Summary

Intricacies of International Branding

Several brands from emerging markets have started entering developed markets and capturing market share in
these markets. In the face of several challenges, these brands have carefully strategised their market entry into
developed markets and have become successful

Challenges for emerging-market Brands in Devloped Markets

An emerging market brand, while entering a developed market, faces the following challenges:

1. Perceived inferior quality - It is a common perception among people from different countries that
products from emerging markets are of low quality. This perception is also attached to branded goods that
go from these markets to developed markets. This creates a huge barrier for the brands to develop trust
among consumers.
2. Latecomer disadvantage - Brands from emerging economies are latecomers in the developed markets,
where established competitors have had plenty of time to build their brand and gain consumer trust and
loyalty. It creates a huge barrier for emerging market brands to steal a consumer base from already
established competitors.
3. Poor marketing capabilities - A majority of companies from emerging markets have limited business
models, primarily focused on the B2B setup. Hence, they don’t have a deeper understanding of consumer
behaviour to market their products to them.
4. Mindset problem - Majority of senior management in these companies focuses on investments that have
assured returns and within a specified timeline. For them, branding, which is a long-term activity, seems like
a futile exercise with no tangible returns.
5. Low marketing budgets - On entering developed markets, emerging market companies compete with
other companies that have multinational presence and whose revenues are substantially higher than theirs.
Therefore, their marketing budgets are a mere fraction of their competitors’.

Overcoming all these challenges, several brands have entered developed markets and created strong, global
brands. A research conducted by Nirmalya Kumar and Steenkamp has outlined several strategies that are
commonly used by brands from emerging markets to enter developed markets. These strategies have been
discussed in detail below

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 The Brand Acquisition Route
Brands use this strategy to acquire foreign brands in developed markets to gain access to their consumer
base. This is a quick way to establish brand presence in global markets. After the acquisition, these
companies have two options:

1. Phase out the acquired brand and migrate its customers to its own brand portfolio - A company
should phase out the acquired brand if the industry it is operating in has huge exit barriers for customers,
such as the telecom industry, banking, etc. These exit barriers ensure that even if the brand name and
identity are changed, there will be little-to-no loss in the existing consumer base. A company should also
go for this option if its own brand is stronger than the acquired brand.

For example, when Tata acquired the Ritz-Carlton in Boston and the W Hotel in Sydney, both luxury hotels,
it changed their names to its brand Taj; Taj is a well-established brand.

2. Retain the acquired brand and assimilate it with its own brand portfolio - A company should retain
the brand if the acquired brand is strong in regions and channels where the acquiring company has little-
to-no presence, or if it differs vastly from the firm’s existing brand portfolio, or if it has a distinctive heritage
from which dissociating the consumers is not an easy task.

When Tata acquired the Tetley brand in the UK, it retained the brand and simply placed its logo on the
packaging. Tata decided to retain this brand because Tetley is a very well-known brand in several different
countries. It also has a distinctive heritage of more than 180 years, because of which Tata decided against
phasing out the brand.

The Positive Campaign Route

The positive campaign route helps brands overcome the perception of negative image. This can be done in
the following ways:

1. Choosing a foreign brand name - By choosing a brand name that sounds foreign and doesn’t give away
the brand’s country of origin, brands can avoid being associated with the negative image of their country.
They should adopt a brand name that gets associated in consumers’ minds with countries that are deemed

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 to possess a strong image for that category. For example, Lenovo, a Chinese brand, chose a brand name
that doesn’t give away its Chinese roots.

2. Favourable cultural aspects - By associating their brand with favourable aspects of their culture,
companies can create an association of high quality in consumers’ minds. For example, China’s ASD brand
associated itself with rice, which is ingrained in Chinese culture, and came out with cooking utensils related
to rice. Consumers automatically associated this product to their rice eating culture and perceived it to be
of high quality as well. The brand succeeded, and then introduced products in other categories as well.

3. Offering extra guarantees - By offering an extra guarantee, companies can lower consumers’ risk
perception for their brands. For example, Hyundai built its brand in developed markets by backing its high-
quality products with a customer-centric warranty program that was hailed as America’s Best Warranty
program.

4. Aesthetics - By focusing on product aesthetics, companies can create an image of a high-quality brand in
consumers’ minds. However, the product should not be of low quality, as aesthetics can’t substitute quality.
Hyundai also focused substantially on its aesthetics. It created a great quality product and focused on
creating a great design, which was branded as the fluidic design. This design focuses on organic shapes
and flowing lines instead of sharp angles and makes the vehicle more beautiful, graceful, and sleek, along
with making it more aerodynamic

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 The Natural Resources Route

Using this strategy, companies can brand their products by drawing an association between a particular
geography, its resources that are unique to that geography, and the company’s product made from these
resources, thus, lending their brands unique perceived characteristics. This involves the following process:

1. Companies should first define the geographical region and create an association between the
region and their brand.
2. They should then specify rigorous production standards to create an entry barrier for competitors
and also to communicate the superiority of their brand.
3. They should then authenticate the ingredients of the product and its manufacturing process by
securing Geographical Indication (GI) status for their product. This needs to be done in association
with the government of the country. A select few majority brands can group together and work with
the government to obtain the GI tag for their product.
4. Finally, brands should invest in branding and marketing activities to create awareness about their
brand and the region to which they belong in the international market.

Basmati rice, which is famous for its aroma and long grains, is unique to the Indian subcontinent and needs
to be aged for nearly 18-20 months to enhance its aroma and quality. This leads to high working capital
requirements for the business, thus creating a strong entry barrier for new players. In 2016, India obtained
Geographical Indication for its Basmati rice. ‘India Gate’, which is a leading Indian brand of Basmati rice, has
managed to establish a global presence by focusing its brand communication on the geographical
requirements and special processes required to produce Basmati rice

The Diaspora Route

Diaspora refers to movement of people from one place to another with an intention to settle there. These
migrants incorporate foreign culture into their own culture in four different ways:

1. Assimilation - This happens when migrants completely adopt foreign culture without retaining any
aspect of their own culture.
2. Marginalisation - This happens when migrants are indifferent to the new culture of which they are
now a part of. They purchase products purely on the basis of their functional performance.
3. Ethnic affirmation - This happens when migrants completely reject the foreign culture and retain
their home culture.
4. Biculturalism - This happens when migrants adopt foreign culture while maintaining their home
culture. They find a way to accommodate both the cultures in their lifestyle.

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The diaspora strategy targets immigrants who have moved out of their home country into another country.
The cultural groups targeted in this strategy should be financially well-off and should socialise with people
of different cultures such that they help to infuse the brand to other populations as well. Since biculturals
accommodate both the home culture and the foreign culture, they are the target segments for this strategy;
apart from consuming these brands, they’ll also propagate them to people belonging to different cultures.
Ethnic affirmers are also a target segment for this strategy, but they will not provide a stronghold to the
brand in the market, as they don’t socialise much with people of other cultures.

Dabur, an Indian brand, used this strategy to enter developed markets. After gaining a strong foothold with
the diaspora, it started targeting the mainstream population of the host country. By following this route,
Dabur managed to mark its presence in over 50 countries and established itself as a global brand to be
reckoned with.

Reverse diaspora - Another common route adopted by emerging market brands is the reverse diaspora
route. In this strategy, brands target tourist populations who have visited the brand’s home country, used
the brand there, and liked it. The brand communication is done in such a way that it triggers people’s
holiday and carefree memories associated with that place.

Corona beer, a low-cost Mexican beer brand, used this strategy to gain entry into the US market. It targeted
the college-going teen population who had visited Mexico during the spring break and had experienced
this product and loved it. With its brand communication, Corona strived to recreate the memories of fun,
joy and free-spiritedness that people felt while on vacation. By creating a brand that people could relate to,
Corona has created a global brand that is now present in over 120 countries

The Cultural Resources Route

This strategy is used by brands to associate their brands with their country’s cultural values. It involves:

1. Identifying the cultural aspects of the country that the brand can be associated with
2. Choosing the brand name, logo, tagline and other communication in such a way that it draws
associations between the brand and the country’s cultural values
3. Communicating these cultural values via proper advertisements and all the appropriate media such
as print, TV, radio and so on
4. Reinforcing the brand image in the form of packaging, pricing, etc.

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Dabur, an Indian ayurvedic brand, apart from following the diaspora route, also focused on its ayurvedic
roots in India. If you look at its website, it has dedicated an entire page for talking about Ayurveda, its
benefits, how it impacts the body, home remedies, and so on. By focusing on these core values, Dabur has
established itself as a trusted brand in all things herbal and ayurvedic.

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