New World Order of Global brands

 most global brands have been invented by Western companies for Western consumers. emerging-market consumers are very different. simon silvester explains how to reach them

Over the past two decades, Western brands have spread across the world. They now fill the supermarkets of Brazil, Russia, India China, as well as Mexico, Indonesia, Vietnam and the other ‘next 11’ emerging markets. Five billion of the world’s seven billion people buy them.

But while they are all successful, these big global brands all have something else in common: nearly all were invented by Westerners for Westerners but they are now being sold to customers who earn $3,000 a year. It’s quite a leap. The consumer they were designed for looks nothing like the global consumer of today.

Emerging market consumers are getting richer of course, and rapidly so – consumer incomes in China, India and Brazil rise by 7% to more than 10% each year. But those consumers are not going to be as rich as consumers in the West in the foreseeable future.

The Chinese economy will soon eclipse the American economy with Chinese household incomes being one-fifth of those in America. India will follow with incomes even lower than that. We are entering a new era where the tastes and desires of poorer people are coming to dominate the consumer goods business. These poorer people in emerging markets are very different from Westerners. They have different demographics, different attitudes and different priorities. The average human being is a decade younger than the Western consumer. They grew up with generation gaps greater than anything ever seen in the West; and they share a past – but it is not the past of rich people.

So a brand designed to appeal to a Westerner is never going to be the right brand to appeal to the new generation of young adults in the emerging world of the 2010s. New brands are needed – brands that talk not to the rich, but mass-market brands that talk to the lives and aspirations of the ‘average’ human being. Here are some principles which may help you build one.

l Think zeitgeist: in the emerging world, the early 1990s was a dark time. In apartment blocks in Eastern Europe, pensioners were starving to death. Most Chinese were subsistence farmers. Many Indians had insufficient food to eat, no TV, no phone and no prospects.

Over time, everything became better, and then it became better again. Indeed, for most of the emerging world, the past 20 years have been the best 20 years ever. The sense of optimism, and that anything is possible, is everywhere. You may be managing your global brand from a depressed a post-credit crunch city in Europe or North America, but the mood of that brand needs to get with the times and be positive and optimistic.

• Think trial: over the past few decades the Western world has become older. The average person in Italy is 43 years old. In Japan the median age is 44. That ageing has slowly altered Western marketing culture – there aren’t many new adults to recruit; but there are many existing customers to keep, so marketing budgets have shifted from trial to retention. Globally, marketers are talking to a much younger consumer. The average age of Indians is 26. The average age in much of the Middle East and Africa is under 20.

Brands are marketing to billions of young adults who are eager to try the fruits of the boom for the first time. And that means that, globally, trial is absolutely central to marketing.

• Think visual: there are hundreds of languages in use in the world today, so any brand that relies on its name meaning something in English has problems.

Also, a big part of the world’s population has problems with reading. All of which suggests that to succeed in the world today, a true global brand needs to be primarily visual in nature.

Do you think this will lead people to think those brands are unsophisticated? Only if you believe that a modern sophisticated piece of technology would be better called a ‘ZX 300 PK’ rather than simply having a big picture of an apple on it. Or a running shoe would be better off with writing on it than simply a graphic ‘swoosh’.

• Think ‘youthquake’: in emerging markets, the generation gaps are much greater than anything seen in the West in the 1960s. A typical 15-year-old girl in the emerging world has grown up in the same SpongeBob- and Dora-led culture that Western kids have. But her mother grew up poor, without a TV or toys, and her grandmother grew up a peasant, with no sense of personal free will. Global brands need to recognise and leverage this generation gap.
• Think status: in emerging markets, status symbols have a much greater significance than in the West. Young adults in particular see the acquisition of status and its symbols as the be all and end all of their existence. If they’ve paid extra for a logo, they want people to see the logo. So the modest, understated nature of many Western clothing brands is completely wrong for them.
• Think small: most people in the emerging world have a lot less space at home than a typical Westerner; 60 sq m in Asia is a big apartment. And the person living in that apartment is unlikely to have a car at their disposal to do the shopping.

So they tend to favour smaller, lighter items that are easier to carry and store.

• Think video: more than 98% of Chinese people have a TV at home, and TV penetration in India will reach 90% by 2014. In China, people spend more time watching video streams via the internet than they do in the US. The conditions for a global mass market – the availability of cheap mass media – have arrived.
• Think fast: while the West stagnates, the global consumer is living through the fastest changes in history. So don’t spend ages trying to fit your product into past consumer trends. It doesn’t matter, and they won’t understand.
• Think service: marketers in rich countries tend to think that they are the best when it comes to inventing brands and delivering brand benefits, but the reality is that they aren’t very good when it comes to services. Asian hotel and airline brands often offer better standards of service than their Western competitors. Global service brands should be led from emerging markets, not from the West.
• Think cultural neutrality: global brands that focus on American and north European faces and attitudes can leave 80% of the world thinking that ‘this is not a brand for me’. For anyone looking for a cultural centre to their brands, the biggest consumer market of the 2010s and 2020s will be China. So they need to work out how it will play in Putonghua rather than in Peoria, Illinois.
• Think fake: fake brands are huge in emerging markets, and may be the main competitor to your brand. Work out how to handle them. Google’s Android is sweeping the emerging world at the moment without any problem at all with fakes – simply because it’s free.
• Think Kiasu: this is a Hokkien Chinese word meaning literally ‘fear of losing’, used by South East Asian Chinese to reflect their obsession with success. Among the new middle classes of the emerging world, life is about being ambitious, getting up to the next level and never being ripped off. Life is about pushing your children, and education, education, education. Brands need to reflect and celebrate their sense of achievement.
• Think cheap: Chinese and Indian companies are not succeeding by innovating in the conventional sense. They are succeeding by working out how to deliver products and services such as telecoms and cars profitably at a small fraction of the Western price. Western companies dismiss them as price-cutters at the moment – but they are following exactly the same strategy that Japanese goods used successfully in America and Europe in the 1970s.
• Think value equations: price consciousness is an element of every buying decision for the global consumer. This leads everyday brands to be perceived differently in the emerging world from how they are seen in the West. In the US, McDonald’s is the cheapest meal you can buy. In Russia or in Indonesia, it’s a mixture of a family treat, a middle-class teen hangout and a date venue. In the West, Ikea is the cheapest way of filling a home. But to most other people in the world, Ikea is a mid-market, stylish option.
• Think mobile: at the end of 2009, 90% of all humans lived in areas where they could receive a cellphone signal, and there were 5.3 billion cellular subscriptions in the world. Most of the planet has a cellphone. After television, the mobile phone is the world’s most popular technology – and is becoming a vital marketing medium.
• Think social: social networks, accessed via smartphones, are exploding in the developing world. Facebook hardly existed in Indonesia two years ago; today, 30 million Indonesians use it. Global brands need to work out how to socialise themselves, not just to Westerners, but to the entire planet.
• Think B2B: ten years ago, if a poor fisherman caught 20 mackerel, he would then have to choose a port, spend several hours sailing to it, and then hope for a good price for his catch. If prices were low that day, he had to sell anyway – or sail home with a boatload of rotting fish. Today the fisherman does his deal at sea via mobile phone. In the 2010s, peasant business is real business.
• Think innovation: societies in the emerging world are changing rapidly. Those in the West have stagnated. It’s much easier and more fruitful to innovate in rapidly changing societies. Global companies need to focus their innovation efforts on the emerging world.
• Think about your origins: people respect Mercedes Benz and BMW not because of any advertising they do but because they are made in Germany. Prada is stylish not because of the campaigns it runs in Vogue but because it comes from Italy. For many brands, their country of origin is their biggest asset. So manage the image of your country of origin with care.
• Think big ideas: many big companies in China and India have built themselves as conglomerates, rather than around a strong, single-minded business idea. Being a conglomerate allows them to succeed within the complex business environment of their home country, but it means that they have no equity when they decide to expand abroad. These big companies need to build big brand ideas around themselves if they are to take on Western global brands and win.

Simon Silvester is head of planning, Young and Rubicam EMEA. This is an abstract of the book ‘How To Dominate the World’, which is available in full at http://pubs.yr.com/dominate [email protected]

For most of the emerging world, the past 20 years have been the best 20 years ever. The sense of optimism, and that anything is possible, is everywhere. The brand mood needs to get with the times and be positive and optimistic

Facebook hardly existed in Indonesia two years ago; today, 30 million Indonesians use it. Global brands need to work out how to socialise themselves, not just to Westerners, but to the entire planet