International Branding - An Internationalization Approach on the Marketing Level

Table of Content

Executive Summary

Preface

1. Introduction

2. Introduction into Branding and explanation of selected terms in general
2.1 Brand and Brand Transfer
2.2 Definition and Term of Brand Equity
2.3 Brand Loyalty

3. Brand Internationalization by Acquisition of another Brand
3.1 Decision about International Branding Portfolios
3.2 Control of the Transfer from National to International Brands
3.2.1 Abruptly Brand Substitution
3.2.2 Step by Step Substitution
3.3 Controlling of the Brand Substitution

4. Process of internationalization by Brand/Line Extension
4.1 Country Decision
4.2 Brand- and Positioning Process
4.3 The Role of “Country-of-Origin-Effect (COO)”
4.4 Pricing Decision
4.5 Distribution Decision
4.6 Communication Decision

5. Brand-Piracy in International Context
5.1 Definition and Forms of Brand-Piracy
5.2 Consequences
5.2.1 Costumer’s Consequences
5.2.2 Impacts for the Victimized Company
5.3 Philipp Morris a current and International Example

6. Conclusion

7. List of Literature

8. Attachment

1. Introduction

During the last decades, the globalisation importance has increased a lot. In this term, the crucial globalisation pushing strength – the homogenisation of markets and short PLC – did change the competition on international markets.^[1] The internationalisation from companies becomes also more and more important.^[2] Due to these challenges lots of companies do not consider to operate their business activity on an international scope, but they are thinking about the aspect of how to act successfully on international markets.^[3]

Within the scope of internationalisation brands play an important role.^[4] The expansion of business activity on international markets is not thinkable without brands.^[5] Especially in terms of uncertain economic activities, the consumer is searching for orientation, trust and identification. The consumer will find all this in the brands.^[6]

Regarding a company that decides to expand his international brand politic, there are different possibilities. On the one hand, because of the changing general framework it is necessary to have the integration of international activities. Besides it is necessary to follow the company’s strategy consistently without considering country-specific differences. On the other hand, critics refer back to existing national even regional distinctions. Therefore demonstrates determination of standardization and differentiation in the literature of Brand Management a very discussable point, especially when you talk about “Global Brand”. Regarding to Specht, who declared: you will find the focal point of market centred activities in consumer goods marketing in the brand, so that there is a direct connection between and the global brand politic and the base of global market activities.^[7]

Considering the terminology of international management, most of the brands are just in a status of a transnational, regional or “Euro” brand today. Even brands like Coca-Cola or McDonald´s differentiate parts of their market development in certain countries. For this reason the theory, which has been noted on top, be explained more clearly: you must not understand brand management as a brand that always has to have exactly the same marketing mix. A brand is more global when the brand core, positioning and brand world are consistent.

2. Introduction into Branding and explanation of selected terms in general

This chapter gives an overview about selected terms which have relevance for this report and topic. So, the following text demonstrates an introduction into branding. The interested reader can get more information of some of these explanations in the attachment at the end of this report. Therefore this chapter represents just a quick overview of selected terms.

2.1 Brand and Brand Transfer

With help of the consumer sight, branded goods are giving the possibility of the identification under competing offer and only after this identification the classification of product related information’s e.g. with advertising, is also possible. These functions create an aimed initial purchase and the repurchase of a brand (orientation).

International Branding is an example of interactive communication between marketers and consumer who are from different countries and cultures.

The name of an established brand will be used at the brand transfer, to launch a new product. Because of this procedure the company is trying to broadcast brand competence of the old product to a new product. Basically you can differ in two strategic alternatives from brand expansion:

In case of the product line extension the new product will be brought to the market.

Brand extension or category extension, which is if the transfer of a main brand refers to a new product, following that the established brand name will be used to launch into a new product category.^[8]

Brand transfers can aid to minimise high risks in case of launching new brands.

2.2 Definition and Term of Brand Equity

There are some definitions regarding brand equity and how you can measure it. Because of the given limited extent of this report we will consider brand equity just of two perspectives.

From the fiscally point of view is brand equity “the present value“ of all cash surplus which the owners of the brand earn.^[9]

Brand equity could be examined from marketing perspective like the additional value of the product (which derives from the brand), or an additional charge (premium price) for that a consumer is willing to pay for an identical product, if this product is also provided with a brand.^[10] The more higher the loyalty results from the marketing mix methods, the higher is the value of the brand.^[11]

Term of Brand Equity

Different authors explain brand equity with components of brand knowledge. The brand knowledge is an associative memory model, which consists out of the two following components “brand awareness” and “brand image” with which the brand image includes a set of brand association.^[12] There are many theoretical appendages about the quantitative determination of brand equity, but because of the limited frame of this report we will not be able to show a very deep approach into this field. For interested reader there is an explanation more in detail concerning brand awareness and brand image in attachment 1.

Concerning quantitative determination of brand equity it is to mention that there are a large number of theoretical approaches in literature. Because of the limited extent and the lower signification in this report we disregard this point.

Brand awareness: Brand awareness consists of two major sub points – brand recognition value and brand recall value.

Brand Image is the cognition of a brand which will be reflected through brand association in consumer’s brain. Further there are three more important aspects of brand image. Here we are talking about favourability, strength and uniqueness of brand association. These brand associations are classified by three sub points – attributes, attitudes and benefits. Attributes are again divided by Non-Product-related attributes and product-related attributes. Benefits means the aim of the product is differentiated by functional, experimental and symbolic.

2.3 Brand Loyalty

Powerful brand loyalty is normally the result of habitual behaviour thus simplified decision behaviour. Though the cognitive discharge of the decision effort it is possible to characterise a lower decision time and a less important affective process. Only in exceptional cases a brand repurchase returns to extensive decisions.^[13]

The number of initial purchase plus the number of repurchase times the buying intension give the sales volume,^[14] The main target of brand politic is to establish consumer satisfaction if the consumer lingering repurchase by usually bought brands.^[15]

For different product groups do exist different degree of brand loyalty: A low till middle brand loyalty appears as a slightly marked daily used goods. A high brand loyalty appears as a strong marked and infrequently bought consumer goods, which exhibit a slight till middle characteristic.^[16]

Another determinate which influences the repurchase behaviour is the age. Older people are more loyal to brands because they are less risk takers and less flexible. Also crucial is the less social status, because of a less information processing level.^[17]

3. Brand Internationalization by Acquisition of another Brand

Amount of worldwide mergers and acquisitions across borders rises steadily. High brand-equities are in common considered as a main part of enterprises value, that’s why in these strategies brand equities playing a major role.^[18] After decision of acquiring an enterprise and its brands, the brand-management of the acquiring enterprise has to decide if brands should be maintained, eliminated, or new international brands should be developed. In this consideration it is placed emphasis on how many international brands per product group an enterprise should have and the question which “local” brands are destined to become “global” mega brands. Or other way round, which one should be kept as “local” brand.

The following chapter shows the decision problems of leading national and international brands. This takes place under the consideration of the substitution process from a national to an international brand by acquisition of another brand. For this procedure a company can use the Multi Brands- or New Brands Strategy which means a new brand will be introduced in the same or a new product category.

3.1 Decision about International Branding Portfolios

After an acquisition of foreign brands in foreign markets – usually by acquisition of entire companies – there evolves the problem how to lead two or more brands in the same product category in multiple countries. From the strategically acquisitions of expansion of the international business activities point of view, one has to define the introduction of secondary and third brands. The new brands, one has introduced into the market, are for the increase of the entire turnover although you know that the turnover of current brands will decrease. Regarding cannibalism-effects, a company’s goal is the expansion of a customer relationship and the creation of market entry barriers.^[19] The result of a branding acquisition is a construction with decision situations questioning if one keeps or substitutes the other brand.

Because of this various opportunities we are assuming for following part of the chapter that an enterprise has already one strong brand in the domestic market and they will get a second brand in a foreign market which is the result of a branding acquisition. In this case the enterprise will have five decision options after the acquisition:

I. The company will keep the acquired brand as their only brand in the foreign market. Therefore the company will not introduce their existing brand into the foreign market.
II. The existing brand of the acquiring company will substitute the acquired brand.
III. The acquired brand will be retransferred into the domestic market and will substitute the existing market.
IV. The existing brand of an internationalising company will be introduced additionally into the foreign market. Both brands are in the foreign market now but under different positions.
V. A new developed brand will substitute both brands.

[...]

^[1] source: Meffert, H., Marketing S. 23

^[2] source: Meffert, H., Markenmanagement S. 84

^[3] source: Meffert, H., Marketing S. 1

^[4] source: Meffert, H., Markenmanagement S. 162

^[5] source: Meffert, H., Marketing S. 21

^[6] source: Meffert, H., Markenmanagement S. 162

^[7] source: Specht, M., Pioniervorteile, S. 204

^[8] source: Keller, K. L., Erfolgsfaktoren, S. 707

^[9] source: Kaas, K. P., Langfristige Werbewirkung, S. 48

^[10] source: Aaker, D. A., Management, S. 18

^[11] source: Crimmins, Better Measurement S. 11

^[12] source: Keller, K. L., Erfolgsfaktoren, S. 1

^[13] source: Kroeber-Rhiel, W., Konsumentenverhalten, S. 392f

^[14] source: Bruhn, M., Markentreue, S. 646

^[15] source: Ehrenberg A./ Scriven, J., Polygame Markentreue, S. 184

^[16] source: Bruhn, M., Markentreue, S. 646

^[17] source: Kroeber-Rhiel, W., Konsumentenverhalten, S. 396

^[18] source: Brockdorff/Kernstock 2001, S.54ff.

^[19] source: Meffert, H., Markenmanagement S. 206 ff.