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”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
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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
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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
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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
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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.
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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
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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
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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
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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).
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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.
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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.
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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.
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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
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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).
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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).
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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
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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).
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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
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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
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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).
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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
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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.
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· 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:
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· 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
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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.
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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).
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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
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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
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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).
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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).
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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:
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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
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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).
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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
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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).
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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
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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
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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).
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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
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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).
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· 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
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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
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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:
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“… 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.
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· 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.
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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.
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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
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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.
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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
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Bio-Oil’s Japanese print advertisements:
“Marks will eventually make you feel uneasy”.
C. INSTRUCTOR’S GUIDE
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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.
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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.
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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:
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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.
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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
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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.
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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
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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
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