The Case of A Case Study Research Report Copyright...

Copyright UCT

”A Lesson in Global Brand Building”

The relevance of standardized advertising

in the transformation of a South African skincare product into a multi-national category leader

The Case of

A Case Study Research Report

presented to

The Graduate School of Business

University of Cape Town

in partial fulfilment

of the requirements for the

Masters of Business Administration Degree

By

Lian Lombard

December 2009

Supervisor: Lance Stringer

Copyright UCT

MBA Research Report

ACKNOWLEDGEMENTS

I dedicate this case study research report to my parents, without whom I would not have been

able to complete the MBA. Thank you.

I would like to thank my supervisor, Lance Stringer, for his guidance and direction throughout

the research report process. His invaluable assistance and enthusiasm significantly helped me

to complete this report.

My sincere thanks to Justin Letschert, CEO of Union Swiss, for giving me permission to write

this case study and also for the many hours he spent explaining his unique vision to me. I

would also like to thank Paula, Pete, Lara and Mark for being available for interviews and

further assistance and insights. A special thanks to Keri, who set up all my meetings and

supplied valuable information throughout the process.

Last, but not least, I would like to thank my partner, Fabien Trzebiatowski, for his support and

understanding throughout the year’s study.

This report is not confidential and may be used freely by the Graduate School of Business.

Lian Lombard

December 2009

Copyright UCT

MBA Research Report

PLAGIARISM DECLARATION

1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is

one’s own.

2. I have used a recognised convention for citation and referencing. Each significant

contribution and quotation from the works of other people has been attributed, cited and

referenced.

3. I certify that this submission is all my own work.

4. I have not allowed and will not allow anyone to copy this essay with the intention of

passing it off as his or her own work.

Lian Lombard

Copyright UCT

MBA Research Report

ABSTRACT

“Creating a global brand is the same as creating a local brand, just a whole lot more repetitive.

A local brand requires one successful launch. A global brand requires 193 successful launches and

so the chances of failure are 193 times greater.”

Justin Letschert, CEO Union Swiss

This case study offers a collection of insights into global brand building, specifically regarding

the relevance of standardized advertising. By following the international success of Union

Swiss’ sole product, Bio-Oil, the case tracks the set of factors which best explain its success

across the twenty-two markets in which it has been launched to date.

In an attempt to make brand building less conceptual and more practical, the case gives an

intimate look at what this marketing activity really entails. The case will allow future MBA

students to gain perspective on how a South African skincare brand became a multi-national

category leader in the space of eight short years.

Finally the case offers a problem for class discussion centred on Union Swiss’ experiences in

Japan which can be used to spark debate and discussion.

Key Words

Global brand building, standardized advertising, skincare industry, global business model, brand building

philosophy, Japanese consumers, South African skincare brand

Copyright UCT

MBA Research Report

PREFACE

This report has been written in three sections and takes on the following format:

The first part is a theoretical overview which reviews the academic background of

Brands and Brand Building as well as International Marketing Communication,

focussing on those areas which are most applicable to the case study.

Secondly is the case study itself. A combination of semi-structured interviews, desktop

research, media reports and company documentation were used to pull all relevant

information together.

The third part is the Instructor’s Guide, which provides a summary of the case study,

learning objectives and questions for discussion and assignments.

Copyright UCT

MBA Research Report

CONTENTS

PAGE NUMBER

List of Tables & Figures 7

Unusual Terms & Acronyms 8

Introduction 9

A. THEORETICAL OVERVIEW

1. Introduction 11

2. Brands & Brand Building

2.1 Introduction 12

2.2 Brands and Branding 12

2.3 Brand Equity 15

2.4 Global Brand Building 19

2.5 Conclusion 25

3. International Marketing Communication

3.1 Introduction 26

3.2 International Marketing Communication – Overview 26

3.3 Developing a marketing communications strategy 30

3.4 The Standardization vs. Adaptation Debate 34

3.5 Conclusion 47

4. References and Bibliography 48

B. CASE STUDY

Part A 53

Part B 67

Appendices

Appendix 1: Bio-Oil’s global retail sales 70

Appendix 2: Bio-Oil market share information 71

Appendix 3: Bio-Oil Consumer television advertisement 73

Appendix 4: Bio-Oil Pregnancy print advertisements 74

Appendix 5: Bio-Oil Japanese print advertisements 76

C. INSTRUCTOR’S GUIDE

1. Case Summary 77

2. Statement of Learning Objectives 79

3. Presenting the Case 80

4. Suggested Discussion Questions 81

5. Suggested Assignment Questions 83

Copyright UCT

MBA Research Report

LIST OF TABLES & FIGURES

· Figure 1: PCDL Model of Brand Building. Source: Ghodeswar, 2008

· Figure 2: Example of how interaction at touch points can build or destroy brand

equity. Source: Hogan, Almquist & Glynn, 2005

· Figure 3: Global strategic segmentation and positioning matrix. Source: Hassan &

Craft, 2005

· Table 1: Hofstede’s dimensions of culture, Examples of countries that exhibit

differences in terms of the value dimensions. Adapted from: Burgess & Bothma, 2007

· Figure 4: A descriptive model to determine the degree of standardization/adaptation of

advertising. Source: Melewar & Vemmervik, 2004

· Figure 5: Standardization and Adaptation over time. Source: Agrawal, 1995

Copyright UCT

MBA Research Report

UNUSUAL TERMS & ACRONYMS

· The 4 P’s of Marketing: Product, Price, Place, Promotion

· Marketing Mix: The 4 P’s as the basic components of marketing strategy. The set of

controllable marketing variables that the company blends to produce the response it

wants in the target market (Burgess & Bothma, 2007)

· Communication Mix: The area of marketing which focuses on communication with

existing and potential customers. Also known as the Promotional Mix.

· ROI: Return on Investment

· MROI: Marketing Return on Investment

· ATL advertising: Above the Line advertising. Mass media like TV, Radio and Billboards

· BTL advertising: Below the Line advertising. Forms of media directed to the individual

consumer. For example, flyers, letters, emails

· Mass Communication: See ATL advertising

· PR: Public Relations, mention by editors in press

· CEO: Chief Executive Officer

· COO: Chief Operating Officer

· GDP: Gross Domestic Product

· POS: Point of Sale communication, in-store advertising

Copyright UCT

MBA Research Report

INTRODUCTION

International trade can be traced back to several of the earliest civilizations and the

Egyptians, Greeks and Romans were all involved in trade across borders. However, in the last

few decades the immense influence of globalization has accelerated advancements in

technology, transport and communication to the extent that global business has exploded

(Rundh, 2003). As a result, companies worldwide extended their market reach far beyond

domestic turf which led to the exponential increase in exports since the mid-1950s. The boost

in international trade led to the development of several new areas of study within the

marketing discipline, two of which are: global brand building and international marketing

communication.

Marketing communication is a critical aspect of a company’s overall marketing mission and a

major determinant of its success (Kitchen & Eagle, 2002). During the past two decades

worldwide expenditure on advertising has been growing rapidly. In 1946, advertising

spending in the USA was approximately $3 billion, and by 2005, $276 billion (Perreault, 2008,

p. 384). Advertising is one of the predominant means of marketing communication and thus

its effectiveness is of great significance to academics and practitioners alike, as it has far-

reaching repercussions for the entire value-chain (Munoz, 2005).

Building strong brands is one of the most significant goals of product and brand management.

Stronger brands means higher revenue streams in the long and short term and therefore the

goal of strategic brand management can be described as “building brands that will last for

decades and can be leveraged in different markets and product categories” (Esch, Langner,

Schmitt & Geus, 2006). When building a brand, consistency, clarity and conformity are

important goals. Consistency of integrated communications and message, based on the brand

identity is critical to the success of brand building efforts as it ensures the delivery of a

consistent, self-reinforcing brand image (Ghodeswar, 2008) (Strategic Direction, 2007).

Copyright UCT

MBA Research Report

Marketing strategy is widely referred to as the marketing mix or the 4 P’s (Product, Price,

Place and Promotion) (Perreault, 2008, p. 28). The viewpoint of Chung (2007) acted as a

starting point for this research. He argues that in most instances, the culture of the foreign

market has no fundamental effect on Product, Price and Place. According to Chung’s research,

the main effect of culture is on the Promotional aspects (also referred to as the

Communication mix) of the marketing mix. This means that when entering a new market,

only the promotional/communication objectives of a firm are likely to be directly impacted by

the culture.

This case study explores global brand building at the South Africa company, Union Swiss by

specifically focusing on their standardized advertising practices. Owned by brothers Justin

and David Letschert, Union Swiss launched its sole product, Bio-Oil, in twenty one countries

on five continents over the past eight years. Bio-Oil is a locally-developed skincare product,

which helps to improve the appearance of scars and stretch marks.

In twenty of the twenty-two countries where it is sold today, Bio-Oil is the number one scar

and stretch mark product. Bio-Oil is also the biggest selling skincare product in the UK,

Canada, Australia and New Zealand. This explains how Union Swiss was able to achieve

astonishing double-digit growth, escalating their turn-over from R 5 million in 2000 to R 1

billion in 2008.

Union Swiss’ CEO, Justin Letschert, believes that their success is directly linked to their

marketing communication including advertising and brand collateral. Union Swiss’ head

office in Cape Town, South Africa, produces these materials in-house. This case will focus on

Bio-Oil’s advertising, although reference will be made to the other communication and brand

building methods Union Swiss utilizes.

Copyright UCT

MBA Research Report

A. THEORETICAL OVERVIEW

1. Introduction

The theoretical overview helps the reader to understand the academic background of the

academic learning points the case strives to illuminate. It creates the setting in which Union

Swiss built the Bio Oil brand, namely international marketing, focussing mainly on two topics:

Brands & Brand Building and International Marketing Communication.

The overview is divided into two portions. The first section will cover the subjects related to

brand building: Brands and Branding, Brand Equity and Global Brand Building.

The second section will cover International Marketing Communication including: how to

develop an international communication strategy and a synopsis of a key debate in

international marketing communication (Standardization vs. Adaptation). Each section is

concluded separately.

International Marketing Communication and Brand Building are broad subject areas and the

related literature is extensive. This literature review does not pretend to cover the full range

of what is written on these subjects. In order to stay within the confines of this thesis

requirement, some key concepts and debates within the subjects were chosen and explored

for this review. The author is aware that this selection is based on her own assumptions and

views about international marketing communication and brand building and does not reflect

all perspectives.

Copyright UCT

MBA Research Report

2. Brands & Brand Building

2.1 Introduction

The proliferation of brands in the modern market place is a key area of interest for marketing

thinkers everywhere. Brands have become more than just trademarks, distinctive names,

terms, signs, symbols, designs (or any combination of these) used to identify the goods and

services of a seller; they have become part of consumers’ lives (Palumbo & Herbig, 2000).

For example, people all over the world refer to searching on the internet as ‘Google-ing’, when

they hear a can of fizz being opened, they think of “Coke Cola”, people don’t trust cars, they

trust BMW’s and they still “Hoover” their floors even if it is not with a Hoover-branded

vacuum cleaner. This trend towards a branded world or “brandscape” has inspired world-

famous advertising agency Saatchi & Saatchi to re-brand themselves as the Lovemarks

Company which highlights their believe that “consumer loyalty beyond reason” can be

fostered when consumers have positive associations with a brand (“About lovemarks”, 2009)

(Salzer-Mörling & Strannegård, 2004).

2.2 Brands and branding

In marketing literature, several diverse definitions of “brand” are offered. Originally brands

were means by which a firm could identify and differentiate their products and services from

competitors (Boyle, 2007). From the viewpoint of corporations, a brand is often described as

the ‘essence’ of the firm, its most crucial asset, and branding as a process of expressing core

values through the use of persuasive communication (Salzer-Mörling & Strannegård, 2004).

Others describe brands as the sum of the customer’s experiences with the product or

company and branding as that which is “transmitted” in every interaction with the customer

over the lifetime of the relationship (Hogan, Almquist & Glynn, 2005). Vrontis and

Papasolomou (2007) propose that branding is crucial for industries, companies and products

because people choose brands in the same way they choose friends.

Copyright UCT

MBA Research Report

Whatever version of the definition is preferred; the consensus in marketing literature is that

brands and branding adds value to products and services (Palumbo & Herbig, 2000).

Palumbo and Herbig (2000) state that a brand is both a physical and a perceptual entity. The

physical aspect can be located on the supermarket shelf or in the delivery of a service and the

perceptual aspect exists in the “image” of the brand in consumers’ minds. A specific brand has

a name which consumers recognize and which they associate with specific attributes.

Research further suggests that in the case of a successful brand these attributes will be

positive (for example: quality, elegance, value) and in the case of an unsuccessful brand the

associated attributes will be negative.

To establish a successful new brand is no easy task and researchers estimate that between

75% and 85% of all new brands launched in the market fail (Kitchen & Eagle, 2002). Brand

co-creation is one of the most recent viewpoints on brand development and gives new insight

on why this failure percentage is so high (Boyle, 2007).

These days, informed, connected and active consumers are challenging the company-centric

model of brand management (Lawer & Knox, 2006). An increasing body of research suggests

that creating a brand is not the “passive or reactive” result of marketing intervention as once

believed, but that strong brands are built up through a co-creation process in which a number

of different actors play leading roles. Brand managers along with the brand’s consumers have

been identified as key players and illustrate how marketing management and consumer

commitment “collaborate” in creating successful brands (Boyle, 2007).

It is important to mention the trend of the sceptical consumer which has started to impact

business in the past decade. The new generation of consumers are much more likely to

research products and services before they buy them. They use computer-mediated

technologies such as the internet, email, blogging and mobile phones to acquire more detailed

information about brands before purchasing (Lawer & Knox, 2006) (Shaw, 2002).

It is therefore not surprising that today’s consumers are more sceptical of corporate

promises, premises and brands. In Britain, researchers found that more affluent consumers

were more likely to buy less expensive, private labels like the grocery store’s own label of

merchandise, than nationally branded products. This indicates that new consumers are

Copyright UCT

MBA Research Report

questioning claims of “better value” and not just accepting advertising promises as in the past

(Shaw, 2002).

In America, a study found that minorities spend more on groceries than the general

population. The study linked this with the tendency of minorities to buy quality products and

their less cynical attitude towards advertising messages (Palumbo & Herbig, 2000).

These trends have vast implications for how brands need to be managed. Consumer advocacy

is becoming an attractive strategic option for many firms as consumers are starting to value

the knowledge and experiences of other consumers more than one-way marketing messages

and controlled brand statements sent out by firms (Lawer & Knox, 2006).

Salzer-Mörling and Strannegård (2004) argues that the story-telling metaphor which

underlies most of branding literature explains the process as “just produced and passively

consumed”. They propose an alternative view of branding as a form of aesthetic expression,

which links more with “feelings and immersion”, rather than “meanings and persuasion” as

the story metaphor suggests. These “images” are open to reflection and distortion and thus

they suggest that the idea of the corporation controlling and owning the brand needs to be

revisited.

The modern world can be described as a “brandscape”, a landscape where the production and

consumption of commercial icons take place. Increasingly in today’s marketplace, the brand is

becoming the product which is consumed. This implies that when branding becomes the core

business, the activities of marketing and advertising are thus no longer categorized as

supporting functions, but rather as the fundamental activities of the firm (Salzer-Mörling &

Strannegård, 2004).

An excellent example which indicates how consumers buy the “image” or brand of a product,

rather than the actual product is the beer industry. When asked, beer drinkers inevitably

claim that they drink their specific brand of beer because of its unique taste. However, blind

taste tests have shown that most beer drinkers cannot distinguish their brand simply by taste.

This clearly indicates that the beer drinker is actually buying the image and not the product

itself (Palumbo & Herbig, 2000).

Copyright UCT

MBA Research Report

2.3 Brand Equity

When discussing brands and branding the most important key idea to explain is the concept

of brand equity. Research has shown that firms experiencing the biggest gains in brand equity

saw their return on investment (ROI) average around 30%, while those with the largest losses

of brand equity saw ROI average a negative 10%. This indicates how powerful this concept is

and how it impacts businesses (Dunn & Davis, 2004).

Brand equity can be difficult to define because different managers will focus on different key

performance measures (Wright & Nancarrow, 1999). Here a selection of the most widely

accepted definitions and opinions on brand equity are reviewed.

Brand equity is described as “the value of a brand” in the Oxford Business Dictionary (2006,

p.68). It goes further to explain that the term refers to the brand “beyond its functional

purpose” and that market share and profit margins could possibly be greater as a result of the

goodwill associated with brand equity. Brand equity thus measures the part of the firm’s

equity which stems from the brand (Salzer-Mörling & Strannegård, 2004).

Wright and Nancarrow (1999) refers to building brand equity as the building of brand

reputation or brand strength and differentiation between competing brands which are also in

the minds of consumers. They claim that there are three different meanings of “brand equity”

which are as follows:

· Brand value: In accounting terms, the brand value is an asset which can be classified

on a balance sheet.

· Brand strength: A measure of the potency of the consumer’s attachment to the brand.

· Brand description: The set of specific attitudes a consumer has towards the brand.

Both marketing practitioners and academics regard brand equity as a platform on which to

build a competitive advantage, future earning streams and shareholder wealth. The challenge

lies in conceptualizing and measuring brand equity, its sources and outcomes (Kish, Riskey &

Kerin, 2001).

Copyright UCT

MBA Research Report

No single set of measures of performance or metrics could apply to all firms, and many such

measures are inter-related. Some consumer brand metrics are “Intermediate” which includes

top-line sales, bottom line, awareness, knowledge, relevance, perceived quality. Others are

“Behavioural” and can be described as loyalty, share of category requirements, number of

customers gained or lost, new leads, repurchase rates and direct marketing responses. Lastly,

there are metrics which are classified as “Competitive” such as, share of market share, share

of voice, relative/actual/measured quality, and relative satisfaction/intention to buy (Wright

& Nancarrow, 1999).

Another way to understand brand equity is as an aggregate variable of five dimensions of

brand assets. These are brand loyalty, brand awareness, perceived quality, brands association

and other proprietary assets. Since this model for measuring brand equity was introduced by

Aaker in 1991, brand equity has generally been defined as the incremental utility with which

a brand endows a product, in comparison to its non-branded counter-part (Wang, Wei & Yu,

2008) (Esch, Langner, Schmitt & Geus, 2006).

In 1993, Keller developed a well-known customer-based brand equity model which focussed

heavily on the manner in which consumers perceive and assess brands by investigating

certain knowledge structures such as brand awareness, image and personality (Esch,

Langner, Schmitt & Geus, 2006).

Based on Aaker and Keller’s conceptualizations of brand equity, Yoo and Donthu (2001)

proposed a multi-dimensional consumer-based brand equity model (MBE) and subsequently

tested the model using cross-cultural data. Their findings included that brand equity, from the

customer’s perspective consists of the following: brand loyalty, perceived quality, brand

awareness/knowledge and associations (Wang, Wei & Yu, 2008).

Consequently, brand equity is often described using these four dimensions of brand assets

(Salzer-Mörling & Strannegård, 2004). Here, each dimension will be described separately:

Brand Awareness

Brand knowledge consists of brand awareness and image. In order to stand out amongst

competitors, marketers have to focus on brand management and niche strategies to improve

Copyright UCT

MBA Research Report

awareness. This is accomplished by strengthening connections between the product and

customers (Wang, Wei & Yu, 2008).

It has been found that when consumers are not certain about product attributes, brands are

used to inform them about product positions and to guarantee that product claims are

trustworthy. Thus brand equity is strengthened by consumers’ awareness of the brand

(Wang, Wei & Yu, 2008).

In their 2006 study into the effect of brand knowledge and relationships on current and

future purchases, Esch, Lanhner, Schmitt & Geus (2006) found the following: despite the fact

that brand image and awareness are generally considered as the central brand variables for

assessing the effectiveness of marketing campaigns, focusing on these aspects alone is not

sufficient, especially in terms of long-term brand success. Brand trust, satisfaction and

attachment were found to also play important roles in purchasing decisions and therefore

also need to be addressed.

Brand Loyalty

Brand loyalty refers to a favourable attitude towards a brand which leads to consistent

purchase of the brand over time (Ghodeswar, 2008).

Traditionally, the main goal of marketing was to increase profits (sales) by attracting new

customers. Recently, the focus has shifted towards the existing customers of the firm and

customer loyalty programs aimed at turning one-time buyers into brand loyal customers

became the flavour of the decade (Palumbo & Herbig, 2000). This explains how brand loyalty

became a hot topic in marketing literature and practice.

Customer retention (sparked by brand loyalty) is of utmost importance since it has been

shown that it is up to five times more costly to create a new customer than it is to sell to a

loyal/existing one (Palumbo & Herbig, 2000).

Not all products have the potential to create loyal customers. Simple commodity products like

toilet paper, frozen vegetables and cat food have been found to spark the least brand loyalty

in consumers. Products which have the opposite effect on consumers’ brand loyalty include:

mayonnaise, soft drinks and bar soap (Palumbo & Herbig, 2000).

Copyright UCT

MBA Research Report

Perceived Quality

Research done in the early 2000’s by Chaudhuri and Holbrook found that consumer trust

based on quality perception assist attitudinal and behavioural loyalty. Literature shows that

quality perception has a major impact on price flexibility (Wang, Wei & Yu, 2008).

A strong brand can charge a higher price than weaker brands or unbranded (generic)

products because consumers are willing to pay more for a product when they perceive it to be

of better quality than alternative products. The more credible consumers find brands to be,

the more tolerant they are of price increases. This implies that a solid pricing strategy could

be based on the way customers perceive quality and value (Wang, Wei & Yu, 2008).

Netemeyer et al. (2004) propose that quality perception, perceived value and uniqueness are

directly linked to readiness to pay a price premium for a branded product, which leads to

buying behaviour.

Brand Associations

Brand associations are not as self-explanatory as the other three brand asset concepts.

Broadly it can be defined as anything that reminds a person of the brand. This includes the

images and impressions that consumers have of a brand which forms the basis for evaluation

of the brand in relation to the price being asked for it (Boyle, 2007).

Academics have looked into the nature of brand association by focussing on factors such as

brand identity, personality, country of origin, culture of origin, aura, essence and values. The

influence of brand associations on the success of brands is so significant that it has been

proposed that at the core, brands are nothing more than a set of connections in the

consumer’s mind (Boyle, 2007).

Brand image refers to the brand’s current associations and thus forms parts of brand

awareness. In contrast, brand identity is inspirational and may imply that the image needs to

be changed and/or augmented. The brand identity is in essence what the organization wants

Copyright UCT

MBA Research Report

the brand to stand for. Brand identity is also referred to as ”brand personality” and is very

important as it is much more difficult to copy than the functional features of a

product/service (Ghodeswar, 2008).

Recently, following Keller and Aaker’s models, researchers started to focus on the way in

which consumers build brand relationships and form brand communities in similar ways as

they build relationships and form communities in their personal lives (Esch, Langner, Schmitt

& Geus, 2006). This has paved the way for new forms of relationship marketing and on-line

efforts such as promotion via social networking websites.

Wang, Wei and Yu (2008) did a study on global brand equity in which they found that a well-

recognized and accepted brand is one of the most valuable assets a firm can possess. They

argue that the primary objective of marketing activities which aim to enhance brand equity

should be growing brand knowledge amongst the relevant target market (which includes

awareness, quality perception and resonance). Brand awareness will attract consumers, but

negative awareness drives consumers away if their expectations regarding quality are

disappointed. These researchers propose that brand resonance is the ultimate goal of global

marketers’ brand building activities as high brand resonance results in a loyal group of brand

followers and a stable source of profits (Wang, Wei & Yu, 2008).

An effective brand identify will thus resonate with customers, differentiate the brand from its

competitors and represent what the organization can and will do over time (Ghodeswar,

2008).

2.4 Global brand building

One of the most important developments in business in the last three decades is the

globalization of markets. This movement has gained such incredible momentum that choosing

not to participate in global markets is no longer optional in most industries (Kitchen & Eagle,

2002). This flows from the fact that even if non-participation is pursued, it is logical that the

impact of globalization may still be felt, as other global players will choose to participate and

may enter any market they are interested in, including the non-participant’s. Jack Welch

(General Electric CEO: 1981 – 2001) stated already in 1999 that “globalization must be taken

Copyright UCT

MBA Research Report

for granted” and that, to him there is only one measure of corporate success: international

market share (Kitchen & Eagle, 2002).

Building strong brands is one of the most significant goals of product and brand management.

Stronger brands means higher revenue streams in the long and short term and therefore the

goal of strategic brand management can be described as “building brands that will last for

decades and can be leveraged in different markets and product categories” (Esch, Langner,

Schmitt & Geus, 2006).

A global brand is one which is perceived to reflect the same set of values around the world as

the same grouping of values (brand character) forms the key of a global brand strategy

(Palumbo & Herbig, 2000). This view is echoed by Kitchen & Eagle (2002) who offers a

similar definition for a global brand, namely: it is when the same product is being sold in the

same way everywhere. Wright and Nancarrow (1999) describe this concept of a global brand

in their case study about Chivas Regal as the “global soul” of a brand. Barron & Hollingshead

(2004) agree with these definitions of a global brand and add that it also means that a brand

has the same positioning vis-á-vis its competitors in all the different markets in which it is

marketed.

Ghodeswar (2008) proposes the PCDL (Positioning, Communication, Delivery, and

Leveraging) conceptual model for brand building (Figure 1).

Positioning the brand is the first element to focus on in this model. This is linked to creating a

perception of the brand in customers’ minds and is thus part of brand identity. It also includes

achieving a perception that differentiates the brand from its competitors. Therefore brand

marketing’s main objective should be to create the desired perception in the mind of

consumers (Ghodeswar, 2008).

Copyright UCT

MBA Research Report

Figure 1: PCDL Model of Brand Building

Source: Ghodeswar, 2008

This includes adding psychological value to products/services in the form of intangible

benefits such as associations, beliefs, values and feelings which people relate to the brand.

Endowing a product/service with significance over and above its functional value is a

substantial source of value creation. A brand that is well-positioned occupies a particular

niche in consumers’ minds (Ghodeswar, 2008).

Communicating the brand message is the second concept in Ghodeswar’s (2008) model. This

is about making the brand positioning known to the relevant target market and contributes to

brand awareness.

At the heart of business strategy lays the relationship between the customer and the

company. It is of fundamental importance that the company transmits its value to its

customers via communications. Communications are so essential that it is sometimes taken

for granted (Utvich, 2004).

The major channels used to communicate about a product/service/firm are: advertising,

direct marketing, sales promotion, sponsorships, endorsements, public relations, the internet

and integrated brand communications. The brand message which is communicated must be

long-term viable, consistent with the brand values, brand personality and other brand entity

dimensions (Ghodeswar, 2008).

Thirdly, Ghodeswar (2008) proposes “delivering the brand performance” as a conceptual tool

in building a successful brand. Companies have to continuously track themselves against the

Copyright UCT

MBA Research Report

effect of competition to make sure they are not losing market share. Progress can be

monitored by measuring purchasing, consumption, brand recognition, brand recall,

advertising awareness etc. Good service is very important as nothing aligns diverse people as

quickly as complaints about bad service, especially in the age of the internet (Ghodeswar,

2008).

Brand loyalty reflects the dedication of a customer to re-buy the brand consistently in the

future and is the result of consistent performance in delivering the brand’s promise

(Ghodeswar, 2008) (Palumbo & Herbig, 2000).

The fourth and last concept in Ghodeswar’s (2008) model is leveraging the existing brand

equity. This can be explained as linking the brand with some other entity which creates a new

set of associations from the brand to the entity as well as effecting existing brand associations

positively. Examples of such strategies are line extensions, brand extensions, ingredient

branding and co-branding.

This proposed model can serve as a guideline for brand managers and executives when

building a brand in target markets (Ghodeswar, 2008).

When building a brand, consistency, clarity and conformity are important goals. Consistency

of integrated communications and message, based on brand identity is critical to the success

of brand building efforts as it ensures the delivery of a consistent, self-reinforcing brand

image (Ghodeswar, 2008) (Strategic Direction, 2007).

Successful brand-builders know which touch-points are important and which are not, and

thus they can resist investing everywhere. They will focus their efforts on where it will have

the most impact on revenue growth and profitability (Hogan, Almquist & Glynn, 2005).

Hogan, Almquist & Glynn (2005) argues that interaction at different touch points can build or

destroy brand equity (Figure 2). They suggest the following guidelines for superior brand

building:

· Identify the most important customers. Not all customers are equally valuable to

current and future revenue growth. Find out who the high-profit customers are.

Copyright UCT

MBA Research Report

· Concentrate investment on customer touch-points which will be most impactful to

raise profitable demand.

· Set realistic goals for implementation.

· Constantly revisit the performance of each implemented program to make sure it is

having the desired results.

Figure 2: Example of how interaction at different touch points can build or destroy brand equity

Source: Hogan, Almquist & Glynn, 2005

Figure 2 clearly shows how the brand touch point priority of this particular bank should be

problem resolution as it has the highest potential to build the brand as well as to destroy it.

Dunn & Davis (2004) suggest that commitment to brand building starts at the top of an

organization. They believe that the CEO must embrace brands as strategic assets and

recognize that they need to be nurtured and built over time. Without such support from the

top, brand building will not receive the attention it deserves. Some organizations have

implemented an Executive Brand Council (EBC), a senior level team which takes care of the

major brand-related issues such as acquisition of new brands, new-product launches and

licensing agreements (Dunn & Davis, 2004).

Barron & Hollingshead (2004) suggest the following as the supposed advantages of global

brands:

Copyright UCT

MBA Research Report

· Better cost efficiency for new product development and R&D because the outputs they

create will enhance revenues world-wide and not just regionally

· Increased leverage with the relevant channel-partners

· Economies of scale in marketing communication

· Improved alignment across the organization, leading to increased speed to market,

workforce flexibility and sharing of best practices (Barron & Hollingshead, 2004)

In reality though, the majority of companies managing “global brands” are struggling to

achieve these economies of scope and scale. Barron and Hollingshead (2004) named the

reason for this phenomenon the “melodrama of central marketing”. This phrase refers to the

struggle of interests between the central organization which is trying to implement global

consistency in brand execution and the individual country organizations who respond with

the classic refrain “But our market is different!”

This debate of local vs. global brand execution is part of the over-arching challenge which

global companies face as they seek to balance central and regional management. The global

organization has excellent motivations for their standardization strategies, as do the regional

management for localization (Crippen, Tng & Mulready, 1995).

Barron and Hollingshead (2004) suggest that the only way a brand can be truly global is by

identifying global customers. They believe companies should focus on segmentation

strategies to identify a set of customers in every country who have a common set of beliefs

and motivations and develop a brand image which will target these consumers. Yet, in their

research they have found that few companies actually examine their customers “through a

global lens” to determine who they are and how a global message could target them. They

believe that by using collaboration and creative thinking, common ground between customers

around the world can be found, even if it seems that there is none, especially if data is used to

look for similarities and not differences (Barron & Hollingshead 2004).

For proponents of adaptation, such global need-sets are unrealistic or uncommon and

therefore they believe that marketing strategy needs to be adapted in different markets.

Those who believe in standardization, have the opposite view. The merits and demerits of

standardization vs. localization of products/services and the associated promotional activity

Copyright UCT

MBA Research Report

are debated in both trade and academic literature and the issue is an important one in global

brand building (Kitchen & Eagle, 2002).

This debate is covered in more detail in section 3.4 of the theoretical overview.

2.5 Conclusion

This review of a selection of academic literature leaves no doubt that brands and branding is

of great importance to both academics and practitioners. With the world transforming into a

“brandscape” organizations of all sizes and orientations are forced to take brand building as

seriously as any other function in their business. Brand building across national borders

brings with it a variety of challenges but also many benefits, and it is up to each organization

to decide how to take on this challenge as guidelines are dependent on each specific situation.

Copyright UCT

MBA Research Report

3. International Marketing Communication

3.1 Introduction

This section of the literature review will take on the following form. First, the reader will be

introduced to International Marketing Communication, the subject matter will be defined and

the basic principles and problems of communication within the marketing framework will be

introduced.

Thereafter the process of developing a Marketing Communication Strategy is briefly

described. Lastly a prominent debate within International Marketing Communication, namely

Standardization vs. Adaptation will be discussed by looking at three schools of thought

namely Standardization, Adaptation and Contingency. As this thesis focus more on

Standardized marketing communication, more emphasis is placed on this subject than the

other two.

3.2 International Marketing Communication - Overview

One of the most important business developments in the past few decades is the globalization

of markets. A variety of challenges are born out of this, one of which is the issues faced by

marketers in this globalized market place when attempting to communicate to “the global

consumer” (Kitchen & Eagle, 2002).

Czinkota (1995, p. 238) claims that the basic principles of good marketing are applicable

anywhere in the world, but that in international marketing, these principles undergoes some

subtle changes. In the global arena, the extent to which marketers manage these changes well,

can spell success or failure.

To be successful in the international market, it is critical for a firm to have effective

communication with existing and potential customers (Burgess & Bothma, 2007, p. 337).

Copyright UCT

MBA Research Report

Without effective communication, a brand is likely to disappear into the abyss of failed

products which flood the global market every year.

Marketing communication can be described as the process of establishing a common frame of

reference between the marketer and the target market. This includes not only the sharing of

information, but also persuasion, thereby facilitating the exchange of value between customer

and company (Burgess & Bothma, 2007, p. 338). Marketing communication is thus concerned

with presenting and exchanging information with various individuals and organizations in

order to achieve particular results (Doole & Lowe, 1994, p. 294).

The marketing communication model has three basic elements. These are as follows: the

sender, the message and the receiver. It is the function of the sender to ‘encode’ the message,

or to put it into symbolic form which can be understood by the receiver. The message channel

is the path through which the message travels from the sender to the receiver. This can take

the form of a traditional media channel, like television or radio, or the more recent

technology-enabled media choices such as SMS and internet advertising (Burgess & Bothma,

2007, p. 337).

Some writers refer to this area of the marketing mix which is concerned with persuasive

communication as the ‘communication mix’; others call it the ‘promotional mix’ (Doole &

Lowe, 1994, p. 294). For the sake of consistency, the author will refer to it as the

communication mix for the purpose of this paper. Elements of the communication mix are as

follows: Advertising, Personal Selling, Exhibitions and Trade Fairs, Public Relations/Publicity,

Trade Missions, Sales Promotions, Direct Marketing and Sponsorships (Burgess & Bothma,

2007, p. 348-353).

Burgess and Bothma (2007, p. 338) suggests three possible variables which can hinder the

communication process in general. The first is called the ‘source effect’ and refers to the

situation when the receiver evaluates the message based on pre-conceived ideas about the

status/image of the sender. An example of the source effect is when a customer decides not to

buy a car because the country of origin has a low-status reputation for manufacturing cars.

The ‘source effect’ is also very important in the context of international marketing

communication as the same message coming from a foreign company could have a very

Copyright UCT

MBA Research Report

different effect than if it came from a local company. The image and reputation of the foreign

company obviously plays an extensive role in this regard (Burgess & Bothma, 2007, p. 339).

The second variable is the ‘level of noise’. A high level of noise will occur when more than one

message is being transmitted at the same time. A high noise level will cause non-reflective

communication, which means that the message will not be understood in the way it was

meant to be understood.

The differences between cultures could have different noise levels as a result. In a developed

country, like the United Kingdom, the growth phase of the economy and communication

industry lead to a high level of noise. Subsequently, the level of noise will be much lower in a

country with less developed communication industries such as Uganda (Paliwoda & Thomas,

2002, p. 321).

The third variable is the ‘perception filter’ of the receiver. This filter will attempt to block out

messages which are not relevant to the consumer or which are inconsistent with the

receiver’s understanding of the world. This filter can thus lead to messages being missed,

misinterpreted or even distorted (Burgess & Bothma, 2007, p. 339).

This often occurs when the sender and receiver are located in different cultural contexts. Due

to a lack of information, the sender might resort to relying on their own cultural environment

to guide them. This could lead to grave misunderstandings as the nuances of culture are

multiple. For example, even a basic building block of communication such as colour has vastly

different meanings in different cultural contexts. To avoid these, many companies choose to

move decision-making regarding communication to the local country (Mooij, 2000).

In the multi-country context of international marketing there are additional barriers to

successful communication which marketers need to overcome. The majority of academic

work concerned with international communication stresses the complexity of developing

messages which are transferable across cultural divides. Cultural barriers which may be

invisible to the sender are important variables at play in international communication

(Kotabe & Helsen, 2008, p. 441). These barriers can take the form of differences in cultural

Copyright UCT

MBA Research Report

context such as humour, colour, symbols, numbers, values and beliefs (Czinkota, 1995, p.

239).

There are countless reasons for communication failure, but most of them fall into the

categories discussed below.

In the international marketing communications field, language and translation issues are rife.

Of all the cultural variables, language is one of the most formidable in its influence on

promotional campaigns. Numerous communication campaigns have failed due to language

mishaps (Kotabe & Helsen, 2008).

The language challenge is often the most difficult to overcome when the advertiser is trying to

translate a theme, rather than a fact. For example, Coca Cola’s ‘Can’t beat the Feeling’ was

rephrased to ‘I feel Coke’ in Japan, ‘Unique Sensation’ in Italy and ‘The feeling of Life’ in Chile.

No translation worked for the German market, and thus the original English phrase was used

(Czinkota, 1995, p. 248).

Another language-related problem is that different styles of conveying corporate identity can

confuse customers and will dilute the over-all brand message. This is why many companies

today have explicit rules regarding how their name, logo and brand promise are used.

Inconsistency of messages and the lack of coordination of messages (advertising, press

releases and price tags) across country markets also add to the ineffectiveness and eventual

failure of communication efforts (Brugess & Bothma, 2007, p. 343).

When dealing with customers from many different cultural and national backgrounds,

ignoring the differences in their field of perception can lead to miscommunication. Customer

motivation across cultures and the criteria used to evaluate products can differ greatly. For

example, Campbell soup used the same message to communicate the time-saving benefits of

their product in the US and Italy. This was an effective message in the US, but in Italy it failed

as Italian women feel inadequate if they do not make food from scratch. Time-saving was thus

not such a major concern for them as it were for American women. To avoid this kind of

situation, knowledge of different market environments and cultural empathy are essential

(Doole & Lowe, 1994, p. 299) (Brugess & Bothma, 2007, p. 345).

Copyright UCT

MBA Research Report

Differences in media availability and diverse media consumption across markets also play a

big role in communication failure. The amount of TV, radio and magazine consumed by the

target market will have to be investigated in order to formulate a media strategy which will

have the desired effect (Kotabe & Helsen, 2008, p. 452).

Regulations which govern advertising and broadcasting standards also influence the way in

which the advertising message can be diffused. For example, Germany banned the use of

superlatives like ‘best’, which impacted the advertising messages of many companies

(Czinkota, 1995, p. 238) (Kitchen & Eagle, 2002).

3.3 Developing a Marketing Communication Strategy

The first step in creating a communication strategy is to define clear objectives. These

objectives should be in line with the over-all marketing strategy of the company. Examples of

objectives are as follows (Doole & Lowe, 1995, p. 303):

· Increase market share at the expense of local or international competitors

· Identify new customers

· To position or re-position the product or brand

· Increase brand/product awareness

· Change customer perceptions of product/brand or firm

Two of the most well-known strategies used to determine the objectives are called Push and

Pull strategies (Perreault, 2002, p. 314). A push strategy means that the product is promoted

to retailers and wholesalers, in order to ‘push’ the product down the distribution chain. The

most popular ways of doing this are by using personal selling, discounts and special deals.

A pull strategy refers to when the marketer tries to communicate with the final consumer to

attract them to the retailer or distributor to purchase the product. Popular methods used here

are mass advertising, sales promotions and point-of-sale promotions (Paliwoda & Thomas,

2002, p. 319).

Copyright UCT

MBA Research Report

Determining the message to be communicated is the next important step in formulating the

communication strategy. Here the product positioning and market research are of critical

importance. The message will be dependent on the objectives and testing in focus groups can

take place to ensure the message is understandable and has the required effect (Argenti,

2006).

Few companies can be all things to all people and instead of competing across the board, the

majority of companies target the most attractive market segments that they can serve

effectively. In essence, this is what segmentation makes possible (Kotabe & Helsen, 2008, p.

222). Therefore defining the target audience (segmentation) will follow from the message.

In the international marketing context global segmentation techniques are often utilized.

Global market segmentation means identifying segments of country groups, individual buyer

groups or potential customers with similar attributes who are likely to have similar buying

behaviour patterns. Hassan, Craft & Kortam (2003) suggests that there are three approaches

to global segmentation, namely:

· clusters of countries that demand similar products (regional selling with geopolitical &

economic segmentation factors)

· different segments in different countries with the same product (differentiated selling

with behavioural and lifestyle segmentation factors)

· Segments present in many or most countries (universal selling, a hybrid balance

between various macro and micro segmentation factors)

To improve effectiveness the product positioning can be combined with these various

segmentation techniques. In this case four different segmentation/positioning strategies are

possible, see Figure 3 below:

Copyright UCT

MBA Research Report

Figure 3: Global Strategic segmentation and positioning matrix

Source: Hassan & Craft, 2005

In Cell 1, the ‘focussed strategy’ shows how a brand can position itself to attract similar global

customer segments with a similar brand positioning. The most fitting example here is The

Body Shop, a company which developed a uniform line of cosmetics and skincare for

environmentally conscious consumers. This uniform strategy led to a very consistent

international brand image which helped the firm to leverage the influence they had on

consumers with similar attitudes (Hassan & Craft, 2005).

Cell 2 represents the ‘optimization strategy’, which is when the firm develops differentiated

brand positions for similar segments across the world. Miele, the leading German appliance

manufacturer, had to create a different positioning for its products in the US than it had in

Europe. In Europe, Miele’s 20-year durability guarantee was their biggest selling point. In the

US, where consumers saw appliances as disposable, this brand image would not have been

successful. Instead, for the US market, Miele positioned themselves as “maintenance-free

appliances in a variety of different colours” (Hassan & Craft, 2005).

Cell 3 offers the ‘geo-centric’ approach which means similar strategic positioning across

different world segments. Gillette adopted this strategy which provided worldwide appeal by

stimulating demand for shaving by providing a range of products for different segments

(Hassan & Craft, 2005).

Lastly, in Cell 4, the ‘localization’ option is shown. This is when a unique positioning is

developed for each segment. Nestlé was forced to adopt this kind of approach when they first

Copyright UCT

MBA Research Report

entered the global arena in order to combat negative customer connotations with instant

coffee. This option is only practical in the context of an entry strategy and not viable as a

market expansion strategy (Hassan & Craft, 2005).

Despite these conceptual guidelines, in practice, global segmentation is often a big challenge

for most multi-national firms. In many instances, no common segmentation exists across

national borders, and so country markets of the same company struggles to compare their

views on the target market (Barron & Hollingshead, 2004).

The way in which the company choose to segment their market and position their product

will directly influence their choice of communication tools. This will also impact whether they

will standardize their communication mix, or follow an adaptation or contingency approach

(see next section).

In most instances an advertising agency will be employed to assist the company in the next

steps of producing the communication tools and formulating a media strategy. The

communication tools can include above the line (ATL) and below the line (BTL) advertising,

direct marketing, point of sale (POS) promotions and the like. In very few cases companies

produce their own advertising materials; this is called in-house advertising (Jae, Samiee, &

Tai, 2002).

The media strategy goes hand-in-hand with the communication tools and entails identifying

which media the relevant target market consumes and then buying airtime from TV

broadcasters, radio stations and/or advertising space in magazines or newspapers which

appeals to that target market (Jae, Samiee, & Tai, 2002).

In some countries the media strategy is even more important than the creative message, for

example, in Japan, media buying is critical due to the scarce supply of advertising space.

Therefore, given the choice, a Japanese advertiser would choose an advertising agency with

enormous media-buying clout above one with good creative skills. In some countries, where

traditional media space is limited, marketers have to come up with creative ideas to get their

message to consumers. An example of this is when Intel, the American computer chip

manufacturer, built brand awareness in China by distributing bicycle reflectors flashing the

words “Intel Inside Pentium Processor” (Kotabe & Helsen, 2008, p. 453).

Copyright UCT

MBA Research Report

Designing systems for measurement and control is the final step in the formulation of a

marketing communication strategy. This step is critical as it is at this point where the success

of the strategy is measured and learning for future use is obtained. Here marketers will look

at conversion rates (how many ‘potential’ customers were converted to ‘buying’ customers),

market share gained/lost and the over-all effectiveness of the campaign, also referred to as

marketing return on investment (MROI) (Munoz, 2005).

3.4 The Standardization vs. Adaptation Debate

One of the fundamental decisions a company has to make when entering a new foreign

market is whether to use a standardised marketing strategy or to adjust their strategy to fit

the unique dimensions of each potentially unique market (Vrontis, Thrassou, & Lamprianou,

2009).

Within the international marketing field, the central debate over the extent of adaptation and

standardization has stretched over the past few decades (Vrontis, Thrassou, & Lamprianou

2009). A review of the existing literature indicates that there is no agreed starting point for

this debate. Some academics are of the opinion that as far back as 1923, the advertising

manager of Goodyear Tire and Rubber Company, David L. Brown made the controversial

statements which sparked the debate initially:

“Just as green is green in Buenos Aires as well as in Batavia, just as two and two are four in Cape Town as well as in

Copenhagen, just as the main purpose of advertising is to sell goods, in Singapore as well as in Sydney or Santiago,

so all the primary purposes of advertising are identical in all countries, and all fundamentals of good advertising

are essentially the same north and south of the Equator and east and west of Greenwich.” (Agrawal, 1995)

Others, like Vrontis (2009), claims the debate commenced in 1961, when Elinder considered

it in the context of international advertising. At the time, the debate was centered on the need

for a common advertising approach for promotional campaigns for multi-national companies

(Vrontis, Thrassou, & Lamprianou, 2009). It then expanded from Promotion to all four of the 4

P’s and now emcompasses the marketing mix as a whole. Given the great importance of this

Copyright UCT

MBA Research Report

issue to practitioners, academics began actively researching it in the 1950’s. Since then

research of this area has remained unabated (Ryans, 2003).

Due to the nature of the focus of this case study, this review will only focus on the section of

the debate around Standardization vs. Adaptation of the communication mix.

The three schools of thought at the centre of the debate are: Standardization, Adaption and

Contingency.

The Standardization Approach

The concept of the “global consumer” has intrigued marketers since Levitt’s 1983 Harvard

Business Review article. He claimed that the world population’s needs and desires have been

“irrevocably homogenized”. This viewpoint has in many instances convinced companies that

learning about global customer orientation is the first step towards understanding how to

compete in the global market (Hassan, Craft & Kortam, 2003) (Sheth & Parvatiyar, 2001).

Onkvisit and Shaw (2009, p. 555) describes the standardization approach as the practice of

advertising the same product in the same way everywhere in the world. The controversy over

standardized communication centres around the appropriateness of advertising content used

across national borders. This technique has sustained a lively debate for decades (Onkvisit

and Shaw, 2009, p. 555).

The standardization approach is favoured by those who believe that above all else, humanity

is more similar than different because people posses certain common attributes. Thus, it is

not only possible to standardize advertising, it is logical. This school of thought sees

differences between countries as matters of degree, rather than direction and believes that by

treating the world as a single global market, companies will not be blinded by seemingly

heterogeneous cultures, economies and political systems (Agrawal, 1995) (Kitchen & Eagle,

2002).

Copyright UCT

MBA Research Report

Standardization proponents believe that advanced technology, communication and transport

have homogenized markets around the world (Onkvisit & Shaw, 2009). This resulted in the

emergence of consumers who expect high-quality products at low prices. The change in

consumer expectations in turn affected the competitive dynamics between companies, forcing

them to go after this one key source of competitive advantage, namely, producing high-quality

products at a low cost. This kind of logic has convinced many multinational companies that in

order to be successful, they need to standardize both their product and practises, including

their marketing communication. Some academics go as far as to say standardization is the

clear way to avoid most of the problems of international marketing communication (Burgess

& Bothma, 2007, p. 345).

Standardization requires extremely focussed objectives and methods. In this approach the

communication message is kept consistent across markets as far as possible within the

restraints of regulations and laws. Shell and Coca Cola are examples of companies who have

implemented the standardization approach with great success (Verity, 2005) (Burgess &

Bothma, 2007, p. 344).

The desire for business efficiency lies at the core of the standardization approach (Burgess,

Bothma, 2007, p. 344). Two major benefits of standardization are cost reduction and

consistent brand and company image. The cost reduction from standardized advertising are

mainly a result of economies of scale and scope. Standardizing allows the company to benefit

from economies of scale in terms of creative development, media buying and placement. In

some instances this means that the success in one country can easily be replicated in the next.

(Melewar & Vemmervik, 2004).

In terms of consistent brand image and message, companies can strenghten their position as a

global brand with standardization. For example, Nike has increased their penetration in both

golf and soccer by using well-known sport personalities who are known across the globe.

Standardization creates brand familiarity which leads to brand loyalty and trust through

consistency (Burgess & Bothma, 2007, p. 345).

A strong relationship exists between standardized advertisements and centralized

advertising functions. Greater control by the global head office across national borders is thus

encouraged by standardization (Paliwoda & Thomas, 2002). This allows the sharing of

Copyright UCT

MBA Research Report

experience, effective use of advertising budget, consistency of communication and less

duplication of effort. Central control also imply simplicity of the planning and control of

international communication (Agrawal, 1995).

Despite these convincing benefits, standardization also have a number of potential

drawbacks. One of the most prominent is that it is only possible under certain conditions.

These include the following: the existence of a global market segment, potential synergies

from standardization and the existence of communication infrastructure to deliver the firm’s

offerings to targeted customer segments worldwide (Zou, Andrus, & Norvell, 1997).

Doole & Lowe (1994) suggested a number of additional conditions for standardization:

· Visual messages form the main content of the communication

· Famous international music, film or sport celebrities are featured

· Music is an important part of the communication

· Well-known symbols or trademarks are featured

However, even if all these conditions are met, the effectiveness of the communication may be

restricted to a specific region if one of the following is true :

· Spoken or written word forms an important part of the communication

· Humour is used

· Local celebrities are used

· The campaign relies on specific knowledge of previous advertising (Doole & Lowe,

1994)

Another complication is that although brand attributes can be communicated as global, and

brand images can stay remarkably stable across borders, there are distinct differences in how

products are used and brands are perceived in different markets (Pae, Samiee & Tai, 2002). It

Copyright UCT

MBA Research Report

is therefore not only the advertising aspects which need to be taken into account when

determining the extent to which standardization or adaption can be effective. Other internal

and external factors need to be analyzed as well. These need to be dealt with for

standardization to be implemented successfully.

Internally, the existing global network of the company may not be compatible with a

standardized strategy. An internal issue that companies wishing to standardize comunication

often face is the Not-Invented-Here (NIH) syndrome. This refers to the reaction of local

subsidiaries and/or local advertising agencies which could stonewall attempts to standardize.

Local offices generally have difficulties accepting creative work from other countries as they

believe that above all else their market is different (Kotabe & Helsen, 2008, p. 449).

Rushing towards global standardization, without managing the process effectively can lead to

disruption of established operations and the loss of key people. Skilled local managers can be

lost due to the resistance the standardization process will most likely evoke from local

management. From this, conflict may arise which could negatively affect the standardization

strategy (Zou, Andrus, & Norvell, 1997).

According to Kotabe & Helsen (2008) a key external barrier to standardization is cultural

issues. Despite “global village” headlines, cultural differences still plays a big role in many

product categories. Differences or gaps between lifestyles, benefits sought, usage contexts

and so on influence how consumers experience communication. One example is the use of sex

in advertising. While references to sex in advertisements are quite common in the West, in

Asia this is not the case (Kotabe & Helsen, 2008, p. 448).

Additionally, competitor strategies are an important factor which acts as a constraint.

Competitors’ strategies could limit the viability of a standardized approach in diverse markets

(Zou, Andrus, & Norvell, 1997).

Cross-market maturity gaps is another external barrier to standardization, as different

maturity levels mandate different advertising approaches. Snapple was confronted by such a

gap when the US-based New-Age drink was first launched in Europe and found that European

consumers were sceptical about the concept of iced tea (Kotabe & Helsen, 2008, p. 448).

Copyright UCT

MBA Research Report

Diverse government regulations across different countries and marketing infrastructure

differences are two additional external factors which can affect the success of standardization.

For example, the broadcasting regulations for advertising to children differs widely between

the US and the UK. In Malaysia, foreign made commercials featuring Caucasians are not

allowed. This can force otherwise standardized campaigns to be adapted, as Ray-Ban learned

first hand (Kotabe & Helsen, 2008, p. 448).

Another negative aspect is the fact that standardization is evidence of a product orientation,

rather than a customer or competitor orientation. Being ‘customer centric’ is one of the major

objectives for most businesses today (Burgess, Bothma, 2007, p. 337). This means that the

firm puts customers and their needs at the centre of the business and work to align all

functions towards meeting customer expectations and needs. Product orientation has proven

to be a very risky stance and is likely to lead to failure. Marketing literature has shown that a

market orientation, which focus on the marketing process from the perspective of the

customer and competitors are more likely to lead to business success than a product

orientation (Zou, Andrus, & Norvell, 1997) (Burgess, Bothma, 2007, p. 337).

It is important to mention that many academics argue against the assumed cost reductions of

standardization. Some claim that standardization is only profitable when the potential cost

savings from economics of scale and/or scope exist, when barriers to standardization is low

(for example culture/infrastructure) and when products address related needs or wants.

Standardization has proven to lower production costs in certain instances, but not media

costs. These media-related costs, which includes the cost of space and time, is generally

significantly higher than production costs (Melewar & Vemmervik, 2004).

Czinkota’s (1995) argument that read - while the search for commonality is worthwhile, it is

very risky, still stands. Onkvisit and Shaw (2009, p. 189) cautions that marketers must guard

against the tendency to find commonalities where they do not really exist, as too often,

cultural similarities are just an illusion. Marketers should also caution against continuing

using a standardized approach when it is proving to be ineffective.

The Localization/Adaptation Approach

Copyright UCT

MBA Research Report

The opposite view of the standardization school is the localization school, also known as the

adaptation school. This school of thought holds that advertisers should focus on the

differences amongst countries. This leads to the development of specific advertising programs

for each local market. The localization approach’s main argument revolves around the idea

that advertisers must consider differences between countries, for example: culture, stage of

economic and industrial development, stage of product life-cycle, media availability and legal

restrictions in order to develop and implement successful promotional campaigns (Onkvisit &

Shaw, 2009, p. 556).

This school of thought is normally closely linked to a decentralized advertising function

(Melewar & Vemmervik, 2004). Supporters of the localization approach often base their

argument on models of cultural difference, of which the most famous those of Hofstede and

Trompenaars. Geert Hofstede’s groundbreaking research in the 1980’s created an

understanding of how values shared within cultures motivate behaviour. Despite the fact that

some of Hofstede’s research has been questioned in the past few years, it can still help the

international marketer to understand the cultures of foreign markets (Kotabe & Helsen, 2008,

pg. 128).

Hofstede proposes five cultural value dimensions (De Mooij, 2000):

· Power Distance: This aspect addresses the way in which inequality between members

of the society are dealt with, for example how much ‘power’ is assigned to someone

based on their wealth. In cultures with high power-distance a small number of very

powerful individuals make all the decisions. In a low power distance culture, power is

more equally spread over the population (De Mooij, 2000) (Kotabe & Helsen, 2008, pg.

128).

· Uncertainty Avoidance: Uncertainty avoidance refers to the way members of a society

deals with uncertain situations. In some cultures uncertainty is seen as a threatening

disposition, while in others it is accepted. Strict rules, regulations and strong

nationalism are usually signs that a culture has high uncertainty avoidance. In the low

uncertainty avoidance culture protests are tolerated and the sense of nationalism is

less pronounced (De Mooij, 2000) (Kotabe & Helsen, 2008, pg. 128).

Copyright UCT

MBA Research Report

· Individualism: This element refers to the extent to which individual self-interest is

promoted in a society. In some cultures individual initiative is accepted and rewarded,

while in others it is discouraged. In the latter type of culture, dependence on the group

is prized (De Mooij, 2000) (Kotabe & Helsen, 2008, pg. 128).

· Masculinity: A masculine culture is based on values such as assertiveness, materialism

and limited concern for others. In less masculine cultures, members of society are

focussed on building and maintaining good relationships with others, quality of life

and concern for others are praised. In predominantly masculine cultures the role of

women is more traditional, whereas in less masculine cultures, women have more

equal, modern roles (De Mooij, 2000) (Kotabe & Helsen, 2008, pg. 128).

· Time Orientation: This aspect refers to the attitude of the society’s members to the

future. According to Hofstede’s model some cultures have realistic future orientations

which can be identified by determination, ordering of relationships by status and

keeping this order stable. Other cultures have a short-term orientation, characterised

by personal evenness and solidity (De Mooij, 2000) (Kotabe & Helsen, 2008, pg. 128).

Value Dimensions High Low

Power Distance Malaysia, Arab countries Austria, Israel

Uncertainty Avoidance Greece, Japan Denmark, India

Individualism Australia, United States Korea, Italy

Masculinity Japan, Mexico Sweden, Denmark

Long Term Orientation Short Term Orientation

Time orientation China, Hong Kong European countries

Copyright UCT

MBA Research Report

Table 1: Hofstede’s dimensions of culture: Examples of countries that exhibit differences in terms of the value

dimensions.

Adapted from: Burgess & Bothma (2007)

Trompenaars studied cultural differences in the late 1990’s and developed seven dimensions

along which differences in culture could be measured (Burgess & Bothma, 2007, p. 175). They

are as follows:

· Universalism vs. Particularism: In a society where universalism reigns, steadfast

principles about what is wrong and right are very important. In a Particularist society,

the obligations formed by a relationship are more important than rules.

· Individualism vs. Communitarianism: In an individualistic society, people think of

themselves as individuals first, then as members of a specific group. In a society

centred on Communitarianism, obligations to the group are seen as more important

than the individual’s desires.

· Neutral vs. Affective: Individuals repress their feelings in a neutralist society, whereas

in a more affective culture, people express their emotions more freely and openly.

· Specific vs. Diffuse: In a specific culture, communication is direct and to-the-point. In

other cultures, the diffusion style of communication is used, where care is taken to

take feelings into account.

· Achievement vs. Ascription: In an achievement orientated culture, a person’s status is

dependent on his/her own achievements. In an ascription culture, the status of the

individual is dependent on their age, gender, family relations and social contacts.

· Attitudes towards Time: In some cultures, achievements in the past are not important,

future plans are where the emphasis lies. In other cultures, past achievement carry

more weight that any future plans.

· Attitudes towards the Environment: Individuals in some cultures believe that the force

which guides their life lies within them and that values, vices and goodness come from

Copyright UCT

MBA Research Report

that same space. Other cultures focus on the force of the environment, believing it to

be much stronger than the individual (Burgess & Bothma, 2007, p. 175).

Kotabe & Helsen (2008, p. 133) argues that in order to function well as a marketer within the

global market place, one needs to become aware of cultural biases that influences thoughts,

behaviour and decision-making. This will help the marketer to make better decisions with

regards to adaptation.

In the localization framework, marketing mix elements cannot be standardized, as every

international market is subject to a different set of macro and micro environmental factors,

constraints and conflicts. Tailoring the elements of the marketing mix to the relevant market

is therefore essential and vital in meeting the unique needs and wants of target markets. This

includes a unique message which will be clearer in the specific language spoken by the target

market.

Another aspect to consider in the adaptation approach is the fact that advertising depends

heavily on symbolism, and that symbolism is heavily dependent on culture. For example, in

India an advertisement should never show a cow as it is a sacred animal for the Indian people

and using it for advertising purposes could grossly offend their traditions and religion

(Agrawal, 1995).

Agrawal (1995) gives three guidelines for developing advertisements for foreign markets:

· The message has to be meaningful to the people of the foreign country in terms of their

experience

· The message must appeal to some sort of “responsive chord” of the desires and

ambitions of the people

· The message must not offend the people’s sensitivities (Agrawal, 1995)

The main argument against adaptation is the increased cost of customized communication.

This is clearly illustrated by the quote below from Dean Peebles, who were the director of

adverting and promotions for Goodyear International during the 1960’s:

Copyright UCT

MBA Research Report

“… just imagine the costs involved when you have 30 different artists in 30 different countries drawing the same

tires – and each one charging you for it – when one artist could have handled the entire job at one fee. And the same

goes for photography, copy, etc.” (Agrawal, 1995)

Other arguments against the adaptation approach include the impractical implications of

having customized messages for every individual target market and dilution of the “pure”

brand image, as adapted advertising could result in different perceptions of the brand (Ryans,

2003).

The Contingency Approach

The third school of thought takes the moderate middle road. When following the contingency

approach, a company would decide that neither total adaptation nor total standardization is

ideal and a combination of the two approaches can be developed after careful evaluation of

the possible factors which could affect the effectiveness of the advertising in the different

countries (Agrawal, 1995).

This means that the most effective strategy would vary, depending on the situation. Internal

and external factors which impact the firm is thus used to determine the degree of

standardization or adaption for the given communication strategy.

To this end by Harvey (1993) developed a theoretical model which identifies six variables

which affect the degree of standardization and adaptation of marketing communication

(Figure 4). Melewar & Vemmervik (2004) use Harvey’s model in their study and identifies the

six variables as follows:

· Product variables: the degree to which the product is universal

· Competitive variables: the structure of the competitive environment

· Organizational experience and control variables

· Infrastructure variables: the degree of correspondence of the media infrastructure

· Governmental variables: restrictions on mass-media etc.

Copyright UCT

MBA Research Report

· Cultural and societal variables: cultural differences between the home and export

market.

Figure 4: A descriptive model to determine the degree of standardization/adaptation of advertising

Source: Melewar & Vemmervik (2004)

This model indicates that there is a variety of variables which can influence the extend to

which standardization or adaptation is needed and therefore standardization is not applicable

in all circumstances.

Vrontis, Thrassou, & Lamprianou, (2009) claims that in most multi-nationals, both the

standardization and adaptation processes co-exist, even within the same company, product

line or brand.

Melewar and Vemmervik (2004) suggest a variant of the contingency approach by

introducing the Compromise school of thought. This approach sees standardization vs.

adaption as a continuum. This approach can be described as follows: companies could be

placed on a global continuum where the companies on the left are companies with highly

decentralized, multi-domestic operations and products. The companies and brands with

totally integrated global advertising campaigns would be on the right side. Companies who

increasingly standardize brands and/ or products, but still adapt to local differences would be

in the middle.

Copyright UCT

MBA Research Report

One way of developing a balanced mix of both approaches was suggested by Jae (2002). Their

study recommends that companies need to differentiate between informational and

transformational advertising styles. Transformational messages associate the brand with a

unique set of psychological characteristics and are therefore universal. On the other end of

the spectrum there are informational advertisements, which more often than not need to be

localized as they concentrate on consumers’ practical and functional needs.

Hassan (2003) suggested alternative ways of global segmentation that are useful for decisions

on brand standardization vs. adaptation. They specify three main segmentations: group of

countries demanding similar products, different countries with the same product and

universal segments that are present in many or most countries. The extent to which ads can

be adapted or standardized for foreign markets are dependent on the following:

· The type of product

· Homogeneity or heterogeneity of markets

· Characteristics and availability of media

· Types of advertising agency service available in each market segment

· Government restrictions on the nature of advertising

· Government tariffs on art work or printed materials

· Trade codes, ethical practices and industry agreements

· Corporate organization (Ryans, 2003)

Overview of the debate

Ryans (2003) suggests that the reason why the Standardization vs. Adaptation debate has

raged for so long without being resolved, is that the last forty years of research was based on

a weak underlying theoretical framework. It is unclear what progress has been made related

to the development of a unifying theory.

Copyright UCT

MBA Research Report

Kitchen and Eagle (2002) argues that the real issue which marketing executives is facing, is

not the drawn-out debate about standardization vs. localization. Increasingly the issue is one

of balance; balance in terms of standardization, but also balance in terms of the degree to

which integrated communication campaigns can and do cross national borders. Also, balance

is needed when looking at how well globalized integrated campaigns are meeting the needs of

customers and consumers around the world.

Others like Palumbo and Herbig (2000) suggest that few global brands are actually

standardized and that it is manufacturers, not customers who desire standardization.

Some authors suggest that the debate is enforcing a false dichotomy. They argue that it should

be recognized that different strategies with regards to the degree of standardization or

localization should apply depending on the nature of the product or service and the relevant

market in which it is active (Kitchen & Eagle, 2002) (Wright & Nancarrow, 1999).

Onkvisit & Shaw (2009, p. 558) agrees with this viewpoint. They argue that while recognizing

local differences and cautioning against the automatic use of standardization, sometimes

using one communication strategy can be desirable and sometimes not, depending on the

specific conditions.

3.5 Conclusion

Since the 1950’s academics and practitioners have supported both viewpoints at different

points in time. There has been no conclusive evidence to prove the superiority of either

approach and research on the topic is still ongoing.

Figure 5: Standardization and Adaptation over time

Copyright UCT

MBA Research Report

Through the review of a selection of scholarly works it can be concluded that not one of the

approaches have proven irrefutably to be most effective in every situation. It would seem

that what would be more important is to establish and recognize the conditions under which

each approach is most suitable.

4. REFERENCES AND BIBLIOGRAPHY

About lovemarks: the future beyond brands. (2009). Lovemarks. Retrieved October 10, 2009,

from http://www.lovemarks.com/index.php?pageID=20020

Agrawal, M. (1995). Review of a 40-year debate in international advertising: Practitioner and

academician perspectives to the standardization/adaptation issue. International Marketing

Review , 12 (1), 26-48.

Argenti, P. A. (2006). Communications and Business Value: Measuring the Link. Journal of

Business Strategy , 27 (6), 29-40.

Backhaus, K., & Van Doorn, J. (2007). Consumer perceptions of advertising standardization: a

cross country study of different advertising categories. International Management Review , 3

(4), 37.

Copyright UCT

MBA Research Report

Barron, J., & Hollingshead, J. (2004). Brand globally, market locally. Journal of Business

Strategy , 25 (1), 9-14.

Boyle, E. (2007). A process model of brand cocreation. Journal of Product and Brand

Management , 16 (2), 122-131.

Bryman, A., & Bell, E. (2007). Business research methods. Oxford: Oxford University Press .

Building and managing a successful brand with the three C's. (2007). Strategic Direction , 19-

22.

Burgess, M. S., & Bothma, C. H. (2007). International Marketing. New York: Oxford University

Press.

Chung, H. (2007). International marketing standardisation strategies analysis: a cross

national investigation. Asia Pacific Journal of Marketing , 19 (2), 145-167.

Chung, H. F. (2009). Structure of marketing decision making and international marketing

standardisation strategies. European Journal of Marketing , 43 (5/6), 794-825.

Crippen, K., Tng, P., & Mulready, P. (1995). DuPont Lycra shifts emphasis to global brand

management. Journal of Product and Brand Management , 4 (3), 27-37.

Czinkota, M. R. (1995). The global marketing imperative. Chicago: NTC Business Books.

Czinkota, M. R., & Samli, A. C. (2007). The remarkable performance of international marketing

in the second half of the twentieth century. European Business Review , 19 (4), 316-331.

Doole, I., & Lowe, R. (1994). International Marketing Strategy. London: Thomson.

Dunn, M., & Davis, S. (2004). Creating the brand-driven business: it's the CEO who must lead

the way. Handbook of Business Strategy , 241-245.

Esch, F., Langner, T., Schmitt, B., & Geus, P. (2006). Are brands forever? How brand knowledge

and relationships affect current and future purchases. Journal of Product and Brand

Management , 15 (2), 98-105.

Copyright UCT

MBA Research Report

Ghodeswar, B. (2008). Building brand identity in competitive markets: a conceptual model.

Journal of Product and Brand Management , 17 (1), 4-12.

Hassan, S. S., & Craft, S. H. (2005). Linking global market segmentation decisions with

strategic positioning options. Journal of Consumer Marketing , 22 (2), 81-89.

Hassan, S. S., Craft, S., & Kortam, W. (2003). Understanding the new bases for global marketing

segmentation. Journal of Consumer Marketing , 20 (5), 446-462.

Hogan, S., Almquist, E., & Glynn, S. (2005). Brand-building: finding the touchpoints that count.

Journal of Business Strategy , 21 (2), 11-18.

Holbrook, M. B., & Hulbert, J. M. (2002). Elegy on the death of marketing. European Journal of

Marketing , 36 (5/6), 706-732.

Jae, H., Samiee, S., & Tai, S. (2002). Global Advertising Strategy: the moderating role of brand

familiarity and execution style. International Marketing Review , 19 (2), 176-189.

Jagdish, N. S., & Parvatiyar, A. (2001). The antecedents and consequences of integrated

marketing. International Marketing Review , 18 (1), 16-29.

Keegan, W. J. (2004). Strategic Marketing Planning. International Marketing Review , 21 (1),

13-16.

Kish, P., & Dwight, R. (2001). Measuring and tracking of brand equity in the global

marketplace: The PepsiCo experience. International Marketing Review , 18 (1), 91-96.

Kitchen, P. J., & Eagle, L. (2002). Towards a globalized communications strategy: perceptions

from New Zealand. Marketing Intelligence & Planning , 20 (3), 174-184.

Kotabe, M., & Helsen, K. (2008). Global Marketing Management. New York: John Wiley & Sons,

Inc.

Lawer, C., & Knox, S. (2006). Customer advocacy and brand development. Journal of Product &

Brand Management , 15 (2), 121-129.

Copyright UCT

MBA Research Report

McCole, P. (2004). Marketing is not dead: a response to "Elegy on the death of marketing".

European Journal of Marketing , 38 (11/12), 1349-1354.

Melewar, T., & Vemmervik, C. (2004). International Advertising Strategy: A review,

reassessment and recommendation. Management Decision , 42 (7), 863-881.

Melewar, T., Turnbull, S., & Balabanis, G. (2000). International Advertising Strategies of

multinational enterprises in the Middle East. International Journal of Advertising , 19, 529-547.

Merrilees, B., & Tiessen, J. H. (1999). Building generalizable SME international marketing

models using case studies. International Marketing Review , 16 (4/5), 326-344.

Miracle, G. (1968). International advertising principles and strategies. MSU Business Topics , 1

(1), 29-36.

Monye, S. O. (1995). Research note: international marketing management: a separate

academic discipline. International Marketing Review , 12 (3), 5-14.

Mooij, M. d. (2000). The future is predictable for international marketers. International

Marketing Review , 17 (2), 103-113.

Munoz, T. (2005). Achieving marketing ROI - finally. Handbook of Business Strategy , 81-84.

Netemeyer, R. G. (2004). Developing and validating measures of facets of customer-based

brand equity. Journal of Business Research , 57, 209-224.

Onkvisit, S., & Shaw, J. (2009). International Marketing: Strategy and Theory. New York:

Routledge.

Oxford Dictionary of Business and Management. (2006). Oxford: Oxford University Press.

Pae, J. H., Samiee, S., & Tai, S. (2002). Global Advertising Strategy - The moderating role of

brand familiarity and execution style. International Marketing Review , 19 (2), 176-189.

Paliwoda, S., & Thomas, M. (2002). International Marketing. Oxford: Butterworth &

Heinemann.

Copyright UCT

MBA Research Report

Palumbo, F., & Herbig, P. (2000). The multi-cultural context of brand loyalty. European Journal

of Innovation Management , 3 (3), 116-124.

Perreault, W. (2008). Essentials of Marketing. New York: McGraw-Hill/Irwin.

Perry, C. (1998). Processes of a Case Study methodology for post-graduate research in

Marketing. European Journal of Marketing , 32 (9/10), 785-802.

Rowley, J. (2002). Using Case Studies in Research. Management Research News , 25 (1), 16-27.

Rundh, B. (2003). Rethinking the international marketing strategy: new dimensions in a

competitive market. Marketing Intelligence and Planning , 21 (4), 249-257.

Ryans, J. K. (2003). Standardization/Adaptation of international marketing strategy.

International Marketing Review , 20 (6), 588-603.

Salzer-Morling, M., & Strannegard, L. (2004). Silence of the brands. European Journal of

Marketing , 38 (1/2), 224-238.

Shaw, F. (2002). Uncertainty and the new consumer. Foresight , 4 (6), 4-13.

Sheth, J. N., & Parvatiyar, A. (2001). The antecedents and consequences of integrated global

marketing. International Marketing Review , 18 (1), 16-29.

Singer, J. (2006). Framing brand management for marketing ecosystems. Journal of Business

Strategy , 27 (5), 50-57.

Solberg, C. A. (2008). Strategy development in international markets: a two tier approach.

International Marketing Review , 25 (5), 520-543.

Utvich, M. (2004). Thresholds of Attention. Handbook of Business Strategy , 103-109.

Verity, J. (2005). Interpreting the successful transformation of Shell's advertising activity

1997-2002. Management Decision , 43 (1), 72-85.

Viswanathan, N. K., & Dickson, P. R. (2007). The fundamentals of standardizing global

marketing strategy. International Marketing Review , 24 (1), 46-63.

Copyright UCT

MBA Research Report

Vrontis, D., & Papasolomou, I. (2007). Brand and Product building: the case of the Cyprus

wine industry. Journal of Product and Brand Management , 16 (3), 159-167.

Vrontis, D., Thrassou, A., & Lamprianou, I. (2009). International marketing adaptation versus

standardization of multinational companies. International Marketing Review , 26 (4/5), 477-

500.

Wang, H., Wei, Y., & Chunling, Y. (2008). Global brand equity model: combining customer-

based with product-market outcome approaches. Journal of Product and Brand Management ,

17 (5), 305-315.

Wright, L. T., & Nancarrow, C. (1999). Researching international "brand equity": a case study.

International Marketing Review , 16 (4/5), 417-431.

Yin, R. K. (1994). Case Study Research. Thousand Oaks: Sage Publications Inc.

Yoo, B., & Donthu, N. (2001). Developing and validating a multi-dimensional consumer-based

brand equity scale. Journal of Business Research , 52, 1-14.

Zou, S., Andrus, D., & Norvell, D. (1997). Standardization of international marketing strategy

by firms from a developing country. International Marketing Review , 14 (2), 107-123.

B. CASE STUDY

PART A

When entering Union Swiss’ headquarters in Cape Town, South Africa, it is easy to wonder if

one had exited the elevator on the wrong floor of the building. The trendy, yet tastefully

decorated space confronting the visitor resembles a classy design agency more than the

global head quarters of a multi-national skincare company. Modern sofas, delicate white

orchids and interesting wall fixtures create a space where even the most hyper of individuals

would feel tranquil.

Copyright UCT

MBA Research Report

Phrases used to describe Union Swiss in the business press such as “R 1 billion retail sales”

and “One of the fastest growing skincare brands world wide” lead to expectations of a bustling

atmosphere where a workforce of a mere 38 employees toil away in a strained environment

to make it all happen… Conversely, apart from being unusually stylish for a corporate head

office, it is also extraordinarily quiet and calm.

A short chat with the CEO, Justin Letschert, will disprove most pre-conceived ideas about this

award-winning company, and it becomes quickly clear that “quiet and calm” are exactly what

Union Swiss thrives on:

“Here at Union Swiss, our goal is to spend 95% of our time thinking, and only the rest doing”.

This is one of several remarkable statements made by the man behind the Bio-Oil brand.

Justin and his team built Union Swiss’ sole product into a world class brand - hailed as

category leader in 20 of the 22 countries in which it is currently marketed and selling 8.7

million units in 2008 alone.

About Union Swiss

Union Swiss (Pty) Ltd was founded in 1954 by Adolf Steffen, a German cosmetic scientist

residing in South Africa. The company was formed to create a legal vehicle for Vitamol, a

Swiss skincare range, in need of a licensee in South Africa (then the Union of South Africa). As

a tribute to the collaboration between the two countries, Mr Steffen named the company

Union Swiss.

Copyright UCT

MBA Research Report

During the 1950’s and 60’s Union Swiss partnered with a variety of European personal care

companies entering the South African market. The company acted as an agency for numerous

German and Swiss personal care products, for example “Badedas” foam bath.

In 1972, Mr Steffen retired and sold the company to Karl Oskar Beier. Mr Beier was also a

German national living in South Africa and previously developed and sold the famous Oil of

Olay skincare range. Three years later, in 1975, Mr Beier sold Union Swiss to his son. Dieter

Beier was a Bachelor of Science graduate, and his acquisition of the business started an era of

product development in the company. He focussed strongly on research and development and

as a result, many “first to market” products saw the light. This gave Union Swiss a reputation

for innovation. Examples of well known brands launched by Union Swiss during Dieter Beier’s

tenure is “Hush” depilatory cream, “Bahia” foam bath and “Shar” liquid shower soap. In 1982,

Newray Distributors, a personal care business was acquired and merged with Union Swiss.

By 1999, Dieter Beier was ready to retire and announced his resignation as chief executive

officer. At that stage Justin and David Letschert was running their own mergers and

acquisitions business, and were asked to act as consultants for the sale. A condition of the sale

was that the company had to be sold as a whole and not broken up into pieces. Justin and

David struggled to find a willing buyer for Union Swiss on these terms and bought the

company themselves on 1 March 2000.

At that point in time the company employed 15 full-time staff members, the majority of them

engaged in the manufacturing side of the business. Justin and David, both Chartered

Accountants by trade, divested six of Union Swiss’ ten brands by July 2000. The reason for

this dramatic move was that Justin saw them as “me-too” brands with few prospects to be

successful internationally. They immediately started to focus on Bio-Oil; a product the

brothers felt had the potential to be successful in South Africa and abroad due to its unique

offering. At that stage Union Swiss was selling approximately 48 000 units of Bio-Oil per year

and generated retail sales of R 5 million.1

The Billion Rand Bio-Oil Success Story

1 “Market Stretch” by Senior Lecturer Gavin Price & Associate Professor Margaret Sutherland, 2009, Ivey Management Services

Copyright UCT

MBA Research Report

Bio-Oil is a specialist skincare product that helps improve the appearance of scars, stretch

marks and uneven skin tone. The light pink oil contains a range of ingredients including

vitamin A oil, vitamin E oil, rosemary oil, lavender oil and the breakthrough ingredient,

PurCellin oil, which make it useful in treating a wide range of skin concerns including ageing

skin and dehydrated skin. Clinical trials have proven Bio-Oil’s effectiveness and the details of

the findings are show-cased on the product’s website.

Bio-Oil’s success is often attributed to the fact that it is a multi-use product which stretches

across a variety of target markets, from sufferers of dry skin to people with sunburn or scars.

Bio-Oil is sold in three sizes: 60ml, 125ml and 200ml. Consumers tend to buy the smallest size

first and as they become more familiar with the product move to the two bigger sizes.

In 2000 and 2001 David and Justin’s main focus was on producing and marketing Bio-Oil for

the South African market. By 2002, after reaching a monthly turnover of R 1 million, they

decided that they were ready to expand the brand globally. A simple model was used to

determine which countries would be targeted. Two variables, total population of the country

and GDP per capita were ranked, then a country score was determined by adding the two

rankings together and ordering them. After the application of the model, the rankings were

subject to two conditions: the country’s policy on import duties, and it’s tolerance of

trademark infringements. These were kept to keep costs down and protect Bio-Oil as a brand.

The first overseas country in which Bio-Oil was launched was the United Kingdom (2002),

followed by Australia (2003), New Zealand (2003), Japan (2006), the United States (2007),

Malaysia (2007) and Canada (2008). The Letschert brothers believe in organic growth and

therefore only launched in one country at a time and only after the previous market had

reached a certain level of success. In 2004, as a result of the success of the global launches, the

rest of the original Union Swiss brands were divested, in order to focus solely on Bio-Oil’s

global roll-out. 2

2 “Market Stretch” by Senior Lecturer Gavin Price & Associate Professor Margaret Sutherland, 2009, Ivey Management Services

Copyright UCT

MBA Research Report

Exhibit 1: Bio-Oil’s Global roll-out

By 2009, only seven short years after the first global launch, Bio-Oil was available in 22

countries on five continents, and the market leader in 20 of those countries. Bio-Oil’s sales

performance is remarkable: in 2009 the 60ml container was the biggest selling skincare

product in the UK, Canada, Australia and New-Zealand. Over 8.7 million units of Bio-Oil were

sold in 2008, with retail sales totalling R 1 billion. (See Appendix 1: Bio-Oil’s global retail sales

& Appendix 2: Bio-Oil market share information)

In 2008, Justin and David Letschert won the Emerging category in the SA section of the Ernst

& Young World Entrepreneur Awards.

Brand Building at Union Swiss

Copyright UCT

MBA Research Report

Global brand building is an elusive subject, almost like a secret recipe which is continually

passed on with one key ingredient missing. Justin claims that this key ingredient is the

product; a product that satisfies an existing need in a superior way to anything currently

available, or an innovative new product. Without this you are doomed before you even start.

The second ingredient Justin believes in is an emotional relationship with the consumers of

the product around the world.

“Having a revolutionary new product which consumers around the world need, does not in itself create a

strong global brand. A great brand is one which has a strong emotional relationship with its consumer.

Each time a product is sold a mutually beneficial relationship is entered into….Very often building this

emotional connection takes the backseat because the innovative nature of the product ensures that it

sells, regardless of how it is branded. Microsoft is a good example of this, I use it every day, yet feel

indifferent to it.”

To build this emotional relationship Justin suggests communication that speaks to the heart.

This is the third ingredient.

“Each country will have a new set of complexities. In Japan the consumers will want to trust the company

first before considering buying the product. In England consumers will want to know if the queen uses it

and in America consumers will want to know if it comes in a bigger size with a discount coupon….but

communication which speaks to the heart will allow the core of the brand to remain simple and

consistent around the globe.”

Some companies may ask: why waste money on branding if sales are soaring? But the reason

is simple: It is very easy to copy a product, but almost impossible to copy a brand. An

innovative product will soon be attacked by hundreds of imitators and the only true defence

against this will be the brand.3

The Business Model

Union Swiss’ brand building success is made possible by their underlying global business

model. This model is based on the belief that brand building is a specialist activity that

3 “Building a Global FMCG Brand” by Justin Letschert, Encyclopedia of Brands and Branding, October 2008

Copyright UCT

MBA Research Report

requires dedicated resources so that working and thinking can happen without distraction.

These conditions are satisfied by the separation of global brand building and global

operational activities.

Most skincare companies follow the classic distribution model when expanding across

national borders. A suitable distributor is found, pricing terms and advertising spend agreed

and then stock is dispatched. According to Justin, this method often fails due to the fact that

there is no underlying global business model to support these agreements. This leads to the

current situation where a handful of established players dominate the global skincare

industry. At their core, these successful companies have one thing in common: a global head

office which controls the global brand and global operations.

Union Swiss pioneered a hybrid global business model, by mixing the best of both of the

existing models. As Justin, who is in charge of all marketing and branding at the head office,

explains:

“Like the established multi-nationals, we have the concept of a standalone global head office, but unlike

them, our head office has no involvement in operations – it is wholeheartedly brand-centric. In order to

achieve this we use the distribution model concept of outsourcing operations to an exclusive distributor

in each country. But unlike the distributor model, we do have an underlying business model.”

Being freed from any involvement in operational issues, the head office spends all day, every

day thinking about the Bio-Oil brand. The strategists, creative directors and designers

working in the global head office have a single-minded mission: to create world-class brand

strategies and brand collateral. There are no distractions, no offices and staff around the

world to worry about, which creates an atmosphere which is calm, creative and supports

strategic thinking.

The global head office produces a variety of collateral in the form of manuals, booklets,

advertising, showcases, presentations, guidelines for third parties and answers to frequently

asked questions to make the job of the distributors as easy as possible. They also facilitate

learning and sharing of information between different country markets via trade, PR, training

and congress newsletters.

Copyright UCT

MBA Research Report

This allows Bio-Oil distributors around the world to work without distraction because they

are independent businesses and not burdened with numerous time-sapping processes

imposed by an operations-centric head office. Distributors employ brand managers, key

account managers, sales managers and the like. They are free to get on with local operational

strategy and execution, equipped not only with tried and tested brand strategies and

collateral from head office, but also the money to implement them.

To add to the focus, all repetitive tasks are outsourced, even the production of Bio-Oil. David

Letschert, the chief operating officer, is in charge of the quality and cost of raw materials and

to ensure that the final product meets the highest standards. Bio-Oil is produced by Columbia

Pharmaceuticals; a Medicine Control Council (MCC) approved manufacturing facility in

Boksburg near Johannesburg. Union Swiss have seven employees based at the manufacturing

plant to maintain tight control over quality.

The Philosophy

When launching a brand in countries as diverse as France and Malaysia, it is tempting to get

caught up in the countless differences, cultural and other, between them. Union Swiss’

marketing team neatly misses this curveball by thinking deeply about human needs and

behaviour.

“Our job is to interrogate the truth” says Paula Dugmore, Brand Strategist at Union Swiss,

when asked how she would describe her role in building the Bio-Oil brand. At Union Swiss

“the truth” is an important concept, one which encompasses a wide variety of ideas.

Firstly, the truth is that all humans have the same basic needs, or, in marketing speak:

“The human heart is the same everywhere.”

This seemingly light statement is the cornerstone of Union Swiss’ brand strategy. It is not just

a corporate tag-line, it is a mantra, and Union Swiss’ marketing team truly believes in it. The

strength of this belief allows them to create advertising which can be used across all of their

markets, saving them immeasurable amounts of time and money. Standardized advertising

also allows them to get the message to more of their customers by freeing up more money to

buy more media space in magazines and on television.

Copyright UCT

MBA Research Report

The second truth is:

“Union Swiss understands their brand best.”

They live and breathe Bio-Oil and thus their understanding of the brand is not of the

superficial sugar-coated kind, but a real understanding borne out of complete and utter

emersion. Why then would they outsource the most important function of their business,

namely communicating their brand to their customers?

Union Swiss produces all of their brand’s mass communication in-house, and the distributors

employ advertising agencies in the different country markets for translation and resizing

purposes only. This is highly unusual for a multi-national brand and Justin had to bust many

of the myths surrounding creativity in advertising to get to the truth of the matter. Some of

these were that “the weirdest idea is the best”, “you need to work on multiple brands to stay

inspired”, “advertising needs to be changed often to keep things fresh” and “you will never

find a creative director who wants to work on a single brand day after day”. In the past eight

years, Bio-Oil’s successful internally-produced advertising and other brand collateral have

disproved these and other misconceptions.

The third truth is:

“There is always room for improvement when your goal is to keep things as simple as possible.”

At Union Swiss the rule for when you find yourself doing something repetitive and frustrating

is: stop, think and implement a system so that you don’t have to do it again. Well-designed

systems are the foundation of Union Swiss’ efficiency. Continuous improvement and rigorous

confrontation of anything and everything which is taken for granted are integral parts of what

keeps costs low and employees free to think about the brand.

This kind of work environment is not suited for the run-of-the-mill employee who thrives on

repetitive, routine work and sees change as a threat to their comfortable work life. At the

moment Union Swiss employs only 38 people in their global head office. With such a small

number, there is nowhere to hide, and individual employees are hired to be experts in their

field. Union Swiss has a reputation for employing only the cream of the crop, passionate

people who are self-motivated, have a keen interest in human behaviour, with a talent for

Copyright UCT

MBA Research Report

conceptual and original thinking. Candidates have to be grounded and self-confident in their

intellectual capabilities, but excess ego is not tolerated. Emotional resilience, determination

and tenacity are the key characteristics to be considered. As the majority of the work is done

on an individual basis, self leadership is more important than organizational leadership and

team spirit. Recruitment at Union Swiss is a long process and it can sometimes take months to

find the right candidate. Their people management goal is to grow the company without

growing the workforce.

Another ode to simplicity is the Bio-Oil product itself. Apart from the three different sizes, no

variations or alterations of the product in terms of packaging, composition or line extension

are allowed. This long term policy is converse to what most other skincare companies are

currently doing with their brands, and Union Swiss sees this as a point of differentiation.

Despite calls from distributors to develop line extensions like a spray bottle or a cream

version, Bio-Oil will remain the way it has always been which keeps manufacturing simple,

costs low and the brand totally consistent.

When asked how this philosophy came into being, Justin answers simply:

“It’s all in the one-brand focus. Focussing on Bio-Oil alone allows us to think about it constantly,

and it is only when you do this that truths are found.”

Standardized advertising that works

Most global brand building decisions at Union Swiss are made by the strategic team

comprising of Justin (CEO), Paula (Brand Strategist) and the Creative Director, Peter Hudson.

These individuals collaborate on a regular basis to “integrate logic and creativity” as Peter

calls it. He believes that creativity is “just a way to optimize thinking”, so that people can learn

from one another and challenge each other constantly to find better ways to do what they do.

The Bio-Oil brand’s positioning is medical, not cosmetic, which means that it is defined not by

glamour and beauty, but by health and caring for your body. Despite its medical credentials it

is not cold and clinical; it has a warm, friendly brand personality. The focus is always on the

functionality of the product rather than some mirage of image. Bio-Oil is honest and simple; it

has integrity, and prides itself on under promising and over delivering. Consumers really

appreciate this fresh, hype-less communication style, and allow themselves to trust a brand

Copyright UCT

MBA Research Report

with these kinds of values, especially since the skincare industry is not exactly known for its

sincerity. Peter believes brand building is about having a great product and speaking honestly

about it:

“The product is our brand… consumers love the product, not just because of the brand, but because of

what it does for them.”

Bio-Oil’s target market is not defined by an exclusive demographic, it appeals to all women.

Male customers are not excluded, but Union Swiss choose to centre their communications on

the female audience. Pregnant women especially are worried about stretch marks, and are

therefore a key customer segment for Union Swiss. Recommendations from doctors and

pharmacist are also very important to Bio-Oil’s success and reputation within the medical

profession, and thus the company works hard to keep these professionals informed. Four

specific target market segments are identified to focus their advertising efforts on: women,

pregnant women, medical professionals and trade.

The communication mix which the Bio-Oil brand team utilizes to communicate with their

target market is listed in “The Ten Pillars of Success” in the Bio-Oil Business Manual. This is a

piece of internal communication which is used to inform new distribution partners about the

global business model. Seven of “The Ten Pillars of Success” are communication-related,

which proves what an integral role communication plays in Bio-Oil’s overall success.

Bio-Oil’s communication mix is as follows:

Advertising: Mostly television commercials and print advertisements in magazines,

developed in-house by the global head office. Resizing and translation is done in each country

market. Media bookings are handled by the distributors, but official, specific Media Booking

Guidelines are provided by the global head office. (See Appendix 3: Bio-Oil TV advertisement)

Public Relations (PR): Editorial mention in magazines. Each country’s distributor employs a

specialized PR agency. Head office supplies PR Guidelines and a monthly PR Newsletter

sharing PR experiences from around the world.

Training & Congresses: As the potential customer is likely to seek advice from their doctor,

pharmacist, midwife or nurse for serious skin concerns like scars and stretch marks, these

Copyright UCT

MBA Research Report

professionals are important objective third parties. It is therefore critical that they have

access to full product knowledge via training and congresses. Therefore Bio-Oil is exhibited at

all relevant congresses and every distributor runs an ongoing Bio-Oil training course.

Trade Advertising and Promotions: Annual trade advertising campaigns in relevant trade

publications to remind retailers of Bio-Oil’s consistent performance. Print advertisements

developed by global head office. Union Swiss also proactively seeks trade promotion

opportunities to support its market leader position.

Co-op Advertising: Appearing in retailers’ own advertisements as a product “on promotion”,

enhances Bio-Oil’s credibility. Co-op advertisement design guidelines are provided by the

global head office.

Point of Sale (POS): Although Union Swiss’ marketing team believe that most purchase

decisions are made prior to entering the store, they also believe in good POS which draws

attention to the product, invite customers to buy it and remind them that it is indeed the right

choice. POS Design Guidelines are provided by the global head office.

When conceptualizing a new creative campaign, every variable that could cause difficulties in

specific countries are carefully considered. Again, the best way to avoid any trouble is by

keeping things as simple and true as possible. This means creativity within fairly tight

parameters. The communication needs to be relevant across cultures, be easily translatable

into different languages and needs to comply with fairly strict regulations.

Bio-Oil’s successful global marketing can be largely attributed to an intuitive curiosity about

what makes people tick. Union Swiss thinks about Bio-Oil as a product that offers an

emotional benefit (“I feel great because I am doing something for my skin!”) wrapped-up in a

physical benefit (“My skin looks and feels great!”). They believe that this core understanding

makes it possible for them to communicate about their product to almost anyone despite any

cultural or geographical differences.

Unions Swiss receives hundreds of letters and emails from satisfied consumers and loyal fans

every year. These authentic testimonials are the lifeblood of Union Swiss mass

communication (television and print advertising) and have been since Justin and David took

over the company. Their content is used as scripts for the TV ads and copy for the print

Copyright UCT

MBA Research Report

advertisements. Apart from an expert, there is no one a woman trusts more regarding

skincare than other women. Therefore these testimonials are more than just correspondence;

they are powerful, inspirational stories about women who have found renewed confidence by

using Bio-Oil. This is maybe not the most glamorous strategy for a skincare product, but

Union Swiss believes it is the most authentic way in which to express the benefits of this

problem-solution, medically positioned product.

Exhibit 2: Example of Bio-Oil print advertisement

Global versatility and longevity are the key considerations when determining the details of a

campaign. Union Swiss does not believe in radically changing their advertising all the time.

Copyright UCT

MBA Research Report

They feel they are communicating the truth in the best way, so by changing it drastically, they

would compromise authenticity.

Since moving into non-English speaking territories, care had to be taken to shoot television

commercials in a way that allows the advertisement to be dubbed without losing its

authenticity. Other important elements are filming/ shooting in locations cosmopolitan

enough to transcend geography and choosing clothing that will not date quickly. Props and

activities are also chosen to be non-cultural specific and a universal feel is created by shooting

in places where women from any country may find themselves on a daily basis, for example a

busy city street, sidewalk café or a gym locker room.

A range of attractive women are cast with whom consumers across the different country

markets can identify. Cultural intricacies like the fact that aspirational consumers in the East

prefer glamorous-looking women are easily catered for with changes in clothing and make-

up and therefore Union Swiss rarely needs to cast a woman for one specific country. Usually

every woman can be used in advertisements for a selection of countries. For the most recent

television campaign, 18 versions of the same commercial were filmed using different models.

About 12 of these ads will work in the United States; four will air in Malaysia and for every

other country there is at least six which will work perfectly. (See Appendix 4: Bio-Oil

Pregnancy print advertisements)

Apart from the testimonials, Union Swiss are also able to share the fact that they are the

number one selling scar and stretch mark product in almost every country in which they are

marketed and that in many countries they are the product most recommended by midwives,

doctors and pharmacists. Together, these two elements make a powerful combination of fact

and emotion and are understood by women practically everywhere. 4

In addition to the benefits of having total control over Bio-Oil’s global brand image, massive

cost savings are incurred by standardized advertising. These savings in modelling fees, copy-

writing costs and creative agency fees are incremental in spending more money on media

4 Union Swiss/ Strategic Marketing by Paula Dugmore. Published on Union Swiss intranet, 2009

Copyright UCT

MBA Research Report

Justin emphasizes that cost saving is not what drove them to standardized advertising; they

were initially attracted by it because they believed it was the right thing to do.

Trouble under the Kimono: the case of Japan

Launching Bio-Oil in Japan brought along many challenges.

The first was that Bio-Oil’s regular advertising could not be used as it was not approved by

the regulatory bodies of the island state due to restrictions on how and when the Japanese

character for “scar” could be used.

Secondly, in modern Japanese, there is no word that conveys the exact meaning of the word

“scar” as it does in English. In modern Japanese the character for scar refers directly to a mark

caused by surgery and has an affiliation with trauma. For this reason it is tightly controlled

by the Japanese regulatory authorities and could not be used for advertising purposes.

Then there were also the Japanese’s scepticism of products produced outside of Japan; in fact,

approximately 90% of skincare products consumed in Japan are from Japanese origin and

95% produced in Japan. The trend that Japanese women tend to be proud of their stretch

marks as a “badge of honour” or “battle scars from birth” also didn’t help.

In addition, the product had to be renamed “Bioil” in the Japanese market due to trademark

issues. Another obstacle which was uncovered through informal research on the buying

behaviour of Japanese consumers was that testimonials on their own were not a good fit for

selling skincare products. Japanese consumers used a variety of information sources,

including blogs, professional opinions and research on the heritage of the company to make

buying decisions. Research also showed that the majority of Japanese women were not even

aware that there was anything they could do about their scars and stretch marks.

Being one of the biggest consumer markets in the world, Japan was an important market to

unlock if Union Swiss really wanted to be a global player. But with all their usual weapons

disarmed, what could they do?

PART B

Copyright UCT

MBA Research Report

Union Swiss’ reaction to the Japanese conundrum

Peter Hudson, Creative Director at Union Swiss calls the Japanese chapter “the university

years for Union Swiss”. He thinks that the challenges they faced and eventually overcame

there, taught them more than their experiences in any other market.

Many Western companies fail in Japan because they don’t anticipate the deep-seated cultural

nuances. Even Unilever admits that the only product they take to Japan without adapting

some part of it for the local market is Pringles potato chips. Justin believes that one of the key

reasons for this is the differences between Japanese and Western decision-making processes.

In most Western cultures, consumers make purchasing decisions after a one or two step

process. This may involve a recommendation from a friend and seeing a TV ad, or reading a

print ad in a magazine and visiting the product’s website, or any combination of these. In

Japan, the process consists of at least four or five steps. It is important to respect these steps,

as just buying a product, without going through a number of decision-making steps shows

disrespect for the purchase.

Union Swiss wanted to develop a way to communicate to their prospective Japanese

customers which would allow as many touch points as possible. This would help create

hurdles the customer could go through before making a purchasing decision. The average

Japanese consumer took a variety of steps before buying a new product which may include

the following: Read magazine advertisement. Check ingredients on-line. Go to store, test

product. Spot TV advertisement. Take in-store brochure home and read. Ask a dermatologist’s

opinion. Visit a skincare ranking website like www.cosme.net.

As no scar product category existed in the Japanese skincare market prior to Bio-Oil, the first

important point to communicate to consumers was that there was a product which could

improve the appearance of scars and stretch marks. Union Swiss decided that they needed

local intelligence and thus employed a Japanese advertising agency. They worked closely

together to develop advertising suited to the Japanese consumer. The result was a new

category called Ato-care (caring for your skin marks).

The advertisements showed a part of a naked body, with a tear in the paper with the

following copy: “Marks will get you down eventually”/ “Marks will eventually make you feel

Copyright UCT

MBA Research Report

uneasy”. The ads included less text and did not give as much information on the product as

traditional Bio-Oil ads. This was done on purpose, to allow the consumer to embark on the

next steps in the information gathering process with clear goals. (See Appendix 5: Bio-Oil

Japanese print advertisements)

Union Swiss also decided to use PR extensively to promote Bio-Oil in Japan. This was a very

effective strategy because editors are allowed to use the classic Japanese character for scar

which was prohibited to Union Swiss. This helped to communicate more clearly what Bio-Oil

was. Also, as in the West, the opinion of magazine editors carry much more weight than

placed advertising, but in Japan, due to the hierarchical nature of their society, editors’ views

were even more respected.

At the point-of-sale, Japanese customers desire detailed information on the product as they

often only reached the purchasing decision on the second visit to the shop. Shops are often

crowded in Japan but the pay-points are not, as many consumers are “just looking”. Special

Bio-Oil brochures and shop assistant training programs were developed and implemented.

Testers were also introduced in retail outlets to allow customers to try the product in-store.

Three well-known aspects of Japanese culture are respect, honour and quality. After lots of

deliberation, Union Swiss moved the manufacturing of Bio-Oil to Japan. Despite the stringent

quality controls in place at the factory in South Africa, the Japanese views on quality led to

further enhancements in the manufacturing process. Since the Japanese market is dominated

by local brands, consumers are reluctant to purchase foreign brands. Local manufacturing

thus served as an extra selling point for Bio-Oil. In addition, Justin had to be seen as being

personally involved in the quality control of Bio-Oil to demonstrate that he had honour. Union

Swiss also adapted Bio-Oil’s packaging by removing some of the clutter.

The result of these adaptations was dramatic. The advertising campaign was launched in

October 2008 and the average run rate for the 12 months to September 2009 increased by

225% compared to the comparative 12 months to September 2008. Although this increase

can be attributed to various factors including a wider retail base and more exposure in-store

in the form of POS displays, the TV and print advertising played a significant role in capturing

the attention of Japanese consumers.

Copyright UCT

MBA Research Report

Over and above the positive financial results, the knowledge gained on Union Swiss’ part is

seen as the real benefit. Justin believes that “Japan taught us more about the West than the

West taught us about the West.”

APPENDICES

Copyright UCT

MBA Research Report

APPENDIX 1: Bio-Oil’s global retail sales

Bio-Oil has achieved 55% year-on-year growth over the past eight years

APPENDIX 2: Bio-Oil market share information

Copyright UCT

MBA Research Report

Copyright UCT

MBA Research Report

APPENDIX 3: Bio-Oil Consumer television advertisement

Copyright UCT

MBA Research Report

APPENDIX 4: Bio-Oil Pregnancy print advertisements

Copyright UCT

MBA Research Report

Copyright UCT

MBA Research Report

APPENDIX 5: Bio-Oil Japanese print advertisements

Copyright UCT

MBA Research Report

Bio-Oil’s Japanese print advertisements:

“Marks will eventually make you feel uneasy”.

C. INSTRUCTOR’S GUIDE

Copyright UCT

MBA Research Report

1. Case Summary

The case study is divided into two sections, A and B. Part A concludes with a real life problem

faced by the company. Students are expected to debate different solutions, after which the

instructor will hand out Part B, which gives information explaining how the company really

tackled the problem.

PART A: Union Swiss is a South African based skincare company founded in 1954. In March

2000, Justin and David Letschert bought the company and over time divested all but one of its

personal care brands. Since then, Bio-Oil, their sole product, has become a global skincare

brand of note. It is sold in 22 countries on five continents and is the market leader in 20 of

those 22 countries.

Bio-Oil is a specialist skincare product which improves the appearance of scars, stretch marks

and uneven skin tone. The oil contains a range of ingredients including vitamin E and A oil as

well as the breakthrough ingredient PurCellin oil, which makes it useful to treat a wide range

of skin concerns.

In 2002, after reaching R 1 million monthly turnover in the South African market, the

Letschert brothers decided to expand the brand globally. They proceeded to launch Bio-Oil in

the UK, Australia, New Zealand, Japan, United States, Malaysia and Canada. In 2008, 8.7

million units of Bio-Oil were sold in its 22 markets around the world, with retail sales totalling

R 1 billion. Justin, the CEO, is in charge of brand building at the global head offices of Union

Swiss in Cape Town, while David, who is the chief operating officer, looks after Bio-Oil’s

manufacturing near Johannesburg.

Brand building at Union Swiss are explained by focussing on three main issues: the global

business model which separates all operational issues from brand building activities, their

philosophy around consumers and communication and lastly, standardized advertising.

Union Swiss uses the same, in-house produced advertising in all their country markets. This

requires careful planning and a message which is globally relevant. To this end, Union Swiss

uses authentic testimonials from satisfied consumers around the world of which they receive

hundreds per year.

Copyright UCT

MBA Research Report

The only market in which Union Swiss could not use their regular Bio-Oil advertising is Japan.

This was due to strict regulations about the use of the classic Japanese character for “scar”.

Prior to the launch of Bio-Oil there was also no scar product category, which meant that

women were not aware that they could improve the appearance of their scars and stretch

marks. Communication was thus a major challenge, aggravated by the fact that informal

research showed that Japanese consumers have a different decision-making-process to

consumers in other parts of the world.

Part A concludes with asking the reader what they think Union Swiss should do in Japan.

PART B: This part of the case study gives a short description of Union Swiss’ response to the

Japanese problem. This includes appointing a Japanese advertising agency, moving the

production of Bio-Oil to Japan and introducing more communication touch points in the

purchasing decision, for example: product testers and special brochures in store and the

implementation of training programs for shop assistants.

Copyright UCT

MBA Research Report

2. Statement of learning objectives

The aim of this case study is to showcase successful global brand building and standardized

advertising through the example of Bio-Oil. The reader is taken on the brand’s nine year

journey; from a local South African product with a turnover of R 3 million, to a category

leader in 20 countries with retail sales of R 1 billion.

Through desktop research, studying internal company documents, company visits and

interviewing key individuals involved in brand strategy, the case is able to give an intimate

look into centralized brand building at Union Swiss’ global head quarters in Cape Town, South

Africa.

The main theme of the case study is to show how a single-minded focus combined with a

philosophy which makes standardized advertising the logical choice, can lead to great

success. Unlike the majority of skincare companies, Union Swiss does not go after every trend

that becomes popular; line extension of core products, over promising to consumers and

glamorous advertising using celebrities are not their style. The company’s unique approach to

communication sets them apart and inspires consumers to trust the brand. The researcher

anticipates that in this global age of business, some important lessons can be drawn from

Union Swiss’ story for any company wishing to expand beyond their national borders.

The case shows how, in order to be successful, global business requires strategic flexibility.

No philosophy can be completely sacred in the global arena. Union Swiss’ willingness to

engage in a long term dialogue with Japanese consumers is bearing fruit and indicates once

again that focussing heavily on the short term bottom line might not be the best strategy for a

global business.

The case study is relevant to business education as it explores how to build a brand across

national borders, using the example of Bio-Oil as a product which has been launched

successfully in 22 countries. It would be ideally suited for a MBA Marketing Management

class.

The case study offers students the opportunity to gain insight into:

Copyright UCT

MBA Research Report

Successful global brand building: Global brand building is often a conceptual topic

without specific practical guidance. The case provides detail and insight into the day to

day practical considerations which global brand building entails.

The debate between standardized vs. adaptation of advertising across national

borders: The case illustrates that even if one of the two strategies are followed

wholeheartedly, there may always be an exception to the rule.

Strategic flexibility: Even though Union Swiss has a specific brand building

philosophy, they were flexible enough to adapt it to capture the Japanese market. In

global marketing practice, being flexible without losing the core of the communication

message is a key challenge.

3. Presenting the Case

Before preparing for this case study, students are advised to revise the prescribed reading

material listed below and any other material on global brand building and/ or international

marketing communications already covered on the course:

Agrawal, M. (1995). Review of a 40-year debate in international advertising: Practitioner and

academician perspectives to the standardization vs. adaptation issue. International Marketing

Review , 12 (1), 26-48.

Wang, H., Wei, Y., & Chunling, Y. (2008). Global brand equity model: combining customer-based

with product-market outcome approaches. Journal of Product and Brand Management , 17 (5),

305-315.

Students should be instructed to read the case and work through the discussion questions

before the class. The estimated time to be spent preparing (reading and analysing) is two

hours.

Copyright UCT

MBA Research Report

4. Suggested Discussion Questions

These questions can be discussed in the class as a whole, or students can be broken into

smaller groups to discuss.

Global Brand Building

Answer:

Why are brands important to businesses? (10 minutes)

Reference: Section on “Brand building at Union Swiss” in case study

Copying a product is easy; copying a brand is much harder

Consumers love brands, not products

Answer:

Is there a difference between local and global brand building? (15 minutes)

Reference: Section on “Global Brand Building” in theoretical overview

Both activities are mostly about building brand equity, but due to more stakeholders

involved (regional offices in different countries) it can be harder to build a global

brand than a local one.

Global brand building also entails finding a message which is relevant across borders,

and which do not offend certain cultures. Therefore it could be said that a global

message must be more “clear” or “simple” in order to be universally understood.

Standardization vs. Adaptation

Answer:

Discuss the benefits of a standardized marketing communication strategy by using

examples from the case. (15 minutes)

Saving of photography, modelling, copy writing costs

Copyright UCT

MBA Research Report

Consistent global brand reinforce brand image/message

When using an in-house agency: total control over global brand image

Answer:

Do you think Bio-Oil’s advertising philosophy (in-house produced, not changed often, and

standardized across borders) can work for any product or is its relevance restricted to

certain product/consumer segments? (20 minutes)

This question’s objective is to stimulate debate, not to suggest a clear answer.

Consider the following: high interest purchases (car) vs. low interest purchases (tooth

paste) and niche brand (designer clothing) vs. mass brand (Coke)

It can be suggested, for example, that brands like Mini Cooper cars or Coke need to

always seem like they are at the forefront of design and entertainment in advertising

and therefore need many advertising agencies working on their communication in

order to come up with the most innovative work.

Strategic Flexibility

Answer:

Do you think Union Swiss made the right decision by choosing to adapt their marketing

communication strategy in Japan, or should they have moved on to an easier market

instead? Give reasons for your answer. (10 minutes)

This question’s objective is to stimulate debate, not to suggest a clear answer.

The reason why Union Swiss did not “just move on” was that they have a broader focus

than the bottom line. The company is interested in learning and saw Japan as an

opportunity to expand their knowledge.

Copyright UCT

MBA Research Report

5. Suggested Assignment Questions

Answer:

Write a half-page description of Union Swiss’ global business model and motivate why it

works.

Reference: Section on “The Business Model” in case study

Mix between classic distribution model and head office model

Separation between global operations and global brand building

Complete focus on brand building, no operational interruptions

Continuous improvement

People: Passion, self-knowledge and leadership, interest in human behaviour

Simplicity

-

Using the Bio-Oil case study, list:

Answer:

Union Swiss’ key brand building principles

Reference: Case study in general

A good product, emotional connection with consumers, communication that speaks to

the heart, the human heart is the same everywhere, in-house advertising, keep things

truthful and simple.

-

Answer:

The key principles of successful global advertising

Reference: “Standardized advertising that works” in case study

A message which speaks to the human heart, across cultures

Copyright UCT

MBA Research Report

A message which will be approved by the strictest regulations for a specific industry

Filming and shooting in locations which are not specific to one country

Using a variety of models who fit into different demographics

For TV: Making sure models do not speak directly to camera so dubbing for different

markets do not compromise on authenticity

Choosing neutral clothing for models

Answer:

Discuss Union Swiss’ communication mix.

Reference: “Standardized advertising that works” section in case study

Advertising (TV and Print), PR, Training and Congresses, Trade advertising and

promotion, Co-op advertising, POS

The Case of A Case Study Research Report Copyright...

Documents

Transcript of The Case of A Case Study Research Report Copyright...