Brand transformation

Springer Professional: Mr. Schaffmeister, the BRIC countries are among the top five countries in which Western companies should expand their brands. These countries have become the leading consumer markets for many products, as you have discovered in your book. What should companies be aware of when expanding their brand to BRIC countries – do you have three tips?

Dr. Niklas Schaffmeister: Firstly, do not assume local customers have been waiting for you all along. With the fierce competition that prevails in many markets and niches, you need sufficient investments and time to achieve pre-set goals. This is not always a walk in the park. Secondly, consider the cultural context and be prepared to at least partially adapt your own positioning and, if necessary, your own business model. Normally, this can be cleverly solved without compromising the global positioning. The local perception of the brand and the role the brand plays in its target group’s life are often very different. Thirdly, you should say goodbye to implementing your own business model 1:1 in a new market. Without significant adaptions, off-the-shelf solutions often do not work: “Culture eats strategy for breakfast”.

Springer Professional: What makes these markets so attractive and how should companies approach their own brand positioning?

Dr. Niklas Schaffmeister: Collectively, with 33 percent, the BRICs generate roughly one third of the global gross domestic product (GDP), based on purchasing power parity. This shows that there is a relevant market with demand in many areas and niches. Naturally, specific customer demand and consumer behavior vary in many cases. Demand usually arises in a specific cultural context and identical products sometimes solve very different problems.

Springer Professional: An example for that would be…?

Dr. Niklas Schaffmeister: While it is becoming trendy in Germany to not own a car anymore but switch to Car Sharing or an electric scooter, the same development would be unimaginable in China, which is still highly status oriented. There, becoming affluent is still a relatively young phenomenon, so most people are not yet ready to switch to downsizing and understatement.

Springer Professional: How can German companies best dominate global competition – through pure sales power or rather through skillful local strategic alliances, if they target growth?

Dr. Niklas Schaffmeister: Both are relevant strategic options. Pure sales power of course must be established. This takes time and investments but can work very well, especially if you are operating in an industry where experience at the point of sale is crucial. An example: for upmarket bathroom fittings and luxury kitchens, flagship stores and a broad and powerful local organization are mandatory. In other areas where products need less physical staging, e-commerce naturally offers many opportunities. But this also demands a strong brand, which you have to position firstly through investments in PR, storytelling, and digital campaigns, and subsequently via commercially-anchored partnerships in digital sales – for example, via your own store on a trading platform such as Alibaba or direct sales via WeChat.

Springer Professional: Which communication strategy is best suited to, for example, entering the emerging markets for the first time?

Dr. Niklas Schaffmeister: In order to position yourself successfully, you should follow a clear process that allows for the right questions to be asked and answered. We call this a market-driven positioning process. This process defines five steps, from ensuring the relevance of services through brand driver analysis and differentiation in local competition, to testing the final concepts. At Globeone, we also work with cultural models for each separate market, which, based on cultural values and other external factors, indicate where differences can be expected in consumption-relevant areas. Building on this, it is easier to determine where potential lies, and which open questions still need to be clarified in targeted market research.

Especially in the BRICs, established brands need to keep an eye on the social context also in social media. A lot goes wrong there. To be able to react appropriately, we recently developed a cultural Brand Safety Training.

Springer Professional: How does that work?

Dr. Niklas Schaffmeister: The training allows to familiarize employees in corporate communications and marketing communications with local culture, to prevent mistakes and misunderstandings that could quickly lead to reputational risks. In so doing, major controversies can be prevented.

Springer Professional: Many economic experts propagate the breakthrough of Asian global players and their immense influence on the corporate and consumer landscape worldwide – how can German companies best counteract this with their brand structures in the future and gain a strategic competitive advantage?

Dr. Niklas Schaffmeister: You’re addressing an interesting subject. In the investment statistics, this trend can only be seen to a limited extent. Most companies in the DAX30, for example, are owned by US or European investors. But of course, takeovers in key areas such as Kuka’s (by the Chinese Midea) or Jaguar-Landrover (Tata), as well as strategic investments especially by Chinese investors, are attracting attention. Certainly, the pressure to innovate will increase, when Asian companies penetrate Europe more strongly in key areas. That is the declared goal of the Chinese government. It aims to become a world leader in electromobility and artificial intelligence. Ultimately, a strong brand is among the few assets that cannot be easily imitated – even more so than technologies. Chinese manufacturers learned a painful lesson here. There is still no Chinese automobile brand that comes close to Porsche, Mercedes, or BMW in terms of brand strength.

Read also: Brand Transformation: Interview with Carina Hauswald, Managing Partner, Globeone Zurich