Five weeks ago, Levi Strauss, the leader in global jeanswear, launched its newest brand, dENiZEN™, a line of denim dedicated to and sold entirely in China. The launch of Levi’s first non-US brand marked a major change in the company’s 137-year-old brand strategy, and came on the heels of a similar announcement from the multi-million dollar fashion house Hermes. In late July, Hermes revealed its newest creation: Shang Xia, a distinct luxury brand based in Shanghai with products being locally “crafted” as opposed to “flown in.”
The surprising announcements from these two international powerhouses beg the question: how far should a brand go to gain relevance and (most importantly) market share abroad?
When it comes to “localized” strategy, we’ve seen it all–from food menus adapting to local tastes and traditions (think McDonald’s McVeggie, McAloo Tiki, and Veg McCurry Pan in India) to stores launching regionally-specific product lines (i.e. Chanel’s recent Chinese-infused Shanghai collection replete with China Doll and Take-Out Box handbags) to partnerships with local celebrities. But today, a rapidly evolving global economy demands an equally evolved (and mutable) branding model. Principal markets today are radically different from the principal markets we entered ten years ago, and Western companies can no longer expect to simply “seed” their brands in the same way they did in the past and still see results.
Today, in order to gain not only a foothold but a leg up in developing markets (Brazil, Russia, India, and China among others), Western brands need to do more than just launch a flagship store and buy up ad space and expect that the local population will adopt their brand simply because they’re there. They need to “think” locally, “speak” regionally, and even go outright “native.”
In India, an emerging market with over 1.1 billion people and a wide array of cultures, religions, and value systems, big luxury brands are finding it difficult to gain traction by merely creating large retail footprints and importing their existing campaigns. As a result, we are seeing big names like Montblanc, Louis Vuitton, and Rolls Royce shifting gears and embracing “localized” marketing. Today, Montblanc creates region-specific collateral for its Indian partners and consumers, with letterheads, invitations, and newsletters customized according to local language and tailored to local tastes, while LV and Rolls Royce take the time to sponsor events and celebrations attended by potential customers (oftentimes newly affluent Indian consumers).
In China, global brands are taking localization a step further. Like Levi’s, who is seeking to tap a growing market (18 to 28 year-olds who are not only value conscious but also label-conscious) with dENiZEN ’s low price point, US automobile manufacturers are partnering with local companies to meet China’s growing demands for small, lower-priced vehicles. Nissan and GM are among a number of brands speaking the “local” language. Both carmakers recently announced new dedicated lines for the Chinese market – SAIC-GM-Wuling turning out the Baojun (the “treasured horse”) and Dongfeng-Nissan, the Qi Chen (the “morning star”) in 2012.
Ultimately, for these multi-million and multi-billion dollar global brands, catering to locals on an entirely new level makes complete sense. With the very visible flops of Western brands like Google and Yahoo (trumped by Alibaba and Baidu) abroad, it’s become clear that one-size does not fit all when it comes to branding in the global marketplace. Succeeding in countries with myriad cultures and tastes demands more than a single strategy topped off by a splashy campaign. Today, global corporations need to reevaluate their entry strategies in order to avoid quick exits. And, “going native” will likely be MORE THAN critical in this process – allowing brands to maintain brand equity, gain local favor, and protect high margin premium.
Happy New Year – and when we say, “Happy,” we really mean it this time! During 2009 and 2010, SALT released trend predictions that coincided with terrifically-dismal economic conditions. They aligned with the realities of a depressed market: brands had to shift and narrow their strategies if they wanted to survive and continue to stand out during lean times. But, with cautious optimism, we see those conditions improving—so we’re entering 2011 with a brighter outlook and new approach to Trends.
