Brand Breakout: How Emerging Market Brands Will Go Global
By Nirmalya Kumar and Jan-Benedict Steenkamp
Palgrave Macmillan, £16.99/$28
Unless you have been living in a world where you reject the notion of product identities, you are a sucker for brands. You may not be aware of it, but branding is why you bought the Financial Times today. It is why you drive the car you drive and it is why you don’t say: “Let me just Bing [rather than Google] that.”
So, given that emerging markets account for more than 40 per cent of global output, why are there no really well-known global emerging market brands?
That is the question put by Nirmalya Kumar of London Business School and UNC Kenan-Flagler’s Jan-Benedict Steenkamp. They think they have the answer. In Brand Breakout, they identify the factors they believe have stopped a big emerging market brand becoming a household name from Rio de Janeiro to Paris to Shanghai.
Anyone with more than a passing interest in how global brands develop should take note.
The book outlines eight scenarios that emerging markets brands could follow, such as the Asian tortoise model (gradually moving from cheap to premium products, as with Japanese cars); the national champions route (Airbus and Volkswagen); using a diaspora to enhance brand recognition (Corona); and the most obvious, brand acquisitions.
But there is a definition issue: what is an emerging market? For Kumar and Steenkamp, South Korea is in the “developed market” category. For many investors, it is still “emerging”. This matters because if Korea is an emerging market, Samsung, Hyundai and Kia are emerging market brands. And that undermines the thesis that there are no leading global emerging market brands. Samsung is, according to Interbrand’s 2012 ranking, the ninth best brand in the world.
At least we can agree China is an emerging market. So where are its brands? As the authors point out, if you ask someone in the west to name a Chinese brand, they will almost certainly struggle. But that is not to say there are none. As they note, Chinese brands Haier (appliances) and Lenovo (PCs) are the biggest sellers worldwide in their respective industries.
Of course, emerging markets companies can always buy international brands rather than develop one from scratch. From Jaguar Land Rover (bought by Tata of India) to Weetabix (Bright Food of China), some groups are snapping up western brands. It does not always work. But it will continue.
The authors do not explore too deeply the psychology of brand purchases for the consumers. Is Weetabix now a “Chinese” brand? Not really. The high level of complexity of some products may mean that the emerging market question is too simplistic.
There is also the issue of time. Of the eight potential ways in which the authors say brands may “break out”, some take decades, especially in the case of the “Asian tortoise”, the model of several Japanese and Korean companies. Will the thesis that “there is no precedent of a country evolving into a developed economy without having some global brands emerge from it” hold? Twenty years is a long wait to find out.
No matter: this book is aimed at managers from emerging markets, and those who need to look out for the competition. As such, with its summaries and excellent case studies, it is a worthwhile read for anyone with an interest in how brands are formed and perceptions change.
Which are the brands to look out for in the next few years? Some candidates have already won recognition outside their home countries: Herborist, Zuczug, Natura, Havainas, ICICI and Galanz.
If you know the above, take a point. Everyone else: check back in 2018 to see if they have indeed “broken out”.
The writer is the FT’s emerging markets assistant editor
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