«Roberto Lobl, IBOPE Media Geoff Wicken KMR Group, London, UK Polly Carter, BMRB, London, UK Preface The BRICs markets – Brazil, Russia, India and ...»
The strategy of category flooding can also be seen to work in India. Taking the toilet soap category as an example, Unilever has Liril and Dove in the premium sector, Lux as a midrange brand, and Lifebuoy in the budget sector. The chart opposite shows the notable strength of the upscale Dove in SEL Group 1, the bias of Lux towards SEL Group 2, and the lower bias of Lifebuoy towards SEL Group 4.
By segmenting the category in this way, Unilever has – taking the performance of these brands together – become market leader in toilet soaps in India. This is also the case in laundry detergents where again Unilever offers brands in each of the three sectors at different price points, and leads in each one.
China is a particularly complex market. The number of brand variants and price points can be large. Brands are stretched in order to allow different product attributes, and cater for people in different economic segments. It is a strategy driven by competition too. Premium brands often find themselves attacked by competitors addressing the middle-market, requiring the development of cheaper variants as a defensive strategy.
To avoid damaging the image of the premium brand, the variants need to be made distinctive, in ingredients, packaging, placement, pricing or several of these.
Most multinational companies active in China operate a tiered approach to market development. They look to develop their products initially in the first tier of the largest cities in which per capita GDP is highest – Beijing, Shanghai, Guangzhou and Shenzhen. Thereafter they seek to move through the tiers – via the 27 cities in the second tier, to the 41 cities in the third tier and the 594 cities in the fourth tier. After this there are the rural areas in which the majority of the population live.
As one moves through the tiers, disposable income is lower and values are more traditional, which brings a need to localise not only the product but also the strategy.
Localising the offer One of the conclusions we reached from our exploration of comparative attitudes across the BRICs is that consumer values in China and India are the most distinctly different from western ones. Of the four BRICs, Brazil can be considered the most westernised. Russia lies somewhere inbetween.
Thus for brand strategy purposes, localizing the offer can be another very important route to success. This is especially the case in China and India, but it can also be appropriate in Brazil. There are few examples in Russia.
Brazil The more affluent classes in Brazil are quite highly westernised in behaviour and buying habits, so global brands can often perform well. Indeed, selling the same version as in Paris or New York can add significant value to a brand.
For the majority unable to afford the more expensive international brands, global companies will often localise their portfolio by developing special products or alternatives. Product variants, ranging from soy milk to soap for washing clothes, address the less affluent at budget prices.
Eight of the top 10 brands in Brazil are internationally-owned. (See chart).
These include some very familiar names, including at number one Coca Cola, with 41 million users or 68% of the measured population. All these brands have very successful broad appeal.
Russia There are few if any examples of a localised or ‘indigenous’ offer being necessary for success in Russia.
Some companies have adjusted production to introduce new flavours which, while not strictly speaking indigenous, are designed to appeal to Russian taste patterns. Bran and berry flavours feature in yogurts from Danone; cranberry is popular, and is used in Finlandia vodka and in Schweppes soft drinks.
For the most part however, the sector of the market ready to buy international brands is sufficiently westernised not to require indigenous products. Their main demand is for standardised international products. This group’s eating habits are becoming more international, as more varied options become available in the food sector. Their greater level of consumer activity of the more westernized ‘innovators’ makes them the core target for most products. The long-term potential lies in marketing to this group.
Traditionalist consumers are used to traditional products from traditional Russian companies. If an international company tries to offer a new product, which will usually be higher in price than Russian companies’ products, this group is unlikely to consume it.
At present most of the brands with largest numbers of users are Russianowned, including seven of the top 10. (See chart).
India Localising the offer has proved successful for a number of companies in India. For example, Frito-Lay have also adapted flavours of potato chips to cater to local tastes – such as a mint chutney flavour. Also they have taken the concept of typical Indian snacks and created a snack brand called ‘Kurkure’ (which means crunchy in Hindi). Here we see the top brands in the Sweet and Salty Snacks category in India, illustrating the success of this approach.
Nestlé too has created a range of products, such as flavoured ketchups and sauces, catering to local tastes. Nestlé have also built a huge Instant Noodle brand in India, with the best-selling flavour being Indian masala. This is a non-Indian snack concept but with Indian flavours.
Unilever have a large ketchup and tomato sauce business, under the name of Kissan, which also features a tamarind and tomato flavour. GSK have a large malted drinks business in India with the Horlicks brand, which has Indian flavours such as Elaichi (cardamom). Cadbury’s have launched chocolate treats under the Dairy Milk brand, with Indian sweetmeat (kalakand) filling.
In fact Maggi Masala instant noodles from Nestlé appears among India’s top 10 brands overall alongside five other internationallyowned brands, including Pepsi, Coca Cola and Unilever’s Brooke Bond/Lipton tea. (See chart).
China In China too there are many examples of how localising the offer for consumers can bring success.
P&G’s success in the toothpaste category has been based on this approach. It created Crest Salty Toothpaste (salt in China is known to be good for whitening) as well as Tea Flavoured Crest Toothpaste (the Chinese believe that drinking tea eliminates bad breath).
Frito-Lay has met with success in China too by adapting products to local tastes. Cheetos are ‘cheeseless’ in China, where its flavours include ‘Peking duck’.
The concept of balancing Yin and Yang is behind ‘Cool Lemon Lays’ potato
chips. Matching hot weather with hot-flavoured products would not work:
this product therefore combines lime and mint flavours into what is promoted as a cool refreshing taste for China’s hot summer.
Haagen-Dazs produces Green Tea ice cream for the Chinese market.
Eight of the top 10 brands in China are internationally-owned: P&G’s Safeguard and Rejoice, Colgate and Crest in toothpaste, Coca Cola and Pepsi in colas, Wrigley’s Doublemint chewing gum and KFC. These illustrate a mix of standardised and localised brands provided for voracious Chinese consumers.
Unique cases or bellwethers for a region?
The BRICs markets are all huge in their own right. But should they be considered as bellwethers for parts of the world, around which regional strategies can be constructed? Our view is that, in three of the four cases, this approach does not make sense. China, India and Russia all present so many unique challenges that they need to be considered individually.
Brazil however might be said to represent Latin America. In many respects there are more similarities than differences. All Latin American countries use the same alphabet, and although Portuguese and Spanish are not the same language, they have similarities. Also the historical, ethnic, cultural and religious background in Latin America is homogeneous.
These Target Group Index examples show commonalities between the values and attitudes of Brazilians and other Latin Americans, as compared to people in the other BRICs countries.
The use of the term ‘Latina’ in the charts refers to the combined Target Group Index data from Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Venezuela.
We can see that the relatively modest desire of Brazilians to stand out in a crowd (previously referenced on page 12 ) is also seen across Latin America as a whole. Also the love of music is expressed more strongly everywhere in Latin America than in the other BRICs.
An example of a brand that has established a powerful presence across the Latina America region is Absolut vodka. Its penetration among vodka drinkers is shown opposite.
A recent example of a brand following a regional strategy that is working in Latin America is Natura.
Natura is a Brazilian cosmetics manufacturer employing a direct sales system through local representatives. Their brand is closely linked to nature, natural products, ecology, environmental concerns and sustainable development. Environmental concern is a specific BRICs value, with high levels of awareness for Brazil as well as the other Latin American countries.
Natura is expanding its product line and sales system to other Latin American countries using the same brand attributes, and so far has been successful in the region. Its user base across the four markets of Brazil, Argentina, Peru and Chile has shown sharp growth of around 50% over three recent reporting periods.
This kind of success suggests that the application of regional strategies in Latin America can bear fruit. What works in one market may also prove successful in others across the region.
Conclusions The unifying factors of the BRICs are their sheer size – overall their populations represent 43 % of the people of the world – and their potential. With their dramatic economic growth rates, the number of potential consumers for brand owners will continue to increase rapidly.
International companies seeking to achieve growth with their global brands have to be interested in them.
With regard to the marketing and promotion of international brands however, it will not generally be possible to apply any “one size fits all” strategies to each of the markets.
Global advertisers will experience the widest divergence from international ‘norms’ when tackling China and India. Here the differences from their familiar territories will be greatest.
Brazil is the most westernised of the BRICs markets, and of the four is the one most closely associated with developments in its overall region. Some brand owners use it as a ‘bellwether’ for Latin America as a whole.
Russia lies in-between these poles and has its own secrets. Some elements in its consumer society are very welcoming to western brands; other elements are much opposed.
Historically, globalisation has been led by western brands, and the movement has depended upon the spread of western values. But if globalisation is to spread more deeply in the BRICs, brand owners must deal with the limits of western values.
Brand owners who wish to develop in the BRICs will have to devise product and marketing strategies to cover four markets that have very different culture and value sets. Category flooding, that is, putting multiple brands into the same sector at different price points, is one strategy that has proved successful. Another is localising the offer, in other words adapting the brand to fit local tastes.
Designing a brand strategy to meet the demands of each of the BRICs is a difficult task, all the more so when the considerations of marketing to western audiences also have to be applied.
In attempting to extend globalisation in this way, the challenges for brand owners are enormous.
But so are the potential profits.
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