Follow-up. 1 Explain the following words/ phrases from the texts.

1 Explain the following words/ phrases from the texts.

Text 1: a premium brand, to buy in bulk, a mother brand

Text 2: economies of scale, competitive tools, a cash cow.

2 Form two groups and discuss the problems/ideas mentioned in the texts. Present the results of your discussion to each other.

Text A Being perceived as local: the new ideal of global brands?

A curious turnaround appears to be taking place. In multinationals the world over, CEOs are proudly producing figures proving that their brand is perceived as ‘local’. In fact, brands that have been very successfully ‘globalised’ for some time are now perceived as local brands, a phenomenon that is just as true for Nivea and Kodak as it is for brands of medication (Aspro and Rennies), washing powder (Ariel and Omo) and even Shell, which the Swedes firmly believe to be their national brand.

Is this desire to appear local a concession to fashion, a concession to the World Social Forums against capitalist globalisation, or does it reflect a deeper awareness?

It should first of all be pointed out that this trend does not affect all brands, only those that want to be accessible, popular brands reaching a wide public in countries throughout the world. By definition, ‘hightech’ is not local – if it is, it is perceived as ‘low-tech’. It is technology that unites the world, which is the essential factor of globalization and the attendant standardisation, by creating the same desire for a particular piece or pieces of new equipment in consumers the world over.

Thus, the big technological brands are clearly perceived as global, a perception that invests them with additional perceived quality and prestige. Similarly, ‘high-touch’ brands are also global – their customers are, in part, buying a value based on the idea that, if they travelled to Paris, New York or Tokyo, they would find exactly the same product.

This is why luxury goods and top-of-the-range cosmetics do not try to appear local – their added value stems from their global image and their foreign origins. Finally, this basic trend does not affect brands whose added value stems from their association with a particular country. For example, Coca-Cola and Levi’s are universal symbols of the United States, while Lacoste symbolises French sporting elegance. Today, young consumers worldwide, who have grown up with mixed cultures, tend to favour brands with a strong national identity which allow them to experiment with their own particular identity.

However, the search for popular success on the world market forces companies to recognise that being close to consumers is a key factor of this success. L’Oré al was quick to realise this and, within its very diverse brand portfolio, the name of the typically French brand Laboratoires Garnier was changed to Garnier in 2001. The change of name was not accidental – it was designed to facilitate the brand’s acceptance by countries on all five continents.

In spite of a ‘brand identity’ platform that is the same in all countries, Garnier readily adapts its products and ingredients to suit local hair and skin types, as well as adapting its packaging to suit local practices (large formats in Portugal, tiny formats in Korea) and its advertising (using local models) to appeal to local consumers. This strategy is therefore the direct opposite of that used by the group’s top-of-the-range brand Lancô me, which is extremely globalised in all aspects of its marketing mix. Thus, the higher up the range the brand, the less it has to adapt.

If brands are seeking to maximise their integration within a country, it is because companies have realised that the global brand was above all a consequence of the pursuit of economies of scale and the competitive advantage they provide. Consumers have never been known to ask for global brands. There is, therefore, a difference between being a global brand that is represented on all continents because it meets a universal need, and proclaiming a global brand from the rooftops.

Text B Demand boomed for organics, but where were the vegetables?

Supermarkets today sell a wide range of ‘organic’ fruit and vegetables, with rival supermarket chains competing against each other on the price and quality of their produce. Some have gone further, and added ethical sourcing as a point of differentiation, for example through compliance with Fairtrade standards. But in the early days of the boom in organic vegetables, competition was not so keen, and those early days illustrate the point that when a company faces acute problems of supply, it may simply not be realistic for it to be customer-led, at least in the short term. In the UK during the late 1990s a combination of rising incomes, greater awareness of health issues, and a stream of food safety scares led to a rapid growth in demand for organic produce. But how could farmers grow organically on land that had been saturated by decades of artificial fertilizers? The Soil Association, which operates an accreditation scheme for organic produce, required that farmland should be free of artificial fertilizer for at least five years before any crops grown on it could be described as organic. So, despite the rapid growth in demand and the price premiums that customers were prepared to pay, retailers found it difficult to satisfy demand. Furthermore, with a difficult and intermittent supply, could retailers risk their brand names by being seen as unreliable suppliers of second-rate produce?

Marks & Spencer launched a range of organic vegetables in 1997, only to temporarily withdraw them soon afterwards, blaming the difficulty in obtaining regular and reliable supplies. In the short term, it was suppliers and not customers who guided the retailer’s policy on organic produce. However, by 2002 previous initiatives to grow more organic food were finally coming on stream, resulting in a glut of produce which depressed the prices that farmers received. It was now a buyers’ market.

UNIT 3