Global Branding Chances And Risks For A Transnational Company.Pdf
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Transcript of Global Branding Chances And Risks For A Transnational Company.Pdf
Global BrandingChances and risks for a Transnational company
Roma, May 7th 2008
Mara PANAJIA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion
AGENDAAGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion
AGENDAAGENDA
A more than 130 years old, German “family owned”,
chemical company, making business in 125 Countries
with more than 50.000people employed and 10.000
products.
WhoWho’’ss
Henkel Headquarter Henkel Headquarter DDüüsseldorfsseldorf--HolthausenHolthausen
Henkel WorldwideHenkel Worldwide
• Sales 13,074 mill. euros • 125 countries• 52,300 employees
Fiscal 2007Fiscal 2007
Sales
13.1 bill. €Operating profit(EBIT)
1.3 bill. €
Organic sales growth
+ 5.8 %Net earnings
941 mill. €
Earnings per preferred share
+ 7.5 %
Return on capitalemployed (ROCE)
+ 15.4 %
OurOur VisionVision
Henkel is a leader with brands and technologies that make people's lives easier, better and more beautiful.
Three Areas of CompetenceThree Areas of Competence
Quality with Brands & Technologies
Laundry & Home Care
AdhesivesTechnologies
Cosmetics/Toiletries
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion
AGENDAAGENDA
GLOBALIZATION: GLOBALIZATION: necessarynecessary??
Technologies
Businessnecessity
Globalization
Business opportunity & economies of scale
Laundry & Home CareCosmetics/ToiletriesConsumer Adhesives
A A „„Road Road MapMap““ On Global BrandingOn Global Branding
ConflictingMarketing Targets
• Market Penetration• Economies of Scale
Market Penetration:Market Penetration:
Objective: Increase of sales and Market Share
How:maximizing penetration (reaching as many households as possible)maximizing loyalty (keeping as many households as possible) closing „white (regional / local) spots“
THE „OUTSIDE-IN“ VIEW (Consumer Orientation)Need for differentiation
EconomiesEconomies of of ScaleScale::
Objective: Profit increase
How:maximizing cost efficiency through integration (in design / advertising / brand / production/ ...... etc.)minimizing diversity (e.g. going for the smallest number of brands and SKUs as possible)Applying Euro learnings (knowledge transfer)
THE „INSIDE-OUT“ VIEW (Company Orientation)
Need for standardization
A A „„Road Road MapMap““ On Global BrandingOn Global Branding
Basic Strategies of Euro-pean Marketing Operations
• Standardization• Differentiation
ConflictingMarketing Targets
• Market Penetration• Economies of Scale
HowHow to to MakeMake thethe Right Right ChoiceChoice??
There is a perceived dilemma between standardization and differentiation - entailing different branding strategies.
In order to obtain further evidence in favor of one of thealternatives we look at:
» the CONSUMER» the TRADE» the COMPETITION
ConsumerConsumer::
Purchasing Habits– normal powder vs. compact powder– powder vs. liquid detergent– bleaches (Northern Europe vs. Southern Europe)– fabric softeners
Usage Habits– washing temperatures– washing machine equipment– fragrance preferences– per capita volume– dryer‘s penetration
Need for differentiation
NO EURO/GLOBAL CONSUMERS!
TheThe European Trade:European Trade:
Euro Accounts represent 50% of turnover
Top 10 trade between 50% (I) and 90% (F) of retail turnover
Acquisitions and fusions
Need for standardization
CompetitionCompetition::
Different importance of Private Labels in various European countries
In Western Europe: 5 competitors with more than 33 HDD brands
In no (!) European core country (i.e. UK, E, F, I, D) same top 3 competitors
Need for differentiation
A A „„Road Road MapMap““ On Global BrandingOn Global Branding
Basic Strategies of Euro-pean Marketing Operations
• Standardization• Differentiation
ConflictingMarketing Targets
• Market Penetration• Economies of Scale
ConflictingMarketing Factors
• Consumer• Trade• Competition
Branding Branding StrategiesStrategies::TheThe Big Big SoapersSoapers
• Globalmove towards a reduced portfolio of global brands with identicalfeatures to maximize efficiency (globally fixed strategy)Example: P&G / Lever
• Multinationalexploit existing local brand heritages to secure current marketpenetration (locally fixed strategy)Example: Benckiser
• Transnationalmaintain a balanced portfolio of global and local brands to exploiteconomies of scale while securing market penetration; migrate towardsa global portfolio (glocally adaptive strategy)Example: Henkel
A A „„Road Road MapMap““ On Global BrandingOn Global Branding
Basic Strategies of Euro-pean Marketing Operations
• Standardization• Differentiation
Henkel Strategy• Euro-Model• Euro-Organization• Euro-Systems• Euro-Culture
ConflictingMarketing Targets
• Market Penetration• Economies of Scale
ConflictingMarketing Factors
• Consumer• Trade• Competition
Branding StrategiesBranding Strategies
Standardization
Differentiation
Roll-out of concepts/speed
Low-cost-production
Lowcomplexity
Regionalmarket
penetration
Close toconsumer
FlexibleresponseGLOBAL
think
LOCALact
GLOCAL
TheThe Henkel Henkel StrategyStrategy::„„GlocallyGlocally AdaptiveAdaptive““
Grow existing global brands.
Maintain existing national brands - strive to globalizewhenever appropriate (adaptive).
Create economies of scale with existing brands bysuccessively harmonizing technical product features(adaptive).
Build new global brands.
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion
AGENDAAGENDA
1. Convergence Plan of Hand Dish Washing Category
2. Nelsen acquisition from P&G in Italy
TWO EXAMPLES:TWO EXAMPLES:
WhyWhy HDW HDW categorycategory::
Fully penetrated in all western countries (>90%);
Huge business dimension;
Despite of being a quite “simple” and “standardized”
product, consumer’s habits differ from country to country;
Battlefield for all international players (Henkel, Colgate, RB,
P&G, Unilever).
Henkel HDW-brands are to a great extend acquired brands
with different histories.
All brands have already a patrimony in degreasing, so it
has been chosen as common positioning for the brands.
Since this proved to be feasible, it is felt possible to
converge the different elements of the marketing mix to
achieve a more efficient steering of Henkel’s HDW category.
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW Background and general objectiveBackground and general objective
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW Ex ante portfolio situationEx ante portfolio situation
Harmonize as much as necessary, as less as possible.
“Avoid harmonization simply for pleasure to fulfill with crosses Excel sheets”
G. Archi – Henkel International Management Conference ‘03
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW PhilosophyPhilosophy
Alignment of the different European Brands towards one “Euro-Brand” on the base of the HDW Positioning System.
This has been done by:
taking from already existing country solutions (i.e. Vinegar)
development of new “Euro- solutions”
National brand names didn’t have to change!!!
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW StrategyStrategy
OLD NEW
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW European Core Variant PortfolioEuropean Core Variant Portfolio
Standardized Differentiated
Brand Name XSubname XConcept XPay off XPositioning XCommunication XProduct Texture (additional RW) XAesthetics
- bottle shape X - logo X - lettering X - caps X - background X - key visual X - colour of the product X
Formula - base X - perfume X - active ingredient content X
Format XAbsolute Price level X
Convergence of the differentnational brands into a
EURO-brand respectinglocalities.
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW Standardization Standardization vsvs DifferentiationDifferentiation
1 2 3 4 5 6
100
100
100 120 123 133162
111120
123130
109115
125139
145
146
146
NES
C1
C2
CONVERGENCE PLAN HENKEL HDW CONVERGENCE PLAN HENKEL HDW Financial Development HDW CategoryFinancial Development HDW Category
Source: internal figures – index 100 year 1
Launched by Melli family (local entrepeneur);
positioning: -> FAST & EASY CLEANING-> MILDNESS
1968
Acquired by Procter & Gamble
positioning: -> GREASE CUTTING POWER-> MILEAGE (value for money)
1989
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYNelsen history Nelsen history
10,9
6,2
0,0
2,0
4,0
6,0
8,0
10,0
12,0
'83 '84 '85 '86 '87 '88 '89
Nelsenbrand
Corevariant
Just one SKU, the Core variant. Value market share constantly declining.
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYMelliMelli Family Age Family Age
Source: Nielsen/IRI Audit
Top result in 1997, then decline for both Core and Perfumedvariants, while Concentrated disappear.
14,9
12,8
11,7
9,7
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Nelsen brand
Core variant
Perfumed
Antibacterial
Concentrated
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYP&G Age P&G Age
Source: Nielsen/IRI Audit
Market share poorly reactive to ADV investments-> limited potential for such a positioning?
4.058
457
3.101
1.9942.218
14,612,9
14,3 14,9 14,9
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
1995 1996 1997 1998 19990
2
4
6
8
10
12
14
16
18
Mediainvestments
Mkt. share
SOV 22%SOV 28%
SOV 42% SOV 49%
SOV 6%
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYP&G ADV Investments P&G ADV Investments
Source: Nielsen NASA/IRI Audit
Why P&G sold Nelsen Why Henkel bought Nelsen
Focus on global brands(DAWN for hand dish).
Focus on concentratedproducts (whilst Italianmarket is 96% diluted).
No alignement to Euro-pean price harmonization.
LACK OF STRATEGIC FIT
To reach 2nd positionin the Italian market andreinforce leadership in Europe
Henkel’s competence inboth diluted and concentrated
products.
STRATEGIC FIT!
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYStrategic IssuesStrategic Issues
Manage two brands in the market (Nelsen and Dixan Piatti).
Increase the brand profitability at Henkel’s standards.
Reach a continous and profitable growth for the HDW business in Italy, using Henkel know how.
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYChallenges for Henkel Challenges for Henkel
Superior aesthetics (new perfumes, PET bottles, labels)
Superior performance (SAS vs LAS)
New size 1250 ML
Positioning: superior degreasing + easy dry
Innovation: Active Coal, Fruit Acid
NELSEN ACQUISITION IN ITALYNELSEN ACQUISITION IN ITALYThe new Marketing MixThe new Marketing Mix
12,8
14,9
14,614,9
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
P&GSource: IRI Audit Tot.Italy w/o Discounts
NELSEN ACQUISITION IN NELSEN ACQUISITION IN ITALYITALYM/S DevelopmentM/S Development
20,4
19,919,1
17,6
15,8
12,813,5
14,914,6
14,9
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
P&GSource: IRI Audit Tot.Italy w/o Discounts
Henkel
NELSEN ACQUISITION IN NELSEN ACQUISITION IN ITALYITALYM/S DevelopmentM/S Development
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion
AGENDAAGENDA
TAKETAKE--AWAYAWAY
There is not a single answer to the dilemma between standardization and
differentiation. Standardization has to be an opportunity, not the objective!
When dealing with standardization of existing mixes, never change more
parameters than absolutely necessary at the same time a brand is much
more than the sum of its elements, so it has to be managed very carefully
Do not preclude local possibilities in the name of standardization and
harmonization (see Nelsen case)
In FMCG markets we are still very far from a global consumer: local
identities are still predominant and in same cases stronger and stronger!
Thank you!