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Globalization is one of the truest realities of the current business climate. More countries are opening their markets and inviting foreign companies into their economies. Migration of intellectual capital is more pervasive than ever.

As democratic principles are more widely adopted around the world, cross-national business has increased. These developments have made the world much flatter.

Globalization’s impact on businesses and brands is profound. On one hand, the flattening world allows companies to grow, increase their customer base and prosper.

On the other hand, it brings increased competition, heightened regulatory monitoring and greater exposure to the fluctuations of the global market.

One of the biggest challenges globalization poses to global brands is the extent to which their country of origin affects their equity when they venture into new, foreign markets. It is well-known that brands originating from certain countries carry with them certain perceptions.

Brands from France, Germany or Italy are known for their sophistication and enhanced symbolic value. On the other hand, the “Made in China” tag has a strong negative effect on brands originating in China.

Given that a brand’s country of origin impacts its equity, brands should manage the possible range of perceptions among their customers and other stakeholders.

Can brands mask or even alter their associations with different origins to overcome the country of origin effect? Although that may be challenging given the access to corporate information, some brands are experimenting with just such a strategy.

Consider the automobile industry. The two leading brands in the world — Toyota and Honda — are from Japan.

Increasingly, Asian brands such as Hyundai, Kia, Nissan and Tata, and European brands such as Volkswagen and BMW, are entering the global market.

Although some brands struggled to achieve acceptance despite their country of origin, Volkswagen is unique.

Although Volkswagen originates from Germany, known for its precision engineering, it faced challenges in establishing a foothold in the world’s biggest car market, the US.

Volkswagen has been the largest automaker in Europe, it is the top foreign car brand in China, and yet it has struggled considerably in the US.

VW has seen sales decrease from around 360,000 cars in 2000 to around 213,000 cars in 2009, a mere 2 percent of the US car market.

Despite revenues of $15.2 billion in North America in 2009, it has steadily lost around $600 million a year since 2003.

However, VW’s vision is to emerge as the world’s biggest car company by 2018 by overtaking Toyota.

One of its biggest challenges has been to design the identity of its brand to convey a sense of belonging to the US.

Although VW has been berated in every quality report, it has followed some innovative strategies to highlight its association with the US market to gain acceptance and legitimacy among customers and collaborators.

Three strategies are important in any such attempt, the first of which is connecting with key stakeholders.

Every industry is composed of influential, external stakeholders, such as entrenched networks of dealers, rating agencies, worker unions, etc.

These stakeholders function as important intermediaries that evaluate brands and convey relative standing to other market participants. Brands striving to create new associations with the country they enter should establish connections with these stakeholders.

They also need to communicate their intended associations. Establishing new associations over and above the country of origin requires aggressive communication strategies.

Brand should convey their tactics to forge new associations with information generators, disseminators and aggregators while centering their brand strategies around a comprehensive media campaign.

Lastly, they must collaborate to build brand experiences.

Collaborating with customers in designing engaging brand experiences to emphasize the new associations is crucial.

The first two strategies highlight the brand in a new light.

The third allows brands to directly involve customers in novel activities that enhance opportunities to interact, experience and test the brand before they make their decisions.


Martin Roll is a global business and brand strategist. His Web site is http://www.martinroll.com.