Phil Taylor's papers
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BACK TO : PROPAGANDA AND THE GWOT Year 4 - 2005
Is 'Brand America' Going to Be an Endangered Species in World Markets? by Gail Dutton 
Magazine Issue Date: 03/01/2005 Is 'Brand America' Going to Be an Endangered Species in World Markets? Gail Dutton Global consumers are cooling on products 'Made in the U.S.A.' Reversing this trend takes savvy citizenship efforts and a lot of listening. For world traders and top corporate managers who came of age in the last several decades, it has long been an article of faith that the world welcomes American brands. Indeed, from blue jeans to heavy industrial machines, Made in the U.S.A. was what people wanted. America, besides being the leading industrial nation in the world, was also one of the most admired. Today though, the situation is more problematic. Some of America's most iconic brands-like Coca-Cola and Boeing-are taking a one-two punch internationally. On the supply side, competitors have arisen, while on the buy side, consumers who dislike our international policies are exhibiting their disdain in the marketplace. The attraction of the American dream carried over into our products. Americans were innovative, idealistic, open and free. In what marketers call 'the halo effect,' these positive virtues became invested in Brand America. That image is slipping. In a recent survey by NOP World, a global market research firm, respondents were asked how they regarded American culture. The results: Americans were perceived to value wealth, power, freedom, enjoying life, having fun, pleasure, status, material security, ambition, self-reliance and sex, in that order. Enduring love, stable personal relationships, honesty, equality and faith were considered among the least important attributes of American culture. Such an image, if accurate and self-perpetuating, bodes ill for U.S. global trade over the long run. "We may have already passed the peak of Brand America's international appeal and its right to brand leadership in almost every market sector," writes English consultant Simon Anholt in his book Brand America. A specialist in the marketing of countries, cities and places, Anholt regards America's positive branding aspects to be sporting prowess, technological achievement, wealth, and definitive youth lifestyle. Of late, though, Anholt detects global disapproval of U.S. foreign policy "so intense that it is spilling over and contaminating the image of U.S. brands and culture." Factual data is hard to gather but there are indications that since 2000, the awareness and use of global brands generally increased. According to Interbrand's 2004 global ranking, the top brands by value, are Coca-Cola, Microsoft, IBM, GE, Intel, Disney, McDonald's, Nokia (Finnish), Toyota (Japanese) and Marlboro. But in the past year, the study suggests 'trust' in leading American brands has slipped: Coca-Cola, McDonald's and Nike by some 3 percent. Some sales increase To be sure, Brand America is not about to disappear. Certain American icons are seeing increased sales. Levi Strauss & Company reports global gross profits increased about 9 percent in the third quarter of 2004 (the most recent reporting period). The Levi Strauss Signature brand, introduced last June in Europe, outpaced the company's expectations there by at least 12 percent, leading the company to expand the brand to kids' wear for Fall/Winter 2005 (see sidebar, page 22). Pepsico's profits are up, too. Its third quarter financials for its international operations reported a 28 percent increase in profits. Its beverage business grew 9 percent in Latin America, 10 percent in Europe, Mideast and Africa (one reporting region) and 14 percent in Asia. Even McDonald's, a lightening rod for anti-American sentiment, reported annual global sales increases of 7.1 percent in December, with European sales up 2.4 percent. "The exchange rate helps," according to Mark Greene, managing director of Brand Research Company. But, he adds, "although we've picked up attitudes that are anti-Bush and anti-American, they generally don't translate into behaviors-particularly in corporate decisions-until extreme situations develop. "Capital equipment companies, that deal business-to-business, are communicating persuasive attributes-we have advanced technology, or international savvy to meet your global needs, or the financial wherewithal to be here for the long-term," Dr. Greene says. Exports in this category actually increased $5.3 billion in the third quarter, the Department of Commerce reports. Brand attributes American global traders are not ignoring the implications of this possible erosion of Brand America. Under the guidance of the President's Export Council, the principal national advisory committee on international trade, a special report was recently released on "U.S. Corporate Stewardship Around the World." Responding to President Bush's injunction that "in the long run, there's no capitalism without conscience," the Council speaking through its Chairman J.W. Marriott, Jr., CEO of Marriott International, endorsed the importance of U.S. companies exporting values along with products. Among these values is increased sensitivity to the host national culture. Sure enough, says Mark Greene, "We see some movement towards making brands less American and more global." Multinationals need to become part of the local landscape. In practical terms, that means international offices run and staffed by locals, a way of showing clients or customers that you have the requisite expertise to meet country-specific needs. In China, for example, 99 percent of Coca-Cola's staff is Chinese, and, according to China Daily, "more than 98 per cent of the basic ingredients, including sugar, are sourced in China." In Australia and Canada, American fast food chains emphasized their use of local beef. The approach was so successful that "a lot of Australians thought McDonald's was Australian," observes Paul Leinberger, global director of NOP World. Citizenship Good international corporate citizenship is also good business. That's the message the President's Export Council is vigorously promoting. There is increasing indication that positive corporate acts of social responsibility correlate with positive branding, notes Jim Sloan, senior VP and U.S. director for corporate stewardship at the giant public relations firm Hill & Knowlton. In China, for example, Cisco developed a network training academy. "People really appreciated that program," notes Yeosun Yoon, assistant professor of marketing, Jones Graduate School of Management, Rice University. "They saw it helped their country. The ideal is to know what local communities need," Dr. Yoon stresses. "American companies tend to be successful when they listen, adapt and synthesize what they learn with what they know works," agrees Mike Bawden, president and CEO, Brand Central Station, a consultancy that helps companies manage brand value. Despite added cross-cultural sensitivity, however, Bawden notes that, "we often misjudge a new market by using the rules and conventions of the market we understand the best-our own." He cites Clear Channel Communications as an example of a company that avoided this natural tendency to overlook national differences. When Clear Channel moved into Poland, "its first move was to create a board of directors made up of Polish businessmen and constituents to make sure their operations weren't ignorant of important cultural, economic or socio-political issues. Next, they hired local PR representation to make sure their core message was presented correctly and was completely understood," he says. "The only way to prove ourselves is to develop long-term relationship-building strategies that help the brand become a part of the local landscape," Bawden insists. "That means going to the market and getting into it-not as tourists, but as businesses interested in making a long-term investment in the community. A big part of this requires American businesses to start thinking in a way that removes our own hubris from our perceptions and identifies the filters by which other countries or cultures view American products or services." U.S. Steel Kosice (USSK) knows this. As the biggest employer in eastern Slovakia, it blends U.S. and Slovak approaches to business into a sophisticated, sustainable stewardship plan that encompasses more than 200 individual programs and involves tens of thousands of people. Its extensive programs include music and entertainment programs, sports and economic development activities, and help for schools, hospitals, children's homes and other institutions. "Our aim is to help children and youngsters to show their talent and to set an example for others, with the message that it makes sense to achieve something," notes company president Christopher J. Navetta. During the U.S. Steel Talent Night every September, 10,000 young people lined the main street in Kosice. Another huge event is International Children's Day. Not all firms are as savvy. "Recently at a dinner in Hungary, one of my public affairs partners-an Irish woman stationed in Brussels, dealing with the EU-commented on what it's like dealing with American clients," recounts Brand Central's Mike Bawden. She says, "I can tell when my American clients have lost their patience with us Europeans. They bark into the phone something like, 'Just get in there and kick some butt if you have to.' They don't understand that we don't work that way in Europe." "To her," Bawden says, "the example was funny and very typically American. Other partners I've worked with don't see it with quite as much humor." Concepts like "old Europe" and "new Europe," popularized by Secretary of Defense Donald Rumsfeld, don't help. Among Bawden's long-time business contacts in Eastern Europe, "The whole connotation of 'old' and 'new' Europes is a running gag. They maintain it's yet one more convenience for Americans to use who don't really care to understand anything about Europe or the various cultures at work here." Contradictory perceptions "Views of America around the world are more complex and contradictory than before," Simon Anholt argues. America's position as the world's sole superpower contributes to this ambiguity, "people's attitudes to absolute dominion are always mixed and uneasy." Stephen Jordan, executive director of the U.S. Chamber of Commerce Center for Corporate Citizenship, saw an example of this ambiguity during a recent trip to Argentina. He observed media there that referred to "savage capitalism" and "saw a certain heartlessness in it, but didn't want to go back," to the previous way of doing business. Partner, not patron Even when an American company seeks to do good abroad, the efforts can backfire. "It's clearly important that corporate philanthropy should be in line with the competencies and with the brand of the corporation," underscored Simon Anholt during an interview with World Trade. "Because if it's just 'socially responsible' acts or 'charity' it tends to look less sincere-and often does less good-than positive action that plays to the corporation's skills and knowledge." "How you implement a stewardship plan is crucial," Rice University's Dr. Yoon agrees. "So many companies waste money on programs that consumers don't care about or need. If there's no benefit to the company, it's a waste of money," she emphasizes. Additionally, Dr. Yoon says, "It's important to show a company sincerely cares." In the 1970s and 1980s, she recounts, Samsung Corporation had an image problem in Korea. To improve it, the company advertised that it donated money to a local orphanage. "The money didn't seem significant, and consumers were skeptical," Dr. Yoon recalls. "So, Samsung got its employees involved. It encouraged them to go the orphanage and help." When consumers saw that employees were involved, Samsung's image began to improve. Partnership is another important concept. Keith Reinhard, president of Business for Diplomatic Action, Inc. and chairman of DDB Worldwide underscores that point. "In investment, America must be presented as the facilitator, not the patron. In the realm of charity, as the partner and not the philanthropist. In business endeavors, as the courier of progress and not the preachers of westernization." Reinhard told the 9/11 Commission last August that corporations, "in some cases, speak more credibly and effectively" than government. The reasons, he says, are that, "American brands touch the lives of more people than government representatives ever could; foreign representatives of U.S. companies are more likely to be representative of local views and perceptions than Americans working in embassies," while corporations are less bureaucratic and more likely to sustain efforts. "Philanthropy is not only an issue of financial support," agrees USSK's Navetta. "Every event is more successful if it is a joint event. We encourage other companies to participate. The rest is an issue of the organizers' creativity. In the end, you can see thousands of people enjoying themselves in the streets, theater or sport hall." Branding diplomacy "Good ideas aren't missing, and plenty of people in America understand what is needed to get Brand America back on track," Anholtz concludes in Brand America. "But the thing which will tie all these loose ends together, ramp the smaller initiatives up into bigger ones, coalesce the willing, and actually create change on a big scale is the brand idea itself." Right now, he says, donating time to public diplomacy is akin to asking consumers "to refresh themselves with a sweet, fizzy brown fluid." Companies need to approach corporate stewardship with the same disciplined approach as they would a marketing plan. It must address local needs and perceptions. Indeed, much can be accomplished simply by listening. Sharing best practices in public diplomacy is another idea advocated by Reinhard. The President's Council on Exports last fall took the first step, by releasing its report on corporate stewardship, highlighting some of the efforts of American corporations abroad. "In the commercial sector, we know that it is not so much what you say, but how you say it. Similarly, in diplomacy, style is often substance," Reinhard says. Sidebar: How Levi Strauss Rekindled the Allure of Brand America When the Berlin Wall came down, the German kids were wearing Levi's jeans. By the mid-1990s, however, the allure of bluejeans seemed over. Indeed, it took seven straight years of slumping global sales before Levi Strauss & Co. could stop its downward trend. But turn around they did. In 2004, the company stabilized its worldwide sales and increased its profitability by strengthening its core Levi's(r) and Dockers(r) product lines around the world and introducing a new global brand - the Levi Strauss Signature brand. The way Levi Strauss reversed its apparent eclipse by supporting revamped products with culture-specific messages points the way to how other U.S. companies can help revitalize 'Brand America'. While specific brand attributes aren't the same thing as core company values, Levi Strauss has deftly established a product image consistent with its corporate stature as an American icon. Levi's image of quality, innovation and sexiness are certainly key parts to the image but its status as "the original pioneer brand" is the hot-button with international customers. The 501 jean - introduced in 1873 - has been updated for modern body types (in fact, the latest version is based on the 501(r) fit offered in the 1950s) and then re-released with campaigns around the world that harken back to its heritage as the original blue jean. "In Europe, the ads (for 501s) talk about the cool fit. In Asia, they talk about the rebirth of an original. In the U.S., ads show real people who are, themselves, originals - ranchers, surfers, great musicians," observes spokesman Jeff Beckman. "There's a connected set of values and brand attributes, communicated in a locally relevant way. Wherever it does business (operations in 70 countries, sales in 110 countries) the company emphasizes its core brand values: empathy, originality, integrity and courage. That emphasis, tellingly, is "less about communicating these values, and really about living them," Beckman says. Employees are attracted to our values, and so are consumers. Consequently, "We haven't seen any anti-American backlash," says Beckman, who's been asked that questions frequently. "People appreciate our brand for what it stands for. It's very democratic. Levi's blue jeans are worn by the affluent and working people; men, women and children alike. People value the notion that this is the pair of pants that started the blue jean revolution. Blue jeans, more than any other piece of clothing, are the most universally worn apparel ever invented. And Levi's(r) jeans are the quintessential symbol of freedom, rebelliousness and democracy. Ideas that are universally appealing from Maine to the Middle East." Gail Dutton is a freelance writer in Washington state. She has covered a wide variety of business and technical topics for World Trade, ranging from economic development to biotech. |