Corporate Branding

Areas, arenas and approaches

T C Melewar, S F Syed Alwi, T C Melewar, S F Syed Alwi

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317950905
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Werbung

A strong corporate image has power in a competitive marketplace. Its influence on reputational value and customer decision-makingis only now beginning to be understood.Interest in corporate branding is exploding as marketing academics and professionals begin to realize howit canboost business performancein measurable ways. For example, it promotes customer patronagewithout expensiveadvertising and raises profitability by enabling companies to leverage their brand image when buying from particular sources.

Yet there are few empirical studies available to clarify its basic tenets and fewer still that help us understand corporate branding in different parts of the world. Existing books focus mainly on conceptual ideas and real-life examples. Corporate Branding: Areas, arenas and approaches is a unique take on corporate branding that provides a global overviewthrough rigorous research of different geographical areas across industries. An international range of leading scholars contribute their coverage across three clear themes:

Area: geographical areas across the globe including the UK, USA, Europe and Asia;
Arena: a variety of commercial and not-for-profit sectors, both B2B and B2C;
Approach: methodological approaches to brand research design, including qualitative, quantitative, case studies, interpretivistic and social narrative.

These three themes enable the reader to consider corporate branding from more perspectives and in more ways than any other corporate branding book. The result is an understanding of this strategically important, growing subject that cannot be found anywhere else. This book is an essential read for any branding student or interested professional.

Part I Corporate brand: areas

1 Corporate brand

Europe

Heather Skinner

DOI: 10.4324/9781315863177-2

Learning outcome

At the end of this chapter, the reader should be able to:

• understand corporate branding in a European context;
• understand corporate brand decisions in the context of European Union membership;
• understand the importance of national identity to corporate branding;
• understand the implications of a further enlarged European Union on corporate brands;
• understand the brand architecture of European corporate and nation brands.

Key points

• In order to understand corporate brands in Europe, there must be an understanding of the concept of Europe itself, not only as a geographic area, but also in the context of the creation and continued enlargement of the European Union.
• A consideration of corporate brands within Europe requires an understanding not only of the importance of national identities, but also of the heterogeneity of cultural and sub-cultural identities across this area.
• Corporate brand decisions in Europe will also be affected by the nature and scope of international trade and the market activities of multinational corporations.
• Competitive advantage can be seen not only in corporate terms, but also in national and supra-national terms.

Introduction

The relevance of geographic areas to marketing activities can be traced back to studies into the country of origin of exported goods, which later laid the foundations for academic consideration into the consumption not only of the exports of a place, but into consumption of the brand and brand image of the place itself. This chapter will therefore consider branding not only in terms of European corporations, but will also explore the importance of a national identity to corporate branding within Europe, along with a consideration of the increasing heterogeneity of the member states of such a supra-national entity such as the enlarged European Union.

International marketing and the triad nations

Successful international marketing activities have tended to be dominated by corporate brands emanating from the developed world's triad nations of the United States, Japan and Europe. Even with the continued expansion of the European Union (EU), the vast majority of the world's nations remain outside of this triad. Although the triad still dominates global trade, the balance of power is shifting as lesser developed countries become more open to and effective at international marketing activities. In 2009, the People's Republic of China became, and remains, the world's number one ranked single nation in terms of the value of its exports. However, as a supra-national entity comprising all its member states, the EU accounts for the highest value of global exports overall, reaching a value of over €1.7 billion in 2013 (Eurostat, 2013), although it must be recognized there are large differences in the value of the exports of each EU nation. When considering the global scope of international marketing activities, it is also important to understand that most multinational enterprises continue to earn the largest proportion of their revenues in their domestic markets and near-neighbour countries, and within their trading bloc, affording many trading benefits for corporate brands from countries that are members of the EU.

European Union

It is becoming increasingly difficult to locate the geographic area of ‘Europe’ without a consideration of the creation and enlargement of the EU.

The European Economic Community (EEC) was founded by the Treaty of Rome in 1957 with six member nations: Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. These nations were joined, in 1973, by Denmark, Ireland and the UK. Greece joined the EEC in 1981, with Portugal and Spain joining in 1986. The EEC was the forerunner of the entity we now know as the European Union (EU). The EU, formed by the 1993 Maastricht Treaty, extended the scope of the EEC, and established co-operation in common foreign and security policy and justice and home affairs, also establishing the groundwork for a single European currency. At the time of its creation the EU comprised 12 member states. Austria, Finland and Sweden joined the EU in 1995 shortly after its creation, and the 15 member state EU remained stable in composition for almost 10 years.

(Skinner et al., 2008:196)

In 1992 the EU formed an initial new domestic ‘European’ market of 345 million consumers. In May 2004, when ten new members joined the EU, this market grew to 450 million consumers. Further enlargement of the EU in 2007 and 2013 has grown this market to more than 500 million consumers. By 2011, inter-EU trade had reached €2.8 trillion (Barnier, 2013).

The EU currently comprises 28 member states: Austria (joined 1995), Belgium (1952), Bulgaria (2007), Croatia (2013), Cyprus (2004), Czech Republic (2004), Denmark (1973), Estonia (2004), Finland (1995), France (1952), Germany (1952), Greece (1981), Hungary (2004), Ireland (1973), Italy (1952), Latvia (2004), Lithuania (2004), Luxembourg (1952), Malta (2004), Netherlands (1952), Poland (2004), Portugal (1986), Romania (2007), Slovak Republic (2004), Slovenia (2004), Spain (1986), Sweden (1995) and the UK (1973).

Iceland, Montenegro, Serbia, the Former Yugoslav Republic of Macedonia and Turkey are now ‘candidate countries’ on the road to EU membership, with Albania, Bosnia and Herzegovina, and Kosovo considered as potential future candidates for EU membership.

Country of origin and product country image

Since domestic consumers’ perceptions of foreign products started to be examined in the literature in late 1960s (Reierson, 1966; Schooler, 1965), there have been many studies investigating the extent to which a product's country of origin (COO), or product country image (PCI), exerts an effect that influences consumers’ perceptions of imported products based on the stereotype image of the exporting country (see, for example, Han, 1989; Johansson et al., 1985; Kotler and Gertner, 2002; Tse and Gorn, 1993). Han (1989) believes that the country of a product's origin forms a ‘halo’ effect that influences consumers’ perceptions of the products based on the stereotype of the country. There is evidence that consumers will use COO as just one variable in the purchase process and are more likely to do so when there is a lack of other product-specific information. For example, a consumer may purchase a bottle of French wine, a German car, an Italian suit or Belgian chocolates because the country is known for producing quality goods in that product category. In this respect, the COO and PCI may override brand considerations, especially when consumers may have little or no knowledge of brands from the exporting country.

The effect of COO does become blurred when considering that, in a global marketplace where multinational corporations source and assemble products from a range of nations, the accuracy or validity of ‘made-in’ labels is now in question (Al-Sulaiti and Baker, 1998). It must also be noted that, in terms of PCI, Kotler and Gertner (2002: 251) recognized that ‘most country images are in fact stereotypes, extreme simplifications of the reality that are not necessarily accurate’. However, an understanding of the effect of COO and PCI continues to help evidence the importance of a place creating a strong positive identity in order that it can exert influence on consumers’ purchase intentions regarding goods associated with a particular country.

Anholt (2005) further related COO not just to the consumption of the exports of a place, but to the consumption of the brand image of the place itself:

When we express a preference for French holidays, German cars, or Italian opera, when we instinctively trust the policies of the Swedish government, comment on the ambition of the Japanese, the bluntness of the Americans or the courtesy of the British, when we avoid investing in Russia, favor Turkey's entry into Europe or admire the heritage of China and India, we are responding to [country] brand images in exactly the same way as when we are shopping for clothing or food.

(Anholt, 2005: 1)

These issues will be explored further in later chapters (Chapter 3 includes a case on the city branding of Singapore, and Chapter 8 focuses more generally on place branding), so in this chapter the link between corporate and place brands will be explored only in relation to the area of Europe, and in relation to corporate brands’ strategic decisions in a European context.

The competitive advantage of nations

Niss (1996) claims that consumers tend to use COO symbolically, to make general associations with countries and product categories for which that country is known. It is this conception of ‘clusters’ of industries that may give a nation a competitive edge that was first proposed in Michael Porter's seminal text, The Competitive Advantage of Nations (Porter, 1990). Porter rejected the classical economist view that national competitiveness was endowed as a result of the abundance (or otherwise) of natural, physical and human resources, favouring, instead, a proactive strategic approach to creating and sustaining competitive advantage. From this perspective the nation is important only in the context that it provides the location for the firm's activities, although Porter stresses the nation's importance in doing so in such a way that creates international competitiveness by providing the encouragement and conditions for local industry to thrive. Anholt (2004) believes that attempts to ‘enrich the nation brand through the addition of information about culture, politics, people, geography and so forth’ can help ‘counterbalance’ the effect of the narrowly defined COO and PCI that countries may gain through the effective development of clusters of competitive industries as proposed by Porter; mentioning, for example, ‘how Japanese electronics and gaming brands create and typify the image of modern Japan to younger audiences’ (Anholt, 2004: 8).

Global Competitiveness Index

As recognized by the Global Competitiveness Report that is compiled annually for the World Economic Forum (www.weforum.org), the ‘12 pillars of competitiveness’ of a nation encompass its basic requirements (institutions, infrastructure, macroeconomic environment, health and primary education); its efficiency enhancers (higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness and market size); and its innovation and sophistication (business sophistication and innovation), stressing in the preface to the 2013–2014 report that:

the traditional distinction between countries being ‘developed’ ...