Building brands in a changing society

When do brands become relevant to an emerging market?

When do brands become relevant to an emerging market?

It’s a question I’ve considered while travelling through Indonesia, Malaysia, Thailand, and, most recently, Vietnam. When industrialization is ongoing and the majority of the population has yet to enter the middle class, how meaningful can a global consumer brand be? How relevant is Apple, McDonalds, or Toyota – to name a few from the BrandZ 100 Most Valuable Global Brands – to everyday life, particularly if a strong brand is expected to command a premium price.

It depends, says a report by TNS on the status of brands in the emerging markets of the Mekong sub-region of Asia: Thailand, Vietnam, Cambodia, Laos, and Myanmar. The report looks at how each country’s level of economic development influences whether brands – national or global – are valued and what that means for global brands targeting these markets.

In Myanmar, just entering the global economy after years of isolation, the young, low-income population is more focused on acquiring basic household durables, like refrigerators and air conditioners. In Laos and Cambodia, urban populations are enjoying recent growth in personal income and brands are slowly starting to become a point of reference. In Vietnam, as household incomes grow, brands are increasingly used as a means of self-expression, although there is a preference for national over global. Thailand has the most developed brand culture: its well-established middle class has an appetite for premium products and has long embraced global brands.

These findings rang true during my recent visit to Vietnam. Global brands seemed thin on the ground in Hanoi, the country’s second largest city, which is better known for small-scale retail and street vendors than high-end malls. On the stretch of highway between Noi Bai airport and Hanoi, there are no billboards of fashionable young people enjoying colas or smart phones. Instead, this prime real estate is devoted to industrial inputs and commercial banks – a clue to the country’s focus on industrialization.

When I walked through Hanoi’s Old Quarter, the only branded retail stores I saw were Converse and Bata, located side-by-side on Shoe Street, one of 36 historic streets in the area named after the goods originally sold there. Of course, many variety stores sported the ubiquitous Coca-Cola or Pepsi signs and there was the odd KFC location as well.  As the TNS report notes, foreign brands like Honda do tend dominate for more expensive purchases like motorcycles and scooters – appropriate for a country where consumers rely on two wheels to transport everything from goats to families of five.

Other than those few indicators, there was little of the globalized consumer culture that is so dominant in wealthy Singapore and Hong Kong, or even in fellow emerging market Thailand.

The takeaway for global brands? There is clearly enormous upside as these countries continue to establish themselves in the global economy. Yet each market has a distinct relationship with brands depending on whether its population is made up of new consumers – as in Laos and Cambodia – or is already well initiated into the world of brands, like consumers in Thailand. Strategies need to be calibrated accordingly.

About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Basic HTML is allowed. Your email address will not be published.

Subscribe to this comment feed via RSS

Follow

Get every new post delivered to your Inbox.

Join 796 other followers

%d bloggers like this: