- Written by Ronald van Haaften
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2.1 Literature Study
In the literature research the emphasis applies to corporate branding and integrated brand variables to identify the factors and criteria within different strategic brand perspectives. In continuation on the objective and the conceptual model the literature study will answer the first central question of this thesis and under laying sub-questions.
I start my literature study by an introduction into branding, followed by an investigation of what researchers and experts have written about branding theories and brand models. The study focus primarily on the theories of: All Ries, David A. Aaker, David Arnold, Jack Trout, Jean Noel Kapferer, Jennifer L. Aaker, Kevin Lane Keller, Philip Kotler, Sisco van Gelder and Theodore Levitt.
B2B Competition has developed rapidly over the last decades in such a way that hyper competitive markets overshadow geographic and cultural barriers (Kotler & Pfoertsch, 2006:88). Strengthened by the liberalization of international trade, a trend of ongoing globalisation, innovation in logistics and development of information and communication technology, has lowered international B2B trade barriers (Kotler & Pfoertsch, 2006:35). Domestic markets can easily form a restriction on corporate growth ambitions due to market saturation and international competition or limited domestic market potential which enhanced internationalisation even more.
Efficiency and economy of scale are important instruments to deliver success and competitive advantage through acts of innovation. These involve investments in competence, assets and brand reputation (Porter, 1990:2). Associated with economies of scale and production Levitt argued in 1983 the upcoming trend of market globalization. New technology and international travel trends increase cross border product awareness. As a consequence, differences in national or regional preferences would be eliminated by global brands with a strategic focus on new homogeneous global markets. Globalization in the context of Levitt leads to a more product orientated paradigm - the use of standard mass produced products against a low price that deliver a product that everyone wants, despite of culture preferences. Because of that, a corporate brand should aim at all stakeholders simultaneously by mass communication (Levitt, 1983:92).
This kind of inside-out product and price driven strategy will often result in vulnerable market positions and jeopardize customer loyalty. Consumers who buy on price may easily switch as soon as competition emerges (Arnold, 1992:233).
Over the last decades Levitt’s controversial globalization theory has indeed taken place on production scale. Hence brands like Coca Cola, Marlboro, Philips, Heineken, Microsoft, Sony and Nike can be found all over the world. Nonetheless, they all have experienced that differences in cultural preferences prevail across countries (Keller, 2006:599). The post-global brand no longer tries to act in accordance with the model of total globalization, which is no longer perceived as ideal. Therefore it is more relevant to refer to selective globalization where the product and/or service is often a composite, hybrid or highly adapted (Kapferer, 2004:397).
The strategic challenge for globally operating organizations lies in the integration-responsiveness dilemma. The proportion between global integration (I) and local responsiveness(R). The basis of the IR-Grid concept is formed by settling a strategic balance in internal efficiency and geographical decentralization (Doz et al, 2001:39). The challenge for corporate management is to find the correct balance between international consistency of strategic integration and local responsiveness for maximum added value to segments of consumers wherever they may be. Next to that, management needs to sort out which brand strategy is appropriate and organize in such a way that the organization is ready to anticipate on this to create a competitive advantage – the think globally, act locally balancing act (Arnold, 1992:244). In this way strong corporate brand strategy makes the difference between global success and failure since it facilitates the implementation of the long term vision and provides a unique position in the market place (Kotler & Pfoertsch, 2006:79).
The corporate brand is the ultimate branded house and has all the advantages of any branded house, plus the fact that it represents an organization (Aaker, 2004:17). It stands as the ultimate identifier of the corporation; it is the overall umbrella for the corporation’s activities and encapsulates the corporate vision, values, personality, positioning, and image among many other dimensions (Kotler & Pfoertsch, 2006:79).
Corporate brand values are latent in the values of the organization’s founders, owners, management and personnel. The reason for corporate branding can be broadly explained by three main factors; differentiation, transparency, and cost reduction (Hulberg, 2006:60). Brands, used as a holistic marketing strategy communication tool, can differentiate itself by offering additional value, especially under severe competition in homogeneous markets where globalisation has created price pressure (Kotler & Pfoertsch, 2006:45).
Brand loyalty plays an important role in the field of international orientated customers. To be able to capitalize on brand loyalty, brands must embrace their true nature and stay close “heart and soul” of the brand. Value creation by the brand can be addressed at the halo effect. Brand awareness, knowing the name of the brand, leverage the consumer’s perception of product advantages beyond the objective tangible and visible advantages. Psychologists have also identified the halo effect as a major contributor of value creator by the brand (Kapferer, 2007:39-43). See figure 3.
Figure 3. The product and the brand - halo effect (Kapferer, 2007:43).