Onkvisit S., Shaw J. International Marketing: Analysis and Strategy

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Branding makes premium pricing possible

because of better identiﬁcation, awareness, promo-

tion, differentiation, consumer conﬁdence, brand

loyalty, and repeat sales.According to one Supreme

Court decision (No. 649, May 4, 1942, Mishawaka

Rubber and Woolen Manufacturing Co. vs. S. S.

Kresge, 53 USPQ 323), “The owner of a mark

exploits this human propensity by making every

effort to impregnate the atmosphere of the market

with the drawing power of a congenial symbol. . . .

Once established, the trademark owner has some-

thing of value.”

Although branding provides the manufacturer

with some insulation from price competition, a ﬁrm

must still ﬁnd out whether it is worthwhile to brand

the product. In general, the following prerequisites

should be met:

■ Quality and quantity consistency, not neces-

sarily the best quality or the greatest quantity.

■ The possibility of product differentiation.

■ The degree of importance consumers place

on the product attribute to be differentiated.

As an example, Nike’s unique designs (e.g., the

wafﬂe sole) allowed the company to differentiate its

brand from others and to become the top-rated

brand among serious joggers.

Private brand vs. manufacturer’s brand

Branding to promote sales and move products

necessitates a further branding decision: whether

the manufacturer should use its own brand or a

distributor’s brand on its product. Distributors in

the world of international business include trading

companies, importers, and retailers, among others;

their brands are called private brands. Many

portable TV sets made in Japan for the US market

are under private labels. In rare instances, Japanese

marketers put their brands on products made by US

companies, as evidenced by Matsushita’s purchases

of major appliances from White and D&M for sale

in the USA. The Oleg Cassini trademark is put on

the shirts actually made by Daewoo.

Even though it may seem logical for a distribu-

tor to carry the manufacturer’s well-known brand,

many distributors often insist on their own private

brands for several reasons. First, a distributor may

be able to create a unique product by bundling or

unbundling product attributes and then adjusting

the price to reﬂect the proper value.

Carrefour, a French retail giant, sells some 3000

in-house products at prices about 15 percent lower

than national brands. J. Sainsbury PLC, a British

retailer, has a private brand that is able to win 30

percent of the detergent market, moving it ahead

of Unilever’s Persil and just behind Procter &

Gamble’s Ariel which is the market leader. It is

believed that private-label products now account for

one-third of supermarket sales in the United

Kingdom and a quarter in France.

Second, a private brand is a defensive strategy

which guarantees that a distributor is not bypassed

by its supplier. For example, Ponder and Best, after

losing the Rolleiﬂex and Olympus distributorships,

came up with its own brand of photographic prod-

ucts,Vivitar.

Third, distributors can convert ﬁxed production

costs into variable costs by buying products made by

others. Sperry’s products are made by more than

200 manufacturers (e.g., Sperry’s personal com-

puter is manufactured by Mitsubishi). With this

practice, Sperry is able to save cash and research-

and-development expenses. Of course, it is import-

ant for a distributor with a private brand to have a

reliable supplier.

The fourth and perhaps the most important

reason for a distributor’s insistence on a private

brand is due to brand loyalty, bargaining power, and

price. In spite of the lower prices paid by the

distributor and ultimately by its customers, the dis-

tributor is still able to command a higher gross

margin than what a manufacturer’s brand usually

offers.The lower price may also be attributed to the

distributor’s refusal to pay for the manufacturer’s

full costs. A distributor may want to pay for

the manufacturer’s variable costs but not all of the

ﬁxed costs. Or a distributor may want to pay for

production costs only but not the manufacturer’s

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promotional expenditures, because a distributor

gets no beneﬁt from the goodwill of a manufac-

turer’s advertised brand. If a ﬁrm has any problem

with the supplier (manufacturer), it has the ﬂexibil-

ity of switching to another supplier to make the

identical product, thus maintaining brand loyalty

and bargaining power without any adverse effect on

sales. RCA, for example, switched from Matsushita

to Hitachi for its portable units of VCRs.

There are a number of reasons why the strategy

of private branding is not necessarily bad for the

manufacturer. First, the ease in gaining market entry

and dealers’ acceptance may allow a larger market

share overall while contributing to offset ﬁxed

costs. Toronto-based Cott Corp., once an obscure

regional bottling company, has emerged as a leading

private-label player by being involved with dozens

of store-brand sodas. It sells more than one billion

servings of soft drinks to Wal-Mart Stores Inc. under

the label of Sam’s American Choice. Cott bottles

Sainsbury Classic Cola for J. Sainsbury PLC which

is the top food retailer in Britain. In the USA,

Safeway Inc. is one of Cott’s largest customers.

Safeway feels that it can give consumers value while

earning better margins than on national brands.

Second, there are no promotional headaches and

expenses associated with private branding, thus

making the strategy suitable for a manufacturer with

an unknown brand. Suzuki cars are sold in the USA

under the GM Sprint brand name. Ricoh’s facsimile

machines are sold under AT&T’s well-known

name. Brother has had virtually no name recogni-

tion because it has marketed its many products

under the private labels of US major retail chains;

to secure recognition,it has begun to mount a major

campaign.

Third, a manufacturer may judge that the sales of

its own product are going to suffer to a greater or

lesser degree by various private brands. In that case,

the manufacturer may as well be cannibalized by one

of those private brands made by the manufacturer.

There are also reasons why private branding is

not good for the manufacturer. By using a private

brand the manufacturer’s product becomes a

commodity, at least to the distributor.To remain in

business and retain sales to the distributor, the man-

ufacturer must compete on the basis of price, since

the distributor can always switch suppliers. Cott

Corp., for example, lost its contract to brew its

President’s Choice beer for Loblaw Cos., Canada’s

top supermarket, when John Labatt Ltd. paid

Loblaw $28 million for the contract.

By not having its own identity, the manufacturer

can be easily bypassed. Furthermore,it loses control

over how its product should be promoted – this fact

may become crucial if the distributor does not do a

good job in pushing the product. For example,

Mitsubishi, which manufactures Dodge Colt and

Plymouth champ for Chrysler, felt that its products

did not receive Chrysler’s proper attention. As a

result, Mitsubishi began to create its own dealer

network and brand identity (e.g., Mitsubishi

Mirage). Ricoh used to sell copiers in the USA only

under such private brands as Savin and Nashua,

whose sales lagged.After switching to its own brand

name in 1981, Ricoh’s sales increased tenfold to

take second place in unit sales behind only Canon.

The manufacturers’ dilemma is best illustrated

by Heinz’s experience in the United Kingdom,

where consumer recognition for its brand is

stronger than in any other country in the world.

Whereas Campbell Soup and Nestlé’s Crosse &

Blackwell make some products under private labels

to accommodate giant supermarkets’ insistence,

Heinz produces products only under its own brand

because, as the largest supplier of canned foods

there, it has the most to lose.To preserve its long-

term market leadership at the expense of short-

term earnings, Heinz has held down prices, stepped

up new product introductions, launched big capital-

spending programs, and increased advertising.

Heinz does make private-label merchandise in the

USA, where private brands account for 10 percent

of its US sales. Its logic is that the slow growth of

US private labeling does not pose a serious threat as

it does in the United Kingdom.

Clearly, the manufacturer has two basic alterna-

tives: (1) its brand, or (2) a private brand. Its choice

depends in part on its bargaining power. If the

distributor is prominent and the manufacturer itself

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is unknown and anxious to penetrate a market, then

the latter may have to use the former’s brand on the

product. But if the manufacturer has superior

strength, it can afford to put its own brand on the

product and insist that the distributor accept that

brand as part of the product.

The hypothesis of the “least dependent person”

can be quite applicable in determining the power of

the manufacturer and that of its dealer.The stronger

party is the one with resources and alternatives, and

that party can demand more because it needs the

other party less.The weaker party needs the other

partner more due to a lack of resources and/or

alternatives, and thus the weaker must give in to the

“least dependent” party. In most cases, the interests

of both parties are interdependent, and neither

party may have absolute power. For instance,

Kunnan, a maker of a high-quality tennis racket, lost

some of its well-known customers when they began

doing their own manufacturing. When those com-

panies discovered later that they could not produce

so well in terms of cost and quality, they came back

to Kunnan for the private-brand manufacturing.

Private branding and manufacturer’s branding is

not necessarily an either/or proposition: a compro-

mise may often be reached to ensure mutual coex-

istence. If desired, both options can be employed

together. Michelin, for instance, is world renowned

for its own brand, and most people do not realize

that Michelin also makes tires for Sears and Venture.

Sanyo, another major international brand, is rela-

tively unknown in the USA because it has relied

heavily on private-label sales to Sears and other big

companies. To rectify this identity problem, Sanyo

has been pushing its own name simultaneously.

Manufacturers cannot treat private brands as

simply generic competitors. After all, retailers that

carry the private labels are both customers and

competitors at the same time.

The popularity of

private brands varies from country to country.

In England, the key factors that have contributed

to the evolution of retail brands within British

grocery retailing are changing the basis and use of

retail power in the distribution channel, centraliza-

tion of management activities, and appreciation of

what constitutes retail image. British grocery retail-

ers have successfully managed these factors. As a

result,their retail brands are regarded by consumers

as being as good as, if not better than, the estab-

lished manufactured brands.

The discussion so far has focused primarily on

the practice of distributors or middlemen having

their own private brands manufactured by the other

companies. A new trend in the high-technology

arena is for manufacturers with top brands to have

their products manufactured by someone else. IBM,

the company responsible for the worldwide accep-

tance of personal computers, has stopped making

desktop PCs in most parts of the world. It has signed

a three-year, $5 billion agreement with Sanmina-

SCI, a contract manufacturer, to make the IBM-

brand PCs.

High-technology ﬁrms have been relying more

on contract manufacturers and original design man-

ufacturers (ODMs). Quanta Computer Inc. is a con-

tract manufacturer that does all the manufacturing

and logistics.

This Taiwan company makes Apple’s

Titanium G4 PowerBook. It also takes care of just

about everything in less than forty-eight hours for

HP’s notebook unit, from hardware to software

and from testing the ﬁnal product to shipping it to

customers. Compaq Computer did not design nor

make its iPaq Pocket PC.This handheld PC and its

system of interchangeable accessory sleeves are

actually the products of HTC, an ODM in Taiwan.

Samsung, LG Electronics, and Acer are ODMs that

make products for others as well as their own

brands. Samsung’s Q10 notebook is almost indistin-

guishable from Dell Latitude X200 and Gateway

200. In the end, customers cannot rely on tangibles

to tell these brands apart and must trust such intan-

gibles as warranty and technical support.

The branding and manufacturing strategy men-

tioned above illustrates the potential beneﬁts and

problems of private branding. By putting their

brands on the computers made by outside suppli-

ers, the brand owners are able to take care of the

gap in their product lines quickly and economically

while solving their inventory problems. However,

this new strategy will make product differentiation

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BRANDING AND PACKAGING STRATEGIES

more difﬁcult. Well-informed consumers may not

see a good reason to pay extra for these brands.

Single brand vs. multiple brands

When a single brand is marketed by the manufac-

turer, the brand is assured of receiving full attention

for maximum impact. However, a company may

choose to market several brands within a single

market based on the assumption that the market

is heterogeneous and thus must be segmented.

Consequently, a speciﬁc brand is designed for a

speciﬁc market segment. In the case of Intel, it

spent several hundred million dollars to promote

Centrino, a new brand for wireless computing.

Figure 11.5 shows Anheuser-Busch’s various brands

for the US market.

The watch industry provides a good illustration

for the practice of using multiple brands in a single

market for different market segments. Bulova is

a well-known brand, as are the Accutron and

Caravelle brands. Citizen, in its attempt to capture

the new youth and multiple-watch owners’ market,

traded down to include a new brand called Vega.

Likewise, Hattori Seiko is well known for its Seiko

brand, which is sold at the upper-medium price

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BRANDING AND PACKAGING STRATEGIES

Figure 11.5

Anheuser-Busch’s multiple

brands for a single market

Source:

Reprinted with permission of

Anheuser-Busch, Inc.

range in better stores; to appeal to a more afﬂuent

segment, the ﬁrm traded up with the Lassale name.

Seiko’s strategy is to deliberately divorce the

Seiko and Lassale names, once used together in the

public mind, with the gold-plated Lassale line and

the karat-gold Jean Lassale line. Lassale watches

have Seiko movements but are made only in the

USA and Western Europe in order to curb parallel

trading, and they are distributed only through

jewelers and department stores. The company

also trades down, with Pulsar, Lorus, and Alba for

Asia. Swatch Group Ltd. has more than 50 percent

of the Swiss watch industry. Swatch owns a

number of well-known brands that include Omega,

Longines,Tissot, and Calvin Klein. It recently spent

$75 million to acquire the French watchmaker

Breguet.

Multiple brands are suitable when a company

wants to trade either up or down because both

moves have a tendency to hurt the ﬁrm’s main busi-

ness. If a company has the reputation for quality,

trading down without creating a new brand will

hurt the prestige of the existing brand. By the same

rationale, if a company is known for its low-priced,

mass-produced products, trading up without creat-

ing a new brand is hampered by the image of the

existing products. Casio is perceived as a manufac-

turer of low-priced watches and calculators, and the

name adversely affects its attempt to trade up to

personal computers and electronic musical instru-

ments. To overcome this kind of problem, Honda

uses the Acura name for its sporty cars so that

Acura’s image is not affected by the more pedestrian

Honda image.

China has a long way to go before it can become

synonymous with quality in the eyes of Western

consumers. Not surprisingly, Chinese companies

have downplayed the origin of their products. In the

case of TCL Corp., a TV and cellular-phone maker,

it acquired the bankrupt German TV maker

Schneider in 2002. Although the TCL name has

done well in Asia, the company believes that it

needs a better known brand to succeed in Europe.

To this end, Schneider, a century-old brand, should

do better.

Local brands vs. worldwide brand

When the manufacturer decides to put its own

brand name on the product, the problem does not

end there if the manufacturer is an international

marketer. The possibility of having to modify the

trademark cannot be dismissed. The international

marketer must then consider whether to use only

one brand name worldwide or different brands for

different markets or countries. To market brands

worldwide and to market worldwide brands are not

the same thing.

A single, worldwide brand is also known as an

international, universal, or global brand. A Euro-

brand is a slight modiﬁcation of this approach, since

it is a single product for a single market (i.e., the

European Union and the other Western European

countries), with an emphasis on the search for

intermarket similarities rather than differences.

For a brand to be global or worldwide, it must,

by deﬁnition, have a commonly understood set of

characteristics and beneﬁts in all of the markets

where it is marketed.

Coca-Cola is a global brand

in the sense that it has been successful in maintain-

ing similar perceptions across countries and cul-

tures. However, most other brands do not enjoy this

kind of consistency, thus making it debatable

whether a global brand is a practical solution.

A worldwide brand has several advantages. First,

it tends to be associated with status and prestige.

Second, it achieves maximum market impact overall

while reducing advertising costs because only one

brand is pushed. Bata Ltd., a Canadian shoe mar-

keter and retailer in ninety-two countries, found

out from its research that consumers generally

believed Bata to be a local concern, no matter the

country surveyed. The company thus decided to

become an ofﬁcial sponsor of World Cup soccer in

order to enhance Bata’s international stature. For

Bata and others, it is easier to achieve worldwide

exposure for one brand than it is for multiple local

brands.Too many brands create confusion and frag-

mentation.

Third, a worldwide brand provides a convenient

identiﬁcation, and international travelers can easily

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recognize the product.There would be no sense in

creating multiple brands for such international

products as Time magazine,American Express credit

card, Diner’s Club credit card, Shell gasoline, and

so on.

Finally, a worldwide brand is an appropriate

approach when a product has a good reputation or

is known for quality. In such cases, a company would

be wise to extend the brand name to other prod-

ucts in the product line.This strategy has been used

extensively by GE. In another case, 3M perceived

commonalities in a consumer demographics and

market development worldwide; in response, it

devised a “convergence marketing” strategy to

develop global identity for its Scotch brand of elec-

tronic recording products, whose design displays

prominently the Scotch name and a globelike logo.

Global consumer culture positioning (GCCP) is

a positioning tool that suggests one pathway through

which a brand may be perceived by consumers as

“global.” GCCP is a construct that associates a brand

with a widely understood and recognized set of

symbols which constitute an emerging global con-

sumer culture. A signiﬁcant number of advertise-

ments employ GCCP (instead of positioning the

brand as a member of a local or speciﬁc foreign

consumer culture).

ACNielsen’s Global Mega Brand Franchises

report uses a number of criteria to identify mega

brands. A megabrand must be available in at least

ﬁfteen out of ﬁfty countries that account for 95

percent of the global economic output. It must be

marketed under the same name in at least three dif-

ferent product categories in three or more regions.

Based on these criteria, the megabrands are domi-

nated by the highly extendable personal care and

cosmetics manufacturers and by food and drinks

manufacturers.The queen of megabrands is Nivea,

a brand owned by the German consumer products

group Beiersdorf. This skin-care brand is a huge

success, and the brand has been extended to at least

nineteen product categories (shampoos, after-shave,

wrinkle lotion, and bath foam) in every part of the

world. In contrast, Coke as a brand does not have

much of this power of extendability.

The use of multiple brands, also known as the

local or individual approach, is probably much more

common than many people realize. Discover

Financial Services, while using the Discover name

in the USA, issues a consumer credit card in

England under the Morgan Stanley Dean Witter.

In the case of Unilever, its fabric softener is sold in

ten European countries under seven names. Due

to decentralization, the multinational ﬁrm allows

country managers to choose names, packages, and

formulas that will appeal to local tastes. More

recently, the company, while keeping local brand

names, has been gradually standardizing packaging

and product formulas.

There are several reasons for using local brands.

First, developing countries resent international

brands because the brands’ goodwill is created by

an advertising budget that is much greater than

research-and-development costs, resulting in no

beneﬁt derived from research and development for

local economies. In addition, local consumers are

forced to pay higher prices for advertising and good-

will, beneﬁting MNCs but hindering the develop-

ment of local competitive capacity. Such resentment

may explain why India’s ministries, responding to

domestic soft drink producers’ pressure, rejected

Pepsi’s 35 percent Pepsi-owned joint venture. Some

governments have considered taxing international

brands or limiting the use of such brands, as in the

case of South Korea, which has considered placing

restrictions on foreign trademarks intended for

domestic consumption.

Second, when the manufacturer is unable to

ensure uniform product quality across countries, it

should consider local brands.Third, when an exist-

ing brand is difﬁcult to pronounce, a new brand may

be desirable. Sometimes, consumers avoid buying a

certain brand when it is difﬁcult to pronounce

because they want to avoid the embarrassment of a

wrong pronunciation.

Fourth, a local brand is more easily understood

and more meaningful for local consumers. By con-

sidering foreign tastes and preferences, a company

achieves a better marketing impact. Post-it note

pads made by 3M are marketed as Yellow Butterﬂies

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in France. Grey, an international advertising agency,

worked with Playtex to create appropriate names

for Playtex’s brassières in different languages. The

result was Wow in England and Traumbügel (dream

wire) in Germany. Translation may also make a

brand more meaningful.This approach is sometimes

mistaken for a single-brand approach when in fact a

new brand is created. Close-Up (toothpaste) was

translated as Klai-Chid (literally meaning “very

close”) in Thailand; the translation retained the

meaning and the logo of the brand as well as the

package design.

Fifth, a local brand can avoid a negative conno-

tation. Pepsi introduced a non-cola under the

Patio name in America but under the Mirinda name

elsewhere due to the unpleasant connotation of patio

in Spanish.

Sixth, some MNCs acquire local brands for quick

market penetration in order to save time, not to

mention money, which otherwise would be needed

to build the recognition for a new, unknown brand

in local markets. Renault would have been foolish

to abandon the AMC (American Motors) name after

a costly acquisition. Thus Renault 9, for example,

became AMC Alliance in the USA. Chrysler subse-

quently bought AMC from Renault, one reason

being AMC’s coveted Jeep trademark.

Seventh, multiple brands may have to be used,

not by design but by necessity, due to legal compli-

cations. One problem is the restrictions placed on

the usage of certain words. Diet Coke in countries

that restrict the use of the word diet becomes Coke

Light.Antitrust problems can also dictate this strat-

egy. Gillette, after acquiring Braun A.G., a German

ﬁrm, had to sign a consent decree not to use the

name in the US market until 1985. The decree

forced Braun to create the Eltron brand, which had

little success.

The eighth and perhaps most compelling reason

for creating new local brands is because local ﬁrms

may have already used the names that multinational

ﬁrms have been using elsewhere. In such a case, to

buy the right to use the name from a local business

can prove expensive. Unilever markets Sure antiper-

spirant in the United Kingdom but had to test

market the product under the Trust name in the

USA, where Sure is Procter & Gamble’s deodorant

trademark.

In an interesting case,Anheuser-Busch bought the

American rights to the Budweiser name and recipe

from the brewer of Budweis in Czechoslovakia;

Budejovicky Budvar Narodni Podnik, the Czech

brewer, holds the rights in Europe. Operating from

the town of Ceske Budejovice, known as Budweis

before World War I, this brewer claims exclusive

rights to the Budweiser name in the United

Kingdom, France, and several European countries.

Courts have ruled that both companies have the right

to sell in the United Kingdom, but Anheuser-Busch

has to use the Busch name in France and the corpo-

rate name in other parts of Europe.

Ninth, a local brand may have to be introduced

due to price control.This problem is especially acute

in countries with inﬂationary pressures. Price con-

trol is also one reason for the growth of the so-called

gray marketers, as the phenomenon contributes

to price variations among countries for the same

product.Thus, instead of buying a locally produced

product or one from an authorized distributor/

importer, a local retailer can buy exactly the same

brand from wholesalers in countries where prices

are signiﬁcantly lower. A manufacturer will have a

hard time prohibiting importation of gray market

goods, especially in EU countries where products

are supposed to be able to move freely. Parallel trad-

ing can be minimized by having different national

brands rather than only a worldwide brand.

As mentioned above, brand standardization is a

common strategy. Companies tend to brand glob-

ally but advertise locally. Interestingly, although the

McDonald’s logo is one of the most recognizable

trademarks in the world, McDonald’s has changed

its advertising logo for Quebec, perhaps the only

market in the world which receives this special

treatment.The most well-known logo in Quebec is

J’M.This is a play on “j’aime” which means “I love”

in French.

The strategy of using a worldwide brand is thus

not superior (or inferior) to using multiple local

brands. Each strategy has its merits and serves its

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own useful functions.This is where managerial judg-

ment comes in. Unilever, for example, considers

consumer responses to a particular brand mix. It

uses an international brand for such products as

detergents and personal products because common

factors among countries outweigh any differences.

Food products, however, are another story. Food

markets are much more complex due to variations

in needs and responses to different products. The

southern half of Europe uses mainly oil for cooking

rather than margarine, white fats, or butter. The

French more than the Dutch consider butter to be

an appropriate cooking medium. German home

makers, when compared to British home makers,

are more interested in health and diet products.

Soup is a lightweight precursor to the main dish in

Great Britain but can almost be a meal by itself in

Germany. Under such circumstances of preferential

variations, the potential for local brands is greatly

enhanced.

When creating local brand names in the multi-

lingual international market, companies have three

translation methods to consider: phonetic (i.e., by

sound), semantic (i.e., by meaning), and phonose-

mantic (i.e., by sound plus meaning).The effective-

ness of translation depends on the emphasis of the

original English name and the translation method

used previously for brand names within the same

category. When the phonetic naming method is

used, brand-name evaluations are more favorable

for names that emphasize an English word than for

those names that emphasize a Chinese word.

BRAND CONSOLIDATION

Frequently, it is either by accident or lack of coor-

dination that multiple local brands result. Despite

the advantages offered by the multiple-brand strat-

egy, it may be desirable to consolidate multiple

brands under one brand when the number of labels

reaches the point of being cumbersome or confus-

ing. National BankAmericard used to issue cards

around the world under twenty-two names before

consolidating them all under the Visa umbrella.

Unilever markets a vast array of beauty, home-care,

and food products under numerous names. Some of

its well-known brands include: ice cream (Breyer’s,

Good Humor), soap (Dove, Caress, Lever 2000,

Lifebuoy), hair care (Suave, ThermaSilk), oral care

(Close-Up, Pepsodent, Aim), fragrances (Calvin

Klein, Elizabeth Arden, Elizabeth Taylor), and per-

sonal care (Vaseline, Q-Tips, Pond’s). However, this

portfolio of 1600 brands, although well recognized,

has proven to be unmanageable. So Unilever has

decided to focus mainly on some 400 brands while

eliminating up to 75 percent of its products.

Another way of consolidating the brand franchise

is simply to drop weak brands.Assuag-SSIH weeded

out all but its most prominent watch brands. Its

Eterna brand, for example, was never marketed in

the USA, and that brand was eventually sold to

another company.

Brand consolidation on a global scale is a strat-

egy that has been hotly debated. As in the case of

Scott Paper Co., the company felt that the Scott

name, just like Coca-Cola, should command respect

all over the world.

In addition, global branding

would allow Scott to use common advertising

messages internationally while saving costs. So the

company has been phasing out local brand names in

its eighty national markets. Even Andrex, a top-

selling toilet tissue in England, will suffer the same

fate, thus diluting or destroying the goodwill that

has been earned.

When a marketer wants to change brands or

consolidate them under one brand in order to unify

all marketing efforts, the process is complex and

extremely costly on an international scale.Although

a uniﬁed brand across frontiers provides cost savings

by eliminating duplication of design and artwork,

production, distribution, communications, and

other related issues, such a change is fraught with

pitfalls and, if not well planned and executed, can

cause more problems than it solves. Nestlé uses a

gradual, evolutionary process in preparing its

European brands for 1992. Its package–design uni-

ﬁcation involves having the Nestlé name appear

along with the local brand.The Nestlé name will be

gradually enlarged over a period of four or ﬁve years

until it replaces the local brand names entirely.

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Another kind of problem presents when a brand

is well known but the corporate name is not, com-

plicating communication for the company. In this

situation, it is probably easier to change the corpo-

rate name to ﬁt the better-known brand, a strategy

used by Sony, Aprica, Olympus, and Amoco.

Nissan’s name change, in comparison, was risky

because it followed an opposite route. Nissan’s

half-hearted entry into the US market led to the use

of the Datsun name to avoid embarrassment in case

the effort failed. However, the company was also

unhappy that the proud corporate name was not

as widely recognized as its Datsun brand, which

enjoyed an 85 percent recognition rate in the USA

(compared to 10 to 15 percent for Nissan). The

company decided to institute a worldwide brand by

phasing out Datsun and phasing in Nissan. Some

critics questioned the move because the change cost

Nissan $150 million. Furthermore, years of good-

will gained from the Datsun name would be lost.To

minimize this problem, both Nissan and Datsun

names appeared together at ﬁrst. Its initial TV com-

mercials and print advertisements emphasized that

Datsun was a product of Nissan.

It is debatable whether the corporate name and

the product’s brand name should even be the same.

When the name is the same, a brand that performs

poorly or gains notoriety through bad publicity

hurts the corporate image as well, since the images

of the corporation and the product are so inter-

twined. Firestone is a prime example of how a

brand could damage the same corporate name due

to the accidents caused by its tires. The strategy is

even riskier for fashion products because fashion

comes and goes. Using the same name, however, is

a relatively safe strategy and should work well if a

ﬁrm has good quality control and the reputation of

its nonfashion products has withstood the test

of time.

Brand consolidation is never an easy process,

especially when well-known brands have to be

replaced. Because of BP’s acquisition of Amoco,

BP Amoco has rebranded Amoco gas stations to

erase the Amoco name from all 9000 stations in

the USA. The decades-old Amoco torch has been

replaced by a new, lower-case BP logo and an eigh-

teen-point green-and-yellow sun. The remodeling

of all 19,000 BP stations worldwide is expected to

cost up to $4.5 billion over four years. The 1725

recently acquired Arco stations are keeping the

Arco name.

Figures 11.6 and 11.7 show how Agere Systems

and Wyeth promote their new corporate names. In

the case of Unilever, it has to deal with complica-

tions related to its effort to replace its Jif brand with

the Cif brand (see Marketing Strategy 11.1).

BRAND ORIGIN AND SELECTION

Brand names can come from a variety of sources,

such as from a ﬁrm’s founders (e.g., Francois

Michelin, Albert G. Spalding, Pierre Cardin, and

Yves St. Laurent), places (e.g., Budweiser), letters

and numbers (e.g., IBM), and coined words (e.g.,

Ikea based on a combination of the initials of the

Swedish-born founder, Ingvar Kamprad, with those

of the farm, Elmtaryd, and the village, Agunnaryd,

where he grew up).

Sometimes, it is easier simply to purchase an

existing brand from another company. Hong Kong’s

Universal International bought Matchbox, a British

toy car maker.W. Haking enterprises, another Hong

Kong company, acquired the Ansco name from GAF,

and most Americans do not realize that the brand of

Haking’s low-priced cameras is actually a Hong

Kong brand. North American Philips (NAP) bought

the Schick shaver trade name. Underscoring the

value of this name, Remington even ﬁled a com-

plaint alleging that the Schick name enabled NAP to

avoid spending $25 million needed to launch a new

shaver to supplement the Norelco line.

Brand selection is far from being an exact

science, as illustrated by the origins of many suc-

cessful brands. Gabrielle Chanel liked the scent of

the ﬁfth sampled bottle in 1921. Feeling that 5 was

a pretty number, she named the perfume Chanel

No. 5. Denmark’s Lego Group, well known for its

interlocking plastic bricks, is the world’s ﬁfth-

largest toy maker with annual sales of about $1

billion. The founder, Ole Kirk Kristiansen, named

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his company Lego which is a combination of the

Danish words leg godt, meaning “play well.”

More recently, brand selection has shifted away

from being an art and is becoming more of a

science.There are several companies that specialize

in creating brand and corporate names, and they use

computer programs that can run preﬁxes, sufﬁxes,

and other word combinations.

However, it must be pointed out that marketers

often do not have the luxury of picking and choos-

ing names they like. Nor is it always feasible to

conduct marketing research to investigate the

appropriateness of a name. In Brazil, Philip Morris

chose the Galaxy name without marketing research

because it happened to be one of the company’s reg-

istered names. NUMMI’s use of the Nova trademark

for cars produced jointly with Toyota and General

Motors was due in part to GM’s ownership of the

Nova brand name.

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Figure 11.6

Agere Systems and a

corporate name change