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International branding – understanding local conventions to enter new markets

In this article for the Identity magazine, we explore how local conventions influence branding strategies (conventions are unwritten rules that govern consumers’ perceptions of products and brands). One of our main conclusions is that brand managers should examine the nature of local conventions in order to understand how solid they are. When a convention is undergoing erosion in consumers’ minds, your brand has an opportunity to challenge it. By challenging a convention you can differentiate your brand from local brands and offer a new distinct value to consumers. Another conclusion is that providing consumers with new experiences can bring more succes in a foreign market that adapting current values of your brand to match local competitors. Read the article “International branding – understanding local conventions” below.

International branding - entering new foreign markets

Local conventions determine consumers’ perception

When a brand enters a foreign market, it needs to pass through a number of filters that determine how local consumers perceive comparable brands. These perceptions often differ from consumer preferences in the brand’s home market. The brand manager needs to understand these differences. Otherwise they can cancel, distort or reduce important elements of your brand.

There are hundreds of factors influencing consumers’ perceptions. In this article we will use a logical framework from the book “Global Brand Strategy” written by Sicco van Gelder. This framework divides factors influencing perceptions of brands in three types: category conventions, needs conventions and cultural conventions. The word ‘conventions’ stands for unwritten rules that govern people’s perceptions of and decisions about a brand. When a convention is considered to be solid, consumers are unwilling to accept an alternative. This decreases  chances to successfully introduce a new brand on a local market. When a convention is flexible, it is undergoing development or erosion in consumers’ minds. And this offers opportunities for foreign brands to enter a local market.

Understanding and using these conventions will help managers of international brands to successfully penetrate new markets, and managers of local brands to successfully defend their market position from intruders. We will use our own experience with international branding and examples from many countries to illustrate how various types of conventions (1. Category, 2. Needs and 3.Cultural) can influence perception of your brand.

01 Category conventions

International branding - beer in plastic bottlesIn every product or service category, there are customs and unwritten rules that most players comply with. For example, why would Dutch or German beer drinkers reject the idea of drinking their brew from a plastic bottle? What is the value of a glass bottle to them? May be, there is no value and they are just used to drink beer from bottles made of glass? This type of category conventions is determined by the major players in a category in response to internal production or logistics requirements. And not in response to consumer needs. Smaller brands often attack these conventions to increase their market share. For instance, the Dutch brewer Dommelsch recently introduced its Dommelsch Ice beer in plastic bottles. These bottles are quite useful in concert halls and on music festivals, where glass is prohibited.

There are three sorts of category conventions – conventions of representation, of product experience and of media. Let’s have a closer look at two of them. Conventions of representation describe how and where a brand portrays itself. They consist of such factors as advertising, packaging, brand name and logo. Conventions of representation often reveal consumer preferences, less obvious to foreign brand managers. For instance, dairy products in Russia, Ukraine and Belarus often have packages and logos that contain references to local traditions and legends. The package communicates that the product inside is manufactured according to traditional production methods. In Western Europe, many dairy products have abstract logos and 1 or 2 colors on their packages, as they want to increase recognition of their packages on supermarket shelves. In order to protect its market from foreign brands (such as Danone and Campina), small Belarusian companies like Kletskaya Krynachka (Клецкая крыначка) use local legends and national flag colors on milk packages. The packages appeal to patriotic feelings of local consumers and position local diary products as “biological, natural, pure” as opposed to the “synthetic and full of chemicals” food produced in the West.

International branding - local fresh market in UkraineConventions of medium concern the way a brand is delivered, both physically and emotionally. This includes distribution as well as brand communication. The conventions of medium govern which media channels are considered to be appropriate for brands within a category. They also govern the choice of distribution channels. Western supermarket chains have found that challenging distribution conventions in Eastern Europe can be very difficult. For instance, the conventions governing distribution of fresh groceries – consumers tend to shop for fresh fruit and vegetables on the local market – are much more durable than was expected.

Category conventions are often the first to be challenged by international brands, as these conventions often lack demand-side logic. In addition, they are easier to observe and recognize than other two types of conventions discussed in this article.

02 Needs conventions

The second type of conventions is needs conventions: consumers obtain their brand experience with an eye to their personal needs. The needs conventions determine how needs are manifested. Although a particular need may be common to all people, it may be satisfied in a different manner in different societies. For example, a basic need for breakfast may be met by eating sandwiches with a cup of tee in Russia, eggs and toasts in the UK, rice and fritters in China, a muffin and a cup of coffee in the United States. In this article we will use examples of security needs and social needs to better understand how needs conventions influence consumers’ perception of brands.

Security needs include our needs for safety, protection and certainty. Although basic security needs involve protection from physical and mental harm, their definition can differ between countries. A good example is the road safety. German drivers trust properly functioning brakes to ensure their safety, while French drivers prefer a powerful engine. There seems to be no or very little interest in road safety in Russia or Ukraine, as local consumers tend to believe in destiny – “if you are destined to die in a car accident, you will die in a car accident regardless of security measures”. So, if you work for Volvo and your company introduces a new car brand on the Russian or Ukrainian market, you will have to find other advantages than the highest security standards.

International branding - fair trade fashion brandSocial or affiliation needs are our needs for belonging to a social group and feeling right. Sometimes these needs can be quite universal. This is one of the reasons why such brands as Nike, Harley Davidson and Kuyichi are so successful in various countries. Nike has managed to be in fashion for so many years. Harley represents the universal need of middle-aged men to feel free. Kuyichi is a brand that creates fashion collections complying with Fair Trade principles by paying more to local producers who adapt their working conditions to international standards, and by using organic materials and ecological processes. 5 years after its launch, Kuichi is selling jeans wear in 14 countries through more than 650 stores. Kuyichi achieved this success by appealing to our need to make our own contribution to the better world. When people buy Kuyichi jeans and t-shirts, they support local producers and durable economies in developing countries.

Examples of Nike, Harley Davidson or Kuyichi do not mean that local brands should give up their attempts to attack global brands, which are good at spotting universal social needs. A good example of using social needs (and attacking conventions of product experience) is success of the first Russian blockbuster Night Watch (Ночной дозор). Russian teenagers believed that really cool movies can only be made in Hollywood. The Night Watch producers disagreed with this convention, and convinced Russian teens that their blockbuster is at least as cool as the Hollywood ones. Their message was very clear – if you haven’t watched the movie, you will be absolutely unable to converse with your school friends. And nothing will help you, not even the latest model of Nikes. Of course, the success of Night Watch can also be explained by cultural conventions – Russians love fantasy novels and magic stories.

03 Cultural conventions

The third type of conventions is cultural ones. Culture is a system of shared beliefs, values, customs and symbols that members of a society use to deal with their world and with one another. Each society develops specific cultural conventions, which influence the way its members are supposed to think and behave. Branding strategies and activities are also viewed by consumers in the context of local cultural conventions.

For instance, different societies have various beliefs about the world. The most typical example is the so-called country of origin effect. Consumers often have a set of beliefs or myths about a country that can have a positive or negative influence on brands from this country. For example, Germany is often associated with engineering excellence, France with romance, Italy with design flair, China with low quality products and so on. According to the Nation Brands Index, Russia is associated with reach culture, not to be trusted government (due to 30 years of the Cold War), very bad investment climate (due to the Yukos and other affairs), and oil, weapons and metals as the main export products.

U-specs universal spectaclesAnother example how beliefs can affect your brand is U-specs. U-specs are universal and affordable spectacles for developing countries, invented by a team of Dutch scientists. U-specs can be adjusted by wearers to suit their own eyesight; no visit to a doctor is required. This makes U-specs truly universal and easy to distribute in non-industrialized countries. The product prototype was tested in India. Local beliefs about health in India are very different from the western ones. Indians believe that children generally have great health, and therefore they don’t need spectacles. Indians also believe that elderly people are generally ill, and therefore they also don’t need spectacles. The main branding problem of U-specs was creating awareness that wearing spectacles can really improve life and health of people. To challenge local conventions, the U-specs team decided to target children and their parents through schools. Children with myopia could be convinced by their teachers that wearing spectacles would improve their school results and that local beliefs about health were wrong. Then, children could convince their parents that they really needed U-specs for their study.

Using local conventions for international branding

International branding - creating experiencesUnderstanding local conventions is extremely important in developing brand strategy for a new foreign market. When a local convention is solid, consumers are unwilling to accept an alternative. So, you will probably have to adapt the particular aspect of your brand to this convention. When a convention is flexible, it is undergoing development or erosion in consumers’ minds. Thus, there is an opportunity to challenge such a convention, in order to differentiate your brand from competitors and to offer new values to consumers. You can judge the solidity of a convention by conducting competitive analysis and consumer research.

The most important consideration is whether adhering to or challenging a convention will provide sufficient additional value to consumers. Providing consumers with new and worthwhile experiences is much more important than adapting your brand to new markets. One of the best examples of a local brand that became global by offering new experience is the Mexican beer brand Corona. Corona was discovered in the 80s by European and American tourists visiting Mexico. Corona conquered western markets because its taste was very different form the traditional western beer. And because a long-neck bottle of Corona, served with a slice of lemon, reminded customers their exotic holidays, Latin rhythms and beach parties.