Building Brand Equity Across Cross-Cultural Markets

A presentation by Leke Alder at the “What Is Your Africa Strategy?” Conference by Georgetown Capital Partners June 17, 2008




n 6 is a perfect number and signifies harmony & balance n 6 represents justice in Pythagorean theory n 6 relates to the dimensions of a cube. It reflects matter


This presentation is focused on 6 things: 1. The Book of Assumptions 2. Definition and Implications of Brand Equity 3. Peculiarities of African Markets 4. A Word on Brand Architecture 5. The Big Question 6. Lessons and Recommendations



The Book of Assumptions


The biggest branding firm in Africa today is...




An analytical study of its methodology quickly reveals serious flaws. It is terribly understaffed for the size of its ambition; and opinion often masquerades as objective analysis.


For example, Jeff Koinange was the only African correspondent of CNN. Judging by the size and complexity of Nigeria, even a thousand Jeffs cannot cover Nigeria, not to talk of South Africa or East Africa, or West Africa.


Major African languages n Arabic n Kinyarwanda n Hausa n Gikuyu n Amharic n More n Oromo n Kirundi n Yoruba n Sotho n Igbo n Luhya n Somali n Tswana n Ibibio n Kanuri n Fula n Umbundu n Malagasy n Northern n Afrikaans Sotho n Zulu n Kongo n Chichewa n Tigrinya n Akan n Tshiluba n Shona n Wolof n Xhosa n Swahili Nigeria alone has 389 ethnic groups and 521 languages


But as far as CNN is concerned, East or West, North or South, Jeff was enough!


The second critical flaw in CNN's methodology is that the Network is guilty of Typification.


According to CNN, Africa is about:


When CNN is not showing slipper-breasted women carrying malnourished babies with flies buzzing around their heads...


… it shows us a picture of Uncle Mugabe.

Robert Mugabe


In CNN’s portrayal, he is a typification of the “African” leader:


The Arabs wanted to escape CNN's racial profiling and someone figured out a way to do it. Perhaps the smartest Arab leader is Sheikh Hamad bin Khalifa, the ruler of Qatar.
Sheikh Hamad bin Khalifa Emir of Qatar


He established his own branding corporation and named it Al Jazeera. The mission of Al Jazeera is “to provide accurate and impartial news with a global, international perspective”.


And the vision of Al Jazeera? “Al Jazeera (English) is destined to be the English-language channel of reference for Middle Eastern events, balancing the current typical information flow by reporting from the developing world back to the West and from the southern to the northern hemisphere.”
(Emphasis mine!)


Now CNN is governed by 2 classes of assumptions: 1. Assumptions made by us about CNN 2. Assumptions made by CNN about us


We assume for example that because CNN has a wide reach, it is an authority on what it says. That is obviously a fallacy. In logic, this fallacy is called Appeal to authority.


Most times, what CNN says is the opinion of people who for the most are not even experts in their field. The term “Correspondent” is an omnibus clause.


Again we assume that if you say something authoritatively, it means you are an authority.


We assume that whatever we hear on CNN is gospel truth. Indeed, were CNN’s broadcast bound into a volume of transcripts, it will rival the Gospel of John!


We do know that what we hear on CNN is not always gospel truth. Jeff was accused for example of staging Niger Delta militants. The poor guy had become a movie director/producer. He seemed to have mingled too much with Nollywood types.


Now let’s turn to assumptions made by CNN about us. Assumption 1: Africa is one! There is no Francophone or Anglophone Africa. Africa is one! What the Organisation of African Unity (OAU) could not achieve, CNN achieved!


Assumption 2: The nations of Africa do not have individual identities or peculiarities!


Assumption 3: P=Q Q=P Africa is Nigeria Nigeria is Africa Where Nigeria is a variable and Africa is a constant.


I do not want to make the same mistakes as CNN, even though we share one similarity: we both speak authoritatively!


Therefore, in talking about building brand equity across cross-cultural markets - an Africa strategy, I will not assume: n That Africa is one n That Nigeria is Africa or Africa is Nigeria n That there is only one phone network in Nigeria. (There are more than 3 actually: Francophone, Anglophone, MTN phone and Celtel phone.)


But I have already started making mistakes in this assumption thing. I am assuming for example that we all know what brand equity is. Please permit me to delve into the subject.


Definition of Brand Equity


Now there are many definitions of Brand Equity: 1. Brand equity is that incremental value that accrues to a product when it is branded.
V. “Seenu” Srinivasan, Adams Distinguished Professor of Management, Stanford University


Brand equity is an intangible asset that depends on associations made by the consumer and it can be viewed from 3 perspectives: financial, brand extensions and consumer-based.
NetMBA, Business Knowledge Center



Brand equity is used to describe both the value of the brand and the brand's component values.


A brand's power derived from the goodwill and name recognition it has earned over time, and which translates into higher sales volume and higher profit margins against competing brands.



An intangible value-added aspect of a particular good that is otherwise not considered unique.


Brand equity is a set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm's customers.
David Aaker, Professor of Marketing & Policy, University of Berkeley


We can see from the foregoing that there’s no consensus on the definition of brand equity. For some, it translates into customer loyalty; for others, it translates into financials. I will therefore settle the score by giving my own definition.


Brand Equity is the intrinsic and extrinsic value inherent in a brand. It includes semi-tangible assets like the name and logo valuation and other abstract assets like reputational advantage, market preference, etc.


Implications of Brand Equity


Generally, brand equity manifests as follows: 1. 2. 3. 4. 5. 6. 7. 8. Increased market value (market capitalisation) Rising stock price Product/service preference Goodwill PR equity Top-of-the-mind name/brand recall Transfer of value to new products Leverage during mergers and acquisition


Consider some brands with immense brand equity in Africa



Event horizon: The big bang


The accepted chronological model of the universe is the Big Bang. We do know that the universe is expanding because of Edwin Hubble’s discovery in 1929 that galactic distances are generally proportional to their red shifts.


Thus, the age of the universe is determined by the light emitted from distant galaxies and quasars. Because they have been red shifted to longer wavelengths, we have an idea of the age of the universe - 13.73bn (give or take 120m years).


But this methodology imposes certain limitations. Because the universe is expanding, some lights from the past may never get to us. And because the universe is expanding, future lights may never reach us.


Thus, we have a past event horizon and a future event horizon.


In considering some of the global brands on our list, we are limited by past event horizons. And because their expansion is in the future, we also have a future event horizon. However this much we can gather from these brands - this is the history we see (I’m going to illustrate with a few case studies).


Nestle Nestlé is a multinational packaged food company founded and headquartered in Vevey, Switzerland. It resulted from a merger in 1905 between the Anglo-Swiss Milk Company established in 1866 by the Page Brothers in Cham, Switzerland and the Farine Lactée Henri Nestlé Company set up in 1867 by Henri Nestlé.

1860 1905 1910s 1947 1950 1963 1971 1973 1977 1984

Nestle founded Nestle merges with the Anglo-Swiss Condensed Milk Company Doubles operations through World War I government contracts Nestle merges with Maggi Acquires Crosse & Blackwell Acquires Findus Acquires Libby's Acquires Stouffer's Acquires Alcon Laboratories Inc. Nestle launches new round of acquisitions


1997 1998 2002 2005 2006 2007

Acquires San Pellegrino Acquires Spillers Petfoods Acquires Ralston Purina, Chef America Acquires Delta Ice Cream Acquires Medical Nutrition division of Novartis Pharmaceutical Acquires Gerber



Standard Bank Standard Bank Group Limited is one of South Africa's largest financial services groups. It operates in 18 African countries and a total of 38 countries worldwide. In 1862, a group of businessmen led by John Paterson founded the bank named Standard Bank of British South Africa and began banking operations in 1863, in Port Elizabeth, South Africa.



Standard Bank of British South Africa begins operations; merges with Commercial Bank of Port Elizabeth, Colesberg Bank, British Kaffrarian Bank & Fauresmith Bank 1883 Renamed Standard Bank of South Africa 1886 Opens branch in Johannesburg 1890-1955 Owns 600 branches 1962 Registers as Standard Bank 1965 Merges with Bank of West Africa


1987 2006 2007

Merges with Chartered Bank of India, Australia and China to become Standard Chartered Bank; Standard Chartered Bank Group established as holding company South African investors acquire 100% ownership Acquires BankBoston Argentina Acquires IBTC Chartered Bank & 67% share in Turkish bank Dundas Ünlü Securities; Industrial and Commercial Bank of China acquires 20% interest in Standard Bank


Multichoice M-Net was founded as one of the first two subscription television services outside of the United States, and MultiChoice was incorporated to provide subscriber management services for M-Net’s pay television bouquets. It is one of the first pay-TV channels to launch outside the US.

1986 1990 1992 1993 1995 1996 1997

M-Net founded as Africa’s 1st pay-TV station Listed on Johannesburg Stock Exchange Launches analogue satellite TV in 20 African countries Multichoice splits from M-Net to become an independent company Launches digital satellite TV & Greek TV platform Changes name to MIH Holdings Expands into Thailand; invests in OpenTV (supplier of interactive TV operating systems)


2000 2001 2002 2003 2005 2007

Launches Direct-to-Home in China; increases OpenTV ownership to 80%; OpenTV IPO; launches Greek digital TV Launches new satellite for sub-Saharan Africa & Indian Ocean islands Acquires 46.5% in QQ, China; launches services in India & Portugal Launches interactive TV Improves service offers DSTV Premium subscribers cross the 1 million mark for the 1st time Acquires Tradus (internet auction company)



There are 3 immediate lessons we can learn: 1. The brands achieve growth through mergers and acquisitions (e.g. Nestle, Standard Bank)


2. The brands seem less concerned with growth than with acceleration. F=MxA where a=acceleration, f=force, m=mass Acquisition is a good acceleration model.


3. The brands are generally seen as a compendium of the events that make up their timelines/history. The history dissolves into the brand. Unilever for example started with Lever Brothers which produced Sunlight soap - the 1st branded product in 1888.


Impact of national brand equity on corporate brand equity


A nation’s brand equity impacts greatly on its emergent brands:


Peculiarities of African Markets


1. The regional nature of the continent. Africa is made up of several countries and not one region 2. The regional nature of the psyche of the population 3. Socio-economic factors 4. Political factors 5. Educational factors 6. Cultural factors 7. Religious factors


A Word on Brand Architecture


Let’s consider brand architecture from the perspective of other successful cross-cultural brands:


Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. Revenues around the world in 2006 exceeded £10 billion (approx. US$20 billion).


Business Focus Entertainment, travel, financial services, consumer products Conceptual Definition/Brand Essence Rebellion against the establishment. Value for money, quality, innovation, fun and a sense of competitive challenge.



Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world. HSBC's international network comprises over 10,000 offices in 83 countries and territories in Europe, the AsiaPacific region, the Americas, the Middle East and Africa.


Business Focus Integrated financial services Conceptual Definition/Brand Essence The world’s local bank




Societe Generale is one of the leading financial service groups in the Euro zone. It employs more than 120,000 people worldwide in 3 three businesses – retail banking and financial services, global investment management & services and corporate & investment banking


Business Focus Financial services group Conceptual Definition/Brand Essence Extreme focus on the customer; Synergies that add value to the customer




From the foregoing, we surmise that 2 kinds of brand architecture can work for cross-cultural brand strategy: monolithic as in HSBC and graphical unification as in SG. Consumer goods corporations like Unilever however sometimes adopt a product-based brand architecture or house-of-brands.


The big question: How do you build brand equity across cross-cultural markets?


The starting point is to identify cross-cultural features and platforms: Features 1 Quality and excellence 2 Strong HR 3 Innovation etc. Platforms Web and new media Sports Youth culture e.g. music, films etc.


Other key areas of focus include: 1.Core definition 2.High level of professionalism and institutional outlook 3.Strong processes and discipline 4.High ethical standards 5.Global outlook with local adaptation 6.Strong HR culture


7. Innovation 8. Succession planning 9. Strategic planning 10.Wisdom (to deal with the political terrain and environmental factors. Understanding of the signs of the times) 11. Regionalised strategies 12. Government relations competence 13. Home government backing


Bringing It Home







Lessons from home-grown brands 1. They focus on their competitive advantage in new markets 2. They have sheer willpower and guts 3. They grow through mergers / acquisitions / strategic partnerships



Recap of lessons and recommendations: Keys to building brand equity across cross-cultural markets


1. Have a strong business definition and conceptual definition 2. Think big 3. Put in place structures to manage growth 4. Adopt international standards 5. Be sensitive to cultural nuances and regional differences 6. Put in place a government relations strategy 7. Shed limitations and cultural baggage 8. Embrace knowledge


Do not be like CNN!


Don’t assume that this lecture is exhaustive.

Broaden your horizon!


Thank you!