Banter Without Borders

Marketing Me Brands versus Performance Brands

 

In the current CNBC documentary on the Coca Cola Company entitled: "Coca-Cola: The Real Story Behind the Real Thing," the focus is Coke's urgent campaign to reinvent itself after years of losing ground to arch-rival Pepsi in the race to develop new blockbuster beverages. What makes the documentary particularly compelling is Coke managements' candid admission that they had taken their eye off the ball by becoming complacent and by living on the brand's past glory. With this mea-culpa came admissions of marketing blunders, the most famous of which was the "New Coke" debacle.

The year was 1985. Coke faced an onslaught by its archrival Pepsi, which was threatening to dethrone Coke as the leading cola brand with an effective marketing campaign called "The Pepsi Challenge." The campaign, which was featured on television, showed consumers preferring Pepsi's sweeter taste in blind taste tests to Coke, even among Coke drinkers. As an aside, these blind taste tests had consumers taking only a small mouthful of both Coke and Pepsi, rather than consuming a normal 8 or 12oz serving of each. Subsequent arguments have been made that with small servings, the sweetness level is more pronounced and responded to positively, whereas in larger servings, the aftertaste becomes more important. On this basis, many researchers believe larger serving tests would have resulted in an equal preference.

Facing this onslaught, Coke, under the leadership of its then CEO Roberto Guoizueta, began testing alternate formulas that were higher in sweetness level than the original Coke formula. This produced a formula which, when tested among both Coke and Pepsi drinkers, was preferred in blind taste tests to the existing formulas of either Coke or Pepsi. In a move criticized by many as one done in a state of panic, Mr. Guoizueta announced before a New York media audience that Coke's 99-year-old formula was being replaced by a new, sweeter formula, and it would be named "New Coke." The results were immediate and devastating. Consumers were outraged, and what followed was essentially a consumer rebellion. Three months later, Roberto Guoizueta formally announced the return of the original formula, renamed "Coke Classic."

As a marketer, what are the lessons to be learned from Coke's experience? Is it to never change the "original formula" of an iconic brand? Would Tide detergent, certainly an iconic brand, still be the market leader if Procter & Gamble had not continually updated and improved upon its original formula... and aggressively marketed these improvements? Wouldn't most leading brands have languished if they had not kept constantly improving their consumer experience, and marketing these improvements? Certainly the answers in most cases would be no. One could argue that developing a formula that beats both your current formula and that of your competitor, as Coke did, is a win. Traditional marketing would encourage you to generate trial of this new formula, and watch your brand share grow. So, what makes Coke different?

Coke is a "Me" brand. So is Budweiser. So is Marlboro. These brands, and brands like them, are "Me" brands because they are part of "My" self-image and reinforce who I am, much as a designer label does. If you change these brands, then you're trying to change me ... and I may not want to change. Subsequent research by Coke revealed that they had totally underestimated the emotional bond that consumers had with their brand. They realized you needed consumer permission to make changes to their "Me" brand. 

In contrast, Tide and most other packaged goods brands are "Performance" brands. These brands don't require permission to make changes. In fact, consumer demands dictate that changes be made continually to improve performance, or they will seek out other brands that they perceive to perform better. You can establish trust and loyalty with these brands, but very seldom are there the emotional ties associated with "Me" brands. However, whether you are marketing a "Me" brand, or a "Performance" brand, you must view these brands through the eyes of the consumer. You may own the brand, but your consumers are stakeholders, and as stakeholders they have definite expectations. and as we've seen with Coke, they may even have an emotional bond with the brand. Understanding these expectations and the extent to which there is an emotional bond can give you permission to make changes, but in their absence, you run the risk of creating the next Coke debacle.

Globalization's Tribulations: Old (Cultural) Habits Die Hard

One of the consequences of the recent economic downturn is that more and more companies realize they can no longer continue to grow their businesses successfully on domestic turf alone. In writing of the Japanese pharmaceutical industry, a recent Financial Times* article states: “With diminishing prospects at home…companies have little option but to scour the globe for richer pickings.”  While I do find the notion of Japan manufacturing ‘fat-busting’ products for its rotund Western customers a bit tongue-in-(plump) cheek, it is nevertheless a compelling sign of this trend in action. Whether through shrinking populations, as in Japan’s case, or shrinking earnings figures and GDPs, companies from Bentonville to Bangalore are, more than ever, “[taking] the fight abroad.” For those of us in the global coaching and consulting industry, it signals cultural challenges and tough times ahead.

As businesses expand their operations through various means (M & A activity, joint ventures and the like), they must resist the temptation to fixate solely on the financial picture.  Although this seems obvious, the spate of recent articles on the lack of global mindset and proper attention to cultural context and human capital factors would have us believe otherwise.  In the Harvard Business Review*, Rosabeth Moss Kanter discusses successful mergers, and outlines the importance of attending to the cultural and emotional facets of a transaction in order to “create real value.” In her eyes, “a deal is never a bargain” when these all-important factors are shortchanged.

Similarly, the title of an editorial in last week’s Nikkei Weekly*, “What Good is Globalization without Global Perspectives?”, effectively describes the many frustrations of UK companies who have been operating in Japan, stymied in their attempts to reach across the cultural divide. It is a striking example of how, even when the aforementioned factors are taken into account, and even with thorough due diligence  – and who better for assiduous information gathering than the Japanese – putting globalization into practice is far easier said than done. Old cultural habits die hard.

From the unfolding Kraft and Cadbury drama, where the merging of two major US and UK business cultures is at stake, to the countless discussions as to whether the cultural differences of East and West Germany have been reconciled successfully since the fall of the Berlin Wall, signs of the difficulty in managing cultural interactions are nearly impossible to ignore. With the world’s economic future still uncertain, and companies ramping up their overseas efforts, we can at least be sure of plenty of intercultural activity on the horizon.

* http://www.ft.com/cms/s/0/72688fb8-c9ab-11de-a071-00144feabdc0.html  

* http://hbr.harvardbusiness.org/2009/10/mergers-that-stick/ar/1

* http://www.nni.nikkei.co.jp/e/cf/fr/tnw/weekly_index.cfm?Keisai_dt=20091026

Global Relocation: Executive Challenges

Contrary to Thomas Friedman's mantra of yore, the world is not flat. In fact, as the Financial Times commented in an August 28th editorial entitled “Rough and Smooth,”* “reality is more messy. Recent history is littered with tales of CEOs from one culture who, for whatever reason, have not stayed the course when put in charge of a company with deep roots in another.” Stuart Chambers aptly phrased it when he resigned as head of Nippon Glass: “I have learned I am not Japanese.”  

What executives must grasp is that the behaviors and attitudes that got them to the top in one culture would not necessarily translate when they assumed control of a company in another country. Culture does matter, and on several levels. For executives to succeed in crossing cultures, they must realize that the greatest attribute they bring to the table is not their previous successes or reputation; in fact, these can hinder their effectiveness in a new market. Their greatest strength in moving to a company in a different country is their ability to be nimble and adaptible, open to events as they unfold. As the Financial Times article concludes, “…there is no template for how to run an Asian business – or, for that matter, a British, French, or Russian one. Running any business requires political savvy and managerial flexibility, going outside one’s comfort zone simply requires a double dose. Different business cultures are there to be navigated, not flattened into mush.”

Every culture has its own set of values that govern not only management styles, but all aspects of business, from advertising & marketing to sales to R&D. And, the range of stakeholders, their attitudes and their issues may be quite different from anything the executive had previously encountered. Laws and regulations, investor relations, unions, employee behaviors, and corporate structures are seldom identical from one culture to another, and they seldom exhibit any degree of flexibility in the short term. So, it falls to the executive to be able to adapt to a very different environment if he or she hopes to achieve any degree of success in a foreign company.

Often, however, it is not the above-mentioned workplace related challenges, but the family issues that force an executive either to refuse a lucrative overseas position or to abort it. Family relocation issues can, for example, undermine the effectiveness of an executive when his loyalties and time are split between his family in one country and the company in another. The Japanese media often attacks Sir Howard Stringer for not spending enough time in Sony’s head office. Indeed, the importance of the family's success in managing the overseas move was given top billing in a recent Harvard Business Review* article on the subject. Simply put, "You can't be successful in your new role if your home life is in chaos." So obvious, yet so often overlooked.

Corporate boards of directors are surprised again and again by the failure of CEOs who have not succeeded in running a foreign corporation. The onus is on them, the board members, to be diligent in their search for the right executive, one who has not only the name recognition (the “his PR precedes him” syndrome) or the technical skills, but also an attitude of openness and flexibility, a satisfactory family situation, and a willingness to learn about new cultures. While that may seem an overwhelming task for a board, the consequences of not doing the requisite due diligence in their search can be even more daunting. However, finding the right executive for the right job with the right skills for a particular company and culture can send the company to new levels of success.

*http://www.ft.com/cms/s/0/673ce6aa-9406-11de-9c57-00144feabdc0.html

*http://hbr.harvardbusiness.org/2009/10/three-keys-to-getting-an-overseas-assignment-right/ar/1

Non-Verbal Communications Are Not Universal

Dollar Is Down, Exports Are Up: Cultural Considerations of Exporting

Cupcakes and Cashmere: Stalking Cultural Preferences

Whether it’s cupcakes in Doha or sushi in Warsaw, following cultural trends and ever-evolving cultural preferences will forever be one of my favorite pastimes.  Such inclinations are of interest as reflections of their surroundings, economic and otherwise. Although not ‘big ticket’ items, the sudden appearance of cupcakes in the Middle East, sushi in Eastern Europe and fine chocolates in China are new tokens of luxury in select burgeoning economies and segments thereof.  What is of greater significance to me, though, is what has happened to the luxury market in Japan, and how this has affected both consumer thinking and its cultural manifestations.

 Much has been written about changing consumer spending habits in Japan (see Carrefour post below), as the country’s collective belt has been tightening for a considerable period of time.  The early proliferation of ¥100 stores in the post-bubble 1990s was perhaps an early indicator of an emerging trend in shopping, which until then had generally eschewed bargain hunting as a cultural sport.  Now, such shops with names like Seria, Watts and Don Quixote are as ubiquitous in Tokyo as tea vendors, and cheap chic is now not only acceptable, it’s downright trendy.  The country’s ailing luxury sector, meanwhile, has been steadily eroding, evidenced by plummeting department store sales, and punctuated by Versace’s complete withdrawal from the Japan market last week.

This is all music to the ears of companies like Fast Retailing (of Uniqlo fame), H & M, and Forever 21.  They, like many others, have been ‘recession ready,’ and are now all battling for supremacy on Japan’s legendary fashion battleground, with jeans at $10.00 and cashmere sweaters of decent quality at eye-popping prices. For even as the country’s luxury market suffers, and one can conjure up a picture of austerity and restraint in a culture known for embracing stability and resisting change, Japan is at the same time one of the most cutting edge trend-driven places on earth. Thus, its new economic realities have simply presented new challenges for its trendmeisters, whether in food, fashion or tech devices and beyond.

As buying on the cheap continues to evolve from ‘hazukashii’ (embarrassing) to virtuous and even cool, it will be exciting to monitor the manifestations of this cultural trend in Japan, along with others across the globe. Now if only flying to foreign cultures were as inexpensive as those Uniqlo jeans………

The Death of the Brand Manger

In the October 12, 2009 edition of Advertising Age, Jack Neff posted a column entitled "Why It's Time to Do Away with the Brand Manager." http://adage.com/cmostrategy/article?article_id=139593. I was shocked...yes, shocked! How could this be? Having grown up in the golden age of "brand management," it was universally accepted that a centralized manager was needed to oversee all aspects of the brand including: a point of consensus, how initiatives were executed and overall accountability. This was the central core of consumer marketing; the hub of the wheel, if you will.

Through all this, the "gold standard" in brand management was and has been Procter & Gamble. Impervious to change over the decades, P&G has been the stalwart of maintaining the status quo, at least in the concept of brand management and its function. And so how does Neff's opening sentence begin? "Managing a brand has always been a slightly odd concept, given that consumers are the real arbiters of brand meaning, and it's become increasingly outmoded in today's two-way world." What? What is a two-way world? What does P&G think of this, or Unilever or other global marketers? Well, as it turns out, they're embracing it...yes really. They're embracing the new concept of "brand advocate" as opposed to the historical concept of "brand manager". So what does this mean? Have I been wrong all my working life, or at least most of it? The answer is "no," but going forward it's "yes," I guess. What's changed?

What's changed is "Digital." In a report issued by Forrester Research entitled:  "Adaptive Brand Marketing: Rethinking Your Approach to Branding in the Digital Age," Forrester suggests... strongly suggests...that the brand manager of today will need to become much more consumer-centric, more nimble and more real-time focused. Digital now has allowed marketers to get to the "Holy Grail"...one-on-one marketing and an opportunity to create a direct dialogue with the consumer. And, that requires different skill sets and a different marketing organization set-up.

From the perspective of the global marketing director, (i.e., the super brand manager), this presents a paradox...more interaction with the consumer in local markets and rapid adaptation of local marketing initiatives by local marketing teams to better adapt to the consumer's needs. Rapid-fire analysis and immediate execution becomes the norm. But, this will have to be balanced with the need to control global brand equity and strategy. Global team building will take on new dimensions and the communications process between the global marketing director and team members will need to be streamlined; think virtual communication. Welcome to the digital world, and congratulations, you are no longer a brand manager; you're now a brand advocate.

Cross Cultural Communication: Global English...Say what?

On a recent cruise throughout Greece and Turkey, I was surprised to find that the entire crew, from various parts of the world, used some form of English to a greater or lesser degree. Many of them had learned English in school, while others had taken classes before finding employment with the ship. All of the employees had varying levels of English. While I found it easy to communicate with them, my untrained traveling companions did not. This led me to ponder the use of English as an International Language (EIL) - a burgeoning field brought on by what I would say is the accelerated globalization of the 21st century.

At the corporate level, EIL is necessary for globalization and outsourcing. Countries like India and China are increasing their use of "global English" in order to do business - a tempting offer for many Fortune 500 companies. The concern here is whether or not companies stateside understand the importance of EIL and the difference between it and their version of American English. To be sure, global English is not American, Canadian, Australian or even British English; it is a hybrid all its own. As transnational companies move into China, Africa and South America, the demand for English speaking skills is on the rise for non-native speakers, and they are learning as fast as they can. For our part, the key is to be aware of native speakers' use of idioms and the speed at which they speak; otherwise it is not conducive to successful ventures or well-formed intercultural relations.

Over the years, I have often been called upon to assist with pronunciation and English acquisition for non-native speaking employees at various corporations. In one instance, I distributed a twenty page handout of common business idioms in a feeble attempt to help these employees "get up to speed". In another case, most of the employees had been with the company for 25 years, and still their American coworkers claimed that they couldn't understand them. In the past, that would do because that was the norm.

Have you ever noticed, though, that it seems easier for German and Chinese coworkers to speak English together and to understand one another than it is for them to understand their American or British counterpart? Native speakers tend to use slang and reductions in speech because they are comfortable in their environment, and they "have the home court advantage". Comparatively, non-native speakers use much more ‘bookish' or formal language. Consider the amount of acronyms, abbreviations and idioms used in the office on a daily basis. They are all within a cultural context that is understood by most Americans, but completely foreign to international employees. For example: They "get a project off the ground." They don't call each other to discuss progress, they "touch base." Later, if the project is not going well, they don't end it, they "pull the plug." Such colloquialisms cause no end of confusion for multinational employees who are not well versed in that particular jargon.

It is time for native speakers to consider the idioms and slang they use and return to a more standard grammar, at least when interacting with non-native associates. If native speakers would only take the time to speak simply and directly, a lot of miscommunication could be avoided between native and non-native coworkers. This may sound inconvenient at first, but second language speakers moderate their speech and code switch without thinking. I believe this, too, will be the norm once a little attention is paid to how employees speak in certain situations.

Raising the awareness of native speakers can be a difficult problem. Native speakers tend to feel that if a person speaks their language, they automatically understand the native speaker's culture and expectations. This is sometimes referred to as "linguistic imperialism," and it can have very negative effects on meaningful communication between two speakers of English who come from different cultural backgrounds. This is not to validate imperialist notions that English is the better language. On the contrary, it is a call to be more aware of how we use English in conducting business and how it can make or break a deal, a global team, or successful negotiations.

I believe that spending money on ESL classes for employees is money well-spent. Spending money on native speaker sensitization is better spent. It will cut your bottom line, save money, guarantee a better ROI and, quite possibly, happier employees.

To read more on this topic visit:
Better Business English - A Proposal, by Kenneth Beare
http://esl.about.com/library/weekly/aa101899.htm

Kraft and Cadbury: Cultural Meltdown or Company Showdown?

Reading all the recent banter about Kraft and Cadbury not only unleashes my undying sweet tooth, it also gets my cultural molecules spinning. This potential acquisition, written about almost daily in the past few weeks, involves far more than simply the wisdom of connecting two companies. For one thing, on a personal level, it arouses passionate debate by virtue of its connection to chocolate, that addicting and magical substance which has captivated us for centuries. Taste, so much a part of our emotional and cultural DNA profile, is significantly shaped by our surroundings, as any global marketing team will attest. Nations do, in fact, have their own very distinct chocolate preferences, some of them surprising.  Judging from all the ruminations on the hugely nostalgic powers of Cadbury, and the attendant bashing of Hershey's, the brand Cadbury aficionados love to hate, the U.S. and U.K., never mind Kraft and Cadbury, could probably go to battle on this culturally sensitive matter alone.

Indeed, cultural preferences are at stake here, but so are corporate culture differences. How ironic, then, that Cadbury is now headed by Todd Stitzer, a "preppy New York lawyer,"* in the words of a Financial Times writer. Nevertheless, its company culture continues to run deep, and like so many organizations who entered early in the chocolate industry -- Fry's, Rowntree, and Hershey's as prominent examples -- its roots were philanthropic, perhaps further feeding into the nostalgia factor. Kraft, meanwhile, whose "tanks rolled on to Cadbury's well-tended Bournville lawns,"* is viewed as the U.S. behemoth ready to devour Cadbury's, despite recent rebranding efforts and cries to the contrary. There is a bright spot, though, and again, an ironic twist. Under Stitzer's reign, with one of the company's factories in Keynsham, England, about to shut down and move to Poland, and with Kraft promising to keep it open if the acquisition materializes, there are some in the U.K. now hoping the "white knight" from across the pond will in fact prevail.*

With rumors swirling about almost daily as to new tactics, potential suitors and sweeter offers, this emotionally and culturally infused topic will be one to watch closely -- perhaps with some "neutral" Swiss chocolate in hand.

*http://online.wsj.com/article/SB125245727048594365.html

*http://www.ft.com/cms/s/3/756b0108-a752-11de-9467-00144feabdc0.html

*http://www.ft.com/cms/s/0/2554c0f2-a322-11de-ba74-00144feabdc0.html?nclick_check=1

 

 

Japan's Election: Ties to Culture -- and Aliens?

There is nothing like a national election for a close-up view into a culture's soul. Whether in the business of global coaching and consulting or intercultural talent development, where obvious links are apparent, or in areas where such connections are more subtle, elections re-align and refresh our focus as we examine the way a country operates both domestically and with the world at large. Japan's recent election of its new prime minister, Yukio Hatoyama, provides such an opportunity.

1.The Land of the Rising Sun is famous for its risk aversion and reluctance to change. Thus, the significance of selecting a prime minister from a party other than the decades-old incumbent LDP, not to mention a prime minister nicknamed 'the alien,' might seem groundbreaking. On second glance, when learning of his rather non-traditional marriage to an eccentric wife -- an actress and 'alien' in her own right, who "travelled to Venus in a U.F.O. in the 70's"* and had a mental rendez-vous with a Japanese Tom Cruise (!) in a former life -- this event borders on the downright bizarre. Upon a closer look, though, this all falls very much within the Japanese cultural fold. For one thing, as the grandson of a former prime minister and former LDP member, Hatoyama isn't exactly a renegade. [In a recent Reuters blog post, in fact, a photographer laments Hatoyama's utter lack of flair and charisma, significant in a country where public persona is everything*.] As for his wife, her non-conventional behavior and peculiarities highlight a distinction in Japanese culture. While change itself may not be embraced as quickly as in the U.S., for example, eccentricity is tolerated and is not unusual at all. As a New York Times blog states: "Ms. Hatoyama, 'a musical actress, cookery writer, clothesmaker and television personality,' is given a sort of free pass by Japanese voters because she falls into the category of public figure known as ‘tarento,’ or ‘talent,' who are expected to be kooky."

2. The huge growth of Japan's 'silver haired' population in proportion to its younger citizens has now put a distinctive stamp on its culture. Changes in the country's workforce dynamics, with possible diversity-related implications for the future, and shifts in family structures, with the growth of '3G' family living arrangements, are but two examples. There is no denying that this past election was very much about Japan's seniors flexing their political muscles.  As Michael Zielenziger points out in the Nikkei Weekly, Hatoyama's campaign was targeted to older voters, who cast far more votes than their 20-something counterparts in this and previous elections. This lies in direct contrast to the Obama campaign's aggressive marketing to America's youth vote. Through adroitly using Japan's election as an effective primer for those who wish to penetrate the country's market, Zielenziger advises companies to keep Japan's demographics in mind, for "as Japan rapidly ages, the elderly have the disposable income, the political power and stay longer on the job.*" Global marketing teams: take heed.

3. The all-important issue of relationships and their carefully cultivated networks, so much a part of Japan's cultural fabric, certainly played a key role in Hatoyama's triumph. [How else to explain this historic victory with such a lackluster public figure?] It would be nearly impossible to imagine anyone from the outside coming in and breaking through this tightly knit circle of networks and into the political arena, no matter how powerful his or her platform. This all-pervasive aspect of conducting any sort of business in Japan, political and otherwise, is not about to change any time soon. The primacy of "relationships over ideas," also mentioned in the Nikkei Weekly article, is often hard for foreigners to accept, and the cogent example is given of attempting to enter the Japanese market with a "hit product," only to be stymied by the country's impenetrable barrier of age-old distribution networks and accompanying reluctance to "disrupt the traditional order."

With so much attention now focused on Japan in its post-election phase, questions surrounding its relationship with its Asian neighbors, China in particular, with the U.S., and with the world in general, will continue to be on our minds. How the country's culture figures into the answers, and how business will in turn be impacted, will be surely interesting to watch.

                                                      

                                                    

*http://blogs.reuters.com/japan/2009/09/08/farewell-to-photogenic-aso/

*http://thelede.blogs.nytimes.com/2009/09/03/japans-new-first-lady-not-from-venus-was-only-visiting/

*http://www.nni.nikkei.co.jp/e/fr/tnw/