Normandy Madden’s article, “In China, multinationals forgo adaptation for new-brand creation” (Adage, January 17,2011), focuses on past mistakes many multinationals have made and the lessons they have learned over the last decade in various global markets, and how they are developing brands and campaigns to reflect economic, cultural and language differences.

From the perspective of economic growth, China, along with other emerging markets including Brazil, India, Indonesia and Mexico are experiencing a growing middle-class with increasing disposable income and growing aspirations, all translating to opportunities for marketing branded consumables, even at the luxury end of the market. In order to capture the early entries into the middle-class in these markets, a number of multinationals are fielding entry-level brands. General Motors, for example, has introduced a starter brand in China named “Bayojun,” which retails for $7,000. Nissan similarly has an entry brand called “Venucia or Qi Chen” meaning “Morning Star.” In apparel, Levis has introduced a low priced jeans brand, “Denizen”, to aspiring Chinese teens who cannot afford the Levi’s brand; the Denizen brand will also be introduced in developing countries in Latin America and Africa.

Although understanding the purely demographic economics of marketing has not been an insurmountable challenge to many multinationals, understanding the cultural differences and language nuances tripped up many in their initial campaign initiatives. From a cultural perspective, these multinationals learned over time to cater to local tastes. In addition to its core Coke brand, for example, Coca Cola markets the “Kuat” soft-drink brand in Brazil, which capitalizes on this country’s love of guarana, a local fruit delicacy. In China, Coke markets the brand: “Spritea” a tea-flavored drink that is a combination of Sprite, the number one soft-drink brand in China, and tea, China’s number one beverage. Similarly, many other multinationals including McDonalds, Pepsi, Lay’s and others have learned over time to adapt, test and perfect local market offerings.

Madden’s article comes at a time when, as he states, “multinationals’ traditional markets are suffering the effects of tightening credit and falling consumption.” This has placed even greater importance on looking beyond the U.S. market for further growth. However, as his article implies, for those companies seeking expansion opportunities beyond their current markets, a simple adaptation of existing brands into global markets, tied to existing campaigns translated into a local language, can be fraught with risk. Even Coca Cola learned the hard way early on with its successful U.S. “Coke adds Life” campaign, which when directly translated into local market languages, resulted in communicating to the Chinese consumer “Coke brings your ancestors back from the grave.”

There are global brands, but not global consumers. The multinationals Madden cites have had the luxury of learning about a market through trial and error; many companies going global do not have those resources. Companies would benefit from doing their cultural research on values, tastes, needs and acceptable marketing strategies prior to entering a foreign market. Such research is far more cost effective than having to rebuild one’s reputation after a cultural misstep.

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About the author

Jack Brown