a regional approach to a global approach; some have even reverted to a regional approach to get the balance right.
Clearly, a one-size-fits-all structure is not an option for the industry, and likely not for any complex portfolio. In this article, we review the potential benefits and challenges of developing global brands and coordinating brand portfolios globally; identify the factors that drive the appropriate level of global brand management across the value chain; and review key implications and principles for successful implementation.
Global Management of Brand Portfolios Has Clear Benefits There have been some fantastic stories of well-managed global brands, both inside and outside the CPG industry. Some are well known: For example, at Apple, a great majority of R&D, innovation, and even marketing is organized centrally; Procter & Gamble’s strong arsenal of global brands benefits from its use of “open innovation,” in which a central R&D hub oversees a pipeline of ideas generated both within the company and with external partners. Other examples have received less publicity, such as the use of consumer insight that parlayed the brand equity of Kimberly-Clark’s Huggies diapers into other successful products for babies, including Pull-Ups and toiletries.
Though CPG companies’ approaches to managing global brands vary, they generally look to gain three particular
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advantages from whatever model they choose: better results from their innovation investment, more rapid geographic expansion, and greater global brand equity.
Innovation investment: In today’s CPG environment, competitive advantage and meaningful differentiation are increasingly dependent on superior R&D. In fact, companies’ greatest gains from global brand management stem from their ability to coordinate innovation activities across products, brands, and markets, and thus amortize the investment. There has been some debate about whether innovation can really be globally applicable, given the widely varying needs of particular brands and the differences between markets. However, we find that core technologies and product innovations have far more global reach than some have assumed. Innovation and consumer insight can be broadly relevant across markets; both P&G and Kimberly-Clark have used insights from emerging markets to develop and market products for low- income consumers in developed countries. For instance, they gained a deeper understanding in emerging markets of how consumers must make trade-offs between the cost of diapers and the cost of child care, and used this knowledge to inform their pricing and marketing for low-income segments in the United States.
Speed of geographic expansion: Global coordination allows companies to more easily share insights across brands and
markets, thereby enabling teams to learn from one another about new product ideas and innovative ways to connect with customers. Additionally, global coordination can make for more rapid and cost-efficient expansion into new markets with existing products. This is particularly true in the case of global brands with a unique name and positioning, as well as similar execution across markets, from pricing to packaging to advertising. Look, for example, at the successful rollout of the innovative Air Wick Freshmatic automatic aerosol. Reckitt Benckiser, the brand’s parent, was able to roll out the product worldwide in less than a year, during which time it found the product in Korea, tested and launched it in Europe, adapted it to meet U.S. environmental regulations, and quickly made it the number two air-care product globally. The product’s rapid global expansion gave it a clear competitive edge in the newly created air-care segment.
Global brand equity: Brands that are proven to have international acceptance and appeal are inherently stronger than national or regional brands. Interbrand, in determining the value of the world’s best brands, uses a brand’s “internationality” to determine 25 percent of its brand strength, making that factor as important in Interbrand’s estimation as “leadership” (i.e., market share). Greater global reach and recognition make a brand more sustainable and indicate potential for further international expansion. Furthermore, a brand’s global status can, in itself, be a