Brand America

Author: Daphne Kasriel

Date published: 18 Nov 2008

Many consumers seem to have a love-hate relationship with the USA. One South African participant in a Harvard Business School (HBS) study confessed: “I love their products, but I don't love the country.” A Filipino contributor admitted: “I used to go on anti-American rallies when I was a student, but I never thought about the [American] brand of clothes or shoes I wore!”

Key trends

Trust discount for the USA;

Quality sells;

Familiarity breeds confidence;

A case of mistaken identity;

Selling the dream;

The allure of luxury;

Social responsibility payback;

The Obama Effect.

Commercial opportunities

Trade on quality;

Aspirational marketing;

Obamamania.

Background

“For the last fifty years, marketers of American brands were happy to ally themselves with the values of their home country – Coca-Cola, Marlboro and Levi's were paraded as affordable slices of Americana – and consumers everywhere in the world took them at their word. In turn, those brands became willing Ambassadors for the values which America wanted to portray as its own: liberty, for example, and material prosperity. Just recently, however, many big American brands have concluded that their homeland is as much of a hindrance as a help,” writes James Harkin in “Big Ideas: The Essential Guide to the Latest Thinking”.

In his book: “Brand America: The Mother of All Brands” (2004), Simon Anholt offers a gloomy diagnosis: “If Brand America slips far enough in people's esteem, there is a chance that American brands will one day have to work harder than others to downplay the negative associations of their country of origin.”

Recent surveys consistently indicate that top US brands no longer tick all the boxes with global consumers. One survey by market research firm GfK Roper Consulting revealed that Coca-Cola, McDonald's and Nike all suffered year-on-year declines in their “likeability,” in the year to 2007, particularly amongst consumers in developing Asian markets. According to the survey, about half of the 33 US brands listed showed decreases in scores based on three key areas: familiarity, likeability and the likelihood for consumers to recommend the brand. “Historically, American brands have always been the least-liked in other countries,” a spokesman said, adding: “This gets back to brand exposure and experience and the fact that some of these iconic brands are not so novel anymore.” The study argues that brands need to re-engage with consumers and allow their customers to contribute more of themselves to the brand experience. Google, Apple and Disney were cited as success stories which had improved their year-on-year likeability scores. Successful global brands engage with consumers in a way that feels local to them, GfK Roper has advised.

Trust discount for the USA

According to the Edelman Trust Barometer, an annual global survey, trust in companies is linked to national origin, industry sector and specific events. Its 2008 survey found a trust advantage for Canadian, Swedish and German companies and a discount for Chinese, Russian, Mexican and Indian companies. Global American brands, such as McDonalds and Exxon Mobil, continued to operate with a trust discount in Europe. The technology and biotech sectors are most trusted, the insurance and banking least trusted, with pharmaceuticals and energy trending up. Recent events have had a major impact on financial service brands such as Citigroup and Merrill Lynch. The survey identifies quality of products and services and value as major drivers of business trust globally, as well as reputation in the social, environmental and employment realms.

Kellogg's is an example of a trusted product that transcends anti-American sentiment. Kellogg's, with its perceived wholesomeness, is considered the most trusted brand of breakfast cereal in ten European countries, including France and Germany, according to a 2008 Reader's Digest survey covered on rdtrustedbrands.com.

Quality sells

According to the HBS report, in the eyes of many consumers a global product equals a quality product. One Russian focus-group participant told researchers: “The more people who buy [a] brand…the better quality it is.” A Thai consumer agreed: Global brands “are expensive, but the price is reasonable when you think of the quality.” Consumers also believe that global players are at the cutting edge of technological development. Their products are “very dynamic, always upgrading themselves,” maintained an Indian consumer. The survey found that while loyalty to domestic products was important, it was only 30% as strong as perceptions driven by a brand's “globalness.”

And in China trust in US consumer brands is at a record high due to recent domestic product scares, such as the contaminated milk scandal. According to the managing director of China Market Research Group, they feel the USA offers better quality control: “So on the consumer side, that 'Made in America' label is still very powerful.” According to the author of “Asian Brand Strategy”, millions of Chinese migrants to the cities want cars, gadgets and appliances, and success for them is defined by American lifestyles and products. On the other hand, the recent economic crisis means Chinese consumer confidence in US financial institutions has taken a nosedive according to recent survey results, reported The Economic Times in late October.

Familiarity breeds confidence

Chinese consumers are less adventurous than those in most other countries and tend to stick with brands they're familiar with. A recent McKinsey survey found that when Chinese consumers try new products, they are twice as likely to opt for ones with familiar branding. It's a calculated choice, when cheaper goods may often be of poor quality and could have major health implications, as in the case of food purchases. Once Chinese consumers recognise and trust a brand they are willing to pay a premium for it. The research also shows that as Chinese consumers become more sophisticated, nationalistic tendencies play a smaller role in consumer choices: 30% of respondents to the 2008 survey said they trusted only Chinese brands, down from 44% percent in 2007, and in the biggest cities just 13% expressed a clear preference for Chinese brands. The majority said they had no clear preferences based on a brand's country of origin.

A case of mistaken identity

Many consumers globally, including in the West, don't always register a brand's nationality. In China, a large majority, according to the McKinsey survey, frequently mistake a wide variety of leading foreign products for domestic brands. These products have been repackaged with a Chinese identity: names, wrapping, and even the models used in advertising give them a home-grown feel. Crest, Pantene, and Motilium have used this approach successfully. They don't actively conceal their origins but they don't shout it from the rooftops either.

Selling the dream

Consumers look to global brands as symbols of cultural aspiration. Those in developing countries want a part of the American dream, and global brands like Coke, McDonalds and Nike are seen as a way of connecting with it. As one Costa Rican consumer told HBS researchers: “Local brands show what we are; global brands show what we want to be.”

Maybe that's why cut-price versions of the dream don't do it for some consumers, as shown by Wal-Mart's expansion into South Korea. One factor leading to disappointing sales, according to a leading expert, is that in relatively affluent Korea, Wal-Mart's low price ethos equals low quality associations. Even before the customer gets through the door, the stores' brick and tile interior sends the wrong signal: they don't provide any sense of wealth or status, important aspects of Korean culture.

The allure of luxury

Luxury goods will always find a market it seems, despite their provenance. According to an October 2008 survey by Nielsen Media Research, Calvin Klein is one of the most popular luxury brands among United Arab Emirates shoppers; three out of five UAE consumers have shopped at Calvin Klein and 59% say they opt for designer wear to project social status.

One company that's happy to trade on its American identity is Hersey's, as consumer qualms don't seem to extend to the confectionary industry. However, one marketing expert believes that if Hersey's is to be successful in China it will need to adapt its products and packaging. Chocolate is still mainly regarded as a gift product in China, so Hershey's traditional brown and silver paper packaging might be a poor fit for this market segment. For gift giving, Chinese consumers want luxurious packaging, so a makeover for Hersey's may be in order.

Social responsibility payback

People expect more social responsibility of global companies than they do of local firms, and they're ready to vote with their cheque books if they feel companies are falling short in areas of public health, worker rights, and the environment. It's an attitude reflected in the comment of an Australian participant in the HBS study: “McDonald's pays back locally, but it is their duty. They are making so much money, they should be giving back.” Such expectations are to be found in China, India and other developing countries as well as the West.

Companies such as Hershey's, which have a tradition of charitable giving, can up their profile in overseas markets by goodwill marketing, without raising cynical eyebrows

The Obama Effect

Barack Obama's election has built up a groundswell of goodwill across the globe that might see Brand America topping the polls as the consumer's favourite. The 'Obama Effect' could have an impact on everything from fashion to pet sales, as the Obama family decide on the breed of puppy to take to the White House.

Interest in what Michelle Obama is wearing has sky-rocketed since she gained widespread praise for the purple sheath dress she wore in June, when Barack won the Democratic nomination.

Seen as a trend-setter to rival the stylish 1960s first lady Jacqueline Kennedy, she's appeared in Vogue and been named twice on Vanity Fair's international best-dressed list. The mid-priced J Crew and Donna Ricco ensembles she wore on television prompted record sales for both designers, and the dress she wore on election night from Narcisco Rodriguez's spring 2009 ready-to-wear collection led to debate amongst fashionistas. She has even inspired a website dedicated to taking “a regular look at what and who she's wearing” and building a following for “the budding style icon, Mrs O.” In the UK, tabloid newspapers have run features on “how to get her look”. Obamamania has even spread to toys and baby-wear, with everything from bibs to Obama action man figures and candy dispensers available online.

Outlook

Over the short to medium term, the near global euphoria over Obama's election is likely to have a positive impact on consumer perceptions of Brand America. In the longer term, quality and aspirational US brands will continue to win votes globally.

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