[Text bank International marketing The fate of global brands Before you read Coca-Cola, McDonald's, Marlboro, Nike and Walt Disney are ‘examples of global brands. Can you think of some other examples? The point of global brands is to produce products that dominate markets worldwide, So how successful are global brands in your area? Why are they successful or why are they not? Reading Read this article by Richard Tomkins from the Financial Times and do the exercises that follow. (Level of difficulty: Text bank Plcharé Tomkins only slightly inferior quality at a ~ » vastly lower price. Usually, too, In the Harvard Business School these products were better suited professor Theodore Levitt’s semi. to local tastes and cultural prefer: nal paper The Globalisation of — ences than those being foisted ‘Markets, written in 1983, he onto consumers by the global cor. argued that, as new media and »s porations. The global brand own. technology shrank the world, peo- ers were left spreading their pple’s tastes would converge, creat- advertising and other fixed costs ing a single global market that over tiny market shares and often would be dominated by the faced extra costs, such as tariffs. +» World's most successful brands. 40 In many of these countries today, | So, when the Berlin Wall fell and global brand owners command the the barriers to world trade came _super-promium end of the market down, it seemed Prof Levitt would in any given product category, be proved right. Global brand own- while local brands command the ers poured into the newly opened 4s rest. ‘The global brand owners ‘markets and, facing little competi- could try to move into the mass tion in countries unaccustomed to. market by ereating low-price prod- consumer culture, they thought ucts designed to suit local tastes, they would clean up. Then, some but that would throw them into zoawkward commercial realities 50 head-on competition with local started to close in. ‘companies possessing better dis. Once local consumers had tried tribution channels and a far deep. these new products, they found er understanding of the market. them far too expensive to buy ona —_ Increasingly, therefore, they have regular basis, even if they liked 5 resorted to buying local brands them. And soon, local producers and the companies that own them, sprang up offering much better And here, of course, ies the para: value for money with products of — dox. Whatever is the point of own. 136] _© Pearson Education Limited 2006 EEE Goodbye to the golden age of global brands ing a global brand if it dovs not 6» work in global markets? Let us be optimistic and suppose the poor countries do become rich. But what do we see happening in rich countries? Ever proliferating brand choices. There are more soft drink brands than there have been for years, more fast food chains, ‘more packaged goods, more cars. Supermarkets are competing with ye brand owners by selling own-label products that are as good as the branded version but cost 20-80 per cent less. Global brands, of course, are nat about to disappear. But it must now be clear that Prof Levitt was mistaken in believing the world’s tastes would converge on stan- dardised products. Everything we te have learned about consumerism over the decades shows that, as people become better off, they want more choices, not fewer. Global brands may be here to stay, 85 but their golden age is over. From the Minanciat Times Pa a oe a a a a ae a ae er oe a a am aaa nan aInternational marketing Text bank J 4 True or false? a) When the Berlin Wall fell and the barriers to world trade came down, Professor Levitt was proved right. ) Shortly after that time, local producers in countries with newly opened markets began supplying similar products to global brands at a much more attractive pric. ©) Currently global brand products sell best as luxury products in many of these countries. 4) In ich countries there are fewer brand choices in supermarkets. ©) The more money consumers have, the more choices: they want, 2 Complete the following definitions of expressions from paragraph 1 with the words in the box. aweward clean consumer converge hime pour seminal aa ‘academic paper is one that has a powerful Tnfluence on the way people think and act. 1) If people’ tastes. . more and more people prefer the same things. ©) When global companies Into newly opened markets, an enormous number of them enter these markets at the same time. 4) Companies that are f9CINg vnenme very few competitors in their market. ©) Countries that are unaccustomed to .. culture are nat yet familiar with the idea that buying and selling goods and services can be a central part af people's. lives, 1 Companies that sew up in a particular market perform well and make big profits. 8) Acompany that has to face . commercial realities has to work with business situations that make its life eiffcut competition have 3. Why has life been so dificult for global brand owners in these new markets? Which ofthe reasons listed below are ‘not mentioned in paragraph 2? 4) These products did not refect the local tastes and ‘cultural preferences. ) Many local consumers may have liked the new products, bbut they were too expensive for them to buy often. ©) The global brand owners had to pay alot for local distribution and warehousing facilities. @) After awhile, the global brands were competing with local producers who were supplying sinvlar products far more cheaply. © Although the global brand owners still have to pay fixed costs such as advertising, they do not really have enough market share to make this worth it. £) tis not easy for global brand owners to set up offices locally and employ local sales forces. 8) Global brands also have a disadvantage compared with local products because they have to pay tariffs for importing their goods into these countries, (GRD © Pearson Enucationimites 2006 44, Before looking at paragraph 3 again, put a verb from the bax into the following sentences inthe correct form. create resort buy command own possess design throw 2) In many of these countries today, global brand owners snons the Super-premiur end of the market in any given product category. ) The global brand owners could try to move into the ‘mass market by «low-price products 7 tosuit local tastes, ©) That would global brand owners into head: ‘on competition with local companies better distribution channels and a far deeper understanding of the market d) Increasingly global brand owners have ern 0 local brands and the companies that own them. .) Whatever isthe point of. does not work in global markets? a global brand ifit 5 Find expressions in paragraphs 4 and s that mes 4) a constantly-growing selection of products from particular manufacturers with particular names ) products presented in special boxes or wrapping goods that carry the brand ofa particular supermarket 4) goods that have a particular, uniform identity and quality level @) 2 period of time when something has great popularity Over to yous Can you think of a global brand that has become particularly ‘successful in your area? Why has it done 0? Can you think of a local product that is so successful that it could become a global brand? Why do you think it could do Over to you 2 Choose a successful local product and give a presentation to your class about why itis successful and which countries it ‘could expand into, 337, Cr RLcOnOar [Text bank NE International marketing Moving your brand image upmarket Before you read ‘What products is Samsung, the South Korean electronics group, famous for? What can Samsung do to sell its products more effectively in Europe? What can Samsung do to appeal to people who buy more expensive products? Reading Read this article by Malja Pesola from the Financial Times and do the exercises that follow. [Level oF iffy Mala Pasola For hundreds of Europe's most fanatical computer gamers who took part in the first European championships this March there 5 was glory up for grabs in best-sell- ing games such as Halo 2 and Fifa ‘Soccer 2008, and €150,000 (£104,000) in prize money. For Samsung, the South Korean electronics group +» that sponsored the event, It was a chance to strut its brand in front of Europe's gaming community. It will be hoping that the seven-fig. ure sum it spent on the champt 1 onships at Hanover's CeBIT com: puter industry exhibition will help it win over an audience that has been difficult for advertisers and marketers to reach. The zegames at the Samsung Euro Championships were all displayed on the company’s 19-inch liquid crystal display flat panel screens, the mobile phone event of the 25 games was played on Samsung's D500 handsets and the company created a special game for the event called Babe Rally. “The games are a platform for us to so communicate with the youth sec- tor and early adopters,” says Hadrian Baumann, Samsung's general manager for European marketing. 35 _ Over the past five or six years, Samsung has fought to move its brand image more upmarket to compete with premium names, such as Sony. As a result, much of itsmarketing strategy has focused ‘on what it calls the *highslfe seek- er” segment of the market ~ peo- ple who adopt technology early and are willing to pay a high price 45 for it. Interbrand, the brand con- sultancy, recently ranked the com- pany as the world’s 2ist most valu- able brand, up from 42nd in 2001, But pressure has mounted on se Samsung to Keep up its efforts, ‘The company recently slipped back into third place behind ‘Motorola in mobile handset sales, At the same time, Samsung is suf ss fering from falling prices for its LCD screens, due to a glut in the ‘market. Stimulating demand for the screens among gaming fans ‘could be one way to help ramp up fo sales. Although Samsung scores well ‘in overall brand surveys and is Samsung plays to the young generation strong in Asia, studies indicate that in Europe it struggles to com. 6: pete with strong local manufac- turers, such as Nokia and Philips. Over the past three years, the com: pany’s internal research has shown a 25 per cent increase in yo positive attitudes towards Samsung in the 18 to 29-year-old age group. Positive attitudes among older consumers, however, have grown more slowly, 75 In order to enhance its hip, youth image, Samsung has also ‘signed a number of partnerships, including one with Quiksilver, the sportswear label, and Xbox, » Microsoft's games console for which it makes DVD drives. Being associated with brands such as these, says Mr Baumann, helps to give Samsung credibility in the 5 youth market: “It is clear that young people have a huge impact over their parents and older peo- ple when it comes to choosing technology. We are using younger y people as spokespeople for our products.’ ‘From the Financial Times 338 (© Peatson Eduction Limited 006 TENSVUUUUUUUUTUUUUUUuUUuUuUuUUUsU TEE International marketing 41 Replace the words in italics in the sentences below with the expressions from the article in the box, early adopters. enhance its hip, youth glory was up for grabs keep up its efforts move its brand image more upmarket sever-figure sum win over an audience 4) In the fist European championships this March, participants could win the admiration of many people in best-selling games such as‘Halo 2" and ‘Fifa Soccer 2005", and €150,000 in prize money. It willbe hoping that the more than €999,999.00 It spent on the championships at Hanover’s CeBIT computer industry exhibition will help it get a section of the public on ther side that has been difficult for advertisers and marketers to reach, ©The games are a platform for us to communicate with the youth sector and people who quickly lke to use new technology. 4) Over the past five or six years, Samsung has fought to ‘make its brand appeal to people who buy more expensive products ©) But pressure has mounted on Samsung to continue to work very hard. In orderto improve its fashionable, young image, Samsung has also signed a number of partnership, contracts with other famous brands. b 2 Look through the whole article and answer these questions, 4) Which different items was Samsung promoting at their ‘Samsung Euro Championships event at the CeBIT exhibition in Hanover? b) What is Samsung trying to do with its brand and is it successful? ©) What are the problems Samsung is having? <) Which part of the market is it most difficult for Samsung to penetrate? (6) So how dines that affect Samsung's overall strategy? 3 Find words or expressions in paragraph 1 that mean: a) participated ) pai for in exchange for advertising and public attention ) to present in a confident way 4) to make contact with €@) part of the market 4 True or false (paragraph 2)? 2) Samsung wants to compete in the same market as Sony. ) ‘High lfe seekers’ want to be the first to buy products with state-of the-art technology. © Avaluable brand’ is one that is well-known and respected for the quality o its products. GREE © eassoneaucation ined 2008 ‘Text bank J 5 Which words in paragraph 3 tellus that: a) not long ago, Samsung had sold more phones than Motorola? ) there are currently too many LCD screens on sale? ) it may be a good idea to generate a demand for LCD screens among people who enjoy playing computer games? 6 Thue or false (patagiaph 4)? a) The Samsung brand is currently more successful in Europe than in Asia ) Nokia and Philips are not competing effectively with Samsung in Europe. ©. Samsung has hired the services of a European research institute to find out how people fee! about their products. 7. Before looking at paragraph 5 again, complete the sentences below with a correct form of one of the verbs in the box. associate come give make sign a) Samsung has a number of partnership agreements. ») Samsung VD drives for the Microsoft Xbox. ©) Samsung is. vith brands such as Xbox and Quiksilver, 4) Being thought of together with these brands ‘Samsung credibility €) Young people have a huge impact over their parents. When it snnnsennnen t0 choosing technology. Over to you Think of five international brands that are successful in your ‘country. Why is this? Now think of five more local brands. What could they do to ‘expand into other markets? In groups or pairs, choose a local brand and prepare a presentation of what they could do to expand into an English: ‘speaking market (maybe into your teacher's country or a business associate's country). [39 yueg xaL