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Glocalization: A Measure of Global Brands’ Adaptation to Local Cultures by Olga Churkina of Fresh Intelligence - Presented at the Insight Innovation eXchange North America 2013

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A brand’s ability to adapt and reflect consumers’ core values in different areas of the world directly effects its sales in those markets. Multicultural targeting is every global brand’s dream, but …

A brand’s ability to adapt and reflect consumers’ core values in different areas of the world directly effects its sales in those markets. Multicultural targeting is every global brand’s dream, but there are no metrics in place to truly know how brand strategy adaptations are resonating with different cultural communities’ values – until now.

The “Glocalization Index” is a simple actionable tool that will revolutionize the field of global brand tracking and communication research. Marketers of global brands will be able to use the “Glocalization Index” to track their communication strategy success and brand health in local markets.

The presentation will illustrate the importance of learning about local values and adjusting brand communication to those local values while keeping true to the global brand’s core essence.

Learn how values associated with being rich and owning prestigious things are viewed by China vs. Australia and how major brands like Colgate and Nike fall on our correlation index that determines how well a brand’s perceived value correlates to that of a country, and relates to that brand’s strength there.

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  • Sec 1
  • Sec 10
  • Sec 20Its me and my boyfriend – I am Russian and he is CanadianWe want to get married but the problem is that our cultures are too different. For example…
  • Sec 25
  • Sec 30
  • Sec 50We live in global worldIn 1964 Marshall McLuhan articulated the emerging phenomena of the global village (McLuhan, 1964) and described the dramatic changes that happened in societies and cultures across the world with the development of new electronic media. It opened eyes on the new global world.
  • Min 1But marketers did not listen!As soon as the concept of global world became popular, marketers decided they want to benefit fromGlobal market.Twenty years later, in 1983 Theodore Levitt advised corporations to benefit from global market and its “economy of simplicity”. He suggested growing by creating uniform products and services to sell around the world.
  • Min 1:20The definition of global brands of that generation was focused on standardization: “global brands are brands which positioning, advertising strategy, personality, look, and feel are in most respects the same from one country to another.” (Aaker, Joachimsthaler, 1999).Companies started to practice standardized packaging and communication to achieve a common positioning that would be effective across cultures. (Levitt, 1983).
  • min 3http://www.youtube.com/watch?v=zlfKdbWwruY&feature=relmfu – from 0 to 2:42The story of global brand reminds me of “where the hell is matt story?”First he was travelling all BY himself… But SOON Matt realized thatthe real success, real fun is happening when he is accepted by locals and surrounded by locals in his dance.First marketers first challenge was just to deliver the brand to all countries, as many as possible… They thought distribution everywhere is what makes the brand global…
  • Min 3:30Understanding of the brand itself is slowly evolving together with the understanding of the new global reality and its new global marketplace.
  • Min 6But soon marketers realized that it is a necessary but not a sufficient step. Consumers in most countries had trouble relating to generic products. Global production companies decided to customize product features and selling techniques to meet local tastes. In 1989 Kenichi Ohmae, head of McKinsey Tokyo, proclaimed “The rule is to see and to think – global first… It does not mean that the appeal of operating globally removes the obligation to localize products. By the end of the 90s, the myth of global consumers was starting to disappear. An ACNielsen study in 1998 showed that Indonesian youth increasingly started to like using traditional Indonesian products and preferred advertisements that used Indonesian models. Soon after, David Wright explained that companies must ensure that products, promotions and delivery channels are appropriately tailored, because “social and cultural factors can be one of the biggest barriers to success across borders”. It was finally understood that global brands can be successful only after cultural factors have been studied and dealt with.
  • Soon after, David Wright explained that companies must ensure that products, promotions and delivery channels are appropriately tailored, because “social and cultural factors can be one of the biggest barriers to success across borders”.
  • Min 10We decided to find a simple tool that can be applied in global research. This tool measures the degree to which brand is synchronised with local culture, or “glocalized”. Taking into account extensive learning of cross-cultural studies and our own ethnographical set-up interviews with representatives from six countries we developed the comprehensive list of 22 values that describe a wide range of attitudes towards personal and social well-being. We worded values in such a way that they could be attributed both to a consumer personally and to a brand. The on-line survey was conducted with n=3000 respondents, 18+ y. o., n=500 in each country (samples representative to each country by age, gender, regions; industry exclusions).
  • Min 11Our brands are picked from the list top 100 global brands 2010
  • Min 10:30Countries we picked for the analysis differ greatly in their history and current position in the world. All of them are big and very attractive markets. Out of six countries, we chose three developing and promising economies: Brazil, Russia, China representing BRIC block; and three developed prosperous countries: Canada, US and Australia. From the ancient China to new Canada, these countries have some core similarities and strong differences in their values.
  • Min 11:30is among the top five values across all six countries, and it is the highest value in the US, Canada and RussiaWe saw for example that feeling safe, secure and protected is among the top five values across all six countries, and it is the highest value in the US, Canada and Russia.
  • Min 13
  • Min 13
  • Min 12:40As we know from the analysis of values, Chinese people really value prestigious items. That’s why many luxury brands are entering the Chinese market with great success. China will become the world's largest buyer of luxury goods by 2015, according to PriceWaterhouseCoopers. Not surprisingly, Hermes launched a ready-to-wear clothing and lifestyle brand in Shanghai last fall. Hermes sells handbags, scarves and leather goods at stores in 14 cities. It aims to open 50 more stores in the next five years.
  • These cultural differences are too significant to be ignored when marketing brands globally. It is obvious that you cannot disregard the fact that local values vary, but the question is how imperative it is for a brand to be adopted to local cultures, and how to do it. Which exact values should be considered in each country and if you don’t, what is the cost to your brand? To answer these questions we develop the Glocalization Score model.
  • Min 16This is how the Glocalization Score model works: it takes into account the hierarchy of country values and compares it to perceived brand values.If they are close, the brand gets a high Glocalization Score. The main hypothesis we wanted to prove true is that Glocalization theory is valid and global brands do need to be glocalized in order to secure high Usage and Loyalty.
  • Min 16:30From this result we can see that Colgate, with a Glocalization Score of 58.8, is the most successfully glocalized brand in Canada. In contrast Nike scores negative, -8.5, meaning that the hierarchy of Nike values does not coincide with the Canadian values hierarchy – it even slightly contradicts it.
  • Min 17:30First we need to identify Canadian values. We can see that among the most important things for Canadians are: being safe, responsible, hard-working, healthy, and helping other people. Among things with the lowest importance are: being rich and owing prestigious things, being physically beautiful (attractive to opposite sex), experiencing sensuality, sexiness. If we look at the values ranking for Canada, Colgate and Nike, we see that the top five Canadian values (highlighted in green) and lowest five values (highlighted in orange) line up well with Colgate’s top five and bottom five: Colgate is a responsible, reliable, hard-working, healthy, family oriented brand. It is not associated with fast, mobile, rich, prestigious lifestyle. Nike at the same time is far from family values, being associated with competition, challenge, and mobility. It is far from being relaxed, providing inner piece, safety and care. As a result the brand struggles to be accepted by Canadians, - it is hardly glocalized. (See Table 2)
  • What we would recommend to Nike to win Canadian long-term loyalty: PROTECT AND REINFORCE what Nike has in common with Canadians:AND STRENGTHENwhat matters to Canadians
  • Min 18We need to prove the importance of the Glocalization Score for brand success. We used the Spearman rank correlation for building the Glocalization Score and validating the modelThe Glocalization Score cannot equal 1 because there is no brand that can perfectly fit a culture (otherwise it could become a religion or ideology). If primary brand-specific values are at the top of brand perception and followed by country-specific values and do not contradict local values hierarchy, the brand would still get a high Glocalization score.
  • Min 18:30In russiacolgate is using local celebrities for the advertising, in turkey they add local herbs to the paste – colgate is local everywhere.
  • Min 19Coefficient of correlation between Glocalization Score and Brand Strength vary from .62 to .79 and is the strongest in China. It means that Glocalization in Chinese market is the most important for brand success out of our 6 countries. Average coefficient of determination for our 6 countries is 50% meaning that
  • Min 20As a rule of thumb, correlation coefficients between .00 and .30 are considered weak; those between .30 and .60 are moderate and coefficients between .60 and 1.00 are considered high. However, for social studies where the subject of the research is very sensitive and volatile, even a coefficient of .50 is considered to be strong and meaningful. The correlation for our six countries is 0.745, indicating that glocalization is strongly connected with brand overall success. All correlations are significant at a 95% confidence level.
  • Min 20:30To obtain meaningful information from the correlation coefficient, squared coefficient of correlation is used, which is called the coefficient of determination. Multiplied by 100, this proportion of variance indicates the percentage of variance that is determined by another variable. This is a very high percent of determination indicating that Glocalization Score can be considered valid and very useful model for measuring global brand success in local markets.
  • Min 23
  • Min 23
  • Transcript

    • 1. “GLOCALIZATION SCORE”MEASURING GLOBALBRANDS’ ADAPTATION TOLOCAL CULTURESA CROSS-CULTURAL STUDYOF BRAND PERCEPTION VS. LOCAL VALUESOLGA CHURKINA | FRESH INTELLIGENCE RESEARCH CORP. | ESOMAR 2011
    • 2. 3 main questions we will answer• What is GLOCALIZATION?• How we measureGLOCALIZATION?• Why GLOCALIZATION isimportant for a brand’ssuccess?
    • 3. We live in a global village….We are closer to eachother than ever before
    • 4. HE WANTS A CANADIAN WEDDING
    • 5. I WANT A RUSSIAN WEDDING
    • 6. MARSHALLMCLUHAN NEVERPROCLAIMEDUNIFICATION AS AGLOBALIZATIONTRAIT.HE ARGUED THATTHE GLOBALVILLAGE CREATESMORE DIVISIONAND DIVERSITY.1964
    • 7. 1983 “ECONOMYOF SIMPLICITY”
    • 8. 1999 “GLOBALBRANDS –POSITIONING,ADVERTISING,PERSONALITY,LOOK, ANDFEEL…ARE THESAME FROMONE COUNTRYTO ANOTHER.”
    • 9. A BRAND IS A NETWORK OFEMOTIONAL CONNECTIONS ANDVALUES IN CONSUMERS’ MINDS2003
    • 10. Richard Tiplady, 2003:“GLOCALIZATION is the way in whichideas and structures that circulateglobally are adapted and changed bylocal realities”Russia McDonalds opening Saudi Arabia McDonaldsopening
    • 11. DO YOU KNOWWHAT YOUR CONSUMERSVALUE?…IN EACH COUNTRY?
    • 12. N=3000respondents14GLOCALIZATION SCORE™22values6cultures10brands
    • 13. Canada RussiaBrazil AustraliaChinaU.S.A.
    • 14. 22 valuesNature Family InnovationInner peaceUniquenessFriendsHealth Helping othersSuccessSafety
    • 15. DO COUNTRIES HAVEDIFFERENT LOCAL VALUES?
    • 16. FEELING SAFE & PROTECTEDis among the top five values acrossall six countries
    • 17. BEING PHYSICALLY BEAUTIFUL andATTRACTIVE TO THE OPPOSITE SEX…is valued the most bywhich of these 6 countries?Canada RussiaBrazil AustraliaChinaU.S.A.
    • 18. BEING PHYSICALLY BEAUTIFUL ANDADDTRACTIVE TO OPPISTE SEXis valued by75% of Russians66% of Brazilians81% ofChinese
    • 19. 81756645 4232China Russia Brazil USA Canada Australiabut not so much byCanadians, Americans and AustraliansValue being physically beautiful, %
    • 20. HOW DO LOCAL VALUES AFFECTBRANDS?
    • 21. BRAND is GLOCALIZEDTO SUPPORT YOURBRAND STRENGTHGLOCALIZATION SCORE™ model24LOCAL BRANDPERCEPTIONLOCALCULTURALVALUESGLOCALIZATIONSCOREBRAND USAGEBRANDLOYALTYBRANDSTRENGTH
    • 22. 16.6-8.5-3.858.8GLOCALIZATION SCORES FORSOME BRANDS IN CANADA
    • 23. SafeResponsibleHard-workingHealthy,activeCaringFamilyorientedInnovativeRelaxedRespectfultotraditionIndependentChallengedFastExperiencingsensualityPhysicallybeautifulRich,prestigiousCanadaColgateNikeWHY?Gi = 58.8Gi = -8.5
    • 24. SO WHAT?STAY TRUE TO YOUR COREVALUES:• Challenged, competing, winning• Fast• InnovativePROTECT:• Healthy• ActiveDEVELOP:• Responsible• Reliable• Casual, down to earth - stay awayfrom being prestigiousin
    • 25. DOES GLOCALIZATION REALLYMATTER?
    • 26. 30PepsiNokiaNikeNestleNescafeMcDonaldsColgateColaAppleAdidas253545556575-10 0 10 20 30 40 50 60GlobalBrandStrengthGlobal Glocalization IndexVALIDATION ACROSS 6 COUNTRIES:STRONGER BRANDS HAVE HIGHERGLOCALIZATION SCORE
    • 27. 0.75
    • 28. Is a correlation of 0.75 high?Let’s compare to well-known Ipsos indices…Source: Ipsos ASI website
    • 29. GLOCALIZATION ISRESPONSIBLE FOR 55% OFGLOBAL BRAND’S SUCCESSVARIATIONWHAT DOES 0.75 MEAN?0.75 = 55%2correlationcoefficientcoefficient ofdetermination
    • 30.  Globalization does not mean unification: people ofdifferent cultures have different values.KEY FINDINGS: Closeness of globalbrands to localvalues, orGlocalization iscrucial for brand’s. No matter what yourbrands target is – theoverall nationalculture matters.
    • 31.  Glocalization Score is a ready to use model whichmeasures the closeness of brand values to culturalvalues. The Glocalization Scorewas validated toin-marketperformance. We recommend everyglobal brand to trackGi to ensure strongperformance of globalbrands in local markets.KEY FINDINGS:

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