2008:005

M A S T E R ' S T H E S I S

Branding Strategies of MNCsin International Markets

Hanna Häggqvist Camilla Lundkvist

Luleå University of Technology

D Master thesis Business Administration

Department of Business Administration and Social SciencesDivision of Industrial marketing and e-commerce

2008:005 - ISSN: 1402-1552 - ISRN: LTU-DUPP--08/005--SE

Acknowledgement

Acknowledgement This thesis was written for the program of International Business and Economics at the Division of Industrial Marketing and e-Commerce at Luleå University of Technology and was completed in January, 2008. This thesis has been constructed during a limited period of time, and these weeks have been instructive and fun, but also very intensive, and have demanded hard work and commitment in order to make this thesis something to be proud of. We have had the chance to develop our skills within the field of business and marketing and we hope that this thesis will contribute to already existing research as well as ideas for further research. There are several persons that have made this thesis possible. We would first like to thank our supervisor, Manucher Farhang, Associate Professor at the Division of Industrial Marketing and e-Commerce, Luleå University of Technology, who has guided us throughout the whole time and given us constructive feedback in order to improve the thesis. Secondly, we would like to thank Andreas Wagner, Assistant Brand Manager, at Procter & Gamble and Andrew Warner, Director of Brand Management at Sony Ericsson, who have provided us with valuable information during the interviews. We would also like to thank Ulrika Köbin, Assistant at Content Planning & Management, Sony Ericsson Mobile Communications AB, and Katarina Willig at Procter & Gamble, for handling valuable contacts. Luleå University of Technology, 2008 Camilla Lundkvist Hanna Häggqvist ___________________________ ___________________________

5TÇç wtÅÇ yÉÉÄ vtÇ Ñâà ÉÇ t wxtÄ? uâà |à àt~xá zxÇ|âá? yt|à{ tÇw ÑxÜáxäxÜtÇvx àÉ vÜxtàx t

uÜtÇwA5@ Wtä|w bz|Ääç

Abstract

Abstract In today’s global marketplace, MNCs need to set up effective branding strategies in order to be competitive. Depending on the structure of the company and the products offered, MNCs can use different strategies. There are certain characteristics that will affect the type of strategy chosen. In order to reach economies of scale and scope, many MNCs standardize their branding- and marketing activities. However, MNCs are often required to adapt to local preferences and cultures. The purpose of this thesis is to investigate the branding strategies of MNCs in international markets. Two research questions were addressed: how can the branding strategies of MNCs in international markets be described and how can the factors determining MNCs’ choice of branding strategies in international markets be described. Two qualitative case studies of well-known MNCs, Procter& Gamble and Sony Ericsson were conducted; the first an example of a company with a product brand strategy and the latter one with a corporate brand strategy. Our findings show that MNCs use either a product brand strategy, or a corporate brand strategy. However, there may be mixtures of the two types, but emphasis is typically on one of them. A product brand strategy is characteristically used when a company offers multiple products within different business segments, and when there are several different target groups. With a corporate brand strategy, the corporate name and the brand are the same. There is typically a master brand which has the same name as the corporation, and which may have additional sub-brands. It was found that the factors determining the branding strategy in international markets are stakeholder interests, corporate image and reputation, market complexity, as well as marketing costs.

Sammanfattning

Sammanfattning På dagens globala marknad är multinationella företag tvungna att skapa effektiva varumärkesstrategier för att kunna hålla sig konkurrenskraftiga. Beroende på företagets struktur och på de produkter som företaget erbjuder, kan olika strategier användas. Vissa kännetecken avgör vilken strategi som företagen väljer att använda sig av. För att uppnå stordriftsfördelar och samproduktionsekonomi väljer många multinationella företag att standardisera sina varumärkes- och marknadsaktiviteter. Dock är många företag tvungna att anpassa sina aktiviteter till lokala preferenser och kulturer. Syftet med denna uppsats är att undersöka multinationella företags varumärkesstrategier på internationella marknader. Två forskningsfrågor lades fram: hur kan multinationella företags varumärkesstrategier beskrivas samt hur kan faktorerna som avgör multinationella företags varumärkesstrategier beskrivas. Två kvalitativa fallstudier utfördes av väl kända multinationella företag, Procter & Gamble och Sony Ericsson; det första är ett exempel på ett företag som använder sig av en produkt-varumärkesstrategi, och det senare är ett företag med en företags-varumärkesstrategi. Våra studier visar att multinationella företag antingen använder sig av en produkt-varumärkesstrategi eller en företags-varumärkesstrategi. Men, det kan dock finnas blandningar av de nämnda strategierna, men tonvikten ligger oftast på en av dem. En produkt-varumärkesstrategi används karakteristiskt när ett företag erbjuder ett stort antal produkter inom olika affärssegment, och när det finns flera olika målgrupper. När en företags-varumärkesstrategi används, är både företagsnamnet och varumärket lika. Det finns vanligtvis ett dominerande varumärke som har samma namn som företaget, och under detta varumärke kan det finnas under-varumärken. Det framkom att de faktorer som avgör varumärkesstrategin på internationella marknader är intressenter, företagets image och rykte, marknadskomplexitet, och marknadskostnader.

Table of Contents

Table of Contents 1 Introduction ........................................................................................................................ 1

1.1 Background ................................................................................................................ 1 1.2 Problem Discussion.................................................................................................... 5 1.3 Purpose ....................................................................................................................... 7 1.4 Thesis Outline ............................................................................................................ 7

2 Literature Review............................................................................................................... 8 2.1 Branding Strategies of MNCs in International Markets............................................. 8

2.1.1 Standardization versus Customization ............................................................. 15 2.1.2 Corporate Branding .......................................................................................... 16 2.1.3 Product Branding.............................................................................................. 19 2.1.4 Differences between Corporate Branding and Product Branding.................... 21

2.2 Factors Determining MNCs’ Choice of Branding Strategies in International Markets ……………………………………………………………………………………...24

2.2.1 Stakeholder Interest.......................................................................................... 25 2.2.2 Corporate Image and Reputation...................................................................... 25 2.2.3 Market Complexity .......................................................................................... 27 2.2.4 Marketing Costs ............................................................................................... 28 2.2.5 Product Characteristics..................................................................................... 29

2.3 Conceptual Framework ............................................................................................ 30 2.3.1 Branding Strategies of MNCs in International Markets................................... 30 2.3.2 Factors Determining MNCs’ Choice of Branding Strategies........................... 31

3 Methodology .................................................................................................................... 34 3.1 Purpose of Research: Explore, Describe and Explain.............................................. 34 3.2 Research Approach: Qualitative Research............................................................... 34 3.3 Research Strategy: Case Study................................................................................. 35 3.4 Data Collection Method: Interviews ........................................................................ 35 3.5 Sample Selection: Subjective and Convenience ...................................................... 35 3.6 Analysis of Data ....................................................................................................... 36 3.7 Quality Standards ..................................................................................................... 37

4 Data Presentation.............................................................................................................. 38 4.1 Case One: Procter & Gamble (P&G) ....................................................................... 38

4.1.1 Branding Strategy of Procter & Gamble in International Markets .................. 38 4.1.2 Factors Determining Procter & Gamble’s Choice of Branding Strategies in International Markets ....................................................................................................... 40

4.2 Case Two: Sony Ericsson......................................................................................... 41 4.2.1 Branding Strategy of Sony Ericsson in International Markets......................... 42 4.2.2 Factors Determining Sony Ericsson’s Choice of Branding Strategies in International Markets ....................................................................................................... 45

5 Data Analysis ................................................................................................................... 48 5.1 Within-Case Analysis............................................................................................... 48

5.1.1 Within-Case Analysis of Procter & Gamble (P&G) ........................................ 48 5.1.2 Within-Case Analysis of Sony Ericsson .......................................................... 54

5.2 Cross-Case Analysis................................................................................................. 60 5.2.1 Branding Strategies of MNCs in International Markets................................... 60 5.2.2 Factors Determining MNCs’ Choice of Branding Strategies in International Markets............................................................................................................................. 62

6 Discussion, Findings, Conclusions and Implications....................................................... 67 6.1 Discussion: Reflections on Past Research................................................................ 67

Table of Contents

6.2 RQ 1: How can the branding strategies of MNCs in international markets be described?............................................................................................................................. 68 6.3 RQ 2: How can the factors determining MNCs’ choice of branding strategies in international markets be described? ..................................................................................... 70 6.4 Implications and Recommendations ........................................................................ 73

6.4.1 Implications for Theory.................................................................................... 73 6.4.2 Implications for Practitioners ........................................................................... 73 6.4.3 Implications for Future Research ..................................................................... 74

7 References ........................................................................................................................ 75

Appendices APPENDIX A The Top 100 Global Brands in the World, 2007 APPENDIX B Interview Guide, English version APPENDIX C Intervjuguide, Svensk version List of Figures Figure 1.1 Thesis Outline ........................................................................................................... 7 Figure 2.1 Four Brand Architectures........................................................................................ 13 Figure 2.2 Core-Value Framework linking a Corporate Brand to Product Brands.................. 13 Figure 2.3 Positioning Alternative Branding Strategies........................................................... 14 Figure 2.4 Factors Affecting Branding Strategy of Developed Country Firms in Emerging

Markets............................................................................................................................. 24 Figure 2.5 Conceptual Framework of Branding Strategies in International Markets .............. 31 Figure 2.6 Conceptual Framework of Factors Determining MNCs’ Choice of Branding

Strategies. ......................................................................................................................... 32 Figure 4.1 Sony Ericsson’s Brand Hierarchy........................................................................... 42

List of Tables Table 2.1 Comparison between a Corporate and a Product Brand .......................................... 22 Table 2.2 Shared Roles of the Corporate and Product Brand .................................................. 23 Table 5.1 Within-Case Analysis of the Branding Strategies of Procter & Gamble in

International Markets ....................................................................................................... 50 Table 5.2 Within-Case Analysis of the Factors Determining the Choice of Branding Strategies

in International Markets for Procter & Gamble ............................................................... 53 Table 5.3 Within-Case Analysis of the Branding Strategies of Sony Ericsson in International

Markets............................................................................................................................. 56 Table 5.4 Within-Case Analysis of the Factors Determining the Choice of Branding Strategies

in International Markets for Sony Ericsson...................................................................... 59 Table 5.5 Cross-Case Analysis of Branding Strategies in International Markets .................... 60 Table 5.6 Cross-Case Analysis of Factors Determining MNCs’ Choice of Branding Strategies

in International Markets ................................................................................................... 63

Introduction

1

1 Introduction Many firms have realized the potential of globalization and new markets in different locations of the world. When expanding globally a global brand strategy has to be developed and when entering international markets different strategies have to be considered. This chapter will start with a brief background to the thesis topic and is followed by a problem discussion which leads to the overall purpose and the research questions of the study.

1.1 Background In today’s global marketplace, MNCs need to set up effective branding strategies in order to be competitive. Depending on the structure of the company and the products offered, MNCs can use different strategies. There are certain characteristics that will affect the type of strategy chosen. In order to reach economies of scale and scope, many MNCs standardize their branding- and marketing activities. However, MNCs are often required to adapt to local preferences and cultures. There has been a lot of research within the area of branding strategies; however there is limited research on how MNCs choose which strategy to adapt in different international markets and therefore this thesis will handle this issue. Brands A brand is defined as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors” (Kotler & Keller, 2006). Ind (1997) proposes that “a product is something that is made, in a factory; a brand is something that is bought, by a customer. A product can be copied by a competitor; a brand is unique”. Branding has the purpose of separating a brand from other competitors and to identify a product or a service and to build customer awareness (Kay, 2004). According to Albaum, Duerr and Strandskov (2005) a brand is “anything that identifies a seller’s goods or services and distinguishes them from others”. A trademark is a part of the brand and is protected by law (ibid). Van Gelder (2003) states that when defining a brand; everything is carefully prepared and planned in order to create value for the customers that will benefit the organization. Functions of a Brand When moving from the concept of a brand, there is a need to explain its functions. Kotler and Pfoertsch (2007) discuss that branding is a very intangible concept and is often being misunderstood as to forming an illusion that the product is better than it really is. The authors state that, what brands actually do is that they facilitate the identification of products, services and businesses, and differentiate them from competition. Similar findings are made by Czinkota and Ronkainen (2004) and they state that branding has importance to customers, because it simplifies the buying process in the way that it reduces complicated buying decisions and “provide emotional benefits, and offer a sense of community”. According to Hollensen (2007) the basic purposes of a brand is universal, and these are:

x to distinguish a company’s offering and differentiate one particular product from its competitors

x to create identification and brand awareness

Introduction

2

x to guarantee a certain level of quality and satisfaction x to help with promotion of the product

Holensen (2007) further states that these purposes have the function of creating new sales (take market shares from competitors) or to create a demand for repetitive sales (to get loyal customers). According to Kotler and Keller (2006) a brand can also give signals of a certain quality of the product. Brand loyalty can create barriers of entry to other companies because the brand is placed in the consumers’ minds and it can create competitive advantage and a willingness to pay a higher price. It creates brand identity through its brand name, but also teaches the customers what the product does and why the customer should choose that specific product (ibid). According to Yu Xie and Boggs (2006), branding means more than just naming a product; brands are a result of market segmentation and product differentiation. Importance of Branding A brand has several functions as stated above. Furthermore, brands are important, and the reasons for that will be discussed below. Kotler and Keller (2006) state that a brand is needed because it identifies the product, and the responsibility of the product hence lies in the hands of the makers or producers of the product. After a customer has been in contact with the brand and the product through its marketing activities, the customer has created a perception of the brand. After that, the brand can be identified by the customer (ibid). The increasing growth of globalization has forced companies to consider the importance of branding (Yu Xie & Boggs, 2006). Yin Wong and Merrilees (2007) state that branding has a remarkable potential for international marketing. According to Kotler and Pfoertsch (2007) brands are gradually more vital for companies in just about all industries since customers face a great number of different suppliers. Hence, the need for companies to differentiate themselves through branding is very important (ibid). Czinkota and Ronkainen (2004) state that brands are important because they “shape customer decisions and, ultimately, create economic value”. Brands are important in both consumer and business-to-business situations, where a decision of purchase is needed. A strong brand can create sufficient higher total returns to shareholders than a weak brand (ibid). The Value of a Brand Branding is important because of different reasons, and furthermore it generates value in different ways. Czinkota and Ronkainen (2004) state that a strong brand allows the company to take advantage of the brand awareness in other new markets as well, because the brand might be known in countries where the brand has no physical activity. Kotler and Keller (2006) mention that a strong brand creates higher profits which in turn create higher value for the shareholders. Motameni and Shahrokhi (1998) state that new brands in a global marketplace have a tiny chance of competing against established brands, and creating a brand from scratch involves enormous investments. The return on the investments spent on branding is converted into brand awareness, image and loyalty and the concept summarising the value of the brand is

Introduction

3

referred to as brand equity (ibid). According to Keller (2007) different marketing programs must be created to satisfy different market segments in building brand equity:

x Differences in consumer behaviour have to be identified x The branding program has to be adjusted accordingly through the choice of brand

elements, the nature of the actual marketing program and activities, and the leveraging if secondary associations.

International Branding The concept of branding, its functions, the importance of branding, and its value have now been discussed. When turning towards foreign countries there are certain factors to consider. Bradley (2002) states that it is usually a process when brands are turning internationally; it often develops from being a local brand and after a while, when the brand is known, move into foreign markets. Palumbo and Herbig (2000) state that in today’s global market, brands compete not only with regional and national competitors, but also with international competitors’ marketing strategies. Yin Wong and Merrilees (2007) state that developing brands on an international basis provides opportunities to exploit economies of scale, develop global markets and explore various market segments. The authors further claim that international marketers need to organize their marketing strategies to match the characteristics of diverse external environments. Another opportunity with acting on international markets is that companies can take advantage of their country-of-origin, and acquire other companies in order to enter a market (Bradley, 2002). Keller (2007) states that the reasons for going international are:

x Perception of slow growth and increased competition in domestic markets x Belief in enhanced overseas growth and profit opportunities x Desire to reduce costs from economies of scale x Need to diversify risk x Recognition of global mobility of customers

Global Brand When a brand has entered international markets, many companies recognize the benefits with global brands. According to Kapferer (1997), a global brand has two functions; “to distinguish different products from each other”, and “to indicate a product’s origin”. Albaum et al. (2005) state that many companies adapt a global strategy. Global brands are usually positioned and marketed similarly throughout the world; however, slight modifications may occur (ibid). A global brand reflects the same set of values around the world, and the key in global brand strategy is formed by those values or brand character forms (Palumbo & Herbig, 2000). In order to succeed, global brands have to foresee cultural trends and consumer values (ibid). Van Gelder (2003) states that various markets have different internal and external factors that influence societies around the world, a brand is perceived differently in different cultures and countries. For a global brand it is needed to carefully consider the factors that influence customers’ behaviors (ibid).

Introduction

4

The benefit of a global brand is according to Czinkota and Ronkainen (2004), higher acceptance of products by consumers and intermediaries, and the drawbacks are “loss of local flavor”. Quelch (1999) states that industrial products and services, luxury products, and pharmaceuticals are groups of products that are suited to be global brands. This is because they are identical all over the world, and the marketing activities are also similar (ibid). Quelch further states that global brands have gained popularity because of telecommunication and youth. People are more and more mobile in their habits, and more people are traveling, or moving to other countries, and the easiness of internet has boosted globalization. With these opportunities, people learn what is going on around the world more than before. Furthermore, global brands are more common in urban areas, than in rural areas (ibid). Quelch (1999) states that what the ten strongest global brands have in common and what distinguishes global brands is that they; are strong in home market, have geographical balance in sales, addresses similar consumer needs worldwide, consistent positioning, consumers who value the country-of-origin, product category focus, and they have the corporate name that is the same as the brand name. According to Bradley (2002) there are very few brands that are known all around the world, and the products that are sold by these global companies are similar worldwide, they are also positioned in the same way all around, and have the same product line worldwide. Strategic Decision When acting on international and global markets, the importance of a solid strategy emerges. Strategy is according to Ind (1997) “concerned with positioning a company so that it can meet its long-term objectives”. Albaum et al. (2005) state that the first choices a company has to make is to select a good brand, and to choose how many brands that should be included in the product line. Furthermore, it has to be decided whether the brand should be a single/family brand, an individual (local) brand, or multiple brands (ibid). According to Bradley (2002), when developing an international brand strategy, the company has to decide; which markets to act on (new or existing), new products or modifying existing products, and also the accessibility of the products in the international market. Bradley further states that companies can gain competitive advantage in international markets through quality and performance. Furthermore, the companies have to sustain competitive advantage in their branding strategy, and they make that achievement through; brand equity, financial strength and international distribution (ibid). A brand can gain popularity in other countries by creating popularity in one country (Bradley, 2002). Brands that stem from the same country are perceived similarly because of stereotyping. By building the brand on the same brand values as in the domestic market a brand can succeed internationally as well (ibid). When dealing with the concept of global branding, several researchers have raised the dilemma of whether to standardize or adapt to the local market (Alashban, Hayes, Zinkhan and Balazs, 2001; Hsieh & Lindridge, 2005; Yu Xie & Boggs, 2006). According to Hsieh and Lindridge (2005) the diversity of markets defend the view that a customization approach

Introduction

5

should be emphasized, but on the other hand a company can reach economies of scale by approaching a standardization strategy. They further state that the balance between standardization versus customization has to do with to what degree the existing brand image is similarly or differently perceived across different nations. The same conclusion is made by Bradley (2002) who discusses that when global companies use a standardization strategy, they decrease unit costs. However, some authors, for example Hsieh and Lindridge (2005), have argued that it is necessary to customize the marketing mix since there are very few markets that are similar (ibid). Cervino and Cubillo (2004) discuss that instead of assuming that different nations are totally heterogeneous, or the other extreme that nations are totally homogeneous, a possible assumption may be to find a middle ground and assume that nations are partly homogenous and partly heterogeneous. Hence, there is a possibility that many MNCs use a hybrid strategy where some parts of the branding strategy is adapted to the local market, whereas other parts are standardised (ibid). Palumbo and Herbig (2000) claim that standardization of both the product and brand are not inevitably consistent: “a regional brand may have local features or a highly standardized brand may have local brand names”. That means that the actual product may be standardized, but the brand name may be adapted to the local market. Many researchers have highlighted that firms should “act global, think local” in order to exploit the benefits of globalization, but still adapt to the local market (ibid). Quelch (1999) states that one pitfall of global branding is that companies standardize everything, and assume that all marketing activities have to be standardized when managing a global brand. Adaptation is costly, whether to adapt or standardize has to be chosen from how much that is gained from the adaptation, if the overall profits exceeds the cost that stems from the adaptation. According to Czinkota and Ronkainen (2004) there are three choices of branding within global, regional, and local dimensions that a global manager has to make. It can have solely the corporate name, have family brands for a large range of products, or have specific product names for each item in the product line. Similar findings are made by Kapferer (1997) who states that some companies market their products under the same brand name as the company name, while others have different brand names on different products. McDonald, de Chernatony and Harris (2001) state that a company has to decide if the brand should be built around its products or its corporate identity. Branding is a broad area and consists of several dimensions. Along with globalization MNCs face the challenge of creating a strong brand and create competitive advantages against competitors, hence the importance of choosing the best suited branding strategy is vital for global firms.

1.2 Problem Discussion According to Yu Xie and Boggs (2006) several brands, corporate brands as well as product brands, are competing in today’s international markets. Corporate branding is defined as “the strategy in which brand and corporate name are the same”, whereas product branding “builds separate brand identities for different products” (ibid).

Introduction

6

Yu Xie and Boggs (2006) state that the function of a corporate brand is to simplify the communication with governments, the financial sector, the labour market, and society in general. The base of a corporate brand consists of organisational values, core values and added values (ibid). The corporate identity, which is represented by the firm’s ethics, goals and values, is a vital corporate asset and differentiates the firm from its competitors (Yu Xie & Boggs, 2006). The advantage with a corporate brand is according to Yu Xie and Boggs (2006) that it can increase the firm’s recognition and reputation to a larger extent than a product brand can. The advantage with product branding is that the corporate branding will be exposed to less harm to its corporate image if one of its individual brands fails (Yu Xie & Boggs, 2006). A product brand is also more flexible, and can be targeted towards different segments in different markets. However, a product brand may be more expensive to market due to the fact that different smaller segments are targeted (ibid). When entering emerging markets, it has been argued that MNCs should adapt to the local market in order to succeed, but the questions is whether the strategy should be corporate branding or product branding (Yu Xie & Boggs, 2006). According to Urde (2003) there are four brand architectures that firms may use:

1) Corporate branding 2) Product branding 3) Corporate-and-product (with dominant use of the corporate brand) 4) Product-and-corporate (with dominant use of product brands)

Some MNCs, for example IBM, may put emphasis on their corporate brand, whereas other MNCs such as Procter & Gamble (P&G) put most emphasis on their product brands (Yu Xie & Boggs, 2006). Other MNCs choose to set up their strategies by focusing on corporate- and product branding simultaneously (ibid). Yu Xie and Boggs (2006) state that corporate branding is on the firm-level, whereas the product branding is focused on the actual product or service. According to Hatch and Schultz (2003) many MNCs shift focus from product brands to corporate brands as they move towards globalization. Yu Xie & Boggs (2006) claim that firms which are successful in building a strong corporate brand is more competitive than firms which rely simply on their product brands (ibid). According to Quelch (1999), emerging markets are not homogeneous, and they vary in economic development and financial stability; they even vary in the same geographical areas. Yu Xie and Boggs (2006) state that there are several factors influencing a firm’s initial choice of branding strategy (corporate versus product branding) when entering an emerging market. These consist of: stakeholder interest, corporate image and reputation, market complexity, marketing costs, and product characteristics. The authors further state that choosing branding strategy is a very important concern for MNCs operating in an international context. However, there is not a single branding strategy that will work for all organisations (ibid). Several researchers have discussed branding strategies, especially corporate branding, however there is limited research on how and why MNCs adopt specific strategies. Furthermore, there is limited research on MNCs’ branding strategies in international markets. These factors have motivated the present study.

Introduction

7

1.3 Purpose Based on the discussion above, we will aim at gaining a deeper understanding on MNCs’ choice of branding strategies; hence our purpose is to investigate the branding strategies of MNCs in international markets. The purpose will be reached by addressing the following research questions: RQ 1: How can the branding strategies of MNCs in international markets be described? RQ 2: How can the factors determining MNCs’ choice of branding strategies in international markets be described?

1.4 Thesis Outline This thesis consists of six chapters, which is shown in figure 1.1. The thesis starts by an introduction of the thesis topic and a brief background is outlined followed by a problem discussion which finally ends in the purpose and the research questions are presented. In chapter two, literature review, relevant secondary literature concerning the research questions are presented. In the end of chapter two, a conceptual framework is presented in order to narrow the information down and this helps to get an overview over the main issues. In chapter three, methodology, an explanation of the procedure and the method for collecting the empirical data on the research questions is presented. Chapter four, data presentation, consists of a presentation of the results collected from the empirical data collection in the case study. In chapter five, data analysis, we will compare our empirical results from our research with previous literature and theories regarding the thesis topic. These empirical results will be compared against each other in a cross-case-analysis. In the last chapter, discussion, findings and conclusions, our overall findings of the thesis topic are presented as well as our conclusions where the research questions are answered and our purpose fulfilled.

Figure 1.1 Thesis Outline

Chapter 2 Literature review

Chapter 1 Introduction

Chapter 3 Methodology

Chapter 4 Data presentation

Chapter 5 Data analysis

Chapter 6 Discussion, Findings & Conclusions

Literature Review

8

2 Literature Review In the previous chapter an introduction of the thesis topic as well as a brief background and a problem discussion was provided. The research questions were also outlined. In this chapter previous research on the thesis topic is presented. This chapter is divided into three sections; in the first two sections, selected literature in connection with research question one and two are reviewed. Finally, a conceptual framework regarding the thesis topic is provided.

2.1 Branding Strategies of MNCs in International Markets In this section the literature collected is connected to branding strategies, product branding, and corporate branding in international markets, as well as literature dealing with the strategy of standardization versus adaptation. A lot of research has been done related to these topics, and we have been selective in our choice of literature and picked out the most relevant writings that are connected to our research topic in order to provide an extended view of branding strategies in international markets. In the beginning of this section general branding strategies are presented, followed by a discussion about standardization versus adaptation. In the following two sections corporate branding and product branding are presented. Finally a discussion about the differences between corporate- and product branding is provided. The Concept of Branding According to Albaum et al. (2005) a brand is “anything that identifies a seller’s goods or services and distinguishes them from others”. A trademark is a part of the brand and is protected by law. It is common that companies have more than one trademark. The function of the brand is to identify the owner of the brand. By this the consumer knows the origin of the brand as well as the quality. Branding is important because otherwise it might be hard to advertise the products (ibid). Bradley (2002) states that it is common to confound a brand with a product. What distinguishes a brand is:

x Brands give the consumer a reference point, during the purchasing process and afterwards.

x A brand is a product or service that provides functional benefits and added values that some consumers value sufficiently to buy.

x Brand values arise from the experience gained from using them - familiarity, reliability, risk reduction.

x Brands provide information as a sophisticated form of value added - the form this provision varies from market to market and time to time.

x Successful brands are balanced between functional benefits and discriminating benefits.

Branding Decisions Albaum et al. (2005) state that the first choices that have to be made by companies are: to select a good brand, and to choose how many brands that should be included in the product line. Furthermore, there are different decisions that have to be made:

x A single/family brand, this strategy indicates that all products under the same brand name have the same quality, and also simplifies the advertising.

x An individual (local) brand, which is a strategy that adapts to local preferences.

Literature Review

9

x Multiple brands, is a strategy to have the same product but within different segments in one national market. This strategy differentiates products from its quality or characteristics (ibid).

A strong brand has to a have long-term perspective; the company has to decide how the brand should be perceived by customers and stockholders. In this way the company creates a brand promise and a platform for the brand (DI:s varumärkesskola, 2007). Furthermore, the brand has to be managed effectively and professionally in order to keep the brand alive and interesting through innovations, and to fulfill customer needs (ibid). Country-of-origin Effects Countries can take advantage of their country-of-origin, and acquire other companies in order to enter a market (Bradley, 2002). It is important to have a stable international distribution system when acting in international markets in order to keep the costs low. However, a large well organized distribution system can create barriers to entry. Especially in emerging markets “where incumbents can often deny access to international competitors” (ibid). Branding in the International Marketplace Consumer product brands are mainly targeted towards the consumer markets and are hence mostly known among the mass market (Bradley, 2002). It is usually a process when brands are turning internationally, it often develops from being a local brand and after a while, when the brand is known, move into foreign markets (ibid). According to Bradley (2002), when developing an international brand strategy, the company has to decide:

1. Which markets to act on (new or existing) 2. New products or modifying existing products 3. Accessibility of the products in the international market. Brands that are exclusive are

demanded because of their uniqueness. However, if they become too inaccessible, the products can prevent brand growth. But in the other way, if the products can be bought everywhere, they loose their uniqueness, and hence the demand is reduced. Many companies use brand extensions or umbrella branding as a tool to control brand accessibility, and many companies also control the whole distribution system (ibid).

Yin Wong and Merrilees (2007) state that the development of brands on an international basis offers opportunities to exploit economies of scale, developing global markets and pursuing multiple market segments. However, branding is not a guarantee for succeeding on the global market (Palumbo & Herbig, 2000). A firm may be a great marketer in one country, but the brand cannot literally be transferred to another country with the expectation of the brand becoming a success (ibid). According to Bradley (2002), companies gain competitive advantage in international markets through quality and performance. By transferring customer goodwill, the customers recognize and identify the brand with a certain image. Furthermore, the companies have to sustain competitive advantage in their branding strategy, and according to Bradley, they make that achievement through:

1. Brand equity x Differentiation that meet the customer needs

Literature Review

10

x Innovation - continuous and relevant x Effective marketing communication - cross-cultural x Focused product portfolio - balanced and relevant

2. Financial strength x Cash flow in domestic market x Dominant shares in large domestic markets x Unique challenge of international markets facing smaller countries

3. International distribution x Comprehensive distribution system; international networks

Bradley (2002) has identified two concepts that are essential in a sustainable success for brands in international markets; brand popularity and country image. A brand can gain popularity in other countries by creating popularity in one country. A brand achieves brand popularity when it is accepted internationally through advertising but also word-of-mouth. When the popularity is sustaining over a period of time, the brand can take advantage over this because it boosts brand loyalty, brand image and brand equity, it also has a positive relationship with performance in the long-run. Brands that stem from the same country are perceived similarly because of stereotyping. By building the brand on the same brand values as in the domestic market a brand can succeed internationally as well (ibid). According to Yu Xie and Boggs (2006) branding strategy is a crucial issue for firms operating in an international environment. The authors state that both several corporate- as well as product brands are competing against each other in the global market. Hatch and Schultz (2003) state that among the changes that firms make when they move toward globalization is shifting focus from product brands to corporate brands. The authors further state that the reason for shifting focus depends on the fact that it is difficult to keep the products differentiated and markets become more complex as the firm is moving towards globalization. Competition increases, hence firms need to position not only products but the whole corporation (ibid). Global Brands Quelch (1999) states that global brands have gained popularity because of telecommunication and youth. People are more and more mobile in their habits, and more people are traveling, or moving to other countries, and the easiness of internet has also boosted globalization. With these opportunities, people learn what is going on around the world more than before. It is shown that global brands are more appealing to the younger segments. Furthermore, he states that global brands are more common in urban areas, than in rural areas. Consumer behaviors are more similar between large cities in different countries, than in a large city and an area in the same country. However, this differs between products; food is for example more culture-bound and heterogeneous than electronic equipments (ibid). Bradley (2002) states that there are very few brands that are known all around the world, and the sales of those global brands are minimum. The products that are sold by these global companies are similar worldwide and they function as to serve the need of the customers globally. Global brands are positioned in the same way all around the world and the consumers take country-of-origin in consideration when buying a global brand. Most of the global firms have the same product line all around the world; this is because it is difficult to be too diversified when acting on a global scale (ibid).

Literature Review

11

Albaum et al. (2005) state that many companies adapt a global strategy. When handling a global brand, certain issues such as languages has to be taken into consideration, because a brand may mean one thing in one country and may have a totally other meaning in another, the brand may even be highly inappropriate. Global brands are usually positioned and marketed the same throughout the world; however, slight modifications may occur (ibid). Characteristics of Global Brands Quelch (1999) lists the top ten global brands of 1997, these were:

1. Coca-Cola 2. Marlboro 3. IBM 4. McDonald’s 5. Disney 6. Sony 7. Kodak 8. Intel 9. Gillette 10. Nike

Furthermore, Quelch (1999) states that what they all have in common except for their easiness to pronounce and what distinguish a global brand is that they:

x Are strong in home market; the cash flow gained in domestic markets give advantages in global markets.

x Have geographical balance in sales; the global brand is more or less known all around the world.

x Addresses similar consumer needs worldwide; the products are somewhat the same all over the world, with some local adaptations in few areas.

x Consistent positioning; the values are communicated the same all around the world, and the products are positioned the same as well.

x Consumers value the country-of-origin; country-of-origin is important for global brands because all consumers around the world associate products with different countries.

x Product category focus; to focus simply on one product category. x Corporate name; the corporate name and the brand name are the same. However,

Quelch discusses that no brand could have the same name on provisions, so Unilever and P&G could never use one single brand name (ibid).

When looking at the top ten global brands today, almost the same brands are stated as in Quelch’s (1999) research of the top ten brands of 1997. Businessweek (2007) lists the 100 strongest brands in the world, and the top ten are:

1. Coca-Cola 2. Microsoft 3. IBM 4. GE 5. Nokia 6. Toyota 7. Intel

Literature Review

12

8. McDonald's 9. Disney 10. Mercedes-Benz

In all cases, except for one (Daimler Chrysler’s Mercedes-Benz), the corporate- and product name are the same (see appendix A which lists the 100 strongest brands in the world). As much as 80% of the brands listed among the strongest hundred brands in the world are corporate brands and about 50% of the brands are from USA. Many of the brands that are listed have about the same ranking as the year before and the value of the brands have not changed much either from previous year with some exceptions. Benefits of Global Branding The benefits of global branding are that it gives the customers added value, it lower the costs, provides cross-border learning, and give cultural benefits for companies (Quelch, 1999). Brands Suited to be Global Brands Quelch (1999) states that industrial products and services are suited to be global brands because their customers are mainly multinationals and hence not culture bound. Luxury products are another group that is suited to be global brands, this is because the customers are often young and rich, and live in urban areas. These products are positioned to a niche group and can spend more money on marketing activities. Pharmaceuticals are also suited to be global because the formulas are consistent worldwide, although some adjustments are needed to fulfill customer needs (ibid). Branding as a Strategic Tool Balmer (1995) states that there are different approaches to brand management:

x Brand Dominance does not relate the corporate brand name and the product name x Equal Dominance links the product brand with the corporate name, for example,

British Broadcasting Corporation (BBC) has different names for different “products”; BBC Radio 1, BBC World Service

x Corporate Dominance uses the corporate name in all activities and on all products (ibid).

Yin Wong and Merrilees (2007) claim that branding should be considered as an integrated business approach and that branding goes beyond marketing communications. The authors further state that the brand should be part of the firm’s total business strategy. A brand can be used as a corporate strategic tool to improve a firm’s performance (ibid). Brand Architectures According to Urde (2003) it is important for a company to choose brand architecture because this affects how the brand is used, the number of brands used, what type of brand etcetera. Furthermore he states that core value and the choice of brand architecture are linked together. According to Urde (2003) there are four types of brand architectures (shown in figure 2.1):

1. Corporate brands 2. Product brands 3. Corporate and product brands (with dominant use of the corporate brand), and 4. Product brands and corporate brands (with dominant use of product brands)

Literature Review

13

Figure 2.1 Four Brand Architectures

Source: Urde (2003, p 1029) Urde (2003) discusses that in the corporate brand box all the products share the core values of the corporate brand, but the brand is individual. Different from the corporate brand, the product brand’s core values are individual for each product and have its own identity. Furthermore Urde (2003) states that a corporate brand and a product brand can have different roles but still be linked together, shown in figure 2.2.

Figure 2.2 Core-Value Framework linking a Corporate Brand to Product Brands

Source: Adapted from Urde (2003, p 1029)

Product brand building provides

Corporate Brand Product Brand Core Values

Corporate brand building provides credibility

Product brand building provides added value

Individual Shared

Corporate brand

Volvo

Product- and corporate brand

Nicorette Pharmacia Corporation

Corporate- and product

brand SAS

Eurobonus

Product brands

AEG, Husqvarna, Flymo The Electrolux Group

Core Values

S h a r e d

I n d i v i d u a l

Identity

Literature Review

14

Categorizing the Brand McDonald et al. (2001) state that there are different ways of categorizing a brand. First, a company can use company as brand name where the corporate name and the product name are the same, and second, a company can use individual brand name where the products have individual brand names and are not related with the corporate name. Ind (1997) suggests that within corporate branding, there are monolithic corporate brands, i.e. all products are branded with the corporate name. The advantage with this strategy is that every time someone sees the specific brand, the corporate image is reinforced. However, this can also be a disadvantage, if the brand is put in unpleasant attention, then the corporate image will be damaged. Furthermore, Ind mentions endorsed corporate brands, which is when companies mix their branding strategies. Some parts of the organization might be linked together, while other can be kept separately or the link might not be obvious (ibid). Strategy Approaches Kapferer (1997) presents a model for branding strategies shown in figure 2.3. This model shows different forms of strategy approaches that a company can undertake. The more differentiated a product is, the more the strategy is aimed towards a product brand, and the more the brand functions as an indicator of origin, the more the strategy is aimed at a corporate brand strategy.

Figure 2.3 Positioning Alternative Branding Strategies

Source: Adapted from Kapferer (1997, p 189) At one extreme, product brand strategy can be found. This is according to Kapferer (1997) where one individual product has a specific name and a specific positioning; every new product gets its own brand name and positioning. At the other extreme the corporate umbrella brand strategy can be found, this means that a company has different products that share the

Brand Function: Indicator of Origin

x Corporate umbrella brand

x Corporate endorsing brand

x Corporate source brand

x Umbrella brand

x Endorsing brand

x Source brand

x Range brand

x Line brand

x Product brand x Generic brand

Brand Function: Product Differentiation

Literature Review

15

same brand name (ibid). Between these, there are other strategies that functions differently. The companies might have a mix strategy of a corporate and product brands. Yu Xie and Boggs (2006) state that some MNCs, for example IBM, almost entirely focus on their corporate brand, whereas other MNCs, such as P&G, focus their strategy on their product brands. Another option is to focus the strategy on corporate branding and product branding simultaneously (ibid).

2.1.1 Standardization versus Customization Bradley (2002) discusses whether companies should adapt a niche strategy or a global strategy. It is argued that firms should have a standardized strategy to international markets since the companies can take advantage of higher sales when the product image is consistent over global markets. The costs can also be reduced because of economies of scale, moving to a low-cost location, and have one standardized marketing plan globally. He further states that when global companies use a standardization strategy, they decrease unit costs, which drive non-global companies out of the market. However, some have argued that it is necessary to customize the marketing mix since there are very few markets that are similar. Although customer needs and preferences have become more and more homogeneous, there is still a great diversity when it comes to this aspect and many global companies exploit national differences and adapt their products to local tastes and preferences. However, preferences vary a lot between different markets, the high-technology markets are highly standardized while provisions are not standardized (ibid). There are different views upon the aspect of whether to standardize or adapt the brand name and some studies supporting brand name standardization and others claiming that brand names should be adapted due to different cultural factors (Yin Wong & Merrilees, 2007). Yin Wong and Merrilees further claim that market structure factors such as competitive, buyer and distribution intensity force international marketers to adapt their brand names. The statement “think global, act local” seems to be favoured many times within international marketing (ibid). Albaum et al. (2005) state that companies can reduce costs by using a standardized strategy. However, by using a strategy based on local preferences, the company can get advantages of:

x customer needs x distribution and promotion methods to be used x competitive market structure x economies of scale in production and distribution x legal constraints x operational structures

Palumbo and Herbig (2000) state that standardization of both the product and brand does not necessarily have to be consistent; a regional brand may have local features or a standardized brand may have local brand names. One example, according to Palumbo and Herbig (2000) is Unilever which sells the same product - a cleaning liquid - in several countries, but the product name is adapted to the local market. They further claim that brand names are typically very difficult to standardize on a global basis (ibid). Arnold and Quelch (1998) state that some companies such as Unilever have created a demand by developing products that suits local preferences in emerging markets.

Literature Review

16

According to Palumbo and Herbig (2000) many MNCs have tried to follow the standardization strategies created by successful global brands such as Coca-Cola, Nike and McDonald’s due to the benefit with economies of scale. However, there are very few successful global brands that are fully standardized (ibid). Hsieh and Lindridge (2005) argue that a standardization strategy may not be suited due to the fact that nations are different. However, a customization strategy may overlook the factors that are homogenous across nations which may result in diseconomies of scale (ibid). Alashban et al. (2001) mention that global corporations benefit from a standardization strategy due to large-scale production instead of dividing the world into a large number of customized markets. However, brands may increase revenue by adapting to the needs of each specific segment (ibid). According to Keller (2008) some companies choose to customize to local preferences, whereas others execute a more centralized branding strategy, and more and more companies are adapting a hybrid strategy. Furthermore Keller states that because of new technology, firms have the ability to customize and tailor products to local preferences and the need for standardization is decreasing (ibid). Quelch (1999) states that one pitfall of global branding is that companies standardize everything, and assume that all marketing activities have to be standardized when managing a global brand. There has to be a balance on what to standardize and what to adapt to local preferences. Adaptation is costly, whether to adapt or standardize has to be chosen from how much that is gained from the adaptation, if the overall profits exceeds the cost that stems from the adaptation. Furthermore, Quelch states that it is easier to standardize in the beginning of the product launch (ibid).

2.1.2 Corporate Branding Corporate Branding Defined According to Yu Xie and Boggs (2006) corporate branding is defined as “the strategy in which brand and corporate name are the same”. They further state that corporate brand simplifies communications with government, the financial sector, the labor market and society. Some examples of corporate brands are according to Yu Xie & Boggs are IBM, Nike, Virgin and Sony. The base for corporate branding consists of organizational values, core values and added values (ibid). According to Ind (1997) a corporate brand is not just a logo, a name and a visual presentation; it is also the values that define it. A corporate brand can be defined by three areas; intangibility, complexity, and responsibility. What distinguishes the corporation is its complexity; “it is larger, more diverse and has several audiences that it must interact with” than a brand. It is important to effectively communicate the values of the core brand and build relationships with the stakeholders and meet their needs (ibid). Characteristics of a Corporate Brand Corporate branding is characterized by the way a company communicates its identity (Kay, 2004). A corporate brand is according to Knox and Bickerton (2000) “the visual, verbal and behavioural expression of an organization’s unique business model”. According to Balmer (2001) corporate brands differentiate the organization from its competitors and aim to be loyal towards the stakeholders.

Literature Review

17

Balmer (2001) outlines five characteristics of corporate brands:

x Cultural. Corporate brands have cultural roots that stem from the sub-cultures that are contained within the corporate brands. The personnel have responsibility since they are the key stakeholder group since they communicate the organization’s values by everything they say or do.

x Intricate. Corporate brands are intricate because they are multidimensional and multi-disciplinary, have a range of stakeholders, both internal and external, they also have controlled or uncontrolled communications through for example, word-of-mouth.

x Tangible. Corporate brands “encompass tangible elements such as business-scope, geographical coverage, performance-related issues, profit margins, pay scales, recruitment etc.”

x Ethereal. The stakeholders of the corporate brand are subjective and emotional when judging the brand; this can be for example, country-of-origin or the type of industry.

x Commitment. The total organizational commitment is very essential and the CEO and the board-level is the prerequisite for corporate branding. Commitment is hence the core and the cornerstone in corporate brand management.

Yu Xie and Boggs (2006) state that corporate branding consist of two very essential core concepts, namely corporate identity and corporate associations. Corporate identity is defined as “the characteristics or associations that strategists in an organization want to implant in the minds of their internal and external constituencies” and corporate associations is defined as “the beliefs and feelings that an individual has for an organization” (Yu Xie & Boggs, 2006). Different Types of Corporate Brands Kapferer (1997) proposes the umbrella strategy which means that a company has different products that share the same brand name. For example, Yamaha, that sells both motor bikes and guitars, and all the products are branded with the Yamaha brand. Even though the products have different communication tools, they still have the same umbrella brand. The advantage with this strategy is that the company can take advantage of economies of scale on an international level. This simplifies the entering on different markets since the brand is well known and it also reduces the costs. Kapferer further states that this strategy is useful where the products need little marketing investments. The drawback of this strategy is that if one product under the umbrella brand is damaged, the whole brand is affected (ibid). Van Gelder (2003) states that corporate-, umbrella- and banner brands are master brands and “drive consumers’ purchase decisions and transfer brand value to new product or service sub-brands”. These brands provide a structure and a brand value that is supposed to infuse trust among the customers and this is in general hard to accomplish with individual brands (ibid). Ind (1997) suggests that within corporate branding, there are monolithic corporate brands, i.e. all products are branded with the corporate name. Ind further states that a monolithic structure should be suited when:

x An emphasis on organic growth x A need to emphasise the points of commonality within an organization x The need to communicate globally

Literature Review

18

x A tightly defined identity built around closely related businesses or a clearly defined idea

x The potential for economies of communication x The parent brand has a strong reputation

Managing the Corporate Brand Balmer (2001) states that a corporate brand and its relationships can be explained as “A corporate brand involves, in most instances, the conscious decision by senior management to distill, and make known, the attributes of the organization’s identity in the form of a clearly defined branding proposition. This proposition underpins organizational efforts to communicate, differentiate, and enhance the brand vis-à-vis stakeholders groups and networks. As such, a corporate brand proposition requires total corporate commitment from all levels of personnel. It particularly requires CEO, and senior management fealty as well as financial support”. Furthermore Balmer states that there are three virtues that should help managing the corporate brand. A corporate brand should:

x Communicate clearly the promises of the corporate brand x Differentiate the corporate brand from its competitors x Enhance the esteem and loyalty of the organization that is given by the customers and

stakeholders Stakeholders Hatch and Schultz (2001) outline three key aspects of corporate branding: vision (managers), culture (employees) and image (stakeholders). They further state that these three have to be aligned in order to have a strong corporate brand. The vision which is put up by the managers of the company has to be clearly communicated to the stakeholders, the stakeholders also have to be defined, and the expectations of those have to be outlined. The culture is how the values, behaviors, and attitudes of the company reflect the employees’ behaviors and how they act. This has to do with if the company acts accordingly with its values, if the vision inspires all its subcultures i.e. if the values are adapted in all units, and if the vision and culture are different from the company’s competitors. Image is how the brand is perceived by the outside world, including all stakeholders. This has to do with the associations of the brand, how the stakeholders and employees are interacted and if the employees care about how the image is perceived by the stakeholders (ibid). According to Ind (1997) the corporate brand is the image that the stakeholders get of the corporation that includes the communication and behavior and the values of the company hold the stakeholders and the corporate brand together. McDonald et al. (2001) state that corporate branding focuses on the brand’s positioning and is consistent with its activities and it also facilitate the understanding of the organization’s activities and communicates a clearer message to the customers. Knox and Bickerton (2000) state that corporate branding strives to create differentiation and preference for a product or service in the mind of the customer which relates with product marketing. Urde (2003) states that the corporate brand might have a role of building relationships with the government, the financial sector, and the rest of the society; by that infuse credibility towards the corporate brand.

Literature Review

19

Motives for Creating a Corporate Brand Yu Xie and Boggs (2006) argue that the motive for creating a corporate brand is to differentiate the firm from its competitors. They further state that the corporate identity, represented by the firm’s ethics, goals and values, works as an important corporate asset to differentiate the firm from its competitors. Due to the fact that products are rapidly imitated, the corporate values and images appear as important in differentiation strategies (ibid). The benefits of a corporate brand is according to Balmer (2001) “increased public profile, customer attractiveness, product support, visual recognition, investor confidence, encapsulating organizational values, and staff motivation”. There are advantages to link the brand name with its corporate name (McDonald et al. 2001). This tend to create trust and confident in the brand within its consumers. Furthermore they state that this strategy creates other advantages as well such as economies of scale. However McDonald et al. state that the benefits of this strategy might be exaggerated when entering new markets. This is because this strategy often inhibits the company’s ability to enter a new market because the products do not fit in with the existing customer base (ibid). Hatch and Schultz (2003) state that a strong corporate brand has a major impact in creating a positive consumer attitude towards new products and services. They further state that corporate branding is important in the selling process “corporate branding brings to marketing the ability to use the vision and culture of the company explicitly as part of its unique selling proposition”. It has been argued that corporate branding involves the total corporate communication mix, and needs integration of both internal as well as external communication (Hatch & Schultz, 2003). Balmer (1995) states that in order to achieve a successful corporate brand management depends upon; “having a clear corporate mission and philosophy; understanding the company’s corporate personality and corporate identity; and having accurate information regarding perceptions held of the organization by its stakeholders”. Companies that undertake a corporate brand need to have strong linkage between the products and services and the corporate name (Kay, 2004). Some companies that have corporate brands connect the products to a social corporate mission, and the company’s values and identity is reflected in the brand (ibid). Bradley (2002) states that Japanese companies use corporate brands to a larger extent rather than product brands. The Japanese companies have specialized in products like electronics and motorcars. However, Japanese companies have now started to brand Japanese food, cosmetics, and clothing which are available in western markets as well (ibid).

2.1.3 Product Branding Product Branding Defined Product branding is defined as the strategy of building separate brand identities for different products (Yu Xie & Boggs, 2006). According to Hatch and Schultz (2003), product brands are short term and live in the present. The ambition of product brands is to attract customers and boost sales (ibid). Examples of product brands include Sprite and Mr Pibb under the Coca-

Literature Review

20

Cola Corporation, Lux and Dove from Unilever and Toyota and Lexus from Toyota (Yu Xie & Boggs, 2006). A product brand strategy is according to Kapferer (1997) where one individual product has a specific name and a specific positioning; every new product gets its own brand name and positioning. Thus, a product brand strategy has a strategy of product differentiation. This strategy is undertaken by for example, P&G. The product is at focus and the only way to extend the product is by a renewal of the product, and to improve the product in order to adapt to customer needs. This can be for example an improvement in packaging. By using multiple brands the same company can have different sorts of for example shampoos with different brands and positioning that targets different consumers. In that way the company can achieve a greater market share. When adapting a product brand strategy, mostly the name of the company is not visible for the public (ibid). Characteristics of a Product Brand A characteristic of a product brand, stated by Yu Xie and Boggs (2006), is that it is flexible which allows firms to position themselves against different segments in different markets. However, there might be very high marketing costs when a product brand is targeted towards different small segments through different brands (ibid). Different Types of Product Branding Van Gelder (2003) states that product and service brands are not master brands, but function individually from the corporate brand. The product/service brand and the corporate brand are positioned separately in the minds of the customers. This strategy might be suited if there is a need for a distance between the corporate brand and the product/ service brand. The corporate brand might be weakly developed or that might be very different from the product/ service brand (ibid). Ind (1997) suggests that a more branded structure should be suited when:

x The emphasis is on acquisitive growth x The organisation’s strength is in its brands x There is a need to segment audiences x There is a wide diversity of businesses within the corporate portfolio

According to Knox and Bickerton (2000) as with corporate branding, product branding also strives to create differentiation and preference for a product or service in the mind of the customer. They further state that product branding is characterized by added value to the core functionality of a product or service and this differentiate the product or service from other brands (ibid). Yu Xie and Boggs (2006) discuss that customers’ perception of a brand typically comes from its advertising, distribution, and communicated image. When targeting new markets McDonald et al. (2001) suggest that product specific brands should be used. This strategy is also appropriate for new products and services as well, since the customers then expect something new and fresh, and do not relate the product with previous products and values. Furthermore they suggest that the benefit with an individual brand name is that if one product should fail, it would not affect the rest of the products or the company name.

Literature Review

21

The same conclusions are drawn by Kapferer (1997), who states that the advantage of a product brand strategy is that a failure of one brand does not affect another brand, or the company name, that is because every brand is individual. However, this can also be seen in a reversed way; that the individual brand does not benefit from another brand’s success. The disadvantages of a product brand strategy is the economic issues, since a new product launch is also a new brand launch, more costs are put into the process (ibid). Urde (2003) states that the product brand might have the role of fulfilling expectations and added value to the customers by flexibility and both are linked together with the core values.

2.1.4 Differences between Corporate Branding and Product Branding Firms that are successful in building a corporate brand are also more competitive than firms relying solely on product branding (Yu Xie & Boggs, 2006). However, corporate branding is more complex than product branding since it requires simultaneous interaction of strategic vision, organizational culture and images (ibid). According to Hatch and Schultz (2003) the main difference between product branding and corporate branding is that focus is shifted from the product to the corporation. Corporate branding has a much wider perspective than product branding and as stated by Hatch and Schultz “the broader scope of the corporate brand pushes brand thinking considerably beyond the product and its relationship to the consumer or customer” (ibid). Other differences between product branding and corporate branding identified by Hatch and Schultz (2003) are:

x The product brand is managed by the middle manager, whereas the corporate brand is managed by the CEO.

x The product brand attracts attention from customers, whereas the corporate brand attracts attention from several stakeholders.

x The product brand is delivered by the marketing function of the firm, whereas the corporate brand is delivered by the whole company.

x The product brand has a short life cycle, whereas the corporate brand has a long life cycle.

x Product brands are more functional, whereas corporate brands have a strategic importance to the company.

Balmer (2001) states that there are differences between a corporate brand and a product brand which is shown in table 2.1.

Literature Review

22

Table 2.1 Comparison between a Corporate and a Product Brand

Factors

Product Brands

Corporate Brands

Management

Middle Manager

CEO

Responsibility

Middle Manager

All Personnel

Cognate Discipline(s)

Marketing

Strategy/ Multi-Disciplinary

Communications Mix

Marketing Communications

Total Corporate Communications

Focus

Mainly Customer

Multiple Internal and External

Stakeholder Groups and Networks Values

Mainly Contrived

Those of founder(s) + mix of corporate

+ other sub-cultures Source: Adapted from Balmer (2001, p 2) When it comes to corporate brands, all personnel within the company have responsibility for the brand and the management is run by the CEO (Balmer, 2001). The corporate brand has a range of stakeholders, both internal and external, and the corporate brands need to fulfill their expectations, in difference from product brands that are more customer focused. The corporate brands have multiple channels of communication to get the brand known, but focus is on total corporate communication rather than marketing communications. Corporate brands are also multi-disciplinary instead of a doctorate of marketing. Finally, the values of corporate brands are held by the personnel and the organization’s sub-cultures (ibid). Yu Xie and Boggs (2006) state that a corporate brand differs from a product brand in its strategic focus and implementation which include corporate strategy, corporate communications and corporate culture. They further state that generally, corporate branding has a much more strategic focus than product branding. The focus of product branding is on the customer and the focus of corporate branding is on the stakeholders (ibid). Product branding as well as corporate branding attempt to create added value to the product or service, however, corporate branding is yet more complex since the corporate brand strategy has to be at the organizational level and not at the individual product or service (Knox & Bickerton, 2000). Knox and Bickerton (2000) further discuss that different from the product brand the corporate brand does not only consider customers, but all stakeholders, hence when managing a corporate brand, interaction with the stakeholders is very important. According to Ind (1997) corporate brands are different from product brands in the way that they are focusing on different audiences. While product brands are focusing on consumers and the corporate brands are focusing on all the stakeholders. However, a corporate brand should not only focus on one of these, because focusing solely on the shareholders would lead to an obsession on profits and solely focusing on the consumers will lead to an obsession with market shares. Hence, Ind suggests that there should be a balance between these in order to have a complete corporate brand (ibid).

Literature Review

23

Kay (2004) states that a strong corporate brand is different from building a strong product brand since the corporate brand targets different segments. P&G has a large portfolio of products, but the corporate name is unknown among its customers. Corporate brand communications are directed towards the shareholders, employees and other stakeholders, and a corporate brand have little impact on its customers and have little influence over demand for products and services (ibid). Kapferer (1997) states that when companies are selling in different markets at the same time, an issue of whether to choose between a product brand strategy or a corporate brand strategy should be used. When deciding this, a case-by-case analysis is often used; this is shown in table 2.2. Table 2.2 Shared Roles of the Corporate and Product Brand

Targets

Product Brand

Corporate Brand

1. Customers

+ + + + +

+

2. Trade associations

+ + + +

+

3. Employees

+ + +

+ +

4. Suppliers

+ + +

+ + +

5. Press

+ + +

+ + +

6. Issues groups

+ +

+ + + +

7. Local community

+ +

+ + + +

8. Academia

+ +

+ + + +

9. Regulatory authorities

+

+ + + +

10. Government commission

+

+ + + +

11. Financial markets

+

+ + + + +

12. Stockholders

+

+ + + + +

Source: Adapted from Kapferer (1997, p 223) + = level of importance The table shows which strategy that focuses on which target groups. For example, a product brand’s main target group is the customers (number 1), different from a corporate brand whose main target is the stockholders (number 12). From number 2 (trade associations) and up to and including number 12 (stockholders), list all the stakeholders.

Literature Review

24

2.2 Factors Determining MNCs’ Choice of Branding Strategies in International Markets

In this section the most relevant literature dealing with the factors affecting firms’ choice of branding strategies will be presented. There has been limited research on what factors that determine the choice of branding strategies in emerging markets. Therefore, the main factors that will we will concentrate on is taken from Yu Xie’s and Bogg’s (2006) frame of reference (figure 2.4), but these factors have been supplemented with additional literature found from other researchers. Branding Strategies in Emerging Markets Yu Xie and Boggs (2006) state that MNCs should adapt to the local markets in emerging markets in order to succeed. The MNCs can choose between using a product branding strategy or a corporate branding strategy (ibid). Kapferer (1997) suggests that choosing an appropriate branding strategy should be determined from three factors; the product or service, consumer behavior and the firm’s competitive position. He further suggests that if the purpose is to personalize the product, a product brand strategy should be chosen, and if the purpose is to indicate the manufacturer, a corporate branding strategy should be chosen (ibid). According to Yu Xie and Boggs (2006), the development of brand strategy in an emerging market should be based on an understanding of its economic, technological, socio-cultural, and competitive conditions. All those factors mentioned may have a significant impact on the firm’s operations and performance (ibid). Other factors that may influence the MNCs initial branding strategy when entering an emerging market are according to Yu Xie and Boggs (2006): stakeholder interest, corporate image and reputation, market complexity, marketing costs, and product characteristics (figure 2.4). Each of those factors will be described one by one.

Figure 2.4 Factors Affecting Branding Strategy of Developed Country Firms in Emerging Markets

Source: Adapted from Yu Xie and Boggs (2006)

Stakeholder Interests

Corporate Image and Reputation

Market Complexity

Marketing Costs

Product Characteristics

Choice of Branding Strategy

x Corporate Brand x Product Brand

Firm Characteristics

x Age x Size x Experience

Literature Review

25

2.2.1 Stakeholder Interest As stated by Hatch and Schultz (2003), the image of the corporate brand is formed by the firm’s stakeholders including employees, customers, investors, suppliers, partners, regulators, and local communities. As mentioned previously, the focus of product branding is on the customer and the focus of corporate branding is on the stakeholders (Yu Xie & Boggs, 2006). According to Hatch and Schultz (2003) the firm’s visibility, recognition and reputation can be increased more by the corporate brand than the actual product brand. The image of the corporate brand is formed by the firm’s stakeholders including employees, customers, investors, suppliers, partners, regulators, and local communities. Hatch and Schultz further state that corporate branding is successful when the values of the corporation are attracted by the stakeholders. An advantage with a strong corporate brand is that the company may attract investors, and potential employees (Yu Xie & Boggs, 2006). A corporate brand can better increase the firm’s visibility, recognition and reputation to a greater extent than a product brand can (ibid). According to Dagens Industri (DI:s Varumärkesskola, 2007) a strong brand affects the quotation positively, and result is a strong market position which leads to the ability to charge a higher price, which in turn leads to an increasing profit. Furthermore it has been discussed that a company can increase its authority by having good relationships with the stakeholders: customers, investors, government, and etcetera. A strong brand is also appealing to collaborators, which makes the brand even stronger (ibid). Yu Xie and Boggs (2006) state that it is rather difficult for an MNC entering an emerging market if it does not have a good relationship with the host government, since the most considerable difference between emerging economies and developed economies is the variations in regulations, rules and policies. Another important aspect when entering an emerging market is to create a partnership between manufacturers and dealers (Yu Xie & Boggs, 2006). Yu Xie and Boggs (2006) argue that it is very important to set up an efficient sales and distribution system, hence different organizations have to be integrated in order to reach efficiency. They further state the most optimal strategy is to use a corporate branding strategy under such conditions (ibid). Harris and de Chernatony (2001) state that what distinguishes a corporate brand is its focus on the organization. Furthermore they state that the employees play a great role when creating a perception of the corporate brand in the mind of the consumers and the rest of the stakeholders. The employees’ values have to be interrelated with the values of the company (ibid). Arnold and Quelch (1998) state that within emerging markets, national and local government have a great impact on country specific issues. Hence it is important to have established relationships with government when entering an emerging market. This can influence to what extent a company can get benefits such as licences or permits, or joint ventures. They discuss that companies with longer experience in the market have an advantage (ibid).

2.2.2 Corporate Image and Reputation Yu Xie and Boggs (2006) define corporate image as “the sum of impressions and expectations of an organization built up in the minds of its stakeholders and the public”. The authors discuss that a strong corporate image is the most useful way of product differentiation.

Literature Review

26

They further mention that branding has to be managed in order to create alignment between the internal culture and the external image of the firm. Abratt (1989) states that firms should make a rigorous effort to manage their corporate images and the corporate image should be managed in order to maintain public trust. He further states that “the image is not what the company believes it to be, but the feelings and beliefs about the company that exist in the minds of the audiences and which arises from experience and observation”. Knox and Bickerton (2000) propose that the brand is developed from corporate image, to corporate personality, to corporate identity, to corporate reputation, to finally corporate branding. The process starts by a focus of the customer to a wider perspective and aims at the employees further towards an understanding of the importance of the perceptions from people other than customers and employees. Focus is more and more put on all the stakeholders. Hence the corporate reputation is very important in order to satisfy the needs of the stakeholders (ibid). Corporate names can be applied to products and services since they carry a message about the brand, however the corporate name can be damaged if it is violated by negative press, and problems can occur if the corporate vision and the stakeholders’ vision are not the same (Kay, 2004). Ind (1997) states that global corporate brands have to have a consistent naming approach and communicate the same brand globally. Otherwise costumers might be confused about the organization structure (ibid). Urde (2003) states that a corporate brand needs to have a brand personality that is inline with the core values of the company. The corporate brand’s mission is to get the customers to identify with the brand and its values; hence this creates trust (ibid). Balmer (1995) states that the benefit of corporate branding is its consistency and it provides “added value to products and services; contributes to a company’s financial margins; affords protection from competitors and attracts top-notch personnel and is seen as having a financial worth”. If the company has a good reputation it can benefit from that, and the strength of the company is visible to investors, the city and the government (ibid). Yu Xie and Boggs (2006) discuss that customers’ perception of a product brand typically comes from the communicated image and advertising, whereas the corporate image is derived from the customers’ interaction with the firms’ employees, physical presence and overall marketing efforts. According to Yu Xie and Boggs (2006), MNCs have to create positive customer perceptions. However, that is much more complicated in emerging markets due to heterogeneity in the market structure (ibid). According to Roth (1992) it is very important for firms to develop and manage a brand image. He further argues that in order to reach market success, it is vital with a clearly defined brand image. If a brand is well-communicated, the consumers will more easily be able to identify the needs associated with the brand and hence differentiate the brand from its competitors (ibid). Roth (1992) stated that an effective brand image helps build and maintain brand equity. Brand equity is defined as “a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm

Literature Review

27

and/or to that firm’s customers” (Aaker, 1991, p.15). According to Aaker (1991, p. 16) brand equity is based on five categories of assets and liabilities: brand loyalty, name awareness, perceived quality, brand associations in addition to perceived quality, and other proprietary brand assets such as patents, trademarks, channel relationships, etcetera. If the brand name would change, some or all of the assets and liabilities could be affected (ibid). According to Yu Xie and Boggs (2006) there are different benefits for firms to use product branding instead of corporate branding. One example is that a firm using a product-brand strategy instead of a corporate branding strategy may experience less harm to its corporate image if one of the individual brands fails (ibid).

2.2.3 Market Complexity Yu Xie and Boggs (2006) state that branding strategies become difficult to set due to complex international environments. There are some barriers that MNCs have to face according to Yu Xie and Boggs (2006):

x On a macro environment o Consumer characteristics and behaviours o The legislative infrastructure o Existing competition

x On the task environment o Inter-institutional relationships o Behavioural norms and channel structures

x On the organizational environment o Cost structures and operational flexibility o Management styles and cultures

Alashban et al. (2001) propose five environmental factors that may influence brand-name standardization/adaptation strategy: religion may affect certain items in society which may be perceived as taboo; language, translation blunders may occur; education, the degree of illiteracy within a society has to be considered; technology, technological differences across nations may affect marketing; and the economy, standardization is more practical in markets that are economically comparable. Yu Xie and Boggs (2006) state that economic growth and liberalization generate great new opportunities for MNCs, but there are structural uncertainties created due to market transition and transformation. According Yin Wong and Merrilees (2007) a firm has to adapt to its environment which may consist of a combination of physical, social, cultural and technological factors. The authors further argue that the cultural aspect is a structural influence which will have an impact on a firm’s marketing strategy. Culture is the main reason why domestic brands are modified to fit into a foreign market (ibid). Roth (1992) defines three international market characteristics that may impact the importance of brand image strategy:

1. Level of economic development Consumer demand and attitudes towards goods and companies offering them are affected by a country’s stage of economic growth. Different markets have different

Literature Review

28

economic and social conditions; hence it is vital for firms to consider a country’s overall economic development when developing international marketing strategies.

2. Degree of cultural context How consumers interpret a message is affected by their culture. Cultural context is defined as “the degree of information consumers infer from implicit, contextual cues – those which are non-verbal and non-written”.

3. The extent of competition within a product category Product positioning, as a means of brand differentiation, has become a vital marketing tool when managers strive to differentiate their brand from competitors. Positioning can be developed by offering something different from the competitors or by doing everything better than the competitors.

According to Yu Xie and Boggs (2006), emerging markets constitute a vital factor in the future growth of the world economy. An emerging market is defined as “a country that has experienced a relatively rapid pace of economic development, and has initiated economic liberalization and a market economy” (ibid). Yu Xie and Boggs (2006) provide three reasons to why firms seek to enter emerging markets:

1. To gain new customers and boost sales. 2. Saturation of developed markets forces MNCs to exploit new markets in emerging

economies. 3. Market size and market growth offer huge potential for marketing success.

Yin Wong and Merrilees (2007) argue that the main implication of emerging global markets is that a firm’s marketing strategy has to match the characteristics of diverse external environments. According to Arnold and Quelch (1998), there is a limited marketing infrastructure in emerging markets; hence distribution channels and media channels are scarce. According to Quelch (1999), emerging markets are not homogeneous, and they vary in economic development and financial stability. They even vary in the same geographical areas. Furthermore, he states that global companies have to be selective where they allocate their resources, but there are a lot of opportunities to gain market shares and acquire local brands (ibid).

2.2.4 Marketing Costs According to Yu Xie and Boggs (2006) creating a brand is very costly and it is very expensive to sustain an existing brand. They further state that there might be high marketing costs when targeting different brands at separate small segments. The authors argue that corporate branding is efficient in communicating market and product information. A way of reducing the marketing costs may be to create an integrated marketing communication programme rather than promoting different product brands (ibid). Aaker (2008) suggests that when adapting a standardized strategy, economies of scale are often created. This can be on for example the marketing process, where brand name, positioning, and advertising issues are handled the same all around the world (ibid).

Literature Review

29

Kapferer (1997) states that the disadvantages of a product brand strategy is the economic issues, since a new product launch is also a new brand launch, more costs are put into the process. Hatch and Schultz (2001) state that companies can reduce costs by adapting a corporate brand strategy, since they can exploit the economies of scale in advertising and marketing. This strategy is suited in markets where the product life cycle is declining and hence the costs would be high to continually creating new product brands (ibid). Knox and Bickerton (2000) discuss that the actions made by the organization affect the brand on a product level to a high degree. This also affects the brand’s economic value in a short term perspective. They further state that where corporate- and product brand are the same, the higher success of the brand.

2.2.5 Product Characteristics Yu Xie and Boggs (2006) state that consumer products are typically more culturally sensitive than industrial products, especially in emerging markets. According to Yu Xie and Boggs (2006) there are some differences between consumer products and industrial products:

x Industrial products target concentrated markets, whereas consumer products are mass marketed.

x Industrial products enjoy long-term, stable relationships, whereas consumer products have a short-term perspective.

x There are relatively fewer buyers for industrial products than for consumer products. x Industrial products typically reach buyers through short channels, whereas long

channels are normal for consumer products. x There is greater emphasis on personal selling for industrial products than for

consumer products. Yu Xie and Boggs (2006) claim that new entrants in emerging markets are more likely to use corporate branding for industrial products rather than consumer products due to the fact that consumer products are more culturally sensitive. McDonalds et al. (2001) state that corporate brands dominate within the financial sector. Furthermore they discuss that when targeting new markets, product branding should be suited. Product branding should also be used when entering markets with new products, since a new approach is expected from the customers. They also mean that product branding should be used for service brands in different situations (ibid). McDonald et al. (2001) state that an advantage with product branding is that it allows the company to be more flexible and to use marketing activities that appeal to different groups of people. However, this also has disadvantages since this strategy increases the marketing costs (ibid). Arnold and Quelch (1998) state that MNCs have to adapt their products or service offerings in emerging markets. The product range should also be narrow and target the major cities in countries. Additionally, the products should be established in other markets, hence the change that the customers have been aware of the brand in other countries from travelling is larger (ibid).

Literature Review

30

2.3 Conceptual Framework According to Miles and Huberman (1994) “a conceptual framework explains, either graphically or in narrative form, the main things to be studied – the key factors, constructs or variables – and the presumed relationships among them”. In line with Miles and Huberman, a conceptual framework will be formed which will help us to collect data relevant to our research questions. Below, the two sections that belong to each research question will be explained, as well as the theory which goes into our conceptual framework and the motives for the selection.

2.3.1 Branding Strategies of MNCs in International Markets As stated by Urde (2003), there are four brand architectures available to firms; corporate brands, product brands, corporate- and product brand (with dominant use of the corporate brand), and product- and corporate brands (with dominant use of product brands). After reviewing different branding strategies and theories related to these, we found that there are a lot of different branding strategies that are mixtures of both corporate- and product brand strategies that MNCs can adopt. However, we will base the conceptual framework on the brand architectures mentioned by Urde because these summarizes and identifies the strategies existing for MNCs in a noncomplex way. Another important strategy connected to MNCs operating in international markets is standardization versus adaptation (Bradley, 2002; Yin Wong & Merrilees, 2007; Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie & Boggs, 2006; Keller, 2007; Quelch, 1999). There have been a lot of research in this area; therefore we believe that this area is an interesting issue to investigate, since MNCs choose either standardization- or an adaptation strategy, or a mixture of these. We choose to rely on previous research from the below mentioned authors because these are most relevant for our area of research. Regarding corporate branding such features include: Strategy

x Corporate brands are strategic (Hatch & Schultz, 2003; Yu Xie & Boggs, 2006) x Brand architectures (Urde, 2003)

Management of the Brand

x Corporate branding is managed by CEO (Hatch & Schultz, 2003; Balmer, 2001) x Delivered by the whole company (Hatch & Schultz, 2003)

Stakeholder Focus

x Focus is on stakeholders (Hatch & Schultz, 2003; Balmer, 2001; Knox & Bickerton, 2000; Ind, 1997; Kay 2004; Kapferer, 1997).

Standardization versus Adaptation

x Standardization versus adaptation (Bradley, 2002; Yin Wong & Merrilees, 2007; Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie & Boggs, 2006; Keller, 2007; Quelch, 1999)

Literature Review

31

Regarding product branding such features include: Strategy

x Product brands are more functional (Hatch & Schultz, 2003) x Brand architectures (Urde, 2003)

Management of the Brand

x Product branding is managed by the middle manager (Hatch & Schultz, 2003; Balmer, 2001)

x The product brand is delivered by the marketing function (Hatch & Schultz, 2003) Stakeholder Focus

x Focus is on customers (Hatch & Schultz, 2003; Balmer, 2001) Standardization versus Adaptation

x Standardization versus adaptation (Bradley, 2002; Yin Wong & Merrilees, 2007; Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie & Boggs, 2006; Keller, 2007; Quelch, 1999)

We have summarized the mentioned strategies and key factors connected to branding strategies within international markets in figure 2.5.

Figure 2.5 Conceptual Framework of Branding Strategies in International Markets

2.3.2 Factors Determining MNCs’ Choice of Branding Strategies According to Yu Xie and Boggs (2006) there are certain factors influencing a firm’s choice of branding strategy. In the conceptual framework we will concentrate on the following factors: stakeholder interests, corporate image and reputation, marketing complexity and marketing costs which are based on Yu Xie’s and Boggs’ model presented in the literature review (Figure 2.4) on the factors affecting branding strategy of developed country firms in emerging markets. Yu Xie and Boggs have proposed this model, however, they have not tested it empirically. Although Yu Xie and Boggs’ model handles the factors affecting branding strategies in emerging markets, we believe that this model can be applied on international markets as well. Therefore, we find their model relevant for our research and thus we wanted to test this model empirically. Furthermore, we find that our research will be a contribution to their research.

Corporate Branding

Product Branding

Standardization versus

Adaptation

x Corporate- and product brand (with dominant use of the corporate brand)

x Managed by CEO x Focus on stakeholders x Delivered by whole

company x Strategic

x Product- and corporate brands (with dominant use of product brands)

x Managed by middle manager

x Focus on customers x Delivered by marketing

function x Functional

Literature Review

32

However, to reach our purpose we have chosen to modify their figure. We have chosen to concentrate on four main factors instead of five which are presented in the original figure, since we believe that these four are most important for our research purpose. We have also chosen not to concentrate on firm characteristics, since we believe that this factor is not relevant for our research purpose. Additionally, we have chosen to add the strategy of standardization and adaptation. Since a lot of research has been done related to this concept, it seems like this is an important issue to consider for MNCs in international markets. Therefore, we find this relevant for our research topic as well. With this modification, we believe that our figure is sufficient in order to research our purpose. Based on the mentioned key factors we have created a conceptual framework which is summarized in figure 2.6.

Figure 2.6 Conceptual Framework of Factors Determining MNCs’ Choice of Branding Strategies.

Except for Yu Xie and Boggs (2006), other authors have reflected on the importance of these factors. Each of the mentioned factors will be further broken down into smaller parts explained as:

x Stakeholder Interests o Employees, customers, investors, suppliers, partners, regulators (Hatch &

Schultz, 2003) o Relationship with host government country (Yu Xie & Boggs, 2006; Arnold &

Quelch, 1998) o Partnership between manufacturers and dealers (Yu Xie & Boggs, 2006)

x Corporate Image and Reputation o Expectations of stakeholders (Knox & Bickerton, 2000; Yu Xie & Boggs,

2006; Ind, 1997; Kay 2004) o Brand personality inline with core values of the company (Urde, 2003)

Stakeholder Interest

Corporate Image and Reputation

Market Complexity

Standardization versus

Adaptation

Choice of Branding Strategy

x Corporate Branding x Product Branding x Corporate- and

product brand (with dominant use of the corporate brand)

x Product- and corporate brands (with dominant use of product brands) Marketing

Costs

Literature Review

33

o Characteristics of a corporate brand: consistency, added value to products and services, a good reputation attracts investors (Balmer, 1995)

o Characteristics of a product brand: less harm to the firm if one of the individual brands fail, flexible, high marketing costs (Yu Xie & Boggs, 2006; Kapferer, 1997)

x Market Complexity

o Consumer characteristics (Yu Xie & Boggs, 2006) o Competition (Yu Xie & Boggs, 2006; Roth, 1992) o Cultural aspect (Yin Wong & Merrilees, 2007; Roth, 1992; o Environmental factors (Yin Wong & Merrilees, 2007)

x Marketing Costs o High costs related to targeting different segments (Yu Xie & Boggs, 2006) o Economies of scale (Aaker, 2008; Hatch and Schultz, 2001)

Methodology

34

3 Methodology In this chapter, the methodology used for this research is outlined and discussed. The purpose is to get an overview over the research and see how the secondary data can be compared with the primary data, and also how they can be compared with each other. This chapter starts with the research purpose, followed by the research approach, the research strategy, data collection method, sample selection, data analysis and finally a discussion about quality standards.

3.1 Purpose of Research: Explore, Describe and Explain According to Eriksson and Wiedersheim-Paul (2006) the purpose of a research is to state what is to be achieved by the research and how the results can be used. According to Yin (2003) there are three stages when designing research; exploratory, descriptive and explanatory stage.

x Exploratory Yin (2003) states that if the research questions are based on “what” questions, the research has an exploratory research purpose. Exploratory research can also be undertaken if there are little or no prior research in the area, and can then be used to explore why there is interests in further research at all (Wilson, 2003).

x Descriptive Descriptive research purpose is according to Wilson (2003) information that is gathered through descriptive research and answers questions of who, what, where, how and when. Furthermore he discusses that this information answers questions of different situations, and are appropriate when the research focus on descriptions of characteristics. Yin (2003) states that descriptive research should describe the situation. Furthermore Eriksson and Wiedersheim-Paul (2006) state that researchers could choose to describe; situations, events and actions.

x Explanatory Explanatory research answers questions of “how” and “why” (Yin, 2003). Eriksson and Wiedersheim-Paul (2006) state that explaining means to analyze cause-effect relationships. Wilson (2003) discusses that causal research examine the relationships with two variables.

Due to the above differentiation, our research may be classified as a descriptive research purpose, since the purpose is to investigate and describe the branding strategies of MNCs in international markets and what factors determine choice of branding strategy. To the extent that the present study may shed light on branding in international markets, scarcely investigated, our research may be considered as partially exploratory. An explanatory research purpose is also used since we begin to explain cause-effect relationships of what factors determining the choice of certain actions when conclusions are drawn.

3.2 Research Approach: Qualitative Research According to Denscombe (2000) a qualitative research approach is suitable when human activities or when behavioral patterns will be investigated. Furthermore he discusses that a qualitative research approach is distinguished due to the researcher’s own interpretations and analyzing. Qualitative research leans towards an unstructured small scale carefully selected individuals approach with a purpose to gather non-quantifiable information that provides insight into a behavior, motivations and attitudes (Wilson, 2003).

Methodology

35

Based on this information, a qualitative research approach was used, since the empirical data was collected on a small scale level and since the purpose of this research was to gain a deeper understanding of actions in certain situations. The ambitions of this research was to gain an in-depth view of this situation, hence qualitative research was most suited.

3.3 Research Strategy: Case Study Case studies are appropriate for small scale researches that handle few units in a narrow perspective and where an in-depth study is going to be conducted (Denscombe, 2000). He further explains that a case study focuses on relations and processes to get a perspective of how these are linked together, the research is also conducted in a natural environment without control over situations, and it also provides the researcher with the opportunity to have different sources and methods. Yin (2003, p. 13) states that a case study is “an empirical inquiry that investigated a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident.” He further states that a case study answers questions that have a character of “how” and “why”. A multiple-case study is suited when two or more entities are studied and compared, and the benefit of this is that it increases validity (Yin, 2003). Yin (1994) argues that within multiple-case studies there are holistic multiple-case design which is suited when the global nature of an organization is examined. Since our research’s aim was an in-depth understanding of a certain situation, and since the research questions had the characters of “how”, a case study was suitable. Since we performed a multiple-case study, multiple cases and single units of analysis were used.

3.4 Data Collection Method: Interviews One source of evidence that Yin (2003) discusses was used in this thesis; interviews. According to Denscombe (2000) an interview is a guided conversation between two or more people. Furthermore, he states that a semi-conducted interview is an interview where the researchers have conducted the interview questions prior to the interview. However, the respondent can speak freely and expand the answers to have a dialogue with the researchers (ibid). According to Jakobsen (1993), there are two kinds of interviews; face-to-face interviews and telephone interviews. In order to gather valuable information, we conducted two interviews. As a method, we used telephone interviews due to geographical distance. We conducted the interview questions prior to the interview, and the interview guide was sent to the respondents in advance. The respondents were given room for reflections and explanations and the respondents were also able to ask questions during the interview. Additionally, supplementary information from both companies’ homepages were added to the cases.

3.5 Sample Selection: Subjective and Convenience A subjective sample selection is according to Denscombe (2000) when a decided sample is chosen when the researcher has knowledge about what is going to be investigated, and the researcher chooses that sample because of the belief that these persons will provide the most valuable information. According Blaxter, Hughes and Tight (2001), a convenient sample selection is when the most convenient sample is selected.

Methodology

36

In order to collect valuable information for the empirical data we chose to undertake a subjective- and a convenient sample selection. We thought that it would be interesting to look into one company that used a product brand strategy, and another that used a corporate brand strategy. When deciding which companies to choose we had different reasons for choosing the companies provided for this research. In our literature review, many authors have mentioned Procter & Gamble when talking about product branding. P&G is furthermore a global company and considered to be a solid, respected, and a trustworthy company and therefore we believed that this company would be interesting to look into, and to further investigate. The authors had also access to P&G because of personal contacts, and therefore this company was chosen. Regarding the other company chosen for this research, Sony Ericsson, we assumed that the company used a corporate strategy. Furthermore, Sony Ericsson is also a company that is highly respected and trustworthy and as with P&G we had access to this company because of personal contacts and due to convenience, this company was chosen.

3.6 Analysis of Data Yin (2003) addresses three types of analytical strategies; relying on theoretical propositions, thinking about rival explanations, and developing a case description. Relying on theoretical propositions is the strategy where secondary data is compared with primary data (Yin, 2003). This was also the analytical strategy that was used in this thesis. We chose to approach this strategy since we conducted a multiple-case study and compared our findings with previous theories in a within-case analysis. Miles and Huberman (1994) clarify data analysis as consisting of three components, namely data reduction, data display and conclusion drawing/verification. They explain each component as follows:

x Data reduction “is the process of selecting, focusing, simplifying, abstracting, and transforming the data that appear in written-up field notes or transcriptions” (Miles & Huberman, 1994, p. 10). They further state that data reduction actually begins before the gathering of the information when the researcher decides which conceptual framework, which research questions to be used and so on.

x Data display “is an organized, compressed assembly of information that permits conclusion drawing and action” (Miles & Huberman, 1994, p. 10). They state that the data display simplifies the decision of either analyzing the data further or to take action. The authors further claim that a good data display is needed for a valid qualitative analysis.

x Conclusion drawing and verification is according to the authors the stage when the researcher starts to see what the collected data means. They further state that the conclusions that begin to appear relatively early in the process should be held lightly until the data collection is over.

We attempted to follow the three stages of data analysis accordingly. Already in the stage of collecting relevant data for our research questions, we selected the literature carefully in order to simplify the answering of our research questions. The conceptualized literature was displayed in figures to provide a comprehensive overview. The empirical data was then compared to the existing literature in a within-case analysis followed by a cross-case analysis in order to compare the two cases, finally conclusion drawings and verifications were made.

Methodology

37

3.7 Quality Standards Denscombe (2000) mentions three types of quality standards that are relevant for a qualitative research; reliability and validity. The criteria of reliability are discussed by Denscombe (2000) as if the research instruments are neutral, and if someone else would perform the same research they would get the same result. In this research interviews were conducted with different people within each organization. Since interviews handle human beings, and the interrelationships between the interviewers and the interviewees, the same result might not be found if someone else would have performed the research. Our research was made with only two companies within different industries, which might have decreased reliability. Our findings were therefore based on two case studies, which makes it worth noting that no generalizations can be made due to the limited number of cases. However, the chosen companies are well established with years of experience within our selected field of study. If there would have been more companies within the same industry, and also companies using the same strategy, this might have increased reliability. However, we believe that these companies could provide us with valuable information since the companies are two global companies and have a trustworthy image. Therefore, we assume that their type of branding strategies may be transferable to other MNCs’ branding strategies and hence increase reliability. Furthermore, we only interviewed one person within each company; this might have decreased reliability negatively. However, we contacted the companies and we were referred to the right person that could answer our questions and therefore we consider the interviewees to be representative for this research and they were the persons that provided us with the most valuable information. In this manner we aimed to increase reliability. To further increase reliability the interview guide was sent in advance so that the interviewees would have time to prepare the answers. We attempted to ask non-leading questions, and the interviewees were able to ask questions when there were questions that were indistinct or unclear. Furthermore, we analyzed the data collected during the interview immediately after the interview. Therefore we limited the risk of missing or forgetting important data, which increases validity. Validity is according to Denscombe (2000) the criteria of measuring what is supposed to be measured. During the interview we used a tape-recorder which we informed the interviewee in advance about. We tape-recorded the whole interview to ensure that we got all information, by that we were able to double check the answers which increased validity. The interviewees were persons who could provide us with the correct information and who were representative for this research. None of them were Swedish speaking. One of the respondents had English as his native language. The other interviewee had German as his first language. Therefore the interviews were performed in English. We believe that this might have decreased validity. However, both the interviewees and the researchers spoke English fluently, and since the interviews were performed in English there might have been a risk of loosing information due to language misunderstandings. But, in this way the risk of translating errors is nonexistent, which in turn increases validity.

Data Presentation

38

4 Data Presentation In this chapter, data collected from interviews with Procter & Gamble and Sony Ericsson is presented. The chapter starts by a presentation of the first case, followed by the second case. Both cases start by brief background information of the companies.

4.1 Case One: Procter & Gamble (P&G) Company Background According to P&G’s webpage, the company consists of over 138,000 employees working in over 80 countries worldwide. P&G is a public company and is listed on the New York Stock Exchange (NYSE). Additionally, the company is on the Fortune 500 list. The CEO is A.G. Lafley. P&G started as a small, family-owned soap and candle company in 1837, and has grown to be a global company providing products and services in different areas. The headquarter is based in Cincinnati, Ohio. P&G has nearly 300 brands in different areas. The company has one of the largest and strongest portfolios of brands, for example Pampers, Tide, Ariel, Always, Pantene, Bounty, Folgers, Pringles, Charmin, Downy, lams, Crest, Actonel and Olay. The company’s operations are listed into three global business units (GBU), with each GBU divided into different Business Segments:

x Beauty o Beauty Segment o Grooming Segment

x Household Care o Baby Care and Family Care Segment o Fabric Care and Home Care Segment

x Health & Well-Being o Health Care o Snacks, Coffee and Pet Care

Our respondent at P&G was Andreas Wagner who works as assistant brand manager, shopper marketing, in Schwalbach am Taunus, Germany. When presenting our empirical findings, we will refer to the respondent Andreas Wagner.

4.1.1 Branding Strategy of Procter & Gamble in International Markets Product Branding Strategy P&G focuses merely on product branding and uses a global strategy. There is no “real” home market since P&G is global company, but it is originally an American company. P&G as a corporation is more publicly known in USA and Great Britain than in other countries. But the actual corporate brand, P&G, is never marketed; instead focus is on the different product brands. P&G has around 300 brands in total worldwide. However, the number of brands may change monthly and sometimes even weekly. The brands that are not successful are sold. For example, many of the family care brands have previously been sold, but instead P&G has acquired the global brands Wella and Gillette. The reason for using a product branding strategy is because P&G has many different kinds of products: baby care, health care, pet food, coffee, etcetera. When there are diverse kinds of products it is better to focus on product branding rather than corporate branding. The focus

Data Presentation

39

will stay on product branding. However, P&G sometimes uses an umbrella strategy where one product brand is extended to several additional products such as Ariel with different products/sub brands under the Ariel brand. Traditionally, the brands’ strengths have been driven by innovation – to be best in class. Today, the focus lies more on commercial innovation. Hence product innovation is losing importance for brand management. For P&G people and managerial resources are important. Additionally, it is important with first-mover advantage. In order to build a competitive advantage, P&G has traditionally been very focused on innovation. However, focus has shifted to be more driven by marketing knowledge. To sustain competitive advantage P&G makes huge investments. There is a huge R&D infrastructure, as well as marketing functions. In some cases P&G acquires other companies with strong global brands in order to sustain competitive advantage. Two recently acquired strong global brands are Wella and Gillette. Hence, P&G focuses only on acquiring truly global brands, or brands that have the potential of becoming global. P&G would never acquire a small local supplier just to open the market. P&G focuses on traditional advertising such as TV-advertising etcetera. P&G does not want to change its type of branding and marketing strategy. The company wants to create global brands. When the company has a new product idea, it has to be considered how that specific product can be taken into other markets. Hence, there has to be consensus for a whole continent. That is the reason why P&G prefers to bring in successful brands from one country to another, instead of developing new products. When developing a strategy for specifically emerging markets, P&G takes the best ideas from other markets and sends the best people to the new markets. P&G opened up China and Russia by sending 10 of the best people. After a few years time, the number of employees had risen to 200 people. P&G’s main reason for going international is to boost sales and reach economies of scale and scope. It also has to do with international communication. P&G simply tries to find out what works internationally. Management of the Brand The product brand is undoubtedly the most important. The whole organization focuses on product branding except for some special functions which may deal with the corporate brand. Since P&G focuses on product management it is the marketing organisation which manages the product brands. The PR department is the ones who make some kind of corporate branding for P&G. There is a Global Business Unit (GBU) which is responsible for the strategic development of the brand. P&G also has regional GBUs on each continent, as well as Market Development Organisation (MDO) in each region. When it comes to managing the brand image, the GBU and MDO have the main responsibility. Both entry level position management, middle level management, as well as senior level management are responsible. The more important a brand is; the higher level of management responsibility. When delivering the product brand, most of the work is made by the MDO at the entry level management. Generally, marketing is mainly managed by entry level management and middle level management.

Data Presentation

40

Focus on Stakeholders For P&G all stakeholders are important, and the most important stakeholders are the customers. It is vital for the company to understand and please the customers. Other important stakeholders include employees (since it is a very strong focus on personal development within P&G), local governments, shareholders, and investors. P&G has a commitment to invest in about 20 billion dollar in sustainable products and grow 5-6% per year; hence the investors are important to consider. P&G has a long-term focus measured in both financial success, as well as sustainability. When it comes to brand-building a long-term focus means up to 20 years, and when it comes to investors it means at least 5 years. Standardization versus Adaptation P&G tries to position all the brands similarly in all markets. However, some brands may have a stronger position in some markets, and a weaker position in others. There are some markets such as South America where some special brands, for example shampoo, is positioned differently because of different income structures. P&G tries to standardize as much as possible, and the aim is that the product should work throughout at least one continent. Hence, there are many different languages on the packages. The same type of product branding strategy is used all over the world. P&G sees what works in one market and takes it to another market, and tries to do it the same way. A lot of research is made before entering a new market in order to find out if the brands have to be adapted. Research is made in order to get to know the customers, the culture and the country. Adaptation is made only if it is necessary, so in some cases there might be adaptations made to each local market when needed. The color green for example cannot be used in the Near East due to cultural reasons.

4.1.2 Factors Determining Procter & Gamble’s Choice of Branding Strategies in International Markets

Stakeholder Interest The employees’ personal development and career path are reasons to work abroad. P&G has the philosophy of bringing the best people and ideas in one country to another. The consumers are very important, and P&G always tries to find out their needs. Normally, thorough research is made before launching a new product in a new market. Usually, P&G always knows what will work in one market before the launching. The marketing strategy is hence very analytical and built upon consensus and it is not very flexible. Numbers, research as well as finding the right target group is therefore important. When choosing branding strategies for emerging markets, culture and non-governmental organizations (NGOs) are important factors to consider. There are many emerging markets where the democratic structure is not as developed as in America or Europe; therefore the local governments and NGOs are important when considering these markets. P&G also has to find out if the goals of the local governments and NGOs fit with the corporate culture of P&G. The local governments are important since there are many laws that have to be taken into consideration. An example is Saudi Arabia, where women are not allowed to shop in the same stores as men. Therefore there might be stores with just male products and other stores with just female products. Corporate Image and Reputation Corporate image and reputation is not so important for P&G since very few people actually know P&G. The consumers know the product brands, but not the corporate brand. The focus

Data Presentation

41

is more about defining the competitive advantage of each product and finding the right target group. The advantage with product branding is if there is a problem with one of the brands P&G can just drop it or sell it. It does not affect the other product brands if one of them fails. For example, if there is bad publicity about one brand, it will not affect all the other brands. The advantage with corporate branding on the other hand is that a strong corporate brand might help to hold all the other brands together, and it might cause a positive effect if new products are introduced. However, for P&G it is more advantageous to use product branding since there are around 300 brands all together, and it is quite difficult to forecast what will happen next. Investors are important for the corporate image and reputation. Simply everything that happens with the company that may affect the stock exchange is important to consider. Also corporate social responsibility is important, since that affects the corporate image and reputation. P&G has a strong corporate culture with certain principles, mission statements, etcetera which are important. The employees are important, since they are the ones spreading the good word about the company. P&G only hires newly graduated employees, and most of the employees who start working for P&G usually stay very long. That means that P&G is a strong community and takes good care of its people. Market Complexity The risks with spreading the brands worldwide are the different countries and different cultural backgrounds. The brands are driven by an American perspective. In many of the emerging markets, the people are looking for a western kind of lifestyle which makes it easier for P&G to launch the products. On the other hand, in countries where the people may be hostile to America, it may be harder to launch the products. When entering a new market legal constitutions and culture is very important when it comes to branding. Competition is another factor also taken into consideration. Marketing Costs P&G’s motive for internationalizing the brands is economies of scale and scope. What is successful in one country is simply brought to another. Each single brand does not necessarily exist in all markets; for example in Germany there are around 150 brands in total. The cost advantage with P&G’s type of branding strategy, i.e. product branding, is as mentioned previously economies of scale and scope. This is proved to be best for P&G. The cost disadvantage is that it requires huge investments for all the 300 brands. The total investment is up to 18% of the total profit.

4.2 Case Two: Sony Ericsson Company Background Sony Ericsson is a joint venture which is owned equally by Sony Corporation and Telefonaktiebolaget LM Ericsson. Sony Ericsson was established in October 2001 and its mission is to be “the most attractive and innovative global brand in the mobile handset industry”. The reason for this joint venture is to combine the individual expertise of both companies and ever since, their individual production of mobile phones has stopped and Sony Ericsson handles all this production. Sony Ericsson has approximately 8,000 employees around the world. Sony Ericsson’s product portfolio consists of mobile phones, mobile music devices, wireless systems, wireless voice devices, hi-tech accessories, and wireless data devices. The company is a global provider of mobile multimedia devices and this includes

Data Presentation

42

phones and PC cards, it also provides products that handle the latest technology in 2nd and 3rd generation. The total revenue of the company (2006) is €10,959 million. According to the Sony Ericsson website, the company is a world leader in design and innovation. Sony Ericsson is the lead brand, but it also has three sub-brands. The company has cooperation with partners such as Sony BMG. Global management and headquarter is based in London (England), R&D in Sweden, UK, France, Netherlands, India, Japan, China, and the US. The President of Sony Ericsson Mobile Communications is Hideki Komiyama, and Corporate Executive Vice-President and Head of Sales is Anders Runevad. Our respondent at Sony Ericsson was Andrew Warner who works as the Director of Brand Management in London, United Kingdom. When presenting our empirical findings, we will refer to the respondent Andrew Warner.

4.2.1 Branding Strategy of Sony Ericsson in International Markets Corporate- and Product Brand Strategy (with dominant use of the corporate brand) Sony Ericsson implements a corporate brand strategy, where the Sony Ericsson is the main brand; hence the company uses a master brand strategy where the Sony Ericsson brand appears on every single product. The brand is organized in the way that Sony Ericsson is the lead brand which is delivered worldwide. Under the lead master brand there are three category brands:

x Cybershot x Walkman x PlayNow

The brand hierarchy is shown in figure 4.1.

Figure 4.1 Sony Ericsson’s Brand Hierarchy

The products fall under different sub-brand depending on whether it is a music phone or a camera phone. The company offers music phones under Walkman, and camera phones under Cybershot. Walkman is delivered with Sony cooperation. PlayNow is an application and a download service, where tunes and images can be downloaded. Sony Ericsson is because of its structure a mix of both a corporate and a product brand. The different products also have names, but this is not considered to be brands; but only a name of a product, e.g. K800. The reason for this is that the products are sold during a very short period of time, so Sony

PlayNow™

Data Presentation

43

Ericsson invests in the category brand instead. These brands are consistent all over the world so the concept is used worldwide. Sony Ericsson does not consider any market to be the home market; this is because of the ambition to be a global brand. Although Sony is from Japan and Ericsson is from Sweden, and the company employs and has more people employed in Sweden than anywhere else in the world, the company still considers it to be an international global brand. Sony Ericsson has its headquarters in UK, but presence in all regions of the world so no nationality is dominating. In this way the company differentiates itself from its competitors. When it comes to motives for internationalization, Sony Ericsson develops a brand structure that will work all around the world. The motives are:

x Efficiency x Consistency x Management

The motive is to have the same values all over the world and to have consistency in the brand message that is used. The company therefore produce products that can be shipped all over the world and hence benefit from economies of scale. The brand is therefore manageable and the control is kept by the company. However the company has some local adaptations, but have the same company values worldwide. Japan is an important market and has a different market structure. First of all because Sony is a part of the parent market, but also because Japan is highly innovative when it comes to innovative technology of the mobile phones. Sony Ericsson can by that learn from Japan and build its expertise. After that, when the technology becomes relevant; the company can apply the technology on the rest of the markets worldwide. One of Sony Ericsson’s strategies, which stems from Sony, is to create markets rather than following it. The company creates a demand at the operators, and provide examples that the company believes can be valuable for the customers. The company does not want to dilute the brand and make it available to everybody, but Sony Ericsson has to keep the control over the brand. Sony Ericsson draws its major strengths mainly from innovation. Innovation is a part of the DNA of both Sony and Ericsson, where both companies have a long history of innovation, and to create new ideas. This concept is brought into Sony Ericsson’s values so that the companies integrate with each other. Sometimes they take first mover advantages but other times they might not be the first on the market, but simply striving to create a way of doing things better and in other ways compared to competitors, also think of things that is more relevant to the consumers. However, financial strength is important as well since the company consider themselves to be one of the top five brands in the world, which means that Sony Ericsson has financial strength. In terms of international distribution the company has a global footprint where Sony Ericsson operates in two mobile phone technologies; 2nd and 3rd generation. In most markets Sony Ericsson can serve the customers since the technology used in the country is matched with the technology used for the mobile phones, but in some markets there are operators that approach other technologies than Sony Ericsson’s; in those markets the company cannot serve the

Data Presentation

44

customers because they do not have phones that match that technology. Managerial resources are important but these are quite similar to other global manufactures. In order to take advantage of economies of scale, produce volume and to achieve low unit prices in a competitive market companies have to appear as a global brand. However it is possible to be a local brand and still have economies of scale. But in order to have a brand that has market shares globally and to be one of the top three or four players, there has to be decided to be either a niche brand or a global player. Sony Ericsson started as a global brand and since the company is a joint venture of Sony and Ericsson, which are two well known global brands it was natural to be a global brand immediately. It has always been a company vision to be the most attractive global brand. Sony Ericsson builds competitive advantage in many different ways, and the company has to manage all things in the marketing mix. The company has to manage relationships and think through how close the company is to consumers and a way to be relevant brand to consumers. The company also has to anticipate trends that emerge in different markets and at the same time stay very close to the customers in the B2B market, like the operators and the retailers. Since the operators and retailers deliver the Sony Ericsson brand, it is important that the retailers and operators understand the Sony Ericsson’s business so that the company can deliver a portfolio that is most relevant. For Sony Ericsson it is important to think through how the company can deliver customized offerings and better understand the business but also the competitors in order to compete in a competitive environment. Sony Ericsson’s strategy is to be ahead of consumers, so the company can satisfy customer needs. Sony Ericsson has to keep up with innovation, but also understand how the company can deliver the products and services most effectively. Management of the Brand Sony Ericsson has a brand manager for each team. The company has a creative design centre in Lund that develops the software and implements it but also designs the phone and develops the technology. The design centre has a set of rules of how to design the phone which they have to stick to. The company has a central brand manager team, a design centre team and in each region Sony Ericsson has one local person. On a local level the company has local expertise; for example in China there are counterfeits and security issues where Sony Ericsson has local people that handle these issues and manage those at a local level. The overall responsibility of the brand is managed by the manager at the central team, and the whole company basically delivers the brand. The brand management team sets the values and communicates these values as well as the guidelines. However, the marketing teams all over the world are responsible for the marketing worldwide in terms of how the brand is conveyed and communicated. There are three persons that have the responsibility of the brand and also deliver the brand; the head of the product business group, the head of the creative design group, and the head of brand management group. The product business group is the ones who make the phones, the creative design group designs the phone and the software inside the phone, and the brand management creates the brand guidelines, the brand positioning and communicates that to all other regions worldwide. Therefore these teams are responsible for each area. Furthermore, the customer service group is important to the delivery of the experience of the brand as well as the retailers who play an important role in delivering and communicating the brand. Sony Ericsson educates the retailers in how the brand should be communicated.

Data Presentation

45

Focus on Stakeholders All stakeholders are important for Sony Ericsson, but the customers are the most important stakeholder. The customers include network operators, retailers, and consumers. Furthermore, Sony Ericsson has an employer brand program, where the company decides how the brand should be delivered to potential and current employees. It is important that all employees understand the Sony Ericsson brand values and are able to communicate those to the customers. The employees are important because they are the ones who maintain the brand. Sony Ericsson focuses on long-term relationships with the stakeholders, especially with the larger customers. Standardization versus Adaptation Sony Ericsson has a consistent strategy worldwide, and has no specific strategy in emerging markets. Although the brand positioning, and the core values are the same all around the world, the company segments markets in order to make the products more relevant to customers and adapts when needed. In those cases, the company varies the market mix and the product mix in those markets and hence the portfolio, the pricing strategy, the channel strategy can be different. In an emerging market such as India, the company might deliver products with for example flashlight or an FM radio alarm because that is relevant in that market. Furthermore Sony Ericsson might use a local celebrity or a local music artist or use Hindi to deliver the products. Sony Ericsson adapts to local preferences and adapt to local markets and markets structures when it come to local pricing and channel structures. There is not a “one-size-fits-all” solution that fits all emerging markets i.e. there are different strategies in emerging markets. The company therefore tailors the approach to different markets, but the core brand values are exactly the same in every market in the world. The way the company expresses the brand might be localized. Furthermore, Sony Ericsson has a brand identity system where the company is allowed to use the local language or a local reference, or the company could use an international language and a global reference. Sony Ericsson sometimes acquires other companies in emerging markets, but as a rule of thumb it is not required.

4.2.2 Factors Determining Sony Ericsson’s Choice of Branding Strategies in International Markets

Stakeholder Interests The factors that determine the branding strategy is both internal i.e. everyone within the organization and also external i.e. how Sony Ericsson differentiates itself towards competitors. The company has a long strategic planning and all stakeholders within the organization determine the choice of branding strategy. The most important stakeholders are the consumers. The stakeholders’ expectations are not the same all around the world. In a market such as Latin America, there is a young population where people demand music technology in their mobile phones. The company has to have a clear message and defined ways of communicating that message to the consumers. Therefore, Sony Ericsson has a commercial focus where the company differentiates itself through for example colors, i.e. the company uses optimistic colors instead of black. Each market is different, and each specific market and demands are considered. Sony Ericsson chooses the branding strategy case-by case. In India for example, focus is put on the customers because they want to have reliable products and warranties. In China, the focus is to maintain relationships with the government. The employees are also important stakeholders since they maintain the brand. Sony Ericsson has therefore an employer brand program, where

Data Presentation

46

the company decides how the brand should be delivered to potential and current employees. It is important that all employees understand the Sony Ericsson brand values and are able to communicate those to the customers. Corporate Image and Reputation Sony Ericsson has a core brand positioning which is used all over the world; therefore the brand is positioned similarly globally. The brand Sony Ericsson is consistent with the delivery of the company’s core values worldwide and there is a red thread throughout the company. Sony Ericsson sometimes cooperates with artists, uses local promotions, uses local artists and brand spokespersons. However, the company still communicates a clear and consistent message throughout the company worldwide. The advantages with the strategy used by Sony Ericsson are that the company has a national benefit and can therefore take advantage of its country-of-origin. When a corporate branding strategy is used, people know the core values of the company when they are exposed to the brand; hence this reflects how people perceive the product. The other benefit is the advantage of a central research and development group. The disadvantages with this type of strategy are first of all that Sony Ericsson is a long name that can be difficult to pronounce, especially in countries where English is not the first language. Competition is a risk in certain markets, in China for example, where local manufacturers can be cheaper. Another disadvantage or risk is the fact that the company is a joint venture, and hence people might confound the company with Sony. The company therefore has to build an understanding of the brand Sony Ericsson. The corporate brand Sony Ericsson plays a significant role since the brand delivers certain perceptions and certain values. The value of the brand is that it provides a reassurance of that the brand delivers a certain expected quality. The category brands differentiate the products from others since they deliver a message to the consumers so that they know that type of product they are buying; these category brands signal a certain expertise of a particular area. Walkman for example, strives to produce high quality products with high multimedia design and people are aware of that it is a music phone. Market Complexity Sony Ericsson’s brand strategy varies between different markets. For example, in Africa it can be useful with flashlights and navigation systems and GPS, other technological factors might be important in other markets. However, since Sony Ericsson has global picture, the company looks at markets that are similar and applies the same strategy in those markets. Pricing factors might be different in other markets, where the price is significant for the customers. Consumer characteristics and cultural aspects are other aspects that may differ between countries. Sometimes it can be a status symbol with a mobile phone, where in other markets it is the average commodity. Sony Ericsson is stronger in some markets than others, and therefore the company acts slightly differently depending on the market. In areas where Sony Ericsson is not that strong and where the brand is less established, the company has another approach than markets which is the opposite. Sony Ericsson is facing numbers of challenges. One of them is the market structure where there are three different markets which they operate in:

x High market shares and low penetration of mobile phones x Low market shares and high penetration of mobile phones x High market share and high penetration of mobile phones

Data Presentation

47

In markets with high market shares and low penetration, the company builds on what is already established and leverages the value of the brand, in these markets Sony Ericsson strives to grow continuously and target new customers. In the markets where the company has low market share and high penetration of mobile phones it is a question of growing the awareness and building the understanding of the Sony Ericsson brand. In the markets that have high market share and high penetration of mobile phones, the company can maximize the profit and value and charge high prices. In markets where the brand is known, there is less of a challenge, and there are less activities regarding the communicating the Sony Ericsson brand, but in markets where the brand is unknown, the company works more with building the understanding of the brand. Other challenges are the operator and retail driven markets. In the markets which is operator driven, most of the phones are bought from the network operators and then sold to consumers. The main customers are therefore the operators, and therefore most of the communication is with and through the operators. But the company has still a relationship with the consumers since they are driving the operators’ stocks. There are markets that are retail driven such as India and China where the company targets consumers directly. In these markets the aim is to build awareness and create a brand understanding. In this case, there are direct relationships with the consumers. There are other markets that are driven by both operators and retailers. In these cases the company has to think through how to deliver the brand message to the consumers through the retailers and to be inline with the values of the Sony Ericsson brand. The customers may get the products from a retailer but also from an operator. It is important to have a consistency in the way the brand is communicated through all those channels. Marketing Costs There are cost advantages with a corporate brand strategy; economies of scale and scope. Since the company has the same brand image all around the world the company does not have to repack the products in different markets, but Sony Ericsson ships the commodities worldwide. There are also R&D efficiencies since the company has the same brand image around the world. The cost disadvantage is the up-front cost, because Sony Ericsson has to localize the products in some regions. There are also high R&D costs before a market is established, because the company has to spend much money on R&D before the global product is launched. After the global product is launched, Sony Ericsson can develop a product that is suited for a global market, and therefore implement it all over the world.

Data Analysis

48

5 Data Analysis In the previous chapter, data was presented in the form of two case studies. In this chapter, an analysis of the collected data will be performed. The collected data from both cases will then be compared to the conceptualized framework in a within-case analysis. This will be done case by case. Finally, the analyzed data from the within cases will be compared with each other, in the form of a cross-case analysis.

5.1 Within-Case Analysis In this part the selected data from both cases presented in chapter four, P&G and Sony Ericsson, will be compared to the conceptualized framework presented in chapter two. This is discussed in a within-case analysis. According to Miles & Huberman (1994), three components are used to clarify data analysis, namely data reduction, data display and conclusion drawing/verification. In this section, data is reduced and the data is displayed in a table in order to simplify the data. In the end of this chapter, we will strive to discover patterns and conclusions will start appearing.

5.1.1 Within-Case Analysis of Procter & Gamble (P&G) Branding Strategies of MNCs in International Markets Strategy at P&G: Product Branding As stated by Urde (2003) there are four brand architectures available to firms: corporate brands, product brands, corporate- and product brands and product- and corporate brands. Yu Xie and Boggs (2006) defined product branding as building separate brand identities for different products. P&G has a clear product brand strategy, since each individual brand has its own identity. The brand portfolio consists of around 300 brands within many different areas, and that is the reason why product branding suits P&G. When there are several diverse kinds of products, P&G finds it better to focus on product branding rather than corporate branding. However, sometimes P&G uses a strategy where one product brand, such as Ariel, is extended to different sub brand. Hatch and Schultz (2003) discuss that a corporate brand has a more strategic approach to the company, whereas product brands are more functional. Since P&G has several diverse products targeting different segments, the strategy has a functional approach; hence this corresponds with the theory. Van Gelder (2003) states that the product brand and the corporate brand are positioned differently in the minds of the customers when using a product branding strategy. He suggests that this strategy is suitable when there is a need for a distance between the corporate brand and the product brand/s. This corresponds with P&G’s strategy, since few people actually know the corporate brand P&G, and the company focuses on each individual product brand. P&G has a global strategy, and the brands are global. Bradley (2002) states that it is usually a process when brands are turning internationally; it often develops from being a local brand and gradually as the brand is becoming more known it moves into foreign markets. This corresponds with the case of P&G which started as a local soap and candle company and has grown steadily since then.

Data Analysis

49

Management of the Brand According to Hatch and Schultz (2003) and Balmer (2001), the product brand is typically managed by the middle manager, whereas the corporate brand is managed by the CEO. In the case of P&G, the whole organization is about product branding since that is the core of P&G’s business. There are some special functions of the organization which may deal with the corporate brand. It is the marketing function within P&G which manages the product brands and marketing within P&G is mainly managed by entry level management and middle level management, whereas the senior level management has a more strategic approach. Hence, our empirical findings somehow correspond with the theory. Within P&G, already the entry-level management has responsibility for the product brand as well as the middle-level management, whereas the theory states that it is the middle-level manager only. The global business unit (GBU) at P&G is responsible for the strategic development of the brands. Additionally, there are regional GBUs, as well as a market development organization (MDO) in each region. Hatch and Schultz (2003) state that the product brand is delivered by the marketing function of the firm. At P&G it is the entry level management within the MDO which is responsible for delivering the brands. Assuming that the MDO is similar to the marketing function; the empirical findings correspond with the theory. Focus on Stakeholders Balmer (2001) as well as and Hatch and Schultz (2002) state that the corporate brand attracts attention from multiple internal and external stakeholder groups and networks, whereas the product brand attracts attention from mainly the customers. At P&G the customers are the most important stakeholder, since they are the ones buying the actual products. P&G finds it vital to understand and please the customers. However, there are other stakeholders who also are important including the employees, local governments and investors. As stated in the theory, it is obvious that product branding is connected with the customers at P&G, whereas the other stakeholders mentioned are connected to the corporate brand. Standardization versus Adaptation Bradley (2002) discusses that firms should have a standardized strategy to international markets since the companies can take advantage of higher sales when the product image is consistent over global markets. He further discusses that the costs can be decreased because of economies of scale and by having a standardized marketing plan globally. However, there may be a need for customizations since very few markets are totally similar, and many firms adapt their products to local tastes and preferences (ibid). The same conclusion is stated by Hsieh and Lindridge (2005) when they argue that a standardization strategy may not be suited due to national differences. P&G tries to standardize as much as possible and uses the same type of product branding strategy all over the world. That is the reason why there are several different languages on the product packages; so instead of adapting to each market, the products are fully standardized. However, the intention is to standardize, but sometimes it is needed to adapt to the local markets. But, P&G’s aim is that the product should work at least throughout a whole continent. Albaum et al. (2005) discuss that companies can reduce costs by using a standardization strategy, however by adapting to local preferences companies can get advantage of customer needs, distribution and promotion methods, competitive market structure, as well as economies of scale in production and distribution. The reason why P&G uses a standardization strategy is economies of scale and scope. The company sees what works in one market and simply tries to do it the same way in another market. Before launching a

Data Analysis

50

product on a new market, there is a lot of research made by P&G in order to find out if and how the products have to be adapted. The purpose of the research is to get to know the customers, the culture and the country. There might be certain customer preferences, for example colors, that need to be taken into consideration before launching a product. Arnold and Quelch (1998) state that some companies have created a demand by developing products that suit local preferences in emerging markets. Although P&G tries to position all the brands similarly in all markets, the company still adapts when it is needed. South America is one example of a market where some special brands, for example shampoo, is positioned differently due to different income structures. In order to simplify the data presented in the within-case analysis above, the main points are summarized in table 5.1. P&G uses a product brand strategy, therefore the empirical data will be compared with the theories dealing with product brand strategies. Table 5.1 Within-Case Analysis of the Branding Strategies of Procter & Gamble in International Markets

Theory

Procter & Gamble

Correlation

¾ Strategy: product branding - Brand architecture (Urde, 2003) - Functional (Hatch & Schultz, 2003)

Product Brand

Functional

+

+

¾ Management of the product brand - Managed by middle manager (Hatch

& Schultz, 2003; Balmer, 2001)

- Delivered by marketing function (Hatch & Schultz, 2003)

Entry-level management &

middle management

Market Development Organization (entry-level

management)

+/-

+

¾ Stakeholder focus: product branding - Customers (Hatch & Schultz, 2003;

Balmer, 2001)

Mainly customers

+

¾ Standardization versus adaptation (Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie Boggs, 2006)

Standardization with local adaptations

+

Codes: + Data coincide with theory - Data do not coincide with theory +/- Data somewhat coincide with theory Factors Determining the Choice of Branding Strategies in International Markets Stakeholder Interest Hatch and Schultz (2003) mention that the firm’s visibility, recognition and reputation is affected by the firm’s stakeholders including employees, customers, investors, suppliers, partners, regulators and local communities. Yu Xie and Boggs (2006), state that the focus of product branding is on the customers, whereas the focus of corporate branding is on the stakeholders. They further discuss that it is rather difficult for an MNC entering an emerging

Data Analysis

51

market if it does not have a good relationship with the host government, since the most considerable difference between emerging markets and developed economies is the variations in regulations, rules and policies. Additionally, Yu Xie and Boggs stated that it is important to create a partnership between manufacturers and dealers when entering an emerging market. P&G confirms that local governments play a vital part when entering an emerging market due to the fact that there might be markets where the democratic structure is not as developed as in America or Europe. P&G always tries to find out if the goals of the local governments will fit with the corporate culture within P&G. The local governments are also important because of laws and regulations. In for example Saudi Arabia women are not allowed to be in the same room as men; hence there are stores with only female products and other stores with only male products, and that will affect the distribution of the products. However, P&G did not leave any information regarding partnership between manufacturers and dealers, therefore it cannot be stated whether that corresponds with the empirical findings. The consumers are the most important stakeholder, and P&G always tries to find out what they want by making thorough research before entering a market. P&G is listed on the stock exchange, and therefore the investors are important to consider. Other important stakeholders for P&G which are not mentioned in the theory are non-governmental organizations (NGOs). According to Harris and Chernatony (2001) the employees play a great role when creating a perception of the corporate brand in the mind of the consumers and the rest of the stakeholders; the employees’ values have to be interrelated with the values of the company. At P&G the employees are very important, and much focus is put on the employees’ personal development. Sending employees abroad is sometimes included in the employees’ career path. P&G has the philosophy of bringing the best people and ideas in one country to another. Corporate Image and Reputation According to Yu Xie and Boggs (2006) a strong corporate image is the most useful way of product differentiation. They further state that customers’ perception of a product brand typically comes from the communicated image and advertising, whereas the corporate image is derived from the customers’ interaction with the firms’ employees, physical presence and overall marketing efforts. For P&G corporate image is not so important since very few people, i.e. the consumers, actually know P&G. The consumers know the product brands, but not the corporate brand. For P&G it is more about defining the competitive advantage of each product and finding the right target group. Urde (2003) states that a corporate brand needs to have a brand personality that is inline with the core values of the company. Since P&G focuses solely on its product brands and not the corporate brand, this does not correspond with the theory. The benefit of using a product brand strategy according to Yu Xie and Boggs is that the company may experience less harm to its corporate image if one of the individual brands fails. This corresponds with P&G’s view, since P&G states that the advantage with product branding is that if one of all the 300 brands fails it will simply be dropped or sold. It does not affect all the other brands if one of them fails. Balmer (1995) states that the benefit with corporate branding is its consistency and that it brings added value to products and services; if the company has a good reputation it can benefit from that and the strength of the company is visible to investors, the city and the government. It is confirmed by P&G that the advantage with a strong corporate brand might

Data Analysis

52

help to hold all the other brands together, and it might cause a positive effect if new products are introduced. However, P&G will continuously focus merely on product branding because that is proved to be the best strategy when having such a large brand portfolio. P&G states however, that investors are important for the corporate image and reputation since the company is listed on the stock exchange. Everything that happens with the company might have an impact on the stock. Additionally, P&G finds it important with corporate social responsibility, since that will affect the corporate image and reputation. Additionally, the employees are important for P&G since they are the ones spreading positive views about the company and hence will affect the reputation. Market Complexity According to Yu Xie and Boggs (2006) complex international environments affect branding strategies for MNCs. Barriers on the macro environment that MNCs have to face may include diverse consumer characteristics and behaviors, the legislative infrastructure and competition. Yin Wong and Merrilees (2007) state that the environmental factors that the firm has to adapt to may consist of a combination of physical, social, cultural and technological factors. The cultural aspect is a structural influence which may have an impact on a firm’s marketing strategy, and culture is also the main reason why domestic brands are modified to fit into a foreign market (ibid). The theory corresponds well with the empirical findings. P&G confirms that different cultural backgrounds are the risks with spreading the brands worldwide. Therefore, it is very important to consider the culture when entering a new market. Other important factors are legal constitutions and competition which also corresponds well with the literature. Consumer characteristics is also very important for P&G, since all consumers have different preferences depending on the cultural background. Marketing Costs Yu Xie and Boggs (2006) state that it is very costly to create a brand and expensive to sustain an existing brand. Additionally there might be high marketing costs when targeting different brands at separate small segments. According to Aaker (2008) economies of scale is often created when using a standardized strategy. Hatch and Schultz (2001) suggest that companies can reduce costs by adapting a corporate brand strategy, since the company then can reach economies of scale in advertising and marketing. P&G states that the reason for internationalizing a brand is economies of scale and scope; what is successful in one country is simply brought to another. By using such a standardization strategy, efficiency is created. The cost disadvantage, according to P&G, is that it requires huge investments for all the 300 brands, and it is therefore expensive to target different segments. In order to simplify the data presented in the within-case analysis above, the main points are summarized in table 5.2.

Data Analysis

53

Table 5.2 Within-Case Analysis of the Factors Determining the Choice of Branding Strategies in International Markets for Procter & Gamble

Theory

Empirical Data

¾ Stakeholder interests - Employees, customers, investors, suppliers, partners, regulators (Hatch & Schultz, 2003) - Relationship with host government country (Yu Xie Bogg, 2006) - Partnership between manufacturers and dealers (Yu Xie & Boggs, 2006)

+

+

N/A

¾ Corporate image and reputation - Expectations of stakeholders (Knox & Bickerton, 2000; Yu Xie & Boggs, 2006; Ind, 1997) - Brand personality inline with core values of the company (Urde, 2003) - Characteristics of a product brand: less harm to the firm if one of the individual brands fail, flexible, high marketing costs (Yu Xie & Boggs, 2006; Kapferer, 1997)

+ -

+

¾ Market complexity - Consumer characteristics (Yu Xie & Boggs, 2006) - Competition (Yu Xie & Boggs, 2006; Roth, 1992) - Cultural aspect (Yin Wong & Merrilees, 2007) - Environmental factors (Yin Wong & Merrilees, 2007)

+

+

+

+

¾ Marketing costs - High costs related to targeting different segments (Yu Xie & Boggs, 2006) - Economies of scale (Aaker, 2008; Hatch and Schultz, 2001)

+

+

Codes: + Data coincide with theory - Data do not coincide with theory +/- Data somewhat coincide with theory N/A Not available

Data Analysis

54

5.1.2 Within-Case Analysis of Sony Ericsson Branding Strategies of MNCs in International Markets Strategy at Sony Ericsson: Corporate- and Product Brand Strategy (with dominant use of the corporate brand) Regarding research question one, the theory that is brought up in the conceptual framework is from Urde (2003). He states that there are four brand architectures available to firms; corporate brands, product brands, corporate- and product brand (with dominant use of the corporate brand), and product- and corporate brands (with dominant use of product brands). Van Gelder (2003) has discussed the concept of master brand, which are supposed to “drive consumers’ purchase decisions and transfer brand value to new product or service sub-brands”. The company in case two, Sony Ericsson, has implemented a corporate- and product brand strategy with the dominate use of the corporate brand. The Sony Ericsson brand is the master brand and under that master brand there are three category brands or sub-brands. The sub-brands have the function of putting added value to the product and making the product easier to recognize as well as to categorizing them into different qualities and features in order to maximize customer satisfaction. Hatch and Schultz (2003) state that corporate brands have a more strategic importance to the company. Similarly, Yu Xie and Boggs (2006) discuss that corporate brands have a strategic focus which include corporate strategy, corporate communications and corporate culture. The theory is supported in this case where Sony Ericsson has a strategic approach where the values of the company are important and consistent throughout the whole company. These values are set by the management team and are communicated to the rest of the company and the employees need to communicate these values to the customers. The long-term approach is also constant throughout the company. This relates with the theory since Hatch and Schultz (2003) discuss that the corporate brand has a long life cycle. Management of the Brand According to Hatch and Schultz (2003), and Balmer (2001), corporate brands are managed by the CEO of the company. The corporate brand is furthermore delivered by the whole company, and it also has multiple channels of communication and this is through total corporate communication instead of through marketing communication. This somewhat coincides with the empirical research where Sony Ericsson is managed by the senior manager, so that the main responsibility is on the senior manager of each of the division. The brand management team sets the values of the company and communicates these, but the managers of each of the three divisions have equal responsibility for the brand. The theory therefore differs from the empirical finding where the theory indicates that the overall responsibility of the brand is on the CEO of the company. But the theory coincide with the empirical findings in the way that the brand is delivered by the whole company in the way that everyone within the organization is supposed to know the core values of the company and deliver those to the public, and the employees have an important role in creating the perceptions and maintaining the brand. Focus on Stakeholders Hatch and Schultz (2003), Balmer (2001), Knox and Bickerton (2000), as well as Ind (1997) and Kapferer (1997) state that the focus of the corporate brand is not only on the customers,

Data Analysis

55

but on all the stakeholders both internal and external and the corporate brands need to fulfil these stakeholders’ expectations. Ind (1997) further states that there should be a balanced focus on consumers and shareholders in order to have a complete brand. This is in accordance with the empirical findings where the respondent company states that all stakeholders are important. However, the company further states that the customers are the most important stakeholder. The customers include network operators, retailers and consumers. Furthermore the employees are highly important since they maintain the brand and spread the good word about the company. The relationship with the stakeholders is long-term focused. Kay (2004) further states that corporate brand communication is directed towards all stakeholders and that the corporate brand has little impact on customers and also little demand for products and services. This does not coincide with our empirical findings since the respondent company states that the most important stakeholder are the customers. Standardization versus Adaptation Several authors have discussed the concept of standardization and customization (Bradley, 2002; Yin Wong & Merrilees, 2007; Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie & Boggs, 2006; Keller, 2008; Quelch, 1999). Bradely (2002) discusses that it is suited for a global company to have a standardized strategy in international markets, hence the companies can benefit from economies of scale and scope, and the unit costs can therefore be decreased. Similar findings are also made by Alashban et al. (2001) where they discuss that a standardization strategy provide companies with the ability to benefit from a large-scale production, but by adapting the needs of each segment can also increase revenue. In the empirical findings, Sony Ericsson has a standardization strategy where the strategy is consistent worldwide. Because of this the company can benefit from economies of scale and scope. However, the company adapts to local preferences when needed. This is in accordance with the theory where Bradley (2002) discusses that it is necessary to adapt the marketing mix because of the heterogenic markets worldwide. He further states that although markets are becoming more and more homogenous, there are a still a great diversity and people in different markets have different preferences (ibid). Palumbo and Herbig (2000) also state that it is difficult to standardize a global brand name, and they discuss that the product can sometimes be the same but the brand name is different or vice versa. This relates with the empirical findings since Sony Ericsson can have the same product name, but the features of the product might be localized. Keller (2008) mentions that some companies have a central strategy, whereas other companies have chosen to adapt the strategy to local preferences, and other use a mix of those strategies. Quelch (1999) states that some companies believe that since they are global brands, they have to standardize everything. This is not the case, and Quelch (1999) further states that it has to be a balance with what to standardize and what to adapt to local preferences. This is in accordance with the company, since it tailors the approach to different market and varies the marketing- and product mix in markets that need adaptation in order to make the products more relevant to the customers. In order to simplify the data presented in the within-case analysis above, the main points are summarized in table 5.3.

Data Analysis

56

Table 5.3 Within-Case Analysis of the Branding Strategies of Sony Ericsson in International Markets

Theory

Sony Ericsson

Correlation

¾ Strategy: corporate branding - Brand architecture (Urde, 2003) - Strategic (Hatch & Schultz, 2003)

Corporate- and product

brand (with dominant use of the corporate brand)

Strategic

+

+ ¾ Management of the corporate brand

- Management by CEO (Hatch & Schultz, 2003; Balmer, 2001)

- Delivered by the whole company

(Hatch & Schultz, 2003)

Senior management

Whole company

-

+

¾ Stakeholder focus: corporate branding - All stakeholders (Hatch & Schultz,

2003; Balmer, 2001)

Mainly customers

+/-

¾ Standardization versus adaptation (Alashban et al., 2001; Hsieh & Lindridge, 2005; Palumbo & Herbig, 2001; Yu Xie Boggs, 2006)

Standardization with local adaptations

+

Codes: + Data coincide with theory - Data do not coincide with theory +/- Data somewhat coincide with theory Factors Determining MNCs’ Choice of Branding Strategies in International Markets Stakeholder Interests Hatch and Schultz (2003) state that all the stakeholders of the company (employees, customers, investors, suppliers, partners, and regulators) affect the corporate brand image and the values of the corporation attract stakeholders. This relates with the empirical findings where Sony Ericsson states that all stakeholders determine the branding strategy in international markets, and this is both internal (everyone within the organization) and also external (how Sony Ericsson differentiates itself to competitors). However, the customers are the ones that have the major influence of which strategy to adapt. The customers can be not only consumers, but also retailers and operators. The adaptation is needed because each market is different depending on preferences, in one country there might be young customers who value a developed music technology, and therefore Sony Ericsson has to fulfil those customer needs. Because of this Sony Ericsson develops each strategy case-by-case. In certain markets it might be of high importance to have and maintain a close relationship with the government. This relates with the theory since Yu Xie and Boggs (2006) as well as Arnold and Quelch (1998) state that it is important for an MNC to have a good relationship with host government when entering an emerging market since the variations of rules and regulations and polices are different in emerging markets. Arnold and Quelch (1998) also state that this can influence to what extent a company can get licences etcetera. However, Sony Ericsson does not have a specific strategy in specifically emerging markets, but evaluates each market independently of the market structure.

Data Analysis

57

Furthermore, Harris and de Chernatony (2001) state that the employees are important to consider since they create a perception of the brand in the consumers’ minds, and it is important that the company values coincide with the employee values. This also coincides with the empirical findings since Sony Ericsson states that it is important for the employees to understand the company brand values and the employees are the ones that maintain the brand. Yu Xie and Boggs (2006) state that it is important to have partnerships with manufacturers and dealers in emerging markets. This does not coincide with theory since Sony Ericsson has the same strategy in all international markets and no specific strategy in emerging markets. The company has no partnerships with manufacturers or dealers in these markets. Corporate Image and Reputation The corporate image is very important to companies and to their way of communicating with stakeholders (Knox & Bickerton, 2000). Yu Xie and Boggs (2006) further mention that in order to have a strong corporate image, there is a need to manage the brand inline with internal and external factors. Kay (2004) further states that the corporate- and stakeholders’ vision has to be the same in order to create a strong corporate brand. Ind (1997) has similar findings where the company has to have a consistent branding strategy to avoid confusing customers and stakeholders. Urde (2003) also states that the brand personality needs to be inline with the core values of the company. The findings from the empirical research coincide with the theory since Sony Ericsson has the same brand positioning and branding strategy worldwide, and deliver the same core values. Although the approach can be different depending on the location, the core values and brand message is always consistent. The reason for this approach is that it provides a reassurance of that the brand delivers certain expected features. The stakeholders’ expectations are always considered since the company adapts some features of the brand to markets that need adaptation. Balmer (1995) states that the advantage with a corporate brand is its consistency and that it creates added value to products and services, and a good corporate reputation can create benefits to the company since it attracts investors. This relates with the empirical findings since Sony Ericsson discusses the advantage with a corporate brand and the importance with a consistency in the brand and the core values of the company. By being exposed to the brand the customers knows the values, qualities and the features of the brand and the corporate brand gives certain signals of the brand. A good reputation is reflected in how people perceive the brand and the product. Regarding the investors importance for the corporate brand, this does not coincide with the empirical findings since the company is not listed on any stock exchange and does not have to take those into consideration. Market Complexity Roth (1992) states that brand positioning is needed to differentiate the brand from the competitors by offering something different than the competitors. Although Sony Ericsson has a global and a standardized strategy, the company adapts to local preferences to some extent. The company seeks to fulfil customer needs depending on the location. The company also considers Japan to be an important market, since it is the parent market, but also highly technologically innovative. Therefore Sony Ericsson often learns from Japan and applies the relevant strategy learned from Japan to other markets. Other ways of handling competitors is to create markets, and not follow markets. The company creates a demand with the customers and serve products that fulfil customers’ needs.

Data Analysis

58

The consumer characteristics are always considered since the company strives to deliver products that are most relevant to the consumers. The company also tries to understand and to be ahead of the consumers and to keep up with innovation and deliver products inline with customer needs. Culture is another dimension that is different depending on where in the world you are. Hence, Sony Ericsson also considers the culture when deciding strategies in international markets and this is adapted to some extent as well to local preferences. The culture aspect does coincide with the theory where Roth (1992) discusses the role of culture where different interpretations are made depending on the culture. Similar findings were made by Yin Wong and Merrilees (2007) where they discuss that the culture influences the choice of a company’s marketing strategy, and further discuss that culture is the main reason for firms to modify their brands to suit the diverse foreign market. Yin Wong and Merrilees (2007) state that environmental factors have to be taken into consideration and adaptations are needed in an international market. Sony Ericsson takes this into consideration, and therefore the empirical findings are supported in the theory. The company considers the international marketplace to be heterogeneous, and Sony Ericsson is stronger in different markets than others. Therefore the company has to act differently depending on certain factors. For example, in markets with high market shares and low penetration of mobile phones, the company needs to grow continuously. Hence, the actions have to be in accordance with the strength and the awareness of the brand. Sony Ericsson also has to consider environmental factors such as if the markets are retail driven or operator driven and will then put the forces on the most suited action. Another important environmental factor to consider when deciding branding strategy is the technological factors. The products are adapted to local preferences and Sony Ericsson seeks to fulfil customer needs. In some parts of the world people might demand a highly developed music technology, and other markets might demand a highly developed GPS system. It might be considered as a status symbol in some countries to have a mobile phone, where in others it is an average commodity. Marketing Costs Yu Xie and Boggs (2006) state that the marketing costs can be decreased by adapting a corporate strategy since it has a unified branding strategy. Aaker (2008) also states that a corporate brand can benefit from economies of scale by a standardized strategy. This stems from the fact that the marketing process is handled the same all around the world. Hatch and Schultz (2001) further state that companies benefit from economies of scale in advertising and marketing since it is standardized. Sony Ericsson benefits from economies of scale and scope since it has the same brand image and strategy all around the world. The company does not have to repack the products, but simply ships the products as they are to different locations. However, since there are different demands in different parts of the world, Sony Ericsson has high up-front costs because the company has to adapt in some markets and localize the products. This somewhat coincides with theory, however, the company has an overall standardized strategy and targets the same segments most frequently. The company has also high R&D costs before a market is established, because the market has to be thoroughly researched before the entering. After that the R&D costs are low since it can be implemented all over the world. Sony Ericsson also has a standardized marketing strategy, so there are no high costs related to that.

Data Analysis

59

In order to simplify the data presented in the within-case analysis above, the main points are summarized in table 5.4. Table 5.4 Within-Case Analysis of the Factors Determining the Choice of Branding Strategies in International Markets for Sony Ericsson

Theory

Empirical Data

¾ Stakeholder interests - Employees, customers, investors, suppliers, partners, regulators (Hatch & Schultz, 2003) - Relationship with host government country (Yu Xie & Boggs, 2006; Arnold & Quelch, 1998) - Partnership between manufacturers and dealers (Yu Xie & Boggs, 2006)

+

+ -

¾ Corporate image and reputation - Expectations of stakeholders (Knox & Bickerton, 2000; Yu Xie & Boggs, 2006; Ind, 1997; Kay 2004) - Brand personality inline with core values of the company (Urde, 2003) - Characteristics of a corporate brand: consistency, added value to products and services, a good reputation attracts investors (Balmer, 1995)

+

+

+/-

¾ Market complexity - Consumer characteristics (Yu Xie & Boggs, 2006) - Competition (Yu Xie & Boggs, 2006; Roth, 1992) - Cultural aspect (Yin Wong & Merrilees, 2007; Roth, 1992) - Environmental factors (Yin Wong & Merrilees, 2007)

+

+

+

+

¾ Marketing costs - High costs related to targeting different segments (Yu Xie & Boggs, 2006) - Economies of scale (Aaker, 2008; Hatch and Schultz, 2001)

+/-

+

Codes: + Data coincide with theory - Data do not coincide with theory +/- Data somewhat coincide with theory

Data Analysis

60

5.2 Cross-Case Analysis Miles and Huberman (1994) state that a cross-case analysis is when multiple cases are compared with each other. This will provide an understanding and an explanation of different situations (ibid). In this section a comparison of the two cases will be made. Similarities as well as differences are outlined and overall patterns are also discovered.

5.2.1 Branding Strategies of MNCs in International Markets In table 5.5 the data presented in the within-case analyses are compared to each other. Similarities and differences between the two companies’ type of branding strategies are provided in the discussion that follows. Table 5.5 Cross-Case Analysis of Branding Strategies in International Markets

Factors

Procter & Gamble

Sony Ericsson

¾ Strategy - Brand architecture - Approach

Product branding

Functional

Corporate- and product

brand (with dominant use of the corporate brand)

Strategic

¾ Management of the brand

- Management by - Delivered by

Entry-level management &

middle management

Market development organization

Senior management

Whole company

¾ Stakeholder focus

Mainly customers

Mainly customers

¾ Standardization versus adaptation

Standardization with local adaptations

Standardization with local adaptations

Strategy P&G and Sony Ericsson are two MNCs targeting consumers. However, the companies act in different areas and offer different kinds of products. When looking at the two companies’ type of strategies, it is obvious that their strategies differ. P&G has a typical product branding strategy whereas Sony Ericsson has a corporate- and product branding strategy with a dominant use of the corporate brand. P&G has around 300 different brands worldwide; therefore the best suited strategy is to use a pure product brand strategy since each individual brand has its own identity. Sony Ericsson on the other hand, has one lead master brand which is the corporate brand Sony Ericsson and three category brands; Cybershot, Walkman, and PlayNow. Sony Ericsson’s lead master brand is delivered worldwide. The different types of mobile phones are not considered to be brands; they are considered to be just names of products, e.g. K800. The reason for not defining the products as brands is due to very short product life cycles. Therefore Sony Ericsson invests in the category brands instead. In the case of P&G, there are huge investments in each of the 300 brands in order to sustain a competitive advantage.

Data Analysis

61

Since P&G has several diverse kinds of products, it has a more functional approach. Each brand is positioned differently and towards different segments in different markets. Sony Ericsson on the other hand, has a more strategic approach, and values of the company are important and consistent throughout the whole company. Additionally, Sony Ericsson has a long-term approach for the corporate brand. Both P&G and Sony Ericsson are global companies with global strategies. None of the companies considers themselves to have an actual home market; instead both companies prefer to see themselves as truly global. Management of the Brand Since P&G is focused on product branding and Sony Ericsson is focused on corporate branding, there are some differences in the management of the brands. In the case of P&G, the whole company is about product branding. However, it is the marketing function within P&G which manages the product brands and specifically it is the entry level management and middle level management who mainly manage the marketing. It is the market development organization (MDO) within P&G which delivers the brands. In the case of Sony Ericsson the corporate brand is managed by the senior manager of each division. The brand is however delivered by the whole company since everyone within the organization is supposed to know the core values of the company and deliver those to the public. Focus on Stakeholders When it comes to drawing attention from stakeholders, both P&G and Sony Ericsson state that the most important stakeholders are the customers. One common denominator for both companies is that they are both consumer driven; therefore the customers are very valuable for the companies. In the case of P&G it is vital to understand and please the customers. However, there are other important stakeholders such as employees, local governments and investors. In the case of Sony Ericsson the customers are the most important stakeholders, however generally all stakeholders are important. The customers for Sony Ericsson include operators, retailers and consumers. As in the case with P&G, the employees are also very important for Sony Ericsson. Standardization versus Adaptation Both P&G and Sony Ericsson are global companies acting on multiple international markets. For that reason, both companies strive for using a standardized strategy. In the case of P&G, the aim is to try to standardize as much as possible and to use the same type of branding strategy all over the world. However, even if the intend is to standardize as much as possible, it is sometimes needed to adapt to the local markets. P&G’s aim is that the product should work at least throughout a whole continent. The reason for P&G to use a standardization strategy is to reach economies of scale and scope. Before launching a product on a new market there is careful research made in order to find out the preferences of the customers and so on. When the preferences differ, there are adaptations made before launching the product. Sony Ericsson uses a standardization strategy as well, and the strategy is consistent throughout the world. The reason for using a standardization strategy is the same as stated by P&G; economies of scale and scope. However, Sony Ericsson also finds it important to adapt

Data Analysis

62

to local preferences when it is needed. One characteristic of Sony Ericsson’s strategy is that the product name is always the same worldwide, but the features of the product might be localised. 5.2.2 Factors Determining MNCs’ Choice of Branding Strategies in International Markets Table 5.6 will provide a cross-case analysis of the factors determining the choice of branding strategy in international markets. The two companies are compared and similarities as well as differences are provided in the discussion that follows. One factor in the table that is presented differently from the conceptual framework and the within-case analysis is “Corporate image and reputation”. This table includes both characteristics of corporate brand and characteristics of product brand and also sub-headings in order to simplify and specify each characteristic. By this, the brands’ characteristics can be compared to each other and the factors are more specific.

Data Analysis

63

Table 5.6 Cross-Case Analysis of Factors Determining MNCs’ Choice of Branding Strategies in International Markets

Factors

Procter & Gamble

Sony Ericsson

¾ Stakeholder interests - Employees, customers, investors, suppliers, partners, regulators - Relationship with host government country - Partnership between manufacturers and dealers

Important

Important

N/A

Important

Important

Not important

¾ Corporate image and reputation - Expectations of stakeholders - Brand personality inline with core values of the company - Characteristics of corporate brand

� Consistency � Added value to products

and services

� A good reputation attracts investors

- Characteristics of product brand � Less harm to the firm if

one of the individual brands fail

� Flexible

� High marketing costs

Important

Not important

Somewhat important

Not important

Important

Important

Important

Important

Important

Important

Important

Important

Not important

Somewhat important

Somewhat important

Not important ¾ Market complexity

- Consumer characteristics - Competition - Cultural aspect - Environmental factors

Important

Important

Important

Important

Important

Important

Important

Important

¾ Marketing costs - High costs related to targeting different segments - Economies of scale

Important

Important

Somewhat important

Important

Stakeholder Interests The first variable discussed in this section is stakeholder interests. The stakeholders are important for both companies, and it is important to have good relations with them. Since P&G is a public company that is listed on the New York Stock Exchange (NYSE) it is important to take the investors in consideration because this affects the quotation. However, since P&G uses a product brand strategy the corporate brand has less connection with the products since they are individual with individual brands. Sony Ericsson is a private company which is owned by Sony Corporation and Ericsson, so the company is not a stock corporation

Data Analysis

64

and there are no stock investors. However, the sales and profits for Sony Ericsson are directly related to the products, and the reputation of the corporate brand affects the perception of the products since the products carry the corporate brand. It is important for Sony Ericsson to have a solid and trustworthy brand image since it affects its profit and revenue. The customers are very important for both of the companies since they need to have a good relationship with these in order to increase sales. But the relationships are different between the companies. Since P&G uses a product brand strategy the customers have no relation with the P&G corporate brand, but with the individual products and it is important to know the customers’ needs and demands. For Sony Ericsson the customers are most important because their perception of the brand determine the sales and hence the life of the whole company. The customer demands differ depending on preferences and the values of that international market, so adaptations might be needed in order to fulfil customer needs and demands. Different from P&G, Sony Ericsson’s customers do not only include consumers, but also retailers and operators. However, none of the companies has direct relations with the end-consumers since they sell to retailers and suppliers. The employees are important for both companies since they create the perception of the brand. For P&G as well as for Sony Ericsson it is important that the company values are interrelated with the employee values so that the employees deliver a message that is in accordance with the core values of the company. The government relationships are an important factor for both P&G and Sony Ericsson. This depends on the major differences regarding rules and regulations in international markets. Companies acting on a global scale need to have satisfactory relationships with the government in order to maintain the business in that market. There is no information whether P&G has partnerships with manufacturers; however, the company sometimes acquire already existing global brands such as Wella and Gillette. Sony Ericsson has no partnerships with other manufacturers, but the company sometimes cooperates with operators in order to sort out customer demands. Corporate Image and Reputation For P&G the corporate reputation is not that important since the corporate name is not visible on the products. Different from P&G, the corporate image and reputation is a highly important factor when determining strategy in international markets for Sony Ericsson. Since Sony Ericsson has its corporate name on all its products, it is important to deliver a message that is inline with the core values of the company. If one product fails, it will affect the whole brand and its sales. However, the expectations of stakeholders are important for both companies. For P&G stakeholder expectations are important first of all since the company is listed on the NYSE, but also since customer expectations create customer demands. For Sony Ericsson it is important since the corporate brand expresses certain messages to the stakeholders and the company has to take those into consideration when acting in different international markets. For P&G the brand personality does not have to be inline with the core values of the company since the company has different sorts of brands that suit different target groups. Hence, it is not important to have consistency throughout the company. For Sony Ericsson it is highly important that the brand personality is inline with the core values of the company, since the

Data Analysis

65

company strives to have a consistent brand image throughout the whole company. The company has the same brand positioning and branding strategy worldwide and the core values are reflected throughout the company. Although, there are local adaptations in different markets, the core values and the brand message are always consistent. Since P&G has different individual products with individual brands it cannot give added value to products and services. Sony Ericsson on the other hand, is a corporate brand and the brand is visible on all products, and hence it can give added value to its products and services and provide an assurance of that the brand delivers certain features, such as quality. Since P&G is listed on the NYSE, it is important to have a good reputation, and a good reputation makes the stock more attractive and might increase the stock price. This is not important for Sony Ericsson since it is a private company. The benefit with a product brand such as P&G is that there is less harm if one individual product fails, because this product can easily be taken out of the market. Sony Ericsson has to take into consideration that the category brands can be damages if one of them fails, and can therefore be forced to take them out of the market. However, since the corporate brand is visible on every single product, the brand can still be damaged on a corporate level. Because of this P&G is more flexible than Sony Ericsson. Because of the fact that P&G has many different products, the marketing costs are therefore higher since the company needs to put marketing actions on every single product. This is therefore an important factor for a product brand acting on an international market. Sony Ericsson can market its product on a corporate level and therefore lower the costs. Market Complexity For both companies market complexity is an important factor when determining the choice of strategy in international markets. Since P&G and Sony Ericsson act on a global scale, it is important to have a strategy that can be adapted worldwide. Although both companies use a standardized strategy, they adapt different dimensions of the marketing mix in order to maximize customer value. Different factors have to be taken into consideration such as consumer characteristics, because this varies around the world and customers have different preferences depending on culture and/or values. Competition is another factor to consider since there might be other companies that are cheaper or have more market shares. Other environmental factors to take into consideration are the technological factors that are very important for especially Sony Ericsson. The company has to live up to its reputation of highly innovative products, and the customers might demand different kinds of products or different technologies depending on where in the world the company operates. Legal constitutions are another important factor to consider for both of the companies. Marketing Costs For P&G, the marketing costs are very important to consider when deciding strategy in international markets. Since P&G uses a product brand strategy, the company has to invest in all individual brands and there are high costs related to this and also when acting in different diverse markets. However, P&G uses a standardized strategy, and therefore, the company can benefit from that. For Sony Ericsson, there are not as high costs related to this since the company has a standardized strategy and markets the products on a corporate level. However,

Data Analysis

66

the company adapts to local preferences and targets different segments worldwide; therefore there are high costs related to this. Both of the companies can benefit from economies of scale and scope since they have a standardized strategy, so this is an important factor when acting in international markets. Both companies can take advantages of the success in one market, and apply this strategy in other markets. Sony Ericsson can benefit from the standardized strategy and the marketing costs are therefore lower, since the marketing functions are central. The company can because of its standardized strategy ship the products worldwide without repackaging, and can by that decrease the costs.

Discussion, Findings, Conclusions and Implications

67

6 Discussion, Findings, Conclusions and Implications In the previous chapter, an analysis of the collected data was done. In this chapter, the overall findings and conclusions are presented and the research questions that were outlined in the first chapter are answered. Conclusions are drawn from our findings and by this the research purpose which is to investigate the branding strategies of MNCs in international markets, is then reached.

6.1 Discussion: Reflections on Past Research The purpose of this thesis was to investigate the branding strategies of MNCs in international markets. To reach the purpose two research questions were stated: “How can the branding strategies of MNCs in international markets be described?” and “How can the factors determining MNCs’ choice of branding strategies in international markets be described?”. Two MNCs; namely Procter & Gamble and Sony Ericsson, were chosen for testing the theory empirically. Both companies are global companies with global brands acting in several international markets. Both companies are also consumer driven, producing and marketing consumer goods. However, the companies fall into different industries; P&G within the beauty, household care and health- and well being industry and Sony Ericsson within the telecommunication industry producing and selling mobile phones for different segments. Since the companies act in different industries, they are not fully comparable. Additionally, P&G focuses mainly on product branding whereas Sony Ericsson focuses mainly on corporate branding. The different focuses have helped us to gain a deeper understanding of when, and in which cases, product branding- as well as corporate branding strategy is suitable. Our findings indicate that MNCs have different strategies depending on their company structure, i.e. whether the company implements a product brand strategy or a corporate brand strategy. However, MNCs acting globally have many factors that are similar regardless of structure. MNCs use a standardized strategy in international markets and adapt to some extent to specific local markets. MNCs thus have no strategy for emerging markets in general; rather they tailor their strategies to individual emerging markets. According to Hatch and Schultz (2003) many MNCs shift focus from product brands to corporate brands as they move towards globalization. This was not the case in our study since P&G has always used a product brand strategy and has no intentions of changing strategy. Furthermore, Sony Ericsson uses a corporate brand strategy and has always had that strategy, and did not start with a product brand strategy as theory indicates. Therefore our findings differ from theory. Bradley (2002) states that it is usually a process when brands are turning internationally, it often develops from being a local brand and after a while, when the brand is known, move into foreign markets. This somewhat coincide with our research since P&G started as a local brand, and after a certain period of time, developed into a global brand. However, Sony Ericsson started as a global brand and did not go through that process. Hatch and Schultz (2003) discuss that the corporate brand has a long life cycle and a product brand has a short life cycle. P&G has a long-term approach measured in both financial success, as well as sustainability. Sony Ericsson has also a long-term approach where the strategy is constant throughout the company. Therefore, theory does not coincide with the empirical findings.

Discussion, Findings, Conclusions and Implications

68

The strongest global brands in the world were presented in our literature review. The question still remains if there is a connection with the strategy used, i.e. if corporate brands are more successful than product brands or vice versa. This is an interesting question that might have been interesting to further discuss and to have included in our conceptual framework. However, this question demands a thorough investigation and because of limited time, this was not included. In retrospect, there are some issues that we did not include in our conceptual framework that could perhaps have been interesting to further investigate. As these are worth mentioning, we will discuss them below. Our research indicated that MNCs using a product brand strategy differs from MNCs using a corporate brand strategy. P&G is a publicly owned company, whereas Sony Ericsson is a privately owned company. However, the outcome of the research might have been different if the respondent companies had been using a corporate brand strategy at the same time as being a public owned company and vice versa. Therefore this might have been interesting to include in our conceptual framework. For a public owned MNC, everything that happens with the company might have an impact on the stock. Therefore, Corporate Social Responsibility (CSR) is an issue worth mentioning, since that will affect the corporate image and reputation. We have not discussed the concept of CSR in our thesis and this would have been interesting to include since it affects the perception of the company. Our research showed that innovation is important for MNCs acting globally. However, emphasis seems to be put more on commercial innovation; i.e. brand management, when it comes to companies focusing on product brand strategy. Regarding companies using a corporate brand strategy, the emphasis seems to be more on technological and product innovation. That does not necessarily go hand-in-hand with being first on the market; but instead to be best in class. However, sometimes companies can benefit from first-mover-advantage. Another issue that was mentioned is the country-of-origin effect and how companies can take advantage of its country-of-origin. This question was raised in the literature review, but might have been interesting to look more into and included in our conceptual framework. We have discussed the importance of stakeholders such as employees, local governments and investors in our research; however non-governmental organizations (NGOs) are also important since it also affect the perception of the company. This is especially important for MNCs that are public owned since this affects the stock price and hence investors.

6.2 RQ 1: How can the branding strategies of MNCs in international markets be described?

During our research concerning MNCs branding strategies in international markets, it has been clarified that companies focus either mainly on a product branding strategy or mainly on a corporate branding strategy. However, there may be mixtures of the two types, but in most cases there will be a dominant use of one of the mentioned strategies. Product branding is suited when a company offers multiple products that are targeted towards different segments. In that way, each product brand can have its own brand identity. Additionally, different products belonging to the same product category can be targeted towards different segments in order to increase sales. Although product branding is being

Discussion, Findings, Conclusions and Implications

69

used, it is still possible to create brand extensions under one of the individual brands. In this way, companies might be able to increase sales by taking advantage of an already existing strong brand. The advantage with using a product brand strategy is that the corporate brand will most probably not be affected if one of the individual product brands fails or is put under the pressure created by bad publicity. Companies using a product brand strategy rely heavily on each individual brand. Since each product brand has its own brand identity, large investments are required in order to create and sustain a strong brand. Due to the above mentioned factors, a product brand is therefore more functional than a corporate brand. Corporate branding is used when the corporate name and the brand is the same. The strategy is suited when a company offers several products which go under the corporate name. With this strategy companies may use the corporate brand as the master brand, and under the master there may be sub-brands. With this strategy companies invest in the master brand and the sub brands rather than in the different products. This strategy has a strategic approach, and the values of the company affect the brand. The advantage with this type of strategy is that each product offered can benefit from the corporate brand. However, that also makes it more complicated since it is very important for the company to have a good reputation as well as having a strong and stable corporate brand. If there is bad publicity for the company, that will affect the products negatively. There are some differences between product branding and corporate branding regarding brand management. When it comes to product branding, it is mainly the marketing function which manages the product brand, whereas management of the corporate brand is on a higher level i.e. the senior manager. In addition, the corporate brand is delivered by the whole organization, whereas the product brand is delivered by the marketing function. For MNCs, regardless of the strategy being a product brand or a corporate brand strategy, the customers are the most important stakeholders. However, there are naturally other important stakeholders such as employees, local governments and investors. Regarding the dilemma of whether to standardize or adapt the branding strategy, our research clearly indicated that MNCs prefer to standardize as much as possible regardless of the company using a product brand strategy or a corporate brand strategy. When acting on different markets, companies standardize in order to reach economies of scale and scope. Efficiency is a lead word for MNCs; including efficiency in production, distribution and marketing. However, it seems like it is not possible for MNCs to use a standardization strategy exclusively due to heterogeneous markets. MNCs acting on the global marketplace need to adapt to local preferences and different income structures in order to succeed. Based on our findings, the following conclusions can be made:

x MNCs acting on international markets use a product brand strategy, a corporate brand strategy or a mixture of the two.

x A product brand strategy is suited when a company offers multiple products that are targeted towards different segments.

x A corporate brand strategy is suited when a company offers several products which go under the corporate name.

x With a product brand strategy the corporate brand is not affected if one of the individual brands fails or received negative publicity.

Discussion, Findings, Conclusions and Implications

70

x The corporate brand may be affected negatively if one of the products fails when a company uses a corporate brand strategy.

x With a corporate brand strategy, all products will benefit from a strong corporate brand.

x The products will not benefit from a strong corporate brand if a product brand strategy is used.

x The product brand is managed by the marketing function. x The corporate brand is managed by the senior manager. x Customers are the most important stakeholders for all MNCs, regardless of whether a

product brand strategy or a corporate brand strategy is used. x A standardization strategy with some adaptations in local markets is preferred for all

MNCs, regardless of whether a product brand strategy or a corporate brand strategy is used.

6.3 RQ 2: How can the factors determining MNCs’ choice of branding strategies in international markets be described?

The factors that determine MNCs’ choice of branding strategies in international markets are stakeholder interests, corporate image and reputation, market complexity, and marketing costs. An explanation of how these factors influence the type of strategy chosen is further explained below. Stakeholder Interests The stakeholder interests are an important factor for MNCs when deciding what type of strategy to use in international markets. The strategy somewhat depends on the structure of the company, whether the company uses a corporate- or product brand strategy, however, this also depends on if the company is a public company or a private company. A company that uses a corporate brand strategy that is privately owned, take all stakeholders into consideration when determining what type of strategy to use in international markets. However, the most important stakeholder is the customers. The same occurs for a public owned company using a product brand strategy. Hence, all stakeholders are important to all MNCs independent on the type of structure of the company, but the customers are most important because they determine the sales and hence the profit. It is important to consider customer needs and demands and to have a good relationship with these. Employees are important for MNCs since they deliver the corporate message to the public and hence create a reputation of the company. Governmental relationships are also important for MNCs acting on international markets since it is important to know different country specific rules and regulations. For a global corporation acting in an international marketplace, partnerships between manufacturers and dealers do not seem to be an important factor determining the strategy to use in international markets. This might have to do with the fact that global companies seem to have a structure and well organized ways of handling sales and distribution channels, and these global companies have their own internal channels of distribution. It is not common for large MNCs to have partnerships at all on an international level and if the global companies are solid; they do not need to cooperate with others to enter different markets. Instead MNCs occasionally seem to have the strategy to acquire other companies; however, these acquisitions are only made of other solid global companies.

Discussion, Findings, Conclusions and Implications

71

Corporate Image and Reputation The importance of corporate image and reputation differs between a company using corporate brand or a product brand strategy. For a company using a corporate brand strategy it is very important to have a good corporate image and to have a good reputation since it affects the perception of the brand since it is shown on all products available. Hence, it also affects the whole brand and the sales. For a company using a product brand strategy it is not as important since every individual product has its own name, and if one brand is damaged, it can easily be taken out of sales, or be sold. However, if the product brand is a public owned company, this might be important since the company then has to take the shareholders and the stock price into consideration and a good reputation therefore attracts investors. The stakeholders’ expectations are important to consider for all MNCs acting in international markets. Since the customers are important to consider for all MNCs, their expectations have to be taken into consideration since it affects the sales of the products. For a company using a corporate brand strategy, the stakeholders’ expectations are important since the perception of the brand creates an expectation that the brand will deliver expected qualifications such as quality or other features. The same goes for a company using a product brand strategy, but on an individual level. The stakeholders have expectations that the specific product brand will deliver what they expect the brand to deliver. It is important for an MNC using a corporate brand strategy to have a brand personality that is inline with the core values of the company. An MNC using a corporate brand strategy needs to deliver a consistent brand message throughout the company and to avoid confusion with the customers. A corporate brand provide added value of the product since it delivers certain messages about the brand and the customer can expect to buy what is expected. On the other hand, for companies using a product brand strategy it is not important to have a brand personality that is inline with the core values of the company since the individual products carry their own brand personalities. It is therefore not important for an MNC using a product brand strategy to have consistency throughout the company. However, a product brand is more flexible and can exclude certain brands more easily than a corporate brand, and there is hence less harm. Since there is no connection with the individual product brands and the corporate brand, the corporate brand stays solid independently on the success or failure of the product brand. Since the products need to be marketed on an individual product level, there are high marketing costs that the MNC using a product brand strategy needs to deal with. An MNC using a corporate brand strategy has a central marketing function, and therefore less marketing costs. Market Complexity For all MNCs regardless of the type of branding strategy i.e. product branding or corporate branding, market complexity is a significant factor to consider when acting on a global scale. It is important for MNCs acting globally to have a strategy that can be implemented worldwide. MNCs have a standardized strategy that is somewhat adapted to local preferences, and since the customers are central, consumer characteristics need to be researched in order to maximize the value for the customers and consumers. In international markets it is important to consider competitors. Local competitors can have competitive advantages since they are familiar with the local preferences. There might be

Discussion, Findings, Conclusions and Implications

72

competitors that have competitive advantages with a lower price, or might have larger market shares. The environmental factors are very important since they reflect customer preferences. Cultural values determine the choice of strategy in international markets since this influences the decision of choosing a standardized or an adaptation strategy. Other important environmental factors can be technological factors for companies in the industry business, since the companies have to keep up with innovations and take different technological infrastructure into consideration. Marketing Costs Another important factor to consider for MNCs in international markets is marketing costs. An MNC using a product brand strategy has higher marketing costs due to the fact that every product brand needs to be marketed on an individual level. Therefore the MNC using a product brand strategy acts in different segments and there are higher costs related to targeting these segments. An MNC using a corporate brand strategy does not need to consider these high costs in the same way, but can benefit from the lower costs related to a central marketing. Since MNCs that act worldwide implement a standardized strategy with some adaptations, they can benefit from economies of scale and scope. MNCs put a lot of money into R&D in order to map the markets and investigate target-groups and customer needs. After that MNCs can benefit from their standardized strategy and implement that on other international markets. However, some markets are more diverse than others, and these need to be further investigated and in those markets it can be necessary to adapt to local preferences. In these cases, there are higher marketing costs. However, in order to maximize utility, this might be a necessary evil and in the end, MNCs creates competitive advantages. Based on our findings, the following conclusions can be made:

x The factors determining the choice of strategy used by MNCs in international market differ between product brands and corporate brands.

x Stakeholders is an important factor for MNCs when determining what strategy to use in international markets.

x The most important stakeholder for MNCs in international markets is the customers. x Corporate image and reputation is a very important factor for MNCs using a corporate

brand strategy in international markets. x Corporate image and reputation is not important for MNCs using a product brand

strategy in international markets since the products are sold on an individual level. x Corporate image and reputation is to some extent important for an MNC using a

product brand strategy that is public owned. x Stakeholders’ expectations is an important factor to consider for an MNCs acting in

international markets. x It is important for a corporate brand to have a brand personality that is inline with the

core values of the company. x A corporate brand provides added value to the product since it delivers certain

messages about qualities etcetera. x For an MNC using a product brand strategy it is not important to have a brand

personality that is inline with the core values of the company since the individual products carry its own brand personality.

Discussion, Findings, Conclusions and Implications

73

x It is not important for an MNC using a product brand strategy to have consistency throughout the company, and therefore a product brand is more flexible and can exclude failure brands.

x Market complexity is an important factor to consider for MNCs in international markets.

x MNCs implement a standardized strategy with some local adaptations to some markets.

x Consumer characteristics, competitors and environmental factors are important to consider for MNCs that act in international markets.

x There are high marketing costs for an MNC using a product brand strategy since it needs to market every product individually.

x An MNC using a corporate brand strategy has a central marketing function, and low marketing costs.

x MNCs strive to benefit from economies of scale through standardization when acting in international markets.

6.4 Implications and Recommendations Based on the conclusions above, in this section implications will be discussed for theory, for practitioners and for future research.

6.4.1 Implications for Theory The purpose of this study was to investigate the branding strategies of MNCs in international markets. We made our study primarily by describing the strategies used by MNC, as well as describing the factors determining the type of strategy used. The research was made through investigating this issue from previous research made by other researchers but also by collecting empirical data from MNCs in a global marketplace. We based out study on Yu Xie and Boggs (2006) model, but we chose to modify it in order to suit our purpose. We added some factors into that model such as standardization versus adaptation, but also deleted some such as product characteristics and firm characteristics since we found them irrelevant for our research. The research coincided with the theory on several points, but it differed on others. We found out that there were no specific to emerging markets. Instead MNCs seem to use a general strategy; either a product brand strategy or a corporate brand strategy and primarily standardize the branding strategy. However, MNCs seem to adapt the strategy to each individual market due to heterogeneous characteristics.

6.4.2 Implications for Practitioners In this section, implications for practitioners is outlined which can be seen as recommendations for managers working with these issues. These implications are based on our collected data and findings. A product brand strategy should be used by an MNC when multiple products are offered, and when these are targeted towards different segments. With this strategy the corporate brand is not affected if one of the individual brands fails. However, the corporate brand will not benefit from a strong product brand either. A corporate brand strategy should be used for MNCs when several products are offered under the corporate name. With this strategy, the company can benefit from success in other products, but also be damaged if the brand is put in an inconvenient situation.

Discussion, Findings, Conclusions and Implications

74

Markets are diverse and customer preferences in different countries also differ. For an MNC operating to local preferences globally, it is prudent to have an overall standardized strategy, but to adapt to local preferences. By this the company will benefit from economies of scale and scope at the same time as local preferences is considered and this will maximize the value for the customers. It is important for MNCs to take all stakeholders into consideration, since these are the ones determining the future business of the company and are in a position to control success or failure. Therefore stakeholders’ expectations need to be thoroughly investigated and these have to be fulfilled to some extent. Corporate image and reputation is important for MNCs in international markets since it determines the perception of the company. This is especially important for a company using a corporate brand strategy since the individual products carry the corporate name. Therefore it is important to have a consistent strategy and make sure that the corporate values are inline with the message that is sent out to the public. However, this depends on the ownership of the company, because for a public owned company, corporate image and reputation is highly important since it determines the company’s stock price.

6.4.3 Implications for Future Research Throughout this thesis, we have been trying to investigate branding strategies used by MNCs in international markets, and the factors determining which strategies to be used. The emphasis has been on product brand strategy versus corporate brand strategy. We have held our discussion related to the above mentioned strategies on a somehow general level, and more research could be made within some specific areas. Therefore, we recommend the following areas to be further researched:

x The importance of innovation (product innovation and/or commercial innovation) for MNCs related to product brand strategy as well as corporate brand strategy.

x Research on a private owned MNC using a product brand strategy. x Research on a public owned MNC using a corporate brand strategy. x The country-of-origin effect, and how that affect MNCs’ strategies. x If a strong successful brand is connected to the type of strategy used.

References

75

7 References Aaker, D.A. (2008). Strategic Market Management. New Jersey: Wiley. Aaker, D.A. (1991). Managing Brand Equity: Capitalizing on the Value of a Brand Name. New York: The Free Press New York. Abratt, R. (1989). A new approach to the corporate image management process. Journal of Marketing Management 5 (1), 63-76. Alashban, A.A., Hayes, L., Zinkhan, G.M., & Balazs, A.L. (2001).International brand-name standardization/adaptation: antecedents and consequences. Journal of International Marketing 10 (3), 22-48. Albaum, G., Duerr, E., & Strandskov, J. (2005). International Marketing and Export Management. London: Pearson Education Limited. Arnold, D.J., & Quelch, J.A. (1998). New Strategies in Emerging Markets. Sloan Management Review 40(1), 7-20. Balmer, J. (1995). Corporate Branding and Connoisseurship. Journal of General Management 21(1), 24-46. Balmer, J. (2001). The Three Virtues and Seven Deadly Sins of Corporate Brand Management. Journal of General Management 27(1), 1-17. Blaxter, L., Hughes, C., & Tight, M. (2001). How to research. Buckingham: Open University Press. Bradley, F. (2002). International Marketing Strategy. London: Pearson Education Limited. Businessweek. (2007-11-15). The world’s top brands. Retrieved November 15, 2007 from http://images.businessweek.com/ss/06/07/top_brands/index_01.htm Cervino, J., & Cubillo, J.M. (2004). A resource-based perspective on global branding: an analysis of trademark registration data. International Journal of Management 21 (4), 451-463. Czinkota, M.R. & Ronkainen, I.A. (2004). International Marketing. Ohio: Thomson South Western. Denscombe, M. (2000). Forskningshandboken; för småskaliga forskningsprojekt inom samhällsvetenskaperna. Lund: Studentlitteratur. Di:s Varumärkesskola: 16 steg till ett starkare varumärke. (2007, 26 November). Dagens Industri, Dagens Industri sektion 2. Eriksson, L.T. & Wiedsersheim-Paul, F. (2006). Att utreda forska och rapportera. Malmö: Liber.

References

76

Hatch, M.J., & Schultz, M. (2003). Bringing the corporation into corporate branding. European Journal of Marketing 37 (7/8), 1041-1064. Hatch, M.J., & Schultz, M. (2001). Are the Strategic Stars Aligned for your Corporate Brand? Harvard Business Review 79(2), 128-134. Harris, F., & de Chernatony, L. (2001). Corporate branding and corporate brand performance. European Journal of Marketing 35(3/4), 441-456. Hollensen, S. (2007). Global Marketing. Edinburgh: Pearson Education Limited. Hsieh, M.H., & Lindridge, A. (2005). Universal appeals with local specifications. Journal of Product & Brand Management 14/1, 14-28. Ind, N. (1997). The Corporate Brand. London: MackMillan Press. Jacobsen, J,K. (1993). Intervju. Lund: Studentlitteratur. Kapferer, J-N. (1997). Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. London: Kogan Page. Kay, M.J. (2004). Strong brands and corporate brands. European Journal of Marketing 40(7/8), 742-760. Keller, K.L. (2007). Strategic Brand Management: building, measuring, and managing brand equity. New Jersey: Pearson Education. Knox, S., & Bickerton, D. (2000). The six conventions of corporate branding. European Journal of Marketing 37(7/8), 998-1016. Kotler, P., & Keller, K.L. (2006). Marketing Management 12e. New Jersey: Pearson Education. Kotler, P., & Pfoertsch, W. (2007). Being known or being one of many: the need for brand management for business-to-business (B2B) companies. Journal of Business & Industrial Marketing, 357-362. McDonald, M.H.B., de Chernatony, L., & Harris, F. (2001). Corporate marketing and service brands: Moving beyond the fast-moving consumer goods model. European Journal of Marketing 35(3/4), 335-352. Miles, M.B. & Huberman, A.M. (1994). Qualitative data analysis: and expanded sourcebook. Thousand Oaks: SAGE publications. Motameni, R., & Shahroki, M. (1998). Brand equity valuation: a global perspective. Journal of Product & Brand Management 7 (4), 275-290. Palumbo, F., & Herbig, P. (2000). The multicultural context of brand loyalty. European Journal of Innovation Management 3 (3),116-124.

References

77

Procter & Gamble. (2007-12-05). Retrieved December 5, 2007 from www.pg.com. Quelch, J. (1999). Global Brands: Taking Stock. Business Strategy Review 10(1), 1-14. Roth, M.S. (1992) Depth versus breadth strategies for global brand image management. Journal of Advertising XXI (2). Sony Ericsson. (2007-12-05). Retrieved December 5, 2007 from www.sonyericsson.se. Urde, M. (2003). Core value-based corporate brand building. European Journal of Marketing 37(7/8), 1017-1040. Van Gelder, S. (2003). Global Brand Strategy: Unlocking Branding Potential Across Countries, Cultures and Markets. London: Kogan Page. Wilson, A. (2003). Marketing research; An integrated approach. Harlow: Pearson Education Limited. Yin, R.K. (1994). Case study research; design and methods. Thousand Oaks: Sage Publications. Yin, R.K. (2003). Case study research; design and methods. California: Sage Publications. Yin Wong, H. & Merrilees, B. (2007). Multiple roles for branding in international marketing. International Marketing Review 24 (4), 384-408. Yu Xie, H. & Boggs, D.J. (2006). Corporate branding versus product branding in emerging markets: A conceptual framework. Marketing Intelligence & Planning 24 (4), 347-364. Interviews Wagner, Andreas, Assistant Brand Manager at Shopper Marketing, Procter & Gamble Germany, 2007-12-04, at 10.00 AM. Warner, Andrew, Director of Brand Management, SonyEricsson United Kingdom, 2007-12-04, at 14.00 PM.

APPENDIX A

APPENDIX A The Top 100 Global Brands in the World, 2007 R

anking 2007

Ranking 2006

Change

Brand

Value of Brand, 1,000 M

illion USD

, 2007

Value of Brand, 1,000 M

illion USD

, 2006

Change from

Previous Year (%)

Ow

ner

Country of O

rigin

1 1 0 Coca-Cola 65,324 67 -3 Coca-Cola USA2 2 0 Microsoft 58,709 56,926 3 Microsoft USA3 3 0 IBM 57,091 56,201 2 IBM USA4 4 0 GE 51,569 48,907 5 GE USA5 6 1 Nokia 33,696 30,131 12 Nokia FIN 6 7 1 Toyota 32,07 27,941 15 Toyota JAP 7 5 -2 Intel 30,954 32,319 -4 Intel USA8 9 1 McDonald's 29,398 27,501 7 McDonald's USA9 8 -1 Disney 29,21 27,848 5 Walt Disney USA

10 10 0 Mercedes-Benz 23,568 21,795 8 Daimler Chrysler GER11 11 0 Citi 23,443 21,458 9 Citigroup USA12 13 1 Hewlett-Packard 22,197 20,458 9 Hewlett-Packard USA13 15 2 BMW 21,612 19,617 10 BMW GER14 12 -2 Marlboro 21,283 21,35 0 Altria USA15 14 -1 American Express 20,827 19,641 6 American Express USA16 16 0 Gillette 20,415 19,579 4 Procter & Gamble USA17 17 0 Louis Vuitton 20,321 17,606 15 Louis Vuitton Moët Hennessy FR 18 18 0 Cisco 19,099 17,532 9 Cisco USA19 19 0 Honda 17,998 17,049 6 Honda Motor JAP 20 24 4 Google 17,837 12,376 44 Google USA21 20 -1 Samsung 16,853 16,169 4 Samsung KOR22 21 -1 Merrill Lynch 14,343 13,001 10 Merrill Lynch USA23 28 5 HSBC 13,563 11,622 17 HSBC Holdings GB 24 23 -1 Nescafé 12,95 12,507 4 Nestlé SWI 25 26 1 Sony 12,907 11,695 10 Sony JAP 26 22 -4 Pepsi Co 12,888 12,69 2 Pepsi Co USA27 29 2 Oracle 12,448 11,459 9 Oracle USA28 32 4 UPS 12,013 10,712 12 United Parcel Service USA29 31 2 Nike 12,004 10,897 10 Nike USA30 27 -3 Budweiser 11,652 11,662 0 Anheuser-Busch USA31 25 -6 Dell 11,554 12,256 -6 Dell Inc. USA32 33 1 JP Morgan 11,433 10,205 12 JP Morgan Chase USA

APPENDIX A

33 39 6 Apple 11,037 9,13 21 Apple USA34 34 0 SAP 10,85 10,007 8 SAP GER35 37 2 Goldman Sachs 10,663 9,64 11 Goldman Sachs USA36 35 -1 Canon 10,581 9,968 6 Canon JAP 37 36 -1 Morgan Stanley 10,34 9,762 6 Morgan Stanley USA38 41 3 IKEA 10,087 8,763 15 IKEA SWE39 42 3 UBS 9,838 8,734 13 UBS AG SWI 40 40 0 Kellogg's 9,341 8,776 6 Kellogg Company USA41 30 -11 Ford 8,982 11,056 -19 Ford Motor USA42 48 6 Philips 7,741 6,73 15 Koninklijke Phillips Electronics NL 43 44 1 Siemens 7,737 7,828 -1 Siemens GER44 51 7 Nintendo 7,73 6,559 18 Nintendo JAP 45 45 0 Harley-Davidson 7,718 7,739 0 Harley-Davidson USA46 46 0 Gucci 7,697 7,158 8 Gucci Group IT 47 NR NA AIG 7,49 NA NA American International Group USA48 47 -1 Ebay 7,456 6,755 10 EBAY USA49 NR NA AXA 7,327 NA NA AXA FRA 50 49 -1 Accenture 7,296 6,728 8 Accenture BER51 53 2 L'Oréal 7,045 6,392 10 L'Oréal FRA 52 50 -2 MTV 6,907 6,627 4 Viacom USA53 54 1 Heinz 6,544 6,223 5 Heinz USA54 56 2 Volkswagen 6,511 6,032 8 Volkswagen GER55 55 0 Yahoo! 6,067 6,056 0 Yahoo USA56 57 1 Xerox 6,05 5,918 2 Xerox USA57 58 1 Colgate 6,025 5,633 7 Colgate-Palmolive USA58 61 3 Chanel 5,83 5,156 13 Chanel FRA 59 59 0 Wrigley´s 5,777 5,449 6 Wm. Wrigley Jr. USA60 60 0 KFC 5,682 5,35 6 Yum Brands USA61 52 -9 Gap 5,481 6,416 -15 The Gap USA62 65 3 Amazon.com 5,411 4,707 15 Amazon.com USA63 63 0 Nestlé 5,314 4,932 8 Nestlé SWI 64 73 9 Zara 5,165 4,235 22 Inditex SP 65 62 -3 Avon 5,103 5,04 1 Avon Products USA66 68 2 Caterpillar 5,059 4,58 10 Caterpillar USA67 67 0 Danone 5,019 4,638 8 Groupe Danone FRA 68 74 6 Audi 4,866 4,165 17 Volkswagen GER69 71 2 Adidas 4,767 4,29 11 Adidas GER70 64 -6 Kleenex 4,6 4,842 -5 Kimberly-Clark USA71 72 1 Rolex 4,589 4,237 8 Rolex SWI 72 75 3 Hyundai 4,453 4,078 9 Hyundai Motor KOR73 81 8 Hermès 4,255 3,854 10 Hermès International FRA 74 66 -8 Pizza Hut 4,254 4,694 -9 Yum Brands USA75 80 5 Porsche 4,235 3,927 8 Porsche GER76 78 2 Reuters 4,197 3,961 6 Reuters Group GB 77 69 -8 Motorola 4,149 4,569 -9 Motorola USA78 77 -1 Panasonic 4,135 3,977 4 Matsushita Electric Industrial JAP 79 82 3 Tiffany 4,003 3,819 5 Tiffany USA80 NR NA Allianz 3,957 NA NA Allianz GER81 85 4 ING 3,88 3,474 12 ING Groep NL 82 70 -12 Kodak 3,874 4,406 -12 Eastman Kodak USA83 86 3 Cartier 3,852 3,36 15 Cartier FR

APPENDIX A

84 76 -8 BP 3,794 4,01 -5 BP plc BG 85 87 2 Moët & Chandon 3,739 3,257 15 Louis Vuitton Moët Hennessy FRA 86 79 -7 Kraft 3,732 3,943 -5 Kraft Foods USA87 83 -4 Hennessy 3,638 3,576 2 Louis Vuitton Moët Hennessy FR 88 91 3 Starbucks 3,631 3,099 17 Starbucks USA89 84 -5 Duracell 3,605 3,576 1 Procter & Gamble USA90 88 -2 Johnson & Johnson 3,445 3,193 8 Johnson & Johnson USA91 93 2 Smirnoff 3,379 3,032 11 Diageo GB 92 92 0 Lexus 3,354 3,07 9 Toyota Motor JAP 93 89 -4 Shell 3,331 3,173 5 Royal Dutch Shell GB 94 96 2 Prada 3,287 2,874 14 Prada IT 95 98 3 Burberry 3,221 2,783 16 Burberry GB 96 99 3 Nivea 3,116 2,692 16 Beiersdorf GER97 94 -3 LG 3,1 3,01 3 LG KOR98 90 -8 Nissan 3,072 3,108 -1 Nissan Motor JAP 99 NR NA Polo RL 3,046 NA NA Polo Palph Lauren USA

100 NR NA Hertz 3,026 NA NA Hertz Global Holdings USA

APPENDIX B

APPENDIX B Interview Guide, English version

1) How many brands does your company have in total?

2) Are the brands positioned similarly in all markets?

3) What are the challenges spreading your brands worldwide?

4) What were the motives for internationalizing your brands?

5) What does your brands draw its strengths from: a. Financial strengths? b. Innovation? c. International distribution? d. Managerial resources?

6) What is the background to the brand developing into a global brand? 7) How does the company build competitive advantage at home and abroad? 8) How does the company sustain competitive advantage? 9) What type of branding strategies does the company use for international markets? 10) Does the company focus on corporate branding, product branding, or a mix of both?

11) Who manages the brand/s?

a. Corporate brand b. Product brand c. Both brands/hybrid strategy

12) What role does the corporate- and/or product brand play? 13) What interested party is most important?

a. All stakeholders? b. Specific stakeholders? Who?

14) Who has the main responsibility for the brand image? a. Middle manager b. All personnel

15) Who delivers the corporate brand and/or the product brand? 16) Does the company focus on long-term relationships with the stakeholders, or is the

focus short-term, i.e. launching the product? How?

17) Does the company standardize or adapt the branding strategy to different markets?

APPENDIX B

a. How?

18) Is there any specific strategy in emerging markets? 19) What factors determine the choice of branding strategy?

20) Which stakeholders are important when choosing branding strategy in emerging

markets?

21) What factors are taken into consideration when creating the corporate image and reputation?

a. Expectations of stakeholders? b. Brand personality; is there a red thread? Connection to the core values of the

company?

22) What are the advantages and disadvantages with a corporate brand and/or a product brand?

23) What market factors are important to consider in emerging market?

24) What are the cost advantages/disadvantages with your branding strategy?

APPENDIX C

APPENDIX C Intervjuguide, Svensk version

1) Hur många varumärken finns det totalt inom företaget?

2) Är varumärkena positionerade på samma sätt på alla marknader?

3) Vilka är utmaningarna med att sprida era varumärken globalt?

4) Vilka motiv fanns för att göra varumärkena internationella?

5) Varifrån samlar era varumärken sina styrkor ifrån? a. Finansiella styrkor? b. Innovation? c. Internationell distribution? d. Chefs-tillgångar?

6) Vad är bakgrunden till att varumärket/varumärkena har utvecklats till ett globalt

varumärke? 7) Hur bygger företaget upp en konkurrensfördel på hemmamarknaden och utomlands?

8) Hur bibehåller företaget en konkurrensfördel?

9) Vilka typer av varumärkesstrategier använder företaget för internationella marknader?

10) Fokuserar företaget på företags-varumärkesstrategi, produkt-varumärkesstrategi , eller

en blandning av båda?

11) Vem ansvarar för varumärket/varumärkena? a. Företags-varumärket b. Produkt-varumärket c. Båda varumärkena/blandstrategi

12) Vilken roll spelar företags- och/eller produktvarumärket? 13) Vilka intressenter är viktigast?

a. Alla intressenter b. Specifika intressenter? Vilka?

14) Vem har huvudansvaret för varumärkets image?

a. Mellanchef b. Alla anställda på företaget

15) Vem levererar företags-varumärket och/eller produkt-varumärket? 16) Fokuserar företaget på en långsiktig relation med intressenterna, eller är fokus mer

koncentrerat kortsiktigt, dvs. på att lansera produkten? Hur?

APPENDIX C

17) Standardiserar eller anpassar företaget sin varumärkesstrategi till olika marknader? a. Hur?

18) Finns det någon speciell strategi för just tillväxtmarknader? 19) Vilka faktorer avgör valet av varumärkesstrategi?

20) Vilka intressenter är viktiga i valet av varumärkesstrategi i tillväxtmarknader?

21) Vilka faktorer är viktiga när företagets image och rykte skapas?

a. Förväntningar från intressenter? b. Varumärkets personlighet; finns det någon så kallad. röd tråd? Finns någon

koppling till företagets kärnvärderingar?

22) Vilka fördelar respektive nackdelar finns det med ett företags-varumärke och/eller produkt-varumärke?

23) Vilka marknadsfaktorer är viktiga när man går in i en tillväxtmarknad?

24) Vilka kost-fördelar respektive nackdelar finns med företaget varumärkesstrategi?