Global brands versus local brands. Where are we going?

Tuesday, June 23, 2015, by Eliane Karsaklian

global versus localWithout using a crystal ball, Theodore Levitt predicted the globalization of markets in the 1980’s by describing a convergence of tastes in the world and thus the emergence of a global market for uniform consumer products. He saw global corporations exploiting the economics of simplicity and standardization to price their global products far below the local competition.

For a while, consumers and companies proved him true. But, it did not last forever and local brands started to fight global brands’ hegemony. With positioning specifically to their home markets, local brands are facing the challenge of beating global brands in localized markets.

After the ‘everyone should buy the same’ trend in consumption, brands that stress their localness, their differences, their specificities and their ability to make consumers look and feel special are acquiring increasing value. In doing so, local brands are winning back customers as their quality improves in response to new competitive pressure. In addition, and as a response to an economic downturn, consumers returned their focus to local concerns with a renewed loyalty to products made with local labor and raw materials. This new trend is strongly stimulated by ethical consumption habits encouraged by governments, companies and culture.

Buying local is becoming the preferred norm. It helps fight pollution, supports local economies, creates local jobs, givse more exposure to the country in the international scene, and provides benefits (usually) from higher quality. Briefly said, buying local brands is buying ethically and stimulating consumer ethnocentrism. For instance, most products sold in Australia have a Made in Australia green tag with a kangaroo as a logo. It appeals to Australian consumers’ pride to purchase local products.

One of the main consequences of the globalization of brands was the emergence of local brands as ‘savers of the planet’. Small local businesses put together products and brands that would be more expensive, but also local, natural, and ethical. Brands such as Innocent as well as The Body Shop in the UK and Ben&Jerry’s in the US are some examples. Not surprisingly, as soon as these brands grew, they were purchased by global companies. Coca-Cola bought Innocent, l’Oréal bought The Body Shop and Unilever purchased B&J. However, the global companies did not disclose such take overs and left the local brands untouched so that consumers’ trust would not be challenged. Today, two-thirds of Coca-Cola’s sales in Japan are from local beverage brands, and the company now owns more than 100 local beverage brands worldwide.

But research is indicating that consumers do value global brands especially for their assumed high quality and prestigious image. If a brand is perceived as globally available, consumers are likely to attribute a superior quality to the brand, since such quality is thought of as a prerequisite for international acceptance.

Ironically, local brands are going global now and are thus reinforcing their image of quality thanks to international consumer endorsement. The Australian UGG and the Brazilian Havaianas distribute their products worldwide with much higher prices than in their local markets. Globalization is no longer aimed at lower prices due to the economies of scale.

Although consumers sometimes challenge the authenticity of global brands over local alternatives, which are understood to be distinctive expressions of local cultures, consumer cosmopolitanism influences the acceptance of global brands as they would rather find familiar brands wherever they travel. However, a paradoxical trend is emerging simultaneously: the regionalization of brands. The saturation of country of origin has to be asserted by other types of authenticity. The regional authenticity.