Developing International Asian Brands

 | March 26,2014 04:51 pm IST

One of the problems that have dogged Asian companies when trying to build and promote their brands domestically and internationally is the effect of the country of origin on the brand image..

In many Asian countries, for example, it is by no means uncommon to hear shoppers exclaim statements such as: "I do not want to buy that brand - it is made here."

Similarly, buyers in foreign markets have strong doubts about the quality of Asian products. Traditionally, Asian countries have suffered from "cheap" and "poor quality" images, especially with respect to their manufactured goods. Only Japan has managed to overcome this problem, and it has taken more than two decades or so, with major brands such as Sony and Canon leading the way. Other Asian countries, including India, are still struggling to overcome negative perceptions held by local and foreign consumers. But the fact is, Asian production quality is just as good as that of many western countries, according to the big-brand companies. For example, PepsiCo says that its China production facility recently won the Best Quality Award for PepsiCo International. Carlsberg's joint venture in Malaysia won the 1998 World Quality Award for Carlsberg, beating every brew from all countries with local production facilities, including the beer brewed in the home country of Denmark.

So, the reality is that international brands are perceived to offer better intrinsic quality than local ones. Two key factors govern the significance of the country of origin to consumers, according to the research: -

Brand Awareness & Knowledge
Perceived Risk

Country of origin becomes less important as brand familiarity increases and perceived risk decreases.

Brand Awareness & Knowledge
If products carry a well-known brand name, the issue of country of origin becomes less relevant to the consumer. Consumers are more concerned about origin when products carry an unfamiliar brand name. Research in China by TWBA (Hong Kong) bears this out, with typical comments from Chinese consumers being -

"If I am not familiar with certain brands, I will pay attention to its country of origin to be sure of the quality and credibility."

"Brand name comes first. I don't care where Adidas and Coca-Cola come from."

Perceived Risk
"Made-in" labels have little effect on famous and well-known brand names. The general perception is that well-known brand names deliver on quality no matter where it is made - the brand name gives them reassurance on authenticity. The perceived risk is, therefore, much reduced.

Because of these factors, companies producing well-known brands are in a better position to take advantage of cheaper production costs and manufacture products in the developing countries.

Country-positioning Effect
Some countries occupy distinct positions in the minds of Asian consumers that indicate they have strong associations with certain products and product images. For example, France is associated with luxury consumer items such as cosmetics, clothing and alcoholic beverages, while the U.S. is associated more with technology and sports products. The Swiss, not surprisingly, are associated with fine prestigious products, the Germans with prestige cars, and Hong Kong with clothing and furniture. Where does India figure?

Two factors appear to influence country positioning: price and utility. Western countries (excluding Australia) are perceived as expensive and Asian countries as providing good value. With regards to utility, countries associated strongly with designer and luxury goods are perceived as producing hedonic (pleasure) goods, while those associated with solid build and engineering qualities are perceived as producing more utilitarian or pragmatic products. If there was a chart with the axes representing leisure and pragmatic goods, the U.S. and Japan, which are strongly associated with most products and attributes, would sit towards the middle of the map. France and Italy would be high on the hedonic scale, while Taiwan might be high on the pragmatic scale.

Distancing from Country of Origin
What can be done to avoid the negative associations of a country of origin, which does not favor the product, for example, a prestigious, or up-market brand by a company in a developing country?

If the product is to be exported, then one possibility is for the company to set up a production unit in a country that has no negative association with quality, premium products. Second, it would also be advantageous to play down the parent company as much as possible, leaving its name and home country off the packaging altogether. Third, it would be helpful to select a brand name for the product that sounds as though it originates from that part of the world that constitutes the main target audience. Alternatively, it could be a name that sounds as though it originates from a country that has a reputation for that type of product.

The classic example of success with such an approach is Lexus, the car made by Toyota. This product was introduced as a prestige, high quality car, aimed at a western audience in direct competition with other famous brands, particularly BMW.

Toyota's image and reputation would not have allowed the new brand bear the parent company name, as it is associated more with the mass-market cars aimed at lower-income market segments, that is, cars that were not really top-tier quality. Toyota produced the Lexus outside Japan; for example, for the U.S. market, a plant was established there, and it chose a name that was globally acceptable. The Toyota name was not used as an endorsement the way it is used with the other brands in the company's stable, e.g., Toyota Corolla.

This distancing technique proved to be highly successful, and in the U.S. market, Lexus stole a large amount of market share from other brands in the category, including BMW. Had the company decided to market the brand as another line in the Toyota portfolio, consumer perceptions would have worked against its entry into the luxury-car segment, even though the quality was as good, if not better, than some competing brands. Perception can be fact or fiction, but to people who have a certain perception in their minds, it is reality. In this case, no one would have believed that this manufacturer from Japan could make that quality of vehicle, based on its past knowledge and experience, and Toyota's existing and previous product ranges.