Thursday, January 05, 2006

Global Brand Management in the Pepsi Generation

This interview features a conversation between Marc de Swaan Arons of EffectiveBrands and Antonio Lucio of PepsiCo, Inc. where they discuss Pepsi’s operating model and philosophy on the role of the global marketing team.

Antonio Lucio is the Senior Vice President Insights and Innovation at PepsiCo, Inc. In his role since January 2005, he drives the growth agenda across all divisions. At the time of this interview, Mr. Lucio was the Senior Vice President and Chief Marketing Officer of Pepsi-Cola International, a division of PepsiCo, Inc. He was responsible for leading the development and implementation of all global brand marketing programs and initiatives for the beverage portfolio. The only market for which he was not responsible was the U.S.

Prior to PepsiCo Mr. Lucio had 15 years of consumer goods experience with Procter and Gamble and Phillip Morris' Kraft General Foods.

To start, would you give me an overview of how your organization is structured and your operating model?

Lucio: We operate under a “local relevance” with “global scale” model. We are a very fast-growing company – the fastest growing international beverage company – but we are the #2 player. For us, maximizing scale when competing is of the essence.

How do we work? Everyone on our central team, by design, comes from our field operations. This provides instant credibility of our work to our field operations. I don’t bring international marketers from the outside world to do isolated, ivory tower type analyses and program development. Globally, my central group owns positioning, formulation, label design, and packaging parameters. We also deliver a comprehensive package of tools and programs every year: global advertising, new product options, promotional platform, and merchandising solutions. The way in which we go about it is different. We operate through a bottom-up, highly participatory and interactive process. It is lengthy and time-consuming, but highly effective.

  • Several times a year, we gather marketers from our key markets to identify needs and provide input to everything we do at the center and at each and every step of the development process – from advertising to product development.

  • We believe in 360-degree marketing for all of our brands. This means consistency and concurrency of all the aspects of the marketing mix. To do this, we have enlisted a very select group of partners and agencies. Our key account planner is the Chairman of BBDO, Allen Rosenshine. He is able to leverage a network of centers of excellence from around the world to deliver a global pool that drives 360-degree marketing. That means all spots are designed with “the store” in mind. As the advertising pools are developed, our alternate media and below-the-line groups get to work to present a comprehensive 360-degree approach to the brands.

  • All of this is delivered to our field in June. From July through September, our field supplements and plans implementation of the next year’s activities.

So with respect to your group’s role it appears that in one case you’re directive, and in another you’re more of a service organization. Is that how you see it?

Lucio: Definitely. We’re directive in terms of strategy, but we’re a service supplier in terms of marketing deliverables: advertising, products, innovation and promotional platforms. Our goal is clear: if we cannot provide goods that are significantly above what a market or region can provide on its own, then we just “don’t do it”.

Who judges your success?

Lucio: Our success is measured in the business results of our markets. We also judge it by the usage of the programs and tools that have been centrally developed.

Is there a steering committee of countries that drives what you do and sets an agenda at the center?

Lucio: Yes, there is a committee – consisting of people from the top 29 countries around the world – that drives everything we do. We also have a smaller operating group, consisting of 7 Regional Vice Presidents and 4 core brand VP’s from the center who make final decisions on the work developed by the top 29 team. Then, if there is a discrepancy, I cast the final vote.

In the areas of strategy positioning, I’m sure you have bottlers who have ideas that clash with your own. How do you address those issues?

Lucio: The concept is to provide role clarity: what is it that they do and what is it that we do. We are responsible for the brands, and they are responsible for the manufacture, sale, and delivery of the product.

We’ve created a joint planning process that brings together bottler and franchise houses on a day-to-day basis, where they look at the trends together to reach conclusions and indicate actions on all elements of the brand business. It all boils down to fact-based analysis and joint planning. If conflict is not sorted through this process, then the franchise house will make the final decision on brand-related matters, and the bottler will rule in operations.

Through our work, we’ve observed that marketing organizations typically split between development and activation. P&G has found a way to re-invent the local marketing position. It involves the division of roles & responsibilities and a better understanding of what’s important to a marketer in each situation. What role does local marketing play at Pepsi?

Lucio: I haven’t seen this happening at PepsiCo because our organization handles this differently. At Pepsi, the local marketer owns the branding locally: the actual manifestation of the positioning statement within the context of his/her particular market. What we, at the center, do is to provide a menu of programs that first and foremost, those local guys helped develop. The 29-people team has dual roles: activation in the local market and joint development of a global platform. For example, we have a global soccer platform. The local marketers helped develop the platform for global use. They also take it and adapt it to their own local markets by supplementing it with local players and activation programs. Our local marketer feels that he totally owns branding: he helped develop global programs and is 100% responsible for the local activation.

When you travel do you always meet with both the marketers and the bottlers? When you came into this role, how did you build relationships to begin working with and leading these people?

Lucio: Yes, I meet with both marketers and bottlers when I travel. In our particular case, given the dynamics of our business, the only approach that works is “Leadership by Influencing.”

In order to be successful in this style, you need to have a strong command of several things:
1) Knowledge of what the brand essence is today in that market
2) Knowledge of what the brand essence should be tomorrow
3) Knowledge of the local market conditions and performance, and
4) Awareness of the relationship between the franchise house and the bottler

At the end of that interaction, if both bottler and franchisee felt that you added value to the local agenda, then you were successful in your visit.

The ability to claim thought leadership comes up often in other interviews. How do you ensure that what you are doing is of better quality than what key markets could develop?

Lucio: Ultimately, the access to a wide network of best-in-class international support agencies – advertising, promotional, packaging, etc. – together with the level of centralized funds that we can assign to a project, will result in a superior project that our local countries can’t do on their own. To ensure that that is the case, the global work is tested in all our key top 29 markets. The norm is clear: global work has to obtain best-in-class scores in our local markets…otherwise it does not work!

Sometimes local countries (e.g., Brazil), in tandem with local agencies, are able to come up with great programs. Do you have any thoughts on this?

Lucio: Three thoughts. First, we work with centers of creative excellence that deliver our global goals and drive the local agenda. In the example you mentioned, Brazil is one of our centers of excellence. The work done by Brazil is leveraged both locally and globally.

Second, outstanding local work is also showcased as best practices with our markets.

Finally, sometimes even a key local market is supported financially by the center to deliver projects with multi-country locations. We run a highly fluid and interactive process that enables us to maximize global and local resources.

On the pitfalls to avoid, you’ve been at Kraft and P&G, so you’ve seen how different operating models work with global brands. What are the 3 things to really watch out for when you’re in a global brand role?

Lucio: Only two things are critical in our book: ownership and participation by the field organization.

By getting the field involved in the development of the global agenda, they feel that they own it. It’s as simple and as complicated as that. When our process hasn’t worked, it’s because the people who were in charge of activating the brand at a local level didn’t feel that they owned it.

What advice would you give to your peers who travel around and meet with local markets, to help build those networks?

Lucio: Be there often. Get immersed in the local numbers. Listen and always build bridges between the local agendas and the global priorities. When in doubt, trust the field. And always, always make a point to add value… to the local agenda.

Principles of Effective Global Brand Leadership

Over the last 4 years, EffectiveBrands has developed The 8 Principles of Effective Global Brand Leadership. In this discussion, Antonio Lucio illustrates how Pepsi exhibits three of these global brand leadership principles.

Ensure Absolute Clarity for Stakeholders
EffectiveBrands has found that it is not the breadth of responsibilities, but the clarity of responsibilities that drives effectiveness. Pepsi demonstrates this fundamental understanding by clearly defining who sets the global agenda, who makes the final decisions on the priorities, and who casts the final vote if any discrepancies exist. In dealing with bottlers, there is also a clear mutually agreed upon operating framework where the central team is responsible for the brands and the bottlers are responsible for the operations. If a conflict arises, then each party has the final decision in the respective areas for which they are responsible.

Adopt a Servant Leadership Mindset
Pepsi recognizes that global marketing takes place in the local market place. Antonio Lucio makes a specific point of avoiding the ‘ivory tower’ way of working and leads with the mindset of ‘Leadership by Influencing.’ He understands that his role is to make the local marketers and bottlers more effective and successful. As a result, his goal is to meet their needs and to always add value to their agenda. This is achieved through showcasing outstanding local work as best practices, in addition to leveraging centers of excellence to deliver global goals and drive local agendas.

Focus the Global Brand Team
Pepsi understands that the global marketing team must focus only on initiatives that the local markets would not otherwise be able to develop either due to lack of time or resources. Many of these initiatives could also be categorized as long-term and ‘very important, but not urgent.’ To build credibility with their local operating companies, Pepsi operates in a bottom-up process involving local marketers in every step of the development process. If the initiatives developed by the central team can be provided at the same level of quality by a local or regional market, then it is scrapped. The global team measures their success based on the business results of their local markets and on the usage of programs and tools that were developed centrally.

Friday, October 07, 2005

Danone: Serving Up Servant Leadership

This Bulletin features a discussion between EffectiveBrands (EB) and Olivier Faujour (OF) of Danone. It talks about Faujour's experiences as General Manager of the Dairy Division for kids' products. Kids' products are sold under different local brand names (Danonino, Danonetje, Danimals, Petit Danone) in more than 30 countries and account for $1 billion turnover.

In 2005 Olivier Faujour was promoted to General Manager of the Dairy Division for China. He had been in his role as General Manager of the Dairy Division for kids' products since 2003. Before that, he served in several marketing roles at Procter & Gamble, in Europe as well as Latin America from 1989-2002, working on brands such as Pampers and Ariel. His last position at P&G was that of Marketing Director Brazil, where he was responsible for fabric and home care.

"Although I am ultimately responsible for P&L, the local organisations will always be in the driver's seat"
EB: Do you have an operating framework in place that clearly delineates responsibility and accountability?

Faujour: At Danone, responsibility and accountability are clearly defined. Local managers are responsible for growing the profit & sales of their brand by putting the right strategy on paper and executing the brand mix - from product development through local R&D down to advertising, merchandising, and pricing.

The primary role of central teams, such as the one I lead, is to give local markets the tools to do this faster and better. Their secondary role is to lead and deploy international innovation projects. The last is to provide dedicated help to countries not able to deliver their growth budget. I believe this operating framework is a key contributor to the strong results that Danone's Dairy Division currently enjoys worldwide.

There is usually great open-mindedness on the part of local organisations because they know that the central teams are there to add value to their work and not to steal their job. The ownership given to the local organisations creates a strong entrepreneurial spirit with highly motivated and enthusiastic people. It also helps us attract top local talent.

EB: Can you give an example of when this local ownership and entrepreneurial spirit translated into a global success?

Faujour: Although I am ultimately responsible for P&L, the local organizations will always be in the driver's seat. It works both ways: whenever I have a success from another country that they could benefit from, they're open to hearing about it and when they want to know what's happening in other countries, they are always free to give me a call and get the answer. Overall, there's a high level of trust and transparency in day-to-day communication. Due to this, we have been able to roll out a successful consumer promotion related to the kids' products, which was invented in Mexico, in more than 20 countries this year and have experienced double-digit growth.

EB: Is the same true across all of the dairy brands or is it specific to the kids' brand?

Faujour: The kids' brand is probably the most local of Danone's four largest brands, the other three being Actimel, Activia, and Vitalinea. Actimel for example has a much more global marketing mix. After achieving success in Belgium, it was launched almost at the same time across several countries with a unique positioning whilst leveraging the best practices from Belgium.

However, the key role of my counterparts who manage brands centrally with a more global mix is much the same as what I described for the kids' brand. Their role is to identify and roll out new best practices to accelerate business growth.

EB: In the scenario where you were not happy with the chosen local direction, what mechanisms do you have in place to put a check on a country's plans?

Faujour: You sometimes need to temper the enthusiasm of local countries that want to embark on a project that has not delivered against expectations in other parts of the world. You need to act fast and be forceful to ensure that they do not waste time and money re-testing an idea that has low odds of success.

If a country wants to implement an idea that did not meet expectations elsewhere, it is our role centrally to raise the flag, to convince them to at least run local research or pursue other ideas with stronger international pedigree. Discussions happen cross-functionally through informal meetings where the general managers and the Dairy Division president sometimes participate. The President of the division acts as the ultimate arbiter/referee, if necessary. Most debates "local vs. global" are healthy. They help question the status quo and can lead to new ways of doing business.

EB: How do you deal with issues where it is a matter of interpretation - globally, it makes sense but locally, it has an impact on how the market is seen to perform in that particular year?

Faujour: It is sometimes an art to find the right balance between global and local needs. Decisions need to be made with the maximum amount of pragmatism, always keeping the consumer in mind. In my experience, when a central team is pushing hard for a "global" idea without getting a positive response from many countries, it suggests that this idea may not be as good as the central team thinks.

There is always some resistance to new ideas, particularly when they come from elsewhere. For instance, when we decided to invest in a common brand character "Dino" to maximize appeal to kids, there was resistance from countries that had other plans such as pure licensing. The resistance was mainly due to the fact that these countries were not seeing the value of the "Dino" character. We launched it first in certain countries and when we experienced success, others quickly followed. Today, the "Dino" character is one of the hottest among kids in countries like Spain and Russia and we are now able to export similar character promotions across the globe at minimal cost.

EB: What would be your key learnings or observations with respect to Roles & Responsibilities coming personally from a centralized to a decentralized organisation?

Faujour: First, the voice of the consumer must always be heard and be at the centre of decisions. Danone values that the consumer is the boss.

  • Don't try to be everywhere. Try to identify the few countries that will help you qualify potential big ideas for the world.
  • Be humble and try to recognize that your intuition can be wrong because in the end, the local organization is supposed to know their market best.
  • Travel enough and spend a lot of time in the markets. Don't stay in your ivory tower.
  • Lastly, show enthusiasm and empathy to the countries. Try to understand their overall business context, not just in the frame of the brand for which you are accountable.
EB: You mentioned earlier that part of the role of the central team is to provide local marketers with tools to perform faster and better. What mechanisms have you put in place to achieve this?

Faujour: We have ongoing tools (available to all marketers worldwide) such as the Intranet, e-mails, and newsletters that help us to share brand-specific best practices. We also have conventions twice a year where we bring the marketing directors from around the world together and the central team presents their vision and latest best practices. The Conventions are more top-down as the objective is to share proven ideas to a large audience all at once. We also have workshops on selected subjects (e.g. evaluating pricing strategy) which bring group managers, who are a level below marketing directors, or the brand managers together for a day or two. There are eight to ten of these workshops each year and they can be run regionally or globally. These meetings are working sessions and are therefore very interactive.

EB: Is there anything that pulls together the Danone Way of managing a brand?

Faujour: General marketing training is run by the central/local HR organizations. The Danone Marketing University is a training program for new hires which consists of 3 waves of training covering the basics of positioning, market research, financial marketing in which key experts participate to share their experience first-hand of working on particular brands. During this 'University', every new hire gets a godfather (a senior-level mentor) whose role is to give tips and advice on business and career management.

We also have something called the Danone Forum, which is an internal training program delivered by the local marketing directors once every quarter. The aim is to give local marketers a little bit of theory on different elements of marketing such as advertising and packaging using benchmarks and case studies. Here, as in other areas, the idea is to leverage the materials developed in other countries and adapt it to the local situation.

EB: Are there any more informal methods of sharing information and best practices?

Faujour: At Danone, having a strong network is very important. We are publicly encouraged by top management to get together, create a network, and talk to colleagues in other countries on issues we face, rather than relying solely on formal meetings. The corporate "Who is Who" Intranet is also a networking facilitator.

EB: How do you ensure that you also have global leverage in terms of your external partners, e.g. ad agency?

Faujour: We use a worldwide agency for advertising, Young & Rubicam. We ran an initiative recently called the 'Copy Challenge' to create advertising copy for the kids brand. We provided some broad guidelines on what the brief should be (the advertising platform). Each of the fifteen participating countries then briefed their local agencies using a local brief. The local agency creatives presented their ads to us in New York and we selected the top 3 ads, which we then partially financed in terms of production costs, etc. The countries whose ads were not selected went ahead and financed their own ads.

The outcome was very positive; it resulted in many good ideas, some of which are now proving to be successful. It was also a good way to make the various local agencies work harder for us.

EB: As you mentioned earlier, the secondary role of your team is to lead and deploy international innovation projects. Where do you find inspiration for new innovations?

Faujour: I try to keep an eye on what's happening in the different markets. There are some specialised websites in nutrition which present all the latest innovations, interviews with food professionals, etc. and that exposure can give you a sense of what could be a big hit two to three years from now. Attending congresses with key food professionals and other experts (sociologists, paediatricians) can also give great insights. Lastly, regular store checks in the 35 countries where my brand is sold can also be a great source of inspiration.

EB: What approach do you employ with respect to these international innovation projects?

Faujour: We work on longer-term breakthrough product concepts that will hit the markets two to three years from now so the work we're doing is quite upstream, e.g. definition of what technology we would need to buy to deliver the product benefits. Once we have identified the market potential, how big the idea could be, we select two or three countries that could roll out the innovation and then they champion running all the market research, development etc. with our guidance. Countries usually don't have the time to do the first stage of the investigation. However, it is critical to involve them early enough so they feel ownership.

EB: Are there other mechanisms through which innovations are leveraged across countries?

Faujour: Every local country has an R&D department that reports via the European R&D to central R&D.

In the case of a concept being developed by a local team, they brief local R&D to first screen for similarity of concept. R&D has resources all over the world and can come back to the local team and ask them to get in touch with another country that is already working on a similar concept. If no similarity is found, then local R&D starts assessing the feasibility and business potential. If approved and additional resources are required, another country will be asked to join either directly or via the centre.

Principles of Effective Global Brand Leadership
In this discussion, Olivier Faujour emphasizes the importance of several principles of leading global brands.

Servant Leadership
Servant Leadership is the idea of helping employees reach their full potential by empowering them and addressing their needs. It is all about avoiding the ivory tower perception of people in the central team. It is about understanding that, as a central resource, you are there for the one and only reason which is to make the local operating companies more effective and successful. Global marketing takes place in the local market place. A simple truth forgotten by many, but driving the Danone way of global marketing.

Facilitate Global Leverage
The role of the central group is primarily to identify and accelerate roll-out of best practices across local markets. Global conventions, together with ongoing tools like Intranet, e-mails, and newsletters, help to effectively disseminate best practices across the global marketing community. Investing in a common brand character and exporting it across the world at minimal cost is one way in which Danone exploits the benefits of scale. Using a worldwide advertising agency is a common means for globally leveraging resources. Having the local creatives of the global agency compete against one another ensures a higher quality end product.

Global Innovation
The area of innovation is often the only one without vested interests. The central group focuses its resources working on breakthrough international concepts, but ensures local ownership and relevancy by involving countries early on in the process. What is also recognized is that good ideas can come from everywhere and everyone: innovation takes place on a local as well as a global level. The way R&D is organized ensures that there is not superfluous repetition of efforts.

For a PDF version of this interview, please click here.

Monday, October 03, 2005

InterContinental Hotels: Global Branding Suite Success

This Bulletin features a discussion between EffectiveBrands (EB) and Peter Gowers of InterContinental Hotels Group. It talks about the challenges of global brand development, global activation in a franchise service model, and inspiring brand-building behaviours throughout an organization.

Peter Gowers joined the strategic planning group of Bass PLC, a hotels, brewing, bars and restaurants conglomerate in 1999. When Bass (then known as Six Continents) announced the demerger of its remaining businesses in 2002, Peter joined the newly independent hotels company, InterContinental Hotels Group, as Executive Vice President (EVP) of Strategy. In 2003, Peter was appointed EVP Global Brand Services with responsibility for group strategy, worldwide marketing and distribution, loyalty programs and revenue management.
We are much better off optimizing our brand for local market conditions than trying to impose a 'one size fits all' approach across the world
EB: InterContinental Hotels Group is comprised of seven major hotel chains across the world. What challenges do you face in managing those chains? Are there any industry-specific challenges that are particularly difficult to face?

Gowers: I think the biggest challenge for us is global brand development. We really wrestled with the challenge of deciding which brands to run globally and which ones are national. As part of our organizational review, we decided that we would run our InterContinental brand as a global brand, meaning one team based in one location with contacts with stakeholders in three regions. They run it as one consistent product across the world.

Holiday Inn (the world’s most stayed-at brand) is run on a regional basis. For Holiday Inn we have dedicated teams in each of our big markets. Each Holiday Inn looks and feels a bit different depending on where you are in the world.

We operate in a franchise service model. We not only have the challenge of what you would like the brand to look like in different regions, but we also have the added challenge of actually making it happen. We don’t control the consumer experience to the last degree. Most branded hotels in the world are franchised. The owner of the property is not the same as the brand owner.

The approach to this challenge has always been to anchor it back to what the consumer wants. What do we think matters to our consumers? We found that 70% of the people who are staying in a hotel tonight are staying in the country they live in. Knowing that, we are much better off optimizing our brand for local market conditions than trying to impose a ‘one size fits all’ approach across the world.

EB: How do you run the InterContinental brand? How the team is set up and structured in terms of roles and responsibilities?

Gowers: We have a Senior VP of the InterContinental brand and she is based in our corporate office in the UK with me. She has all the classic brand management responsibilities: developing the brand essence, the core brand positioning, the essential attributes for the brand, the hotel standards, and assuring a consistent, creative look and feel. She also does the media buying and selection for most markets of the world.

In the biggest region in which we operate (U.S.), we have folks on the ground that deal with modifying the global campaign locally and also serve as the public face of the brand if we try to buy or sell a new hotel. Those people report in a matrix structure into the global brand manager and also to a local or regional marketing director.

We have a brand team here in the centre that is responsible for A&P and new product development. In total, the team is about six people.

EB: With regard to developing the InterContinental brand positioning based on a universal target consumer insight, how did you tackle this?

Gowers: First of all, on the consumer side, the InterContinental brand targets the consumer who is internationally-minded, psychographically as well as demographically (who see themselves as or actually are people who travel all over the world). We have a lot of consumers in America who don’t travel the world at all, but like to feel they understand its differences. The brand is aimed at that kind of consumer.

When we revisited our brand positioning, we commissioned quantitative research in the US market, Europe and several markets in Asia to get an understanding of our broad consumer base for segmentation purposes. From this research, we distilled the critical and fundamental attributes to deliver the guest experience that really needed to be consistent across all three regions. For the InterContinental brand, these attributes included: having a signature restaurant, providing 24-hour a day services and offering real local insight to help you get the most from your stay.

Then we looked at attributes that were very specific to the local market. For example, a consumer who visits one of the less developed markets in Asia Pacific expects to find many staff to deal with their needs, they know that the labour costs there support this level of service. They don’t necessarily expect quite the same thing when they go to Geneva.

So we have a basic series of things that all our hotels do regardless of where they are in the world and we try to select a minimum number. What we are looking to have is a guaranteed execution across the world. In a service business the fewer things you guarantee, the more likely you are to be able to do them. Brands that can guarantee very complicated propositions around the world tend only to be higher-priced brands like the InterContinental.

We might have 25% of standards that are absolutely cast in stone; the remainder (which are largely to do with physical property and staffing levels) will be much more flexible by region. We allow our hotel operators in each region to make those decisions in accordance with local competition.

"You can’t come up with a positioning of your brand that is inconsistent with the sort of people you’ve got working for you…"

EB: How does your vision and culture relate to your brand positioning?

Gowers: We are trying to link the corporate strategy of the business that we communicate to the stock market as explicitly as possible with our day-to-day operations. This company is all about signing up new contracts and franchises and the key driver of doing that is brand strength. Gradually over time, we built more and more of a brand culture in our company where it used to be dominated by a hotel operations culture. These are two very different things. We are wrestling with the challenge: what takes the values of your brand right through the organization when your organization is full of people who are not used to seeing brands in the hotel industry.

EB: How do you ensure that this brand positioning is executed in terms of the values that people represent to the end consumer?

Gowers: There are two big things that we have learned that have influenced the way we do things:

You can’t come up with a positioning of your brand that is inconsistent with the sort of people you’ve got working for you, unless you are prepared to change them all and that is pretty difficult. We very much start from the perspective that if you want this value to come alive on the property, you have to have the right kind of people in the first place. So, I can’t tweak my brand values unless I am committed to changing my staff.

The second thing we learned is that every aspect of your marketing and service delivery has to be tied back to the brand essence & personality. I know this is Marketing 101, but in this industry it’s something quite difficult to do. Our brand personality, ‘the hotel that understands you’, wouldn’t mean anything if we couldn’t get those little executions right. We tend to try and do fewer things, but do them really well. A good example of that would be our Holiday Inn Express brand. We selected one or two things that we can stand for and completely execute. A new breakfast concept, an initiative of the brand director, was successfully rolled out over 1,000 hotels in about 3 months. This concept was thoroughly researched and works on one of the key attributes of Holiday Inn Express.

EB: Once you’ve got that employee base you can’t change it completely, but you can influence the new people that you take on board. How do the brand values influence your recruitment process?

Gowers: At a property level it is fairly obvious that recruiting on brand type does. You tend to screen against a particular pattern of brand attributes. For example, at Holiday Inn we tend to recruit people who are extrovert and have a friendly demeanour and all the other things that go with our brand. At InterContinental we try to recruit people that know how to deliver discreet service. We even tried to extend this back up the line: if you look at the 5 or 6 people that head up the brand in the different markets, you will find that they tend to embody their brand personality. So the person who runs Staybridge Suites is very much a straight-forward, unpretentious kind of guy and the lady who runs InterContinental is someone who obviously knows her way around the luxury end of the travel market.

We have got people whose personalities reflect the brand that they run and that turns out to be very effective. When you are trying to sell a new hotel (or get a travel agent to decide to book people into your property) there is nothing that makes them feel more comfortable about it than seeing the personality of the brand come through in the people who are going to deliver it.

EB: Could you elaborate on the brand values that are important for InterContinental in recruitment?

Gowers: InterContinental tends to look for people who are respectful but not sycophantic, have a degree of appreciation for the world, rather than just their local market. InterContinental, for example, has a far higher proportion of people who have worked in multiple countries, right down to housekeepers and front desk staff. We do tend to recruit people who know the foibles of different nationalities and that is much more important than at a Holiday Inn Express. A good InterContinental General Manager will probably have worked in at least three countries and three continents. For most of our people this is quite true, they have worked in multiple geographic regions of the world. Ultimately, the brand personality is very much to be both worldly and international and relatively exclusive and sophisticated.

EB: Does this carry through in the way you evaluate people in their performance reviews?

Gowers: We’re getting there. On the spectrum of things you can do to guarantee the guest’s experience, you first start with a clear brand identity. You translate that into who you hire and you then monitor that into how they deliver. I would say we have done a good job on the first two. We are starting to track individual performance with reference to individual brands. That has been the main challenge, and I guess it’s also the case in other industries. Economies of scale in the systems facilitate tracking them all in the same way (standard performance assessment across brands). This can leave little room for brand individuality. In the industry everyone is learning that you can’t create a true brand personality unless you do measure the brand performance differently by brand. We are just starting to roll this out.

Principles of Effective Global Brand Leadership
In this discussion, Peter Gowers has emphasized the importance of several principles of leading global brands.

Focus the Global Brand Team
In a service industry, having a focused brand positioning is a key success factor. Knowing this, InterContinental selected set of core brand attributes which then allows the Global Brand Team to focus on, and flawlessly execute, each of those attributes. The brand platform clearly identifies which attributes should be consistent globally and which can be adapted for the local market, giving clarity between the Global Brand Team and local marketers.

Inspire Personal Commitment to the Brand
A challenge several global brand leaders face is inspiring the personal commitment of their employees to their brand. InterContinental recognizes this challenge and reflects it not only in their positioning, but also in their hiring practices. The brand leaders in each of their markets personify the brand. In leading by example, they inspire others in the organization to become more committed to the brand. When hiring all new employees, InterContinental looks for people who embody the brand personality, knowing that they will better be able to deliver on the brand promise.

Promote True Brand Behaviour
Promoting the right behaviour is a key component to the long-term success of a brand. An essential part of promoting consistent brand behaviour is measurement. InterContinental acknowledges the importance of monitoring how employees deliver on the brand promise. While they are still in the process of rolling out a performance measurement system tailored to their individual brands, InterContinental understands the importance of promoting and reinforcing behaviour that is consistent with the brand identity.

For a PDF version of this interview, please click here.

Tuesday, September 20, 2005

Dow Corning: Silicone-Smooth Branding

This Bulletin features a discussion between EffectiveBrands (EB) and Scott Fuson of Dow Corning. It talks about Dow Corning’s experiences harmonizing the company under one master brand, educating and inspiring the marketing community at Dow Corning about the new strategy and architecture, and using all of the resources available to him to make the changes happen.

Scott Fuson is the Chief Marketing Officer for Dow Corning Corporation. Mr. Fuson joined Dow Corning in 1982 as a Field Sales representative in New Jersey for High Technology Industries. In 1995, Mr. Fuson relocated to Europe, where he served as Sophia Antipolis site manager and as European Industry Director for Healthcare Industries in France. He was named Global Marketing Manager for the Strategic Intelligence and New Business Market Development unit in 1999 and relocated back to the U.S.

Formulating a Clear Brand Strategy and Architecture

EB: One challenge that companies and marketers typically face is marrying the fact that they have both specialized brands and a corporate brand. How did you handle this, both strategically and tactically?

Fuson: We made the decision to target the price driven end of the market by developing a new web-enabled business model branded as Xiameter®, which offers low prices for large volumes of commonly used silicone products. We decided on this strategy because the Dow Corning brand is not a “price brand” and we don’t want to make it a price brand. To that effect, a new business model had to be developed.

In the past, we let our brand evolve and we ended up with was a master brand imbedded with the culture of the company. Positioning our brand was somewhat new territory for us. At the same time we had a proliferation of new brands that really had no rhyme or reason. We realized then that it was time for a corporate branding strategy.

Three years ago, we looked at the master brand, Dow Corning, and decided what the attributes and brand drivers were. We then developed a brand architecture, which was done with the top 25 executives of the company. Ultimately, we developed a master brand endorser strategy, then went back to the portfolio and mapped all our products accordingly.

EB: Did you ever come across brands you owned that were very successful in a specific industry yet somehow their values seemed at odds with the Dow Corning brand? How did you go about resolving this?

Fuson: Yes, we found a number of brands in that situation. We addressed this by forming a Brand Council and creating a new position of Global Brand Manager. The Corporate Communications Officer, the Global Brand Manager, several leaders from across our industry units, our corporate brand and trademark attorney, and I formed the Council.

In our discussions, we made sure we educated the marketing and industry groups worldwide on the new marketing policy and on how to effectively do branding globally. Part of this new policy stated that before creating a new brand marketers had to come to the Brand Council.

EB: How did you go about educating the marketing and industry groups?

Fuson: We educated them primarily through workshops. The workshops we conducted were about marketing education – what are the rules and general principles of branding, such as ‘A few strong brands are better than many average brands’, then we got into specifics like ‘What should the brand architecture be?’ You have to have agreement and support at the beginning of the process. We created a common language through education and everyone came back with recommendations.

EB: Was there ever a struggle between you and the other business leaders?

: Not really, since the business managers and top 25 people agreed to the brand strategy and architecture. Everyone had a natural interest in participating. The attitude was basically, ‘Let's get together and clean this up.’ The time was right.

Every year the company develops 3-5 corporate priorities, based on the company’s strategy as a whole. These are things that drive everything forward. For the last three years, one of these priorities has been to energize the Dow Corning brand. Basically, energizing the Dow Corning brand was made a top corporate priority.

Bringing the Strategy to Life

EB: How many brands did you have prior to the development of your corporate branding strategy? What impact have you seen as a result of the new strategy?

Fuson: About a hundred. Since we formed the Brand Council, Dow Corning had been reducing the number of brands we own eliminating non-strategic or poorly supported brands. Licensing income has increased dramatically as we have reduced the number of brands we use and made them selectively available to third parties. Focusing on the central Dow Corning brand has brought in licensing fees from many areas that were not previously Dow Corning branded.

EB: Did the CEO support you in your efforts?

Fuson: She whole-heartedly bought into it because when you energize the brand, you energize the people. So naturally, she saw the link and value that would be added from the work.

EB: Now you have to tell the business leaders that the brands need to change or are conflicting with the master brand. Can you talk about this?

Fuson: We essentially said, “Here's the list of the brands you own and we're going to migrate them to the house brand. If you have an objection, you have to come to the Brand Council." For the most part, there was very little conflict. There were some tough decisions. We continually asked for analysis to support the proposals people brought, yet few had the data that made the case for their brand not migrating. Because the culture of the company places an emphasis on using ‘fact-supported decision-making’ due to Six Sigma, the Brand Council knew what the sales were for each brand and what the budget was, so it was a very transparent, natural process.

We went through a process and set of criteria outlining questions such as: ‘How much are you investing?’, ‘What's the value of the offer brand today?’, and ‘What do you project it to be in the future?’ This also involved measuring the performance of the brand. We looked at the brands, ran through the hierarchy, and had the data to respond to any challenges. The Brand Council was pleased at how much credibility and authority we had. This was all attributable to the research we had conducted.

EB: You've talked about educating and aligning the whole marketing group – how large is your team and how is alignment executed?

Fuson: Several hundred marketing professionals worldwide.

Alignment is done at two levels. First is brand communication in general. One communication channel we use is the global communications leadership team, which consists of top managers of all functions across the globe. We meet with them every other month, sometimes by voice conference. We have a regular call for Asia, one for Europe, and one for the Americas. That's how we keep top management informed. The meetings are generally run by the CEO. Slides are sent out a few days in advance and the meetings typically last 90 minutes. She introduces the meeting and talks about issues she thinks are important, then the CFO speaks about the company’s performance, and then we transition into the focus topic for the meeting with the global managers. That's how we get them engaged. The second half of the meeting is open for questions. We also reinforce brand communications using our intranet and with visual reminders such as posters that get sent to all of our locations worldwide. Our customer service organization also has what is called a brand attribute of the month where they hold workshops engaging people in the essence of the brand attribute and how to reflect it in their daily activities.

In addition, I hold quarterly conference calls using the same format with our marketing professionals worldwide focusing on branding and marketing excellence.

Taking the Temperature of the Brand

EB: How do you ensure that the information from the meetings reaches everyone in the organization and that they completely understand what is being conveyed?

Fuson: The expectation is that all communication will be cascaded down into each business unit by those attending the meeting. They're expected to organize this themselves, but the communications group surveys people to see how effective the communication was. The survey is in the form of a web-based, Intranet questionnaire. Employees are asked if they would like to participate in the survey and can then go to the Intranet to complete it. In the survey, we measure their awareness of topics in several areas, for example:

* Energizing the brand as a corporate priority
* Brand drivers
* Brand attributes
* Salience and understanding of the information discussed

The survey is anonymous. I’d like to have more information on the types of people who score the highest and lowest, so I can see who best understands the information. We haven’t moved in this direction, though, because our results indicate that we’re already getting a pretty good understanding across the board.

The second communication tactic we use is the Intranet, ‘DC Connection’. On the Intranet, we post articles that are relevant to the execution of our strategy and priorities. One section is called ‘News from the Field’, where anyone from the field can post a major accomplishment or their experience on a successful and significant project. Globally, we get about two of these postings each day. The site basically facilitates the sharing of best-practices, practical applications, and shows people in the back office that the strategy is actually happening and that it’s working. By providing a forum to highlight successes, we are essentially creating heroes, which we believe is a very important thing in change management.

EB: How do you ensure that your ‘Brand Heroes’ are recognized?

Fuson: We have a Marketing Excellence Council that consists of lead marketing people from each of our industries. We have recognition events where top executives select the best marketing professionals from the previous year, based on certain criteria, which include elements of the company’s strategy. Marketers throughout the company know about this and are motivated to win these awards. From a career perspective, winning an award or participating in the process is essential to reach certain levels within the corporation.

Principles of Effective Global Brand Leadership

In this discussion, Scott Fuson emphasizes the importance of several principles of leading global brands.

Ensure Absolute Clarity for Stakeholders

Formulating a brand strategy and architecture that was clearly understood by everyone in the organization was the first step the company took in effectively managing the Dow Corning brand. Making “Energizing the Brand” a top corporate priority illustrated branding’s importance to the future success of the company. The creation of the Brand Council provided a means to mutually agree upon the core attributes of the brand. The Brand Council clearly conveys what is negotiable about the brand and what can not be changed.

Inspire Commitment to the Brand

The support from the CEO, coupled with marketing education, drove the appreciation for branding within the organization. CEO-led meetings were used to disseminate information as well as engage and inspire employees. The employment of the “News from the Field” section on DC Connection, Dow Corning’s Intranet website, was essential in creating internal role models and fostering commitment to the brand.

Promote True Brand Behavior

The key to long-term differentiated success is rewarding those who consistently exhibit brand-building behavior. Dow Corning promotes brand behavior by highlighting successes through DC Connection as well as through major employee recognition events. Incorporating brand-building behavior into employees’ career paths makes it clear that commitment to branding is essential to success at Dow Corning.

For a PDF version of this interview, click here.

Thursday, August 11, 2005

Samsung's Brand Essence

A recent Businessweek interview with Samsung's Chief Marketing Officer, Gregory Lee, sheds insight into the work behind the successful Korean brand. The discussion revolves around creating one master brand and aligning design, sound, and image to reinforce the brand essence.

A link to the original article published in Businessweek can be found here.

Samsung's Goal: Be Like BMW
Like the iconic carmaker, the Korean electronics giant is out to build a brand that people know instantly and desire, says its chief marketer

Since BusinessWeek and leading brand consultancy Interbrand launched our annual ranking of the 100 largest global brands five years ago, no brand has dominated the list more than Samsung, the Korean consumer-electronics maker. In that time, no other global brand has risen as much in brand value -- 186%, to $14.9 billion, by the end of 2004.

Surpassed only by eBay last year in brand growth, Samsung posted a 22% gain, overtaking Sony in overall brand value to become the leading consumer-electronics brand (see BW, 7/4/05, "The Best Product Designs of 2005").

How Samsung did this is a testament to a strategy of singularly focusing on one brand -- a "master brand." With so much media fragmentation and clutter, Samsung believes the master-brand strategy is the only way to reach the consumer today. A similar strategy is being followed by other top gainers on this year's list.

In an interview with Robert Berner, a correspondent in BusinessWeek's Chicago bureau, Samsung's Global Chief Marketing Officer Gregory Lee discusses in detail why Samsung made this shift, why design is a very important part of brand identity, and where the Samsung brand is still weak. Edited excerpts of their conversation follow:

Q: Samsung used to have a number of subrands: Plano, Tantus, Yepp, Wiseview. But the company has gone to a single brand. Why?
A: It was a change in 1996 by our chairman, who wanted to build a brand, not just a product. There was an Asian economic crisis, and the company was in a crisis because it wasn't as efficient as it needed to be. And not having a strong brand was crippling. We also migrated to a premium-brand strategy, ditching low-end products that were selling well.

The story I'm trying to tell is about a big way of building a brand. It works because Samsung has one master brand as opposed to 50. We looked to the future to build the Samsung brand as iconic -- that everybody would want to have and love to have. That is what BMW has done well.

Q: What's the advantage today of having a single master, or mono, brand?
A: [You avoid problems with] fragmentation and not having enough money to support a lot of brands.

Q. Have you also increased spending behind the brand as a percent of sales?
A: We don't release that, [but I can tell you] it has been going up pretty significantly. If you focus all that investment into one brand, you get a lot of brand leverage. We have really focused our communication around not just the uniform brand message, but around focused products, what we call flagship products. Mobile phones would be No. 1. And No. 2 would be TVs.

Q: Why those products?
A: We have an advantage in those products around technology: digital technology, chips, liquid-crystal-display business, and traditional audio and video from making products for 30 years.

If you look at the future, it's very bright for TVs and phones. The TV is a window to a lot of things. When you look at TV, it's a window to another set of convergent activities. But it doesn't mean the business side of TV is going to be easy necessarily.

Q: Have you increased your focus on product design?
A: We have about 450 people on our design staff. Four or five years ago, it would have been 100 or less. We have six design centers around the world.

We're bringing design into everyday products such as mobile phones. There are many mobile phones that hip people want to have. We're able to bring coolness into the category and are also able to price up because of the coolness factor. Coolness is very much part of strategy.

Q: How else does design help the brand?
A: You don't want all the designs to look and feel completely different. So when you look at a Samsung mobile phone or TV, you get that same black or silver -- a consistent look. On cell phones, there are similar user interfaces and tones.

Q: Even the sounds a machine makes?
A: We are tying to go to a multisensoral approach to design. That means when you open up the user interface, whether it is a phone or a TV, those user interfaces will signal the same sound.

For example, we introduced a global advertising campaign, called "Imagine," and at the end of the commercials there's a Samsung logo and a sound effect. And that sound is supposed to be the new Samsung sound. We will use that sound in all of our products. We have just started this.

Q: Please say more about how sound helps the brand?
A: The design isn't just the shape. It's the color, the feel, and the sound when you turn it on. We want to have the same kind of sound and look and feel throughout our products so it all works toward one Samsung brand.

Here's another way to think about it. If you had completely different sounds and color and look and feel, it would be very difficult to keep a common-brand essence. Sound works towards a common brand affinity.

Q: What is Samsung's brand essence?
A: What we are trying to stand for going into the future is technology, design, and sensation, human sensation. We are trying to bring those three things together so all the products work together.

Q: What are some of the problems you see with Samsung's brand image?
A: Our brand awareness is very high, but our affinity, meaning preference [among consumers] is still not as high as it needs to be to become like a BMW.

You ask somebody, "What does Samsung mean to you?" A lot of people don't know. So with BMW, you would say performance. Or they might say a different thing but they all sort of talk in the same area -- we would call it brand essence.

That is a huge opportunity for us. Our next round [of communication strategy] is centered around our customers and the benefits we bring to their lives. In the past, our communication was all about the product. There wasn't a real story to it. We are really trying to tell a story about how it fits into a consumer lives in our newer communications.

When we do our studies, most people see our product and brand as cold -- and we are tying to move away from that. We want to be warm. But the most important thing is being relevant. I don't know if BMW is warm, but it's certainly relevant and it's cool, and you want to have it. That is the approach we want to take.

Saturday, August 06, 2005

MasterCard - Finding a Compelling Global Positioning: 'Priceless'

This bulletin features a discussion between EffectiveBrands (EB) and Lawrence Flanagan of MasterCard. It talks about Flanagan's success in rejuvenating the MasterCard brand, his approach to building an effective global brand team and the lessons he has learned along the way.

Flanagan is the Chief Marketing Officer and Executive Vice-President of Global Marketing at MasterCard. The company's 'Priceless' advertising campaign currently is airing in more than 90 countries worldwide. Flanagan has also held brand leadership positions at L'Oreal and Procter and Gamble.

Developing a Consistent Global Positioning

EB: Can you describe the evolution MasterCard went through to achieve its current global positioning?

Flanagan: Back in 1997, MasterCard didn't stand for any one thing. It had run through five different advertising campaigns in ten years and was losing a lot of business. My job was to fix the brand. I started in the U.S. by developing an effective U.S. advertising campaign that differentiated the brand in the marketplace. We worked alongside McCann-Erikson to develop the highly successful 'Priceless' campaign. The positioning created by 'Priceless' allowed MasterCard to integrate all its other campaigns and marketing practices within the U.S. This started as an advertising strategy, became a marketing platform and went on to become our global brand platform.

At that time, every country used a different agency, a different campaign, and a different strategy. The success of 'Priceless' as a platform in the U.S. helped us persuade other countries to adopt one single approach. Over time this became a consistent global positioning. Our 'Priceless' campaign now appears in 96 countries and 45 languages and forms the framework we use for all brand communications.

EB: Starting a locally-developed positioning and then successfully expanding it globally is unusual. The more typical approach is to begin with a unique consumer insight that's applicable globally and then build a global platform from there. Is it luck that MasterCard's key insight is applicable in other countries?

Flanagan: The U.S. strategy was based on a lot of consumer research; and the insight we arrived at was that there had been a significant change since the 70's attitude of, 'you are what you buy'. Consumers now focus on lifestyle and quality, and on the concept of 'rewarding yourself for what you've earned'. Their core values are family, security, companionship and 'making time for yourself'. It was unique for a credit card company to say to consumers, "It's not about what you buy; it's about how you take care of yourself."

We found that our U.S. insight held just as true for every other country. We also conduct research called 'What Matters' to help keep our finger on the pulse of what is going on in the world. The success in this situation came from taking the insight to a level where it cut across every culture and country, based on an extensive understanding of what really matters to people.

EB: How did you convince marketers in other countries to adopt the same advertising campaign and platform?

Flanagan: Three factors facilitated the global adoption of the 'Priceless' platform. First of all, the great success in the U.S. grabbed everyone's attention. Secondly, nobody believed any other alternative campaigns were any better. Most importantly, whenever local marketers saw the campaign, they really liked what they saw. We had the numbers to back up the strategy, but we didn't even need to cite them; marketers were won over by the innate appeal of the 'Priceless' platform.

EB: Did you use the 'What Matters' research to adapt the campaign outside the U.S.?

Flanagan: Absolutely. We empower every local team by saying, “Here's the strategy and the framework that's proven to be effective. Now focus on creating content relevant for your own area within that framework.” The 'What Matters' research generates insights that allow local marketers to create a campaign that they truly feel has local resonance, while at the same time maintaining the core brand positioning. We've changed the meaning of 'NIH' (Not Invented Here) to 'Now Improved Here'.

Global vs. Local and Building Effective Teams

EB: How do you structure your marketing organisation to promote a balance between executing a global strategy and maintaining local relevance? Where does innovation fit into this structure?

Flanagan: We have about 130 people in the marketing organisation. The global team works with regional presidents and other marketing people on a daily basis. They are responsible for creating global strategies, setting budgets, signing off on plans and disseminating best practices across countries. Local marketers have clearly defined roles and responsibilities, so they are always certain about which aspects of the brand are non-negotiable and what aspects they can tailor for local consumers. The whole group has shared values and investments and we work in close partnership with McCann-Erikson sharing both risks and rewards.

Innovation is a little different for us as we do not distribute our own product, the banks do and they tend to invest in their own innovation and products. We typically develop things centrally and then work with the countries to see where this should be applied, but on the true product innovation front, we often find that more ideas come from outside the U.S. The lack of standardised infrastructure elsewhere creates more opportunities to innovate in areas like chip technology and card design.

EB: What do you do to make it easier for your international marketers to work together effectively?

Flanagan: I make sure that our people meet at least once a year to simply get to know each other. Our corporate culture is such that if you have a question you just pick up the phone and call the person. If you've already met the person, that's much easier to do. I try to create introductions and familiarity to instil a quick-response mentality.

Lessons Learned

EB: What are some of the top lessons you've learned that can be transferred to other brands?

Flanagan: The most important lesson is, 'Listen to the consumer'. This was one of the keys to MasterCard's turnaround. When you really listen to and observe consumers, you can make decisions based on what the consumer really thinks and feels.

Beyond the infrastructure you work within and measuring your ROI, everything comes down to the people you work with. We have a relatively small marketing function. We are fortunate in that we have some really talented marketers in every country who really 'get' brands, enjoy the challenges involved in growing them, and know how to work in a matrix organization effectively.

EB: Based on our experience and past interviews, we often hear that Global Marketers lack a community in which they can openly share ideas. To address this we are creating a 'Leading Global Brands Council', where project participants will be able to meet and share best practices and challenges. Do you share a similar sentiment about there being a lack of community? And if so, to whom do you turn for guidance?

Flanagan: For general advice I turn to the CEO and COO, regional presidents and banking professionals. When it comes to global brand issues I often talk to McCann-Erickson. They have accumulated decades of incredible experience. These discussions help push my team's strategy to the next level.

However, I do feel that people in my specific profession lack a community and that there are very few people with whom I feel I can have an open exchange of ideas. This is one of the reasons why I am so enthusiastic about the Leading Global Brands project and future Council meetings.

Principles of Effective Global Brand Leadership
In this discussion, Lawrence Flanagan emphasizes the importance of several principles of leading global brands.

Robust Global Positioning
The insight reached by listening to the authentic voice of the consumer gave Flanagan a head start in gaining buy-in for his global positioning. MasterCard's new positioning was easily accepted across all markets because the quality of the insight and its expression was instantly recognisable and this led to an overwhelmingly positive reaction from markets outside the U.S.

Clear Roles and Responsibilities
MasterCard reached genuine clarity on roles and responsibilities and on the operating framework of the whole team locally and globally. There was a shared understanding of how customer insight should be used at every stage in the process and on what aspects of the brand were non-negotiable. Expectations on roles and responsibilities were communicated to the entire team at the outset. Supporting this framework, a strategic partnership with a single advertising agency, allowed the expression of the brand to be executed seamlessly.

Effective Team Work
The global team worked well together based on a shared understanding of their 'rules of engagement' and a specific team culture. Building an effective global team, with the ability to overcome the complexity of a matrix organisation, was given a high priority at MasterCard.
Lawrence Flanagan encouraged a culture of openness, where people communicate directly, with people they actually know, to turn strategy into action. He facilitated regular face-to-face meetings to nurture these relationships and instil a quick-response mentality.

For a PDF version of this interview, click here

Monday, August 01, 2005

Top 100 Global Brands

The latest issue of Businessweek included the Businessweek/Interbrand rankings of the Top 100 Global Brands.

The top 5 were the same usual suspects as last year -- Coke, Microsoft, IBM, GE, and Intel. Not surprisingly, Google leapt into the top 100 to join the list at #38, beating out rival Yahoo!, which came in at #58 this year.

A PDF version of the article and Top 100 rankings can be found here.

Saturday, July 02, 2005

Heineken's Global Paradigm

This bulletin features a discussion between EffectiveBrands (EB) and Heineken's Chairman, Thony Ruys. What role can the Chairman play in ensuring global consistency and driving the priorities of the brand? Is there a global Heineken consumer? And what principles for leading global brands has Ruys found to be effective?

Thony Ruys (b. 1947) After 18 years with Unilever in the Netherlands, Colombia and Italy, he became the marketing member of the Executive Board at Heineken NV. Since April 2002, Ruys has been Heineken's Chairman of the Executive Board.

Tradition and Change

There's often a very strong personality behind a global brand. Is that the case with Heineken?

Ruys: Of course -- Freddy Heineken. He was aware of everything, concerning himself with the smallest details. For example, he once sent back an enormous batch of café parasols because he felt that their color lit ladies in an unflattering way. That's why you'll never find anything other than green-and-white Heineken parasols. Heineken is a very different company from, for example, Unilever. You feel the legacy and the vision of Freddy Heineken everywhere.

Understanding the Global Young Adult Consumer

EB: What's your greatest Global Branding challenge?

Ruys: Heineken has always appealed to the young adult consumer. One of my spearhead objectives is that Heineken retains that appeal. Over the last few years, beer has been under pressure in clubs and at parties because of the introduction of mixed drinks, which are regarded as "hipper". We must ensure that our beer remains relevant.

EB: Our conversations with corporations such as Nokia, Virgin, and Starbucks have shown us that every global brand director wrestles with the question of how to manage brand development at the central level without neglecting local customer insights. How do you develop a brand worldwide without making too many compromises?

Ruys: Freddy Heineken always asked, "And what would the consumer think about it?" That made an impression on me.

Right after my appointment, I went around the world to learn more about the young adult consumer. I wanted everyone at the company to grasp just how important it was that we understand this market. In many countries, I sat in on local research about young adults. I also spoke personally with the local young adults, usually without them knowing my job title, so that I'd get to hear the naked truth. After a number of months, the ball started rolling, and more and more initiatives emerged. Project Beacon, as we call it internally, has already brought our marketers closer to the consumers in their twenties.

EB: So Project Beacon was about getting all marketers across the globe more engaged with their local youth market?

Ruys: Yes. Some assume that a uniform urban culture has come into being among young adults in big cities. However, what we learned from Project Beacon was that these young adults are not a homogenous international target group. They're interested in international brands, but remain strongly attached to their personal cultures and origins.

The challenge for an international brand is to inspire but at the same time remain personally relevant. A good example is the Thirst Platform that Heineken launched in the summer of 2002. This is an international dance-concept in which young, local up-and-coming DJs get the chance to play with famous international DJs. This world of entertainment fits very well into the Heineken brand, and it also addresses the needs of each local market.

EB: Are you seeing a shift in dynamics between global brands and consumers?

Ruys: Modern consumers increasingly have problems with the intrusiveness and uniformity of brands. As a result, a new wave of branding has come into being in which the consumer gives meaning and content to the brand. In other words, it's now the consumer who's choosing the brand, as opposed to our previous situation in which the brand chose the consumer.

For example, there are rebellious brands such as Gsus and Quicksilver that are latched onto by young people. There are also a few global brands that are very successful, such as Nike and Sony, in part because they've brought out special editions for select young consumers.

From Project Beacon we learned that we need to continually reinvent Heineken in order to be successful with our target groups. As a result, we've brought out a considerable number of new products and communication concepts. One notable example is the Alu bottle, which we're now rolling out internationally.

Global vs. Local Brand Leadership

EB: An issue that arises time and again is how to manage global brands, and what responsibilities should be placed at central versus local levels. At the beginning of this year, the papers were full of stories about marketing reorganizations within Heineken. It seemed as though you were centralizing all marketing power.

Ruys: Yes and no; we drew a very clear line.

Our two global brands, Heineken and Amstel, are now almost entirely steered centrally from the Netherlands. Many specific guidelines have been developed that determine the face of these two brands worldwide.

At the same time, we've strengthened the importance of and the resources for our local brands. Don't forget that beer is still largely a local business. Our local brands are often the market leaders in their respective countries.

EB: Many global organizations have come to standardize back-end production while preserving "end of line" flexibility to allow for local diversity. What's Heineken's approach?

Ruys: We too believe strongly in that. We harmonize the bottle for a number of countries, creating substantial savings. At the same time, we make sure the local consumer can identify with the label and contents.

EB: Global brand directors put a lot of time and effort into making all team members understand precisely what they can contribute to the success of the brand. How does Heineken communicate this to, say, a brand manager in China?

Ruys: Our global team is increasingly focusing on communicating with and supporting our local marketers. I indicated earlier that for our two global brands, a number of important aspects are set -- positioning, name and logo. In addition, we try to pass on best practices from other countries so that the wheel doesn't need to be reinvented; and central media planners play an important advisory role for local colleagues.

EB: Companies with strong brands take organizational activation very seriously. For example, Dove's global brand director recently conducted a brand stewardship tour in five regions with more than 2,000 people invited. Nokia's global brand director sends every new marketer a "brand book" as a welcoming gift.

Ruys: I too believe in the head office communicating fundamental brand values. However, it's also important to remember and acknowledge local differences. The key is to find the right balance between central guidelines that the entire organization "lives" by and the content of the brand at a local level. It's only when you understand and properly manage the relationship between the global brand and the local consumer that you have a strong global brand.

EB: American corporations often find it difficult to find the right people for international marketing positions. A headhunter recently told me that she'd recommended an American Hispanic for a regional brand management post in Asia because she felt he'd have a stronger conception of and sympathy for cultural differences. How international is Heineken's global brand team?

Ruys: Very much so! Given Heineken's history, you'll still see many Dutch people occupying important positions throughout the company. However, we have marketers from all countries working on Heineken and Amstel. This diversity is crucial; otherwise, we'd be dealing with these beers as export products. Heineken and Amstel are genuine global brands, and their management reflects that.

Principles of Effective Global Brand Leadership

In this discussion, Thony Ruys emphasizes the importance of several principals of leading global brands.

Project Beacon, Thony Ruys' initial push to get the whole company closer to local consumers gave a clear leadership signal to the company. Everyone at Heineken quickly understood where they should be looking for growth ideas to build on the brand heritage, as developed by Freddy Heineken. By visiting and personally speaking with consumers around the world, Ruys led by example and embodied the brand to local marketers.

Heineken's Thirst Platform is a very effective approach for leveraging global scale. Instead of trying to push a fixed global promotion campaign across the globe, the central team truly added value for local marketers by providing a "platform" that is flexible enough to travel. The fact that local marketers were subsequently challenged to develop locally relevant translations of the program recognizes the importance of inspiring marketing excellence at a local level.

By recognizing that not all brands in the portfolio need to be managed in the same way, Ruys is leading Heineken from an export company to a true global marketing organization. We feel he is striking the right balance between global harmonization and local relevancy and that this mix will drive Heineken to growth.

For a PDF version of this interview, click here
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