Case study: The making of global brand

Jochen Muhm, Dean of Business, Administration Faculty, Swiss German University (SGU), Bumi Serpong Damai, Tangerang

What is the "phenomenon" of the 21st century for companies and their decision makers? What confronts them as being an unequaled experience, a heretofore unknown exotic sight, the attractive yet potentially overwhelming condition that can make or break companies?

As evidenced by the exponential increase of mergers and acquisitions in the international arena during the past decade, the demands of globalization have caused the decision maker of companies to rivet their attention on positioning their companies to be global players throughout the 21st century.

Below is an illustration of how one of Indonesia's top brands could become a global brand.

Extra Joss is undeviatingly one of Indonesia's hottest products and brands. Yes, everybody is using the word "brand" and is talking about it. But what is a brand exactly?

A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services and to differentiate them from those of competitors. It delivers a specific set of features, benefits and services consistently and conveys a warranty of quality.

In the first stage on the way to create a global brand, its manufacturer, PT Bintang Toedjoe, needs a global corporate strategy, meaning by which they can achieve their global objectives with Extra Joss. It is a unified, comprehensive and integrated plan. The process of establishing a global strategy involves defining the company's purpose and mission, and environmental analysis, establishing global objectives and alternative strategies, implementation and control.

The global marketing manager of Bintang Toedjoe needs to assess and make choices about markets. The marketer needs to assess potential customers by segmenting them into groups, which can vary from country to country or region. The bases for segmenting are numerous and varied, ranging from environmental criteria to psychographics, demographics and behavioral characteristics.

One of the fundamental questions Bintang Toedjoe will face in the global market is the extent to which they should standardize or adapt for Extra Joss. The factors encouraging standardization are economics of scale in manufacturing, reduction in research and development (R&D) costs, marketing economies, global consistency and serving global customers wherever they may be.

Factors encouraging product modification include different consumer tastes and preferences, different levels of socio- regulations on product standards, for example how much Taurine is allowed per serving, tax regime and local content rule.

The main criteria is the nature of Extra Joss, the market conditions, the company environment, market development, the infrastructure of the market and the result of a cost-benefit analysis. This must be considered before the marketer can decide whether adaptation or standardization is the most appropriate method.

A global distribution strategy is important for Bintang Toedjoe, as the choice of channels will ultimately influence the other marketing mix decisions. It also involves the commitments which the company may find difficult to change, and there will be some loss of control. There are different types of channel structures in the global market, from independent to integrated distribution systems.

The next decision the marketer of Bintang Toedjoe has to make is on distribution density, channel length, channel alignment and logistics. In selecting the various alternative channels available for Extra Joss, the final choice will be determined by channel costs, coverage, control, continuity, communication, product characteristics, their objectives, competition, distribution culture, customer characteristics and complementarity.

Once the distribution system has been designed, the Bintang Toedjoe marketer needs to select appropriate and reliable intermediaries, evaluate their performance, motivate them to deliver results and control their activities to ensure that they implement Bintang Toedjoe's marketing strategy.

How much can Bintang Toedjoe price Extra Joss globally? The price is influenced by Bintang Toedjoe's chosen international strategy, the marketing policies that flow from it and conditions in specific markets. Three major categories of factors have impact on the pricing decision of Bintang Toedjoe's marketers: company internal factors, competitive factors and environmental factors. All these have to be considered.

The marketing management has to tackle the pricing problems and opportunities arising from transfer pricing, price escalation, foreign exchange fluctuations, the international product life cycle, dumping practices in some countries and the use of trade terms to gain competitive advantage.

Finally the marketer of Bintang Toedjoe has to decide on the communication concept to launch a global brand. Of all the marketing mix, promotion is most vulnerable to misinterpretation and misuse, which are major obstacles to effective communication and promotional messages of the brand Extra Joss in a global market.

The communication and advertising is particularly challenging, as Bintang Toedjoe's strategic choices are constrained and modified by a number of factors: the promotional effort will be subject to different legal requirements, cultural and language barriers, the availability of media in the respective country or region, the level of literacy in the target market and, of course, the cost of the promotional effort.

These are the major types of limitations that any international marketer will encounter in a global promotional campaigns. The effective implementation of the promotional program is crucial to Bintang Toedjoe's marketing success in the global market place.

One of the major decisions that an international marketer needs to make is to determine whether the advertising campaign should be standardized or localized. The conventional marketing practice would call for a "marketing pull" strategy, with heavy spending in TV advertising and significant heavy trade and consumer promotions to achieve trade sell-in. Another way to increase awareness of the brand Extra Joss could be the two- pronged "marketing push" tactics by having as many people as possible trying Extra Joss to generate significant word-of-mouth publicity.

First there could be the penetration into food-service accounts with quality hotels and restaurants, bars and leisure centers like music halls or discotheques. Key to this part of the marketing strategy is a sort of co-branding arrangement that stipulates the sale of Extra Joss only to accounts who print the brand on the menu, thereby ensuring not only more sales of Extra Joss, but also increasing awareness of the brand in the right places.

The penetration of food-service accounts could be assisted by clever promotions in which, for example, in return of proof of previous purchase of Extra Joss, consumers receive a voucher entitling them to a meal for two at reduced prices in participating restaurants. Second there could be the targeting of retail accounts, which include a roll-out into supermarket chains, delicatessen, cinemas and convenience stores, anything from bakeries to video and DVD stores, and the like.

Furthermore, Bintang Toedjo's marketer could also use sports and related events sponsoring.

Another major decision area for consideration is advertising agency selection. Should it be one global agency or a different agency for each country? The administrative handling, the cost and the budget will give an input for the decision. Furthermore, the marketer needs to examine media coverage, media availability and effectiveness if a campaign is to be successful.

Global public relations is the management of the corporate image that Bintang Toedjoe wishes to project to its numerous consumers, given that the organization's image is a valuable strategic asset in the competitive market place. Public relations is an important and sensitive task for a newcomer in the global brand market.

Finally, sales promotion can be divided into three broad categories -- those that add value to the product, those that provide information and those that reduce price in some form. There are a number of factors that affect the types of sales promotion technique to utilize -- these are channel power, costs, cultural values, regulatory constraints and channel capacity.