Tuesday, November 29, 2005

Global Communication is Key to Overcoming BrandUSA Rejection

Consistent Harmony - American Executive, December 2005

There was a time when Made in the USA was the highest accolade a product could carry. The world’s consumers lined up to buy American products and capture a taste of the American dream. McDonald’s golden arches gleamed with global allure; Levis hugged the figures of the world’s “in” crowd. Cadillac was used as a synonym to describe a level of high quality. We even sang about buying the world a Coke.

How times have changed. Today, McDonald’s and KFC outlets are the sites of protests and even violence. Levis has a global brand value below that of Spanish retailer Zara. General Motors is gasping for breath while Toyota and BMW race ahead. Mecca-Cola competes for shelf space in European grocery stores.

It’s clear that the world’s passion for American brands has been tempered. American companies comprise 68 of the world’s top brands, but huge swaths of the world’s consumer markets hold negative views of the US and US businesses. In some countries, double-digit percentages of the population actively boycott American brands.

There’s no question that the war in Iraq and America’s pursuit of its own self-interest has spurred much of this anti-Americanism. But the war is only the latest catalyst, albeit one that may portend a sea-change for American brands.

Several US publications have looked at the implications of weakened acceptance of American brands. In some markets, consumer support is merely declining; in others it’s in freefall. Polls by Seattle-based GMI show that 67% of French consumers and 58% of Germany’s harbor negative impressions of US companies. Other research found that 20% of respondents in Europe and Canada say they consciously avoid buying US products. Similar percentages in China and Japan echo that disturbing trend.

Of course, many American brands continue to thrive in global markets. Marlboro cigarettes remain a top seller in most markets. Tiffany & Co. sparkles with customers; many are happy to get on waiting lists for hot products. Clothes from The Gap complement haute couture on Parisian shoppers. American technology leaders Microsoft, IBM, Intel, HP, Cisco, and others provide the tools and innovations that fuel the global digital economy. Starbuck’s serves coffee to consumers around the world and test markets pioneering innovations such as its digital music business in trend-setting Asian cities. Defying skeptics and surprising even some optimists, Starbuck’s now has 10 outlets in café-cultured Paris, a market some said would send the American brand back to the US in shame.

Remember TWA?
In an economy where every percentage point counts, and global markets may be the only opportunity for growth, the market erosion has triggered alarm bells in boardrooms and executive offices across the US. Those percentages represent people, and American companies are confronting the possibility that markets may reject them.

The brands at the top always face pressure from those on the rise, so it’s possible the current decline simply signals a shift in tastes away from the brands that have dominated the marketplace for decades. But many in American business are concerned that we’re be seeing a shift in consumer values rather than tastes.

The end of an iconic American brand is not without precedent. Pan Am and TWA were once the recognized leaders in global travel; today, they are little more than proof points in a business school case study on what happens when the buying public rejects a brand.

Some experts are advising American brands to distance themselves from their US identity. Take on a local “face,” the thinking goes, and you can be seen as less American. But having spent countless fortunes on building these brands, some American products will be unable to shed their identity in the hope of blending in with their global counterparts.

Still, some American brands are wisely adopting a posture that balances local, grassroots connections with the upside of worldwide reach and vision. The adage “think global, act local” comes to mind.Hiring local talent, translating into local languages, and adapting a product for local tastes are all steps that appeal to a foreign market. This would be true even if American brands were not under assault.

At the same time, giving the local arm of a company too much autonomy can lead to fragmentation. At an extreme, this can result in de facto standalone companies, each configured to serve a single market. Fragmentation increases redundancy, decreases saving from economies of scale, and results in the loss of control of a company’s most valuable asset: its brand. A country manager should not be the shepherd of a global brand.

Sending confusing or mixed messages to consumers creates confused customers. By globalizing their branding operations, American companies ensure that their efforts in support of that brand are consistent worldwide. To attract and retain customers, American brands must speak to the global marketplace with a single voice.

Taking advantage
A globalized American brand can connect with the global marketplace by focusing on its company’s values. Do not just tell international consumers about your corporate values, show them. Standing for something positive and working to make the world a better place (or at least appearing to do so) can give savvy American brands an advantage.

America exports more than goods and services; it exports ideas. Leaving politics aside, America has improved the lives of billions of people worldwide, with better healthcare, improved education, cleaner water, and greater freedoms. There are many intangibles the world admires in America, including our innovation and creativity, our optimism, and our business and marketing strengths.

In industries such as agriculture, medicine, education, and technology, American experts are hot commodities. The world may not always want our products (the “hard” side of Brand USA), but it certainly wants our minds.

The “soft” side of Brand USA is often what hurts us the most. Americans who have traveled internationally have been confronted with the expectation of the “ugly” American who expects everyone to speak English and behave like a Westerner.

Companies that compete with American brands are taking advantage of this decline in favorability and some are emerging as impressive global players. When an American brand’s leadership appears vulnerable, foreign competitors know how to grab marketshare. A shopper in Brazil may no longer want a Maytag or GE appliance, but due to heightened brand value, China’s Haier or Germany’s Bosch offer acceptable alternatives.

Creating a brand that appeals universally to consumers is a Herculean task, but the global marketplace expects nothing less. By emerging as a global brand, rather than an American one, US products can continue to compete in the global marketplace. GM may again be seen as the Cadillac of the automotive industry—but the owner will probably have a Mecca-Cola in the cup holder.

Josef Blumenfeld is a global communications consultant with experience in 28 countries and is the founder of Tradewind Strategies. He can be reached at jblumenfeld@tradewindstrategies.com.