10 Jul Exploiting the full potential of market: Separate brands for separate markets
Increase sales Potential of Market
To increase sales potential of market, many international companies are building up Separate brands for separate markets, consisting of a brand for the upper market and separate brands for medium and lower segments. This strategy, which is based on many brands, is mainly found in the consumer goods sector and has proven to be very effective if properly implemented. In countries such as China, where regulations often require joint ventures in the development of domestic brands, companies are occasionally forced to develop additional brands for political reasons.
In contrast to the vertical brand expansion described in our previous section, which deals with the development of the middle-income segments through the expansion of a premium brand, this is a broad positioning for several or all important consumer segments, including the entry-level segment of a rapidly developing middle class. This strategy is appropriate if several or all important segments in an emerging market show strong growth and consumers are switching dynamically to higher segments due to their income situation. This is described in detail in our new Springer publication “Erfolgreicher Markenaufbau in den großen Emerging Markets” by Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
Potential of market does not works without the important entry-level segment
In January 2013, Volkswagen’s Head of Development Ulrich Hackenberg reported that the Wolfsburg-based company was planning its first low-cost vehicle in China as a separate brand together with one of its two Chinese joint venture partners. In March 2013, the joint venture partners BMW and Brilliance confirmed reports of the establishment of a joint sub-brand with the Chinese name “Zhi Nuo”, which can be translated as “The Promise”. For BMW, the new brand was part of an expansion plan into local markets and a further step towards obtaining approval for a second joint venture production plant in Shenyang.
Utilizing the first mover advantage and developing additional dynamics
The Unilever Group in Brazil wants to benefit from the opportunities in the mid-market segment in the detergent products segment by positioning itself with OMO as a premium brand, but also with ALA as a brand that has been specially developed for the lower and middle-income groups. In the case of Brazil, these groups live mainly in the north-east of the country. Unilever’s internal campaign name for this region-specific brand extension was “Project Everyman”. Product customization for ALA aimed to better meet the needs of consumers with lower incomes. These included smaller plastic bags instead of the normal three-kilogram pack from OMO, but also different scents such as lavender, which promises happiness in the local culture and is said to attract men, as well as an easily recognizable packaging due to the low literacy prevalence in the region. In the ten years before 2007 Unilever had succeeded in achieving 81% market share in Brazil in the detergent powder sector.
The company developed a portfolio that covered virtually all major segments of the available market from the premium brand OMO to Minera (washing powder and household soaps) and down to Campeiro (the cheapest washing powder brand). Before Unilever began to expand into the north-east of the country, it carefully studied local demographic conditions. There are 48 million low-income consumers living in the country’s North-East, or 28% of Brazilians. The usage behavior was relatively easy to determine: Clothes were washed more frequently because people had fewer clothes per person. They mostly used launderettes or even water basins where they could meet and talk to their friends while washing. The entry into this rural market offered the opportunity to develop additional dynamism, benefit from the first mover advantage and become a market leader in consumer marketing for low-income people.
Realizing the full sales potential of market
Consumer goods giant Procter & Gamble (P&G) pursued a similar strategy of portfolio expansion in the Chinese detergent market in order to realize its full sales potential. The brands Ariel and Tide are available for this purpose. P&G’s flagship detergent brand Ariel is positioned in the premium segment, while Tide is focused on the mass available market. In order to achieve a clear differentiation between the two brands, P&G relied on two brand ambassadors who could not be more different. The company was able to win the famous Taiwanese singer, actress and TV presenter Xu Xidi for Ariel. It is considered very quick-witted and somewhat snappish and thus appeals to modern urban Chinese consumers. In Ariel’s TV commercials, Xu Xidi often appears with a playful and funny undertone and shows off her humor to its best advantage. Slogans such as “five-star purity” further underline the premium positioning of the brand.
Tide, on the other hand, is advertised by Chinese TV star Hai Qing. She is known as Everybody’s Darling and is famous for her numerous roles in Chinese soap operas. Through the cooperation with Hai Qing, Tide reaches the rather conservative mass available market. As brand ambassador for Tide, she organizes cooking lessons and gives household tips at events or in the social media. The advertising campaigns often show them in a traditional environment together with mothers and children. P&G’s product policy reflects the positioning of both brands. Ariel’s packaging sizes are significantly smaller than Tide’s when defining the segments along approximately the same price level. This makes Ariel the ideal product for Chinese consumers who find large packaging uncomfortable and are more focused on quality, while Tide is the preferred choice of more price-oriented consumers.
In order to exploit the entire sales potential in the major growth markets, separate brands are required for separate markets. The brands must be clearly distinguishable and their respective merits should be communicated in the language and with clear reference to the respective income groups.
Click to receive more insights from
“Brand Building and Marketing in Key Emerging Markets”
Read more insights from Globeone
United against the coronavirus – examples of more or less successful corporate communication
The extent of the social and economic impact resulting from the global coronavirus pandemic is ...
Corporate Newsrooms – The organizational foundation for successful communication
If you had talked to communications managers about a “corporate newsroom” five years ago, they ...
Culturally sensitive communication
For the brand communication of globally active companies, it is of decisive importance to take ...