Brand Failures_ The Truth About the 100 Biggest Branding Mistakes of All Time - Matt Haig [60]
Many companies have confused the era of globalization with an era of homogenization. If they have had success with one product in one market they have assumed they can have equal success in another. All they believe they have to do is set up a website in the relevant language, run an ad campaign and set up a similar distribution network. What they forget to understand is that there is more to a country than its language, currency or gross domestic product. The cultural differences between, and often within, countries can greatly affect the chances of success for a brand.
In order to succeed, brands must cater for the specific tastes of each market they enter. If these tastes change, then the brand must change also. As the bumpy ride experienced by Kellogg’s in India (the first example included in this chapter) indicates, companies which fail to accommodate and acknowledge these vast cultural differences face a long battle in replicating their success at home in other markets.
However, understanding cultural differences is not just about international markets. It is also about understanding the specific culture of the brand. When companies acquire a brand that wasn’t theirs to begin with, they can often make similar faux pas as when they move into a foreign market. However, instead of making the mistake of misinterpreting the market they misinterpret the brand. This happened when CBS acquired the guitar company Fender and when Quaker Oats bought the soft drink Snapple. Although the companies spent millions on marketing, they lost market share as they didn’t understand exactly where the market was, and what the customer wanted. As a result, in both cases, the acquisition weakened the brand.
48 Kellogg’s in India
Kellogg’s is, of course, a mighty brand. Its cereals have been consumed around the globe more than any of its rivals. Sub-brands such as Corn Flakes, Frosties and Rice Krispies are the breakfast favourites of millions.
In the late 1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the US ready-to-eat market from its cereal products alone. By that time, Kellogg’s had over 20 plants in 18 countries worldwide, with yearly sales reaching above US $6 billion.
However, in the 1990s Kellogg’s began to struggle. Competition was getting tougher as its nearest rivals General Mills increased the pressure with its Cheerios brand. Kellogg’s management team was accused of being ‘unimaginative’, and of ‘spoiling some of the world’s top brands’ in a 1997 article in Fortune magazine.
In core markets such as the United States and the UK, the cereal industry has been stagnant for over a decade, as there has been little room for growth. Therefore, from the beginning of the 1990s Kellogg’s looked beyond its traditional markets in Europe and the United States in search of more cereal-eating consumers. It didn’t take the company too long to decide that India was a suitable target for Kellogg’s products. After all, here was a country with over 950 million inhabitants, 250 million of whom were middle class, and a completely untapped market potential.
In 1994, three years after the barriers to international trade had opened in India, Kellogg’s decided to invest US $65 million into launching its number one brand, Corn Flakes. The news was greeted optimistically by Indian economic experts such as Bhagirat B Merchant, who in 1994 was the director of the Bombay Stock Exchange. ‘Even if Kellogg’s has only a 2 per cent market share, at 18 million consumers they will have a larger market than in the US itself,’ he said at the time.
However, the