Global Branding -- No Branding Before Sufficient Sales

Everyone is talking about global branding these days, as a follow- up on globalization. We need to be careful how we use the word "global". So often it is used to mean that a company can sell anywhere in the world. But that is not what counts: sales count, and sales only occur when the market is aware of a company's product or service. There is a world of difference between using the words "global" and "international" in a company name and its marketing/communication... versus actually developing the markets in other countries, one by one. The only way to speak about "global" and really mean it is on the granular level... country by country.

The issue of branding doesn't come to the fore before a company actually has sales -- and significant sales -- in a country. The real question to ask, for most companies, is how to build sales up to the point where the issue of branding becomes important. And for a company who has never done much but accept the occasional orders from another country, this is a big step.

Branding is an issue that is country-dependent: a company may be quite well-known in one country, and totally unknown in another country. Thus the issue of branding has to be tied to a country- specific way of thinking. Bring the global market down to many country markets first. They can be organized by regional sales managers, and once a sufficient momentum of sales is happening in a given country, the company can shift its marketing/communications campaign to include branding. But not before. It would just be a waste of money.

Before worrying about branding, a company needs to be selling regularly in a particular country market. Usually, it is the large countries that produce the first sporadic sales -- the U.S., Japan, the U.K., Germany, France, etc. A company needs to devote personnel to various sales regions. At first, one person can cover the entire international market, but as international sales grow, more people have to be added to the international sales staff. It is simply not possible to take the world market seriously without having individual staff members responsible for certain territories. As a rule of thumb, let a region grow up to $3-5 million of sales and then split it in two, adding another area sales manager.

American companies may be surprised that there is already a local competitor entrenched in their market niche. eBay, a large U.S. auction site, is now starting to make forrays into Europe, but is finding that European auction house QXL already has mind-share in Europe. This is the importance of getting into one's niche as quickly as possible, since the "first mover advantage" is quite real: whoever gets there first has very good chances of winning the game, even without deep pockets.

Gradually, as international sales grow, the level of granularly comes down to the country level... for instance, a European Sales Manager might at first manage all European sales, but the region would have to be split in three after enough growth. And after a year or two, this will develop into 5-10 countries/regions worldwide (usually dependent on language). Only after a country's sales have progressed to a certain point, can branding be spoken about. The Internet has not changed traditional business here. No sense in talking about branding before a good rhythm of sales has been reached.

Since international market development takes years, even for highly funded companies, it is hard to give a concrete example of how a specific company developed. However, I can give Compaq as an example, since I was part of Compaq's earliest European sales team in the mid-80s. In 1983, Compaq started a small office in Munich, a European HQ (the company was only two years old then). This small office established country distributors in the countries where offices were not going to be established -- all European countries except the U.K. and France, where offices opened up in 1984, with 2-3 employees. By 1986 it was time to open up other offices, and the consultants who were managing sales in Italy and Holland founded offices in those countries. It wasn't until 1988- 90 before there was a Compaq office in each European country. Before then, sales managers at Compaq's European HQ managed sales growth.

This example is for a highly financed company, Compaq. Even with deep pockets, it took 5 years to become established in all European countries. You can understand that it would take longer for smaller companies who do not have this sort of funding.

Where the Internet has changed the international business world, is that much of international sales can take place from a distance, from abroad. Ultimately, a call center can be set up to handle after-sales support in many languages, as long as it looks transparent to the customer, and there is a good level of customer confidence in the supplier.

Today, with the Internet, the idea of country offices can be accelerated by developing a Website for a particular country, as this example shows:

"Early adopters, those companies that see the global picture and have altered their Web strategy to address international issues, are seeing the payoff from localization. One large IT company discovered that a significant percentage of inquiries were coming from South Korea - they created a Korean website and revenues rose by 8%."
(Ferranti, Marc, "From Global to Local", Infoworld. October 11, 1999)

Building traffic to a Website on a country-specific basis

Time for Branding

After quite some development, it is time for the URL of a site to be promoted in the view of getting people to remember the company being advertised, which is a different matter than just driving sales traffic to a site. After a company has a threshold of sales in a particular country, it can start spreading its Marketing/Communication budget to include more traditional advertising techniques: newspaper, radio/TV, busses/taxis/bus- stops/train stations. Obviously, this is far more expensive than simply promoting a Website in order to get new sales leads. Advertising that is aimed at branding might cost ten times as much as if it were simply used for sales. This means that there have to be enough sales in a particular country in order to justify the cost.

For example, on my frequent trips to Paris, I often see ads for Lycos in places I would never suspect. Lycos appears on the side of taxi-cabs, on bus-stops, on the subway walls, even ad trailers before seeing a movie. If I didn't know Lycos, it is this constant barrage of the name "Lycos", over and over again, that would make this brand known to me (if I was not already aware of it).

Global branding can occur by company acquisition. Amazon bought telebuch.de in Germany and bookpages.co.uk in the U.K. (online booksellers) and transformed them into Amazon-Germany and Amazon- U.K. Or another example: Bertelsman wanted a joint venture with French publisher Havas to crate BOL-France.

Examples of companies using their Website to attract non-English- speaking customers:

At the top end of the scale there is Charles Schwab, the extremely successful online stock brokerage, with $26 billion of investments made online last year. They opened a Chinese part of their Website in May, 1998, backed up by a Chinese e-Team that is dedicated to supporting the on-line investing needs of its Chinese speaking customers.

Another success story is Dell Computers, who has translated their site into most every language. Over 20% of their online sales comes from abroad

Cyberian Outpost (www.outpost.com) is a computer ware distributor who sells only online: one-third of their sales come from outside the U.S. Historically, they had a foothold in Asia (mainly Japan) before Europe, and Japanese sales are still stronger than in Europe. They realize such a success by translating the most important four pages of their site into nine languages. These "language gateways" have only been registered in the large, international indexes, not the local ones in each country.

Conclusion

It is expensive to open up foreign markets, and you should develop a roll-out plan in several phases. Make sure the largest country markets are covered in phase one, and use that phase to establish your company's online sales in this limited number of countries. You will probably need to show ROI to your Director of Finance in order to have the budget to pass to the next phase (country markets of lesser importance). What profits have your sales in phase one brought your company, and how much did it cost you? Once you have proven an acceptable ROI ratio for certain countries, it would make sense to increase the promotional budget there and drive sales even harder. And it would also make sense to invest in smaller country markets in phase two.

After several years of this kind of growth, your company should start fulfilling its goal of globalization of sales. And that puts you into another level as a company - a truly global player.

January, 2000

Written by Bill Dunlap (Managing Director)
Global Reach
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Written by Bill Dunlap
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Last revised on 19 Feb., 2000
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