By Dr Paul Temporal
All businesses are subject to change that puts a premium on the ability to survive. Coca-Cola, Colgate, Kellogg’s and other top brands of the 1920s have maintained their industry leadership in many disparate and changing markets, despite changes of management over the years. Their key to success is the development and management of brands as the key driver for achieving corporate goals. While the pursuit of longevity and sustainability have always been a powerful part of Asian cultural thinking, except for Japan there are few truly global Asian brands. Why?
In part because many Asian businesses settle for short-term gain. For example, they fall into the ‘OEM trap’, where companies build components or assemble end products for customers who then place their own brand names on the finished products. Further, while many Asian companies have pursued operational efficiency through quality programmes and re-engineering, but this is not sufficient to help companies differentiate themselves. Long-term profitability depends on climbing out of the ‘commodity trap’ via branding.
Asian companies, faced with increasing market deregulation are now starting to adopt a more strategic brand-centric focus to achieve sustainable growth. Interestingly, governments have had to kick start this revolution. For example, significant financial assistance is available in Singapore, Malaysia and South Korea for companies wishing to undergo branding activities. The public sector rationale is that the more successful private sector brands they have, the better the ‘national brand’ image will be.
Chinese and Indian companies are buying western brands (such as Lenovo’s purchase of the IBM PC business, and Tata Group’s acquisition of Jaguar and Land Rover). But buying a brand is one thing, developing and managing it another. There is no quick-fix, and few companies have sufficient experience or knowledge of brand management. As a Chinese Minister explained: “We have plenty of people, low costs of production, the latest technology and high quality products. But our weakness is branding. We do not know how to do it and yet it is essential for our future success.”
Some people say that Asian companies find it incredibly difficult to build global brands because world markets and product categories are already dominated by powerful Western brands. Furthermore they claim that Asian companies have to overcome deep and widespread consumer perceptions of sub-par quality. However, the very nature of the fast-changing business world can help Asian companies, since innovation no longer belongs to the privileged few. We now find Asian corporate leaders who are harnessing technology and ideas, both of which are freely available. For example, Samsung and LG are at the forefront of innovation in consumer electronics but neither bothers to create costly new technologies with large R&D budgets. Instead, they take new technologies and beat the technology creators with speed to market.
As for negative perceptions associated with quality, Asian companies are making similar strides forward. For example, the Chinese brand Haier has made inroads into the highly competitive US market for consumer durable white goods products, and is now the number two brand in the world. But it took one CEO to line his factory workers up and take a sledgehammer to each defective unit to impress upon them the critical importance of product quality!
Corporate thinking has to concentrate on long-term brand building. Brands are assets that require investment. There has to be a top management mind-set change about the strategic role of branding, and what building a brand really involves. A brand is not merely a logo, slogan, or advertising but a relationship with every customer that needs to be carefully built and managed.
Behind all corporate success these days are solid brand strategies, with clearly defined brand visions, values, positioning statements and plans for fulfillment. Brand strategies have to be brought to life by people, and the development of a brand culture is vital if companies are to deliver on the messages projected by market communications. Brand successes and failures are linked directly to levels of consumer satisfaction, and consumers want new things fast. The great brands of the future will be those that consistently generate emotionally engaging and innovative products and experiences. For example, in India, some companies like Wipro and Infosys Technologies realize this and have used branding to help gain international status.
For Asian companies wishing to create sustainable, profitable global market positions, branding is the road to travel. This is the strategy missing from many boardroom discussions in recent years that could have saved a number of firms in adverse situations. With more turbulence on the way strong brands built on innovation and speed to market will be essential for survival and sustainability in the 21st century.
Excerpted from an article by Dr. Paul Temporal of Saïd Business School and the University of Oxford.