In a post written early in July, I said that the best way for Chinese brands to overcome people’s notions of what “Made in China” means is to develop and market strong, innovative products. But for a multinational brand seeking to grow its franchise in China or elsewhere, is the recipe for success different?
I was reminded recently of Nokia’s success in China, which can serve as an example for other brands. At the AMA event in New York in June, Professor Joe Plummer explained how Nokia seized the mass-market in China by developing cheap plastic phones instead of focusing solely on high-end “smart” phones. (See my post on this here.)
Not content simply to battle with Motorola and Samsung for market share among the well-off, Nokia chose to expand the category. They supported their premium brands, but also introduced simpler products to open up the mass market. A more recent example of opening up the mass market comes from India, where Nokia is planning to extend an initiative whereby it sells handsets to a microfinance company, which in turn sells them to women in rural areas (To read more, click here).
In following the strategy of making their brand as accessible as possible, Nokia is following Tom Doctoroff’s recommendation to “brand down,” and so succeed by being in the right place at the right time with the right product. (For my post on this topic, click here.)
Branding down has proven to be a successful strategy for many brands trying to gain a foothold in China. But for Chinese brands trying to go global, I recommend that they “brand up.” Chinese brands need to establish the perceptions of quality and trust that they are currently lacking. (This is the opposite of the problem faced by multinational brands, which start with high status but are too expensive for the mass market.) Innovation is central to both branding down and branding up, even though the objective may be different.
Of course, it should go without saying that innovation is central to the success of any brand. However, I am not just referring to product innovation, though that is one of the most important drivers of success, but also innovation in business model, supply chain, organization, pricing, sales, and marketing. Innovation should apply to every aspect of a business and brand.
Recently I used Toyota as an example of a company that outgrew its national origins and succeeded on the global stage. Toyota is a company that understands the importance of innovation and being in the right place at the right time. The introduction of the Prius Hybrid is a classic example. When the concept first appeared in 1997, other manufacturers had hardly started to give the idea of blended technology any real thought. Consumers in the United States were still living in blissful ignorance of what was to come in terms of gas prices.
Released in Japan in 1997 and in the United States in 2000, the Prius is now sold in more than 40 countries. In March 2009, Toyota announced that it had sold its one-millionth hybrid in the United States. (Click here for story.) And for more on Toyota’s commitment to innovation, check out this post by Craig Rispin referencing Matthew E. May’s “The Elegant Solution: Toyota’s Formula for Mastering Innovation.”
What other examples of companies branding up or down can you think of? Do brands only make progress when they innovate in some way?
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