Sixth, some MNCs acquire local brands for quick market penetration in order to save time, not to mention money, which otherwise would be needed to build the recognition for a new, unknown brand in local markets. Renault would have been foolish to abandon the AMC (American Motors) name after a costly acquisition. Thus Renault 9, for example, became AMC Alliance in the USA. Chrysler subsequently bought AMC from Renault, one reason being AMCs coveted Jeep trademark.
Seventh, multiple brands may have to be used, not by designed but by necessity, due to legal complications. One problem is the restrictions placed on the usage of certain words. Diet Coke in countries that restrict the use of the word diet becomes Coke Light. Antitrust problems can also dictate this strategy. Gillette, after acquiring Braun A.G, a German firm, had to sign a consent decree not to use the name in the US market until 1985. The decree forced Braun to create the Eltron brand, which had little success.
The eight and perhaps most compelling reason for creating new local brands is because local firms may have already used the names that multinational firms have been using elsewhere. In such a case, to buy the right to use the name from a local business can prove expensive. Unilever markets Sure antiperspirant in the United Kingdom but had to test market the product under the Trust name in the USA, where Sure is Procter Gamble’s deodorant trademark.
In an interesting case, Anheuser-Busch bought the American rights to the Budweiser name and recipe from the brewer of Budweiser in Czechoslovakia; Budejovicky Budvar Narodni Podnik, the Czech brewer, holds the rights in Europe. Operating from the town of Ceske Budejovice, known as Budweis before World War I, this brewer claims exclusive rights to the Budweiser name in the United Kingdom, France and several European countries. Courts have ruled that both companies have the right to sell in the United Kingdom, but Anheuser-Busch has to use the Busch name in France and the corporate name in other parts of Europe.
Ninth, a local brand may have to be introduced due to price control. This problem is especially acute in countries with inflationary pressures. Price control is also one reason for the growth of the so-called gray marketers, as the phenomenon contributes to price variations among countries for the same product. Thus, instead of buying a locally produced product or one from an authorized distributor/importer, a local retailer can buy exactly the same brand from wholesalers in countries where prices are significantly lower. A manufacturer will have a hard time prohibiting importation of gray market goods, especially in EU countries where products are supposed to be able to move freely. Parallel trading can be minimized by having different national brands rather than only a worldwide brand.
As mentioned above, a brand standardization is a common strategy. Companies tend to brand globally but advertise locally. Interestingly, although the McDonald’s logo is one of the most recognizable in the world, McDonald’s has changed its advertising logo for Quebec, perhaps the only market in the world which receives this special treatment, The most well-known logo in Quebec is J’M. This is a play on ” j’aime” which means ” I love” in French.
The strategy of using a worldwide brand is thus not superior ( or inferior) to using multiple local brands, Each strategy has its merits and serves its own useful functions, This is where managerial judgment comes in. Unilever, for example, considers consumer responses to a particular brand mix. It uses an international brand for such products as detergents and personal products because common factors among countries outweigh any differences. Food products, however, are another story. Food markets are much more complex due to the variations in needs and responses to different products. The southern half of Europe uses mainly oil for cooking rather than margarine, white fats, or butter. The French more than the Dutch consider butter to be an appropriate cooking medium. German home makers, when compared to British home makers, are more interested in health and diet products. Soup is lightweight precursor to the main dish in Great Britain but can almost be a meal by itself in Germany. Under such circumstances of preferential variations, the potential for local brands is greatly enhanced.
When creating local brand names in the multilingual international market, companies have three translation methods to consider : phonetic ( i.e. by sound ), semantic ( i.e. by meaning), and phonosemantic ( i.e. by sound and meaning). The effectiveness of translation depends on the emphasis of the original English name and the translation method used previously for brand names within the same category. When the phonetic naming method is used, brand name evaluations are more favorable for names that emphasize an English word than for those names that emphasize a Chinese word3.
Arguments against globalization Those who oppose global branding base their arguments on fundamental marketing principles: it is the job of marketing people to be sensitive to their customers and consumers, and only they – in the local country- really understand them. Markets are actually different Market shows different preferences, and even if some of this is due to past government action, it is an additional argument for treating each local market as unique. Pasta is seen as old-fashioned in Italy, but rather trendy in many other countries. The biscuit market shows quite different patterns in different countries.
Local markets have different histories and structures The development of particular product markets will have different histories in every country. They may be converging- usually because of the actions of the major multinationals- but their current situation may still vary widely. The brand share of even a leading global brand will vary across countries. There may, for example, be a very strong local competitor with an entrenched position. In such circumstances, goes the argument, a standardized strategy makes no sense.
Brands designed internationally are the lowest common denominator. If a company tries to take all these differences into account, it will end up with a compromise- something bland that offends no one but delights no one either. This seems a convincing argument, but it is not clear how many companies actually work that way. There must be some sensible compromise between taking all national preferences into account and ignoring them completely. Culture-bound and culture free Products are said to be the culture-bound if their use is intricately tied up with some aspect of the country’s culture. Examples of products that are free of such associations are consumer electronics: we use a VCR in the same way regardless of our nationality and background.