which a shopper picks between two soy sauces is pretty rare: there are typically a lot more; the familiar label helps to reduce the stress and get you on your way down the isle ("I don't know if this Kikkoman is the best, but it must be OK cause I have seen it on the table at sushi restaurants before, and besides, I'm running late for my _______ appointment"). Also, as a father of a toddler, mystery labels have a big downside! i imagine that some other parent consumers think this way too. - @brandfixer

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