Executive Insights: Real Differences Between Local and International Brands: Strategic Implications for International Marketers

I. Schuiling, J.-N. KAPFERER

Journal of International Marketing

2004, vol. 12, n°4, pp.97-123

Departments: Marketing

In this article, the authors question whether the elimination of local brands represents a lost opportunity for companies. In the current context of globalization, firms have concentrated their efforts on international brands. As a result, they have restructured their international brand portfolios and have removed many successful local brands. Not only has the fast-moving consumer goods sector experienced this trend but the banking, insurance, oil, and retailing sectors, among others, have as well. International brands might offer undisputable advantages, but local brands have traditionally built close relationships with consumers over the years, representing years of investment in their markets. The authors' objective is to improve the understanding of the real differences between local and international brands. To date, no study has been conducted in this area. Managers are regularly confronted with the question of putting together the best portfolio. They must decide not only how to develop their international brands but also which local brands to build or to eliminate. In this article, the authors present their exploratory research of the extensive Young and Rubicam brand database 'Brand Asset Valuator.' They reexamine 744 food industry brands on the basis of interviews conducted with 9739 people across the four largest countries in Europe (United Kingdom, Germany, France, and Italy). The results indicate that local brands benefit from strong brand equity. Local brands benefit more from higher consumer awareness than international brands do, and they enjoy a strong image. In addition, they benefit more not only from customer perceptions of good quality but also from perceptions of better value and trust than do international brands. The authors find that trust represents a significant advantage and creates a unique relationship with consumers that can only be enhanced over the years. An international brand cannot necessarily reproduce such a unique relationship with consumers, even if there is substantial investment in marketing. The exploratory research also indicates that local brands can offer strategic advantages that international marketers should consider; they provide greater strategic flexibility in many marketing areas, such as product development, pricing, and positioning. On the basis of the results, Schuiling and Kapferer suggest that companies should develop brand portfolios with a balanced mix of strong local and international brands, thus helping minimize the risk usually associated with a portfolio of mostly international brands. Development of new local brands could also be a way to generate ideas that could be transformed into successful international brands at some point. The authors conclude by recommending that international marketers consider the substantial long-term advantage of owning brands with strong equity, even at the local level. In view of the difficulty of building strong brand franchises, especially when product differentiation is difficult to achieve, strong brands are essential differentiating assets.