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8/22/2019 The Power of Managing Brands Globally
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Perspective DeAnne Aguirre
Paul Leinwand
Sudeshna Saha
Aurelie Viriot
The Power of ManagingBrands GloballyLessons from theCPG Sectors MostSuccessful Players
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Booz & Company is a leading global management consultingrm, helping the worlds top businesses, governments,and organizations.
Our founder, Edwin Booz, dened the profession when heestablished the rst management consulting rm in 1914.
Today, with more than 3,300 people in 58 ofces around theworld, we bring foresight and knowledge, deep functionalexpertise, and a practical approach to building capabilitiesand delivering real impact. We work closely with our clientsto create and deliver essential advantage.
For our management magazine strategy+business, visitwww.strategy-business.com.Visit www.booz.com to learn more about Booz & Company.
CONTACT INFORMATION
ChicagoPaul [email protected]
Sudeshna [email protected]
San FranciscoDeanne AguirreSenior [email protected]
Aurelie ViriotSenior [email protected]
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Booz & Company 1
As CPG companies have turned todeveloping markets and regionalexpansion as their primary pathsto growth, their ability to developtruly global brands and to manageportfolios of brands globally hasbecome essential. The geographicdiversity of CPG companiesbusinesses, as well as the rela-tive importance of internationalbusiness to the overall portfolio,has reached unprecedented levels.For instance, European companiesUnilever and Nestl have long hadglobal reach, but their interna-
tional business is on the rise: Uni-lever now derives 62 percent ofits revenues from outside Europe,compared to 54 percent a decadeago, while Nestl has seen a simi-lar increase to 63 percent from58 percent. Meanwhile, Wrigleyand Procter & Gamble now see67 percent and 54 percent oftheir sales, respectively, comingfrom outside North America (upfrom 52 percent and 50 percent a
decade ago).
There are clear benets to thedevelopment of global brandsand, more broadly speaking, toglobal coordination across brandsand markets. Companies can
THE POWEROF MANAGING
BRANDSGLOBALLY
Lessons from the CPGSectors MostSuccessful Players
Executive Summary
The question of how to manage
global brandssuch as Coca-
Cola, Gillette, and Nestl, as
well as those with less global
recognition, such as Wrigley,
Avon, and Campbellsacross
a set of diverse geographies has
spurred significant debate among
consumer packaged goods (CPG)
companies. The complexity stems
in part from the fact that there are
very few truly global brands: CPG
global brands are more often
multinational or regional. Of the
top 100 recognized global brands,just 21 are from the CPG sector,
and only 14 of them have a value
of more than US$5 billion (see
Exhibit 1, page 2).
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2 Booz & Company
nd synergies all along the value
chain, from consumer insights, toinnovation, to sourcing, to mar-keting. However, they must walka ne line in developing thesecapabilities globally: On the onehand, doing so allows companiesto achieve the benets of scale,
and speed their expansion in new
markets by quickly applying bestpractices learned in one region toother geographies. On the otherhand, without the right structurein place to manage these capabili-ties, companies are likely to seeincreased organizational complex-
itywhich brings its own chal-
lenges in terms of local marketrelevance and speed-to-market.In managing these tradeoffs, CPGcompanies have been experiment-ing with a variety of structuresin the oversight of their globalbrands. Many have gone from
Exhibit 1Top CPG Global Brands
* CPG encompasses the food, beverage, alcohol, personal care, and tobacco sectors
Sources: Interbrand Best Global Brands 2007; Booz & Company
Top 100 Global Brands: Breakdown by Sector
100%
Total: 100brands
100%
0%
20%
40%
60%
80%
100%
Other
Diversified
Consumer Electronics
Financial Services
IT
Automotive
CPG*
Percentage of Value ofTop 100 Global Brands
Percentage of Brands inTop 100 Global Brands
Total:US$1.156
billion
Best Global Brands2007 Interbrand Ranking
21 CPG Brands in Top 100, Valued at $220 billion
Rank Brand
12
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1819
20
24
26
30
40
51
53
57
59
63
65
67
70
85
86
8790
91
96
Coca-ColaMicrosoft
IBM
GE
Nokia
Toyota
Intel
McDonald's
Disney
Mercedes
Citi
HP
BMW
Marlboro
American Express
Gillette
Louis Vuitton
CiscoHonda
Nescaf
Pepsi
Budweiser
Kellogg's
LOral
Heinz
Colgate
Wrigley
Nestl
Avon
Danone
Kleenex
Mot & Chandon
Kraft
HennessyJ&J
Smirnoff
Nivea
65.358.7
57.1
51.6
33.7
32.1
31.0
29.4
29.2
23.6
23.4
22.2
21.6
21.3
20.8
20.4
20.3
19.118.0
17.8
13.0
12.9
11.7
9.3
7.0
6.5
6.0
5.8
5.3
5.1
5.0
4.6
3.7
3.7
3.63.4
3.4
3.1
Brand Value
(Dollars in Billions)
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Booz & Company 3
a regional approach to a globalapproach; some have evenreverted to a regional approach toget the balance right.
Clearly, a one-size-ts-all structureis not an option for the industry,
and likely not for any complexportfolio. In this article, wereview the potential benets andchallenges of developing globalbrands and coordinating brandportfolios globally; identify thefactors that drive the appropriatelevel of global brand managementacross the value chain; and reviewkey implications and principlesfor successful implementation.
Global Management ofBrand Portfolios HasClear Benefts
There have been some fantasticstories of well-managed globalbrands, both inside and outsidethe CPG industry. Some arewell known: For example, atApple, a great majority of R&D,innovation, and even marketingis organized centrally; Procter &
Gambles strong arsenal of globalbrands benets from its use ofopen innovation, in whicha central R&D hub oversees apipeline of ideas generated bothwithin the company and withexternal partners. Other exampleshave received less publicity, suchas the use of consumer insightthat parlayed the brand equity ofKimberly-Clarks Huggies diapersinto other successful products
for babies, including Pull-Upsand toiletries.
Though CPG companiesapproaches to managing globalbrands vary, they generallylook to gain three particular
advantages from whatever modelthey choose: better results fromtheir innovation investment, morerapid geographic expansion, andgreater global brand equity.
Innovation investment: In todays
CPG environment, competitiveadvantage and meaningfuldifferentiation are increasinglydependent on superior R&D. Infact, companies greatest gainsfrom global brand managementstem from their ability tocoordinate innovation activitiesacross products, brands, andmarkets, and thus amortizethe investment. There has beensome debate about whetherinnovation can really be globallyapplicable, given the widelyvarying needs of particular brandsand the differences betweenmarkets. However, we nd thatcore technologies and productinnovations have far more globalreach than some have assumed.Innovation and consumerinsight can be broadly relevantacross markets; both P&G and
Kimberly-Clark have used insightsfrom emerging markets to developand market products for low-income consumers in developedcountries. For instance, theygained a deeper understandingin emerging markets of howconsumers must make trade-offsbetween the cost of diapers andthe cost of child care, and usedthis knowledge to inform theirpricing and marketing for
low-income segments in theUnited States.
Speed of geographic expansion:Global coordination allowscompanies to more easily shareinsights across brands and
markets, thereby enabling teamsto learn from one another aboutnew product ideas and innovativeways to connect with customers.Additionally, global coordinationcan make for more rapid and
cost-efcient expansion into newmarkets with existing products.This is particularly true in thecase of global brands with aunique name and positioning,as well as similar executionacross markets, from pricing topackaging to advertising. Look,for example, at the successfulrollout of the innovative Air WickFreshmatic automatic aerosol.Reckitt Benckiser, the brands
parent, was able to roll out theproduct worldwide in less than ayear, during which time it foundthe product in Korea, tested andlaunched it in Europe, adaptedit to meet U.S. environmentalregulations, and quickly made itthe number two air-care productglobally. The products rapidglobal expansion gave it a clearcompetitive edge in the newlycreated air-care segment.
Global brand equity: Brands thatare proven to have internationalacceptance and appeal areinherently stronger than nationalor regional brands. Interbrand,in determining the value of theworlds best brands, uses a brandsinternationality to determine25 percent of its brand strength,making that factor as importantin Interbrands estimation
as leadership (i.e., marketshare). Greater global reachand recognition make a brandmore sustainable and indicatepotential for further internationalexpansion. Furthermore, a brandsglobal status can, in itself, be a
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key differentiator to consumersfor example, a customer whowants to have global bankingservices will be attracted toHSBC, which bills itself as theworlds local bank. To fully
capture these potential benetsand enhance brand equity, it iscritical for CPG companies tocoordinate the communicationand messaging related toglobal brands. Leveraging allthese benets, the portfolio ofInterbrands Best Global Brandshas consistently outperformed themarkets by a considerable margin.Where the characteristics ofconsumer demand and preferences
justify it, companies can generatesignicant value by supporting thedevelopment of global brands.
The Challenges of GlobalBrand Management
Although coordinating brandsglobally has clear benets, itoften comes with two unintendedconsequences that have to becarefully addressed: increasedorganizational complexity and
the potential for lack of focus inindividual markets.
Organizational complexity:Adding global structures tocoordinate activities across brandsand markets where coordinationdoes not add signicant valuecan actually create unnecessaryorganizational complexity.Such complexity can result inan inated organization and
shadow staff. It can hampermarket responsiveness ifcoordination processes, decisionrights, and information ows
between global and local teamsare not dened clearly. Unclearaccountability for performance,a natural consequence of poorlydened global structures, canmake the situation worse and
cause ineffective execution andloss of speed. Even P&Gs globalstructure, which is well dened,has troubles with accountabilitiesrelated to the P&L between theglobal business units (GBUs) andmarket development organizations(MDOs): The GBUs own theP&Ls for particular product lines,but the MDOs own the P&Ls forregional execution. If results donot meet expectations, its often
unclear where the problem lies.Was the product, owned by theGBU, inadequate for local needs,or was there poor pricing in themarket or poor execution inthe store?
Diminished local focus: GlobalCPG companies face a major chal-lenge in nding the right balancebetween global coordination andthe local exibility needed to
adapt to market-specic tastesand preferences (e.g., packaging,colors, avors, and messaging). Aglobal strategy that does not leavesufcient room for local marketcustomization may diminishbrands and products localrelevance to an extent that sur-passes the benets expected fromglobal coordination. Althoughcertain global brands (such asCoca-Cola and McDonalds)
are still largely associated withtheir home market in the eyes ofconsumers worldwide, othersin a variety of industriesare
attempting to appear more localas a way to be better connectedto consumers in each market. LGElectronics, for example, aims tomake it completely unimportantto consumers where LG is head-
quartered.1
Finally, there is alsoa risk that the companys globalcore may focus excessively on acompanys largest markets andmay not give smaller markets theresources they need to grow. Para-doxically, the opposite can also bea riska companys position in itshome market may be threatenedif its resources are spread too thinby global expansion.
Leading CPG CompaniesTake Diverse Approaches toGlobal Brand Management
Faced with these complex trade-offs between the potential benetsof global brand managementand the possibility of greatercomplexity and lack of exibility,CPG companies have adopteda wide variety of approachesto global brand management,reecting the diversity of their
situations (see Exhibit 2).
A companys organizationalfocus will be largely determinedby the way it structures itsbrand-management model. Somecompanies, such as Procter &Gamble and LOral, are primarilyorganized around powerfulcentralized category-managementteams, which determine prioritiesfor the category as a whole and
leverage synergies across markets.Other companies, such as Ferreroand Heinz, have adopted a moredecentralized approach, aligned
1 Yong Nam, CEO of LG Electronics.
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Exhibit 2Organizational Focus: Choices of Leading CPG Companies
Source: Booz & Company
CentralizedCategory
Management
Procter & Gamble
LOral
Nestl (waters, nutrition)
Newell Rubbermaid
Sara Lee
Unilever
Nestl (food and beverages)
Ferrero
Heinz
BIC
Reckitt Benckiser
Kimberly-Clark
DecentralizedCategory
Management
PrimarilyCategoryManaged
Primarily globally managed, withpowerful global categorymanagement units that leveragebrand and customer preferencesimilarities across markets
Execution driven by strong local arms
Managed through matrix of category-and geography-focused teams
Extensive use of coordinatingmechanisms (e.g., councils, stronginnovation processes)
Primarily managed through strong regionalcommercial organizations in entrepreneurialculture
High focus on geographic P&Laccountability for fast local decision makingon heterogeneous products and customersacross countries
Process-Based
Coordination
PrimarilyGeographically
Managed
primarily along geographies, inwhich the bulk of decisions andactivities are managed locallywith minimal coordination acrossmarkets. In between these twomodels of P&L accountability,with fully centralized categorymanagement at one extreme andgeography-centered decentralized
management at the other, arenumerous other options inthe continuum.
Similarly, leading CPG companieshave made different choicesin terms of decision-making
processes. Whereas somecompanies have favored a modelin which the dominant categoryor brand sets goals and isresponsible for their attainment,others have opted for a council-based model in which interestgroups are represented, or fora steward-driven process with
a facilitator who coordinatesresources across functionalgroups. Some companies relyheavily on formal structures andprocesses (e.g., explicit lines ofcontrol and measures), and others
primarily leverage incentives orfavor more informal structures.
These major differences amongleading CPG companies suggestthat there is no single best model.The optimal level of globalcategory management and,more generally speaking, central
coordination of activities isspecic to each company.
Identifying the Right GlobalManagement Model
Are there opportunities to lever-age scale for certain brand-related
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functions or activities in differentmarkets? Are product and cus-tomer insights from one marketrelevant and meaningful to othermarkets? Are speed-to-market andthe ability to roll out products
quickly across markets a key com-petitive advantage? If a companyanswers yes to these questions,then it will nd signicant valuein coordinating brands and cat-egories across markets. For thesecompanies, the question is oftennot Should we set up a globalmanagement structure? Rather,they need to ask, Which parts ofthe value chain and which specicbusinesses should be managed
Exhibit 3Global Brand Management Strategy: Key Building Blocks
Source: Booz & Company
Global Brand Management Model
Global Portfolio View
Which specific businesses should bemanaged globally?
Which parts of the value chain shouldbe managed globally?
Corporate growth strategy
Role of expansion into new markets Role of new capability building
Management of organizational complexity
How can global brand management support the
companys overarching strategy?
Category-Specific Views
Category dynamics
Does the category showsimilarities across marketsthat can be leveraged?
Where in the value chain
can it most benefit fromglobal coordination?
Category strategy
What are the strategicpriorities for the category?
Which level and type ofglobal coordination do
they call for?
To what extent can each individual category benefitfrom global brand management?
globally? To answer this ques-tion, they must take into accountconsiderations involving both theglobal portfolio and individualcategories (see Exhibit 3).
Global Portfolio ViewAn
Overarching Approach: Theglobal brand portfolio is aprimary driver of corporategrowth and should be a majorfactor in determining priorities.It is important, then, to have aholistic understanding of how acompanys approach to portfoliomanagement can support orundermine its overall strategy.
First, companies must look at therole of growth in new markets:If this is a critical componentof the enterprise strategy, thencompanies should choose anoperating model that facilitates
focus in these areas. A globaloperating model will allow forthe rapid expansion of existingproducts, whereas a regionalmodel will enable a highlycustomized and fast approach inindividual growth markets.
Second, companies need to lookat the capabilities that will becritical to support the globalstrategy they have selected. For
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Booz & Company 7
instance, the development andglobal rollout of a new productwill require, rst, coherentinnovation capabilities that cancreate breakthrough products;second, the ability to customize
those products by geographicsegment; and third, the consumerinsight necessary to addressdiverse customer needs.
Category-Specifc ViewsAssessment of Global BrandManagement by Category:Once a company understandshow its approach to globalbrand management can supportits overall strategy, it can beginto consider the benets of itsapproach to individual categories.The type and magnitude ofthe benets will vary widely.Opportunities for globalcoordination at the varioussteps of the value chain differfrom one category to the next,depending on the intrinsiccharacteristics of each categoryand strategic priorities:
Similarity of consumer demand
characteristics across geogra-phies presents the opportunityto coordinate consumer andshopper insights, key mes-sages, and, most important, theinnovation engine. For globalbrands, where a consistentname and positioning are usedaround the world, aspects ofmarketing communication canand should be coordinatedglobally; of course, in somecases, strong local adaptationis criticalfor language, atan absolute minimum. Typi-cally, investments in creative
development, digital media,and multicultural marketingcan also be leveraged globally.Companies can use insightsfrom each market in whichthey operate to understand
what might appeal to consum-ers in comparable markets.One lens through which to seethese insights is that of the lifecycle of emerging markets: Theconsumption of staples likewheat reveals how consumerstastes change, following a pre-dictable pattern, as an economymatures (see Exhibit 4, page8). First, wheat consumptionrises (tracked here with the
data for China and India), thenit falls (China, Turkey, Brazil),and nally, levels off (Poland,Hungary). Companies that takea global view of their customerbase can track how demandfor their own products mightfollow similar trajectories.2Recognizing these similaritiescan help companies better man-age the tremendous demandfor resources in innovation and
take a long-term approach toleveraging the output.
Similarity of product charac-teristics across geographies,in terms of underlyingproduct formulation, processtechnology, or broader supplychain approaches, enablescompanies to leverage scaleglobally for activities suchas product development,
technology platforms,procurement, manufacturing,and logisticseven whenconsumer needs may vary. Forexample, atbread may take
the form of naan in India,tortillas in Mexico, and wrapsin the United Statesbutthese variations use largelythe same ingredients, servesimilar consumer needs, and
even share similar processingapproaches. Companies can usetheir knowledge of needs acrossthe value chaininnovation,supply chain, packaging,partnerships, and shelfassortmentto determine anddevelop the capabilities thatwill support a winning strategy.
Powerful global retailers thatdominate a particular categorycreate a need for global coor-dination in the areas of supplychain, customer management,in-store marketing, and prod-uct development (especially forretailer-specic SKUs).
Analysis of the characteristics ofa given category along these threedimensions gives an indicationof where in the value chain thebenets of global coordination aregreatest for a given category (see
Exhibit 5, page 9).
Analyzing a category along thesedimensions also provides guidanceas to the best management model.For categories that are composedof highly similar products andthat rely heavily on global brandsserving similar consumer demandcharacteristics across geographies,a formal coordination system withpowerful global category manage-
ment is generally most effective. Incontrast, categories with a rangeof highly diverse products mar-keted mostly through local brandsare typically best coordinated
2 Alonso Martinez and Ronald Haddock, The Flatbread Factor,strategy+business, Spring 2007.
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through lighter and less formalmechanisms. These may includecenters of excellence, which arepopulated with thought leaderswho research best practices in aparticular area and disseminatethem throughout the company, orvirtual teams, which are cross-functional, cross-geographic
teams that come together regu-larly to share information.
Although a categorys intrinsiccharacteristics are a keyconsideration in developing aglobal management structure for
that category, companies alsoneed to take into account theirstrategy in the category: Is thecategory mostly a commodity playfor the company, which wouldimply that category managementshould focus on cost efciency?Or are innovation and speed-to-market the top strategic priorities?
Is global expansion a majorgrowth avenue for the category?The answers to these questionsare crucial to determining thebest management structure andleadership style for each category
in which the company operates(see Seeking the Best Fit).
Defning the CompanysGlobal Management Model
Because the ideal globalmanagement structure mayvary from business to business,there is a real risk of developing
an overly complex operatingmodel at the corporate level,with a multitude of coexistingmanagement structures tailored tot the diverse needs of individualcategories. The key question here
Exhibit 4The Wheat Wave: Common Patterns of Consumption
Sources: Food and Agriculture Organization of the United Nations FAOSTAT, online database (19612003); International Monetary Fund, World Economic Outlook Database, April 2006;
Booz & Company
Normalized GDP per Capita
60%
60%
$0 $5,000
Survival
Quality
Convenience Customization
$10,000 $15,000
40%
40%
20%
20%
0%
Cumulative Change in Total Wheat Consumption per Capita19802003
China India Turkey Brazil Poland Hungary
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Booz & Company 9
Exhibit 5Opportunities for Global Coordination Across the Value Chain: Key Drivers
Source: Booz & Company
Consumer andshopperinsightsdevelopment
Breakthroughinnovation
Brand positioningdefinition
For global brands Messaging Advertising
strategy,marketingplatform
Digital mediastrategy andplatform
Platform/breakthroughinnovation
Productdevelopment
Processingtechnology
Raw material
procurement
Regional supplychain services
Productdevelopment forretailer-specificSKUs
Customerrelationshipmanagement
Corporatepricing/contractmanagement
Category advisory
Supply chainservices
Logistics
In-store marketing
Activities to Be CoordinatedKey Drivers
ConsumerInsights
SimilarConsumerDemand
Characteristics
SignificantGlobalCustomers
(Retailers)
Similar
Products
ProductDevelopment
CustomerManagement
Marketing Logistics
Manufacturing
andProcurement
Seeking the Best Fit
One large CPG company had a number of factors to consider in determining the best approach tomanaging a particular category. It was successful and well established as a player in this categoryin developed markets, but had virtually no footprint in emerging markets. Customer preferences,
occasions of use, and types of products differed signicantly from country to countrywhich wouldsuggest at rst glance that rollout of existing products to emerging markets had limited potential and
that there were few benets to be gained from global category management.
However, the company saw signicant potential for growth in emerging markets. Accordingly,it opted for a strategy that made the most of its strong innovation capabilities and was able to
introduce a game-changing product that would appeal to consumers across markets.
Even though the denition of the category itself was initially different between markets, the companychose to drive innovation centrally for the category. In doing so, it developed a product that
changed consumer habits and preferenceswhich enabled the company to create a protablecategory in emerging markets where it had not previously existed.
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10 Booz & Company
is the degree of coherence inthe portfolio: Do the categoriesand brands in the portfolio haveany signicant similaritiesforinstance, in consumer demand,technology platforms, or
distribution networks? Howmuch know-how can be sharedacross the portfolio? What are theexpectations about the differentbusinesses, in terms of growth andprotability around the globe?The answers to these questionswill identify opportunities tocluster categories together andmanage them accordingly.
Bringing together the portfolio-level and category-levelassessment of global managementallows a company to strike abalance between meeting theunique needs of individual brandsand leveraging major synergiesacross brands and categories. Theoptimal operating model has to bebased on a balanced considerationof both category requirementsand corporate priorities, withthe objective of avoiding
unnecessary organizationalcomplexity. When the analysis ofindividual categories suggests thedevelopment of a variety of globalmanagement models, the best wayto reduce complexity is to limitthe number of models coexistingwithin a given company and tokeep them separate.
For example, Nestl has optedfor a hybrid organizationalstructure with two major globalmanagement models (see Exhibit6). In the rst, selected categoriesare managed globally. Forinstance, the companys watersbusiness, which has productsand consumer preferences that
are highly similar from marketto market, benets from a globalmanagement model that allowsit to capture synergies acrossmarkets. In addition, the separateglobal management model
gives this high-growth businessthe management visibility andfocus it requires to thrive. In thesecond model, the traditionalfood and beverage categories,which typically show muchgreater diversity across markets,are managed by geography. Thishybrid organization recognizesthe diverse needs of individualcategories while limitingorganizational complexity. Such
balance is not easy to achievebut is critical to the successfulmanagement of a global portfolio.
Best Practices forSuccessful GlobalBrand Coordination
Through years of research and inour work with CPG companies,we have identied a series ofoperating principles that compa-nies typically employ to capture
the full benets of global brandcoordination and management.
Where the characteristicsof consumer demand andpreferences justify it, supportthe development of trulyglobal brands, as they can bethe greatest source of long-term value creation for aCPG company. Take a broadperspective regarding new
innovation that may shapeglobal demand without losingperspective on the underlyingconsumer dynamics in a region.Actively look for opportunitiesto expand strong existing
brands into new markets toleverage the important benetsthat global brand managementoffers and mere global categorymanagement does notsuchas coordinated marketing and
digital media platform sharing. Focus on the areas of the
value chain in which globalbrand management showsthe highest potential for thecompany, given the specics ofits portfolio and its strategicagenda. Rather than issuinga universal decree for globalbrand management, understandhow it benets the company ineach area of the value chain.
Assess the opportunity toestablish a global category-management structurecategory by category, basedon the degree of similarityof consumers and productsand the importance of globalbrands for a given category;there is no single best modelto be universally appliedacross categories.
Beyond structural lines andboxes, identify opportunities tocoordinate activities by facili-tating communication acrossbrands and markets along theentire value chain to leveragecross-category synergies.
Keep the organizationalstructure as simple as possible.In some cases, it may be betterto give up scale for the sake oforganizational simplicity andquick decision making.
Dene P&L accountabilityin close alignment withstrategic objectives, clearly
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Booz & Company 11
Exhibit 6Nestls Hybrid Category Management Model
* Previously FoodServices; provides solutions to food and beverage professionals
Source: Booz & Company
CEO
Nestl
Dairy SBU Coffee and
Beverages SBU Chocolate,
Confectionary,and Biscuits SBU
Managed through Three Geographic Zones Global Category Management through SBUs
Ice Cream SBU Food SBU PetCare SBU Nespresso Nescaf
Consumerinsights
Businessstrategydevelopment
Innovationmanagement
Brand equitymanagement
Food and Beverages
ZoneAmericas
NestlWaters
NestlNutrition
NestlProfessional*
Pharma andCosmetics
ZoneEurope
ZoneAsia, Oceania,
Africa,Middle East
Strategic Business Units,Marketing and Sales
Managed Globally
Other Categories
Innovation,Technology,
R&D
Finance andControl
HR
Central Functions
delineating the decision rightsof the various global and localteams to maintain speed indecision making. Dene whois responsible for the results ofeach business, and be carefulto ensure that the ownership
does not get fragmented amongvarious entities.
Establish streamlined processesfor coordination betweenglobal and local teams.
Align the incentive structurefor all teams involved with thechosen P&L accountabilitymodel to encourage thebehaviors that will strike anoptimal balance betweenglobal coordination and local
exibility. For example, in acentralized structure, employeesshould be encouraged topay special attention to theneeds of local markets; ina decentralized structure,employees should be rewarded
for efforts to share informationwith peers in other units.
If a companys portfolioincludes a diverse set ofbusinesses, all of which mayrequire different models, itshould consider clustering
them by their status as global,regional, or multiregionalbrands. Doing so will greatlysimplify information ows toand from the local markets.
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12 Booz & Company
The challenges associatedwith the coordination of ever-increasing numbers of productsand markets are real, but thepotential benets of global brands
and global category managementare considerable. There is noquestion that the majority ofoverall growth in the CPG sectorwill come from international
marketsand those that getthe formula right in terms ofmanaging that growth will seedisproportionate success.
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Printed in USA
2008 Booz & Company Inc.
BOOZ & COMPANY WORLDWIDE OFFICES
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