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Developing a glocalisation strategy expe
Marketing quốc tế
Trường Đại học Ngoại thương
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© HENRY STEWART PUBLICATIONS 2045-855X JOURNAL OF BRAND STRATEGY VOL. 4, NO. 3, 201–211 AUTUMN/FALL 2015 201
Svend Hollensen, Department of Border Region Studies, Alsion 2, DK – 6400 Sønderborg, Denmark E-mail: svend@sam.sdu Christian Schimmelpfennig, Fürst-Franz-Josef-Strasse, 9490 Vaduz, Liechtenstein E-mail: christian- nig@uni
Papers
Developing a glocalisation
strategy: experiences from
Henkel’s product launches in
the Middle East and Europe
Received (in revised form): 25th September, 2014
SVEND HOLLENSEN is the author of globally published textbooks such as ‘Marketing Management’, 3rd edn (Pearson, 2014) and ‘Global Marketing’ 6th edn (Pearson, 2014). His work has also been published in numerous internationally recognised journals. He has a PhD from Copenhagen Business School, and his research interests are within relationship marketing, globalisation, global branding and the internationalisation of companies.
CHRISTIAN SCHIMMELPFENNIG is Director of Executive Education at the University of Liechtenstein. He has a PhD from the University of St Gallen and his research interests lie in the area of advertising and branding strategies.
Abstract
The glocalisation strategy strives to achieve the slogan, ‘think globally but act locally’, through dynamic interdependence between headquarters and subsidiaries and/or local intermediaries around the world. Companies following such a strategy coordinate their efforts, ensuring local fl exibility while exploiting the benefi ts of global integration. The challenge is to balance local knowledge with global reach. In the case of Persil Abaya Shampoo (for the Middle East market) and Persil Black Gel (for the European market), Henkel chose a strategy that successfully benefi ted from the ‘economies of scope’ in the purchasing department as well as in production and packaging. But by using an adapted product communication, plus individualised packaging designs, product positioning and marketing communications for the two regions, Henkel honoured the cultural heterogeneity of its target markets and used Persil Abayas’ particular signifi cance in the Arab world to its advantage. The results document that it has been possible for Henkel’s Persil to gain competitive advantages in terms of higher market shares, with the ‘glocalisation strategy’ in the (Middle East) liquid detergent market.
Keywords
glocalisation, global marketing, internationalisation, standardisation, adaptation
INTRODUCTION
With the implementation of new prod- ucts, many chief marketing offi cers must decide whether to pursue a global or a local marketing strategy. While global strat- egies use so-called ‘economies of scope’
and therefore go easy on the marketing budget, local marketing strategies promise a greater success due to a better match- ing of the product to customer needs. A so-called ‘glocal’ marketing plan combines the advantages of both ways and therefore
Svend Hollensen
Christian Schimmelpfennig
202 © HENRY STEWART PUBLICATIONS 2045-855X JOURNAL OF BRAND STRATEGY VOL. 4, NO. 3, 201–211 AUTUMN/FALL 2015
HOLLENSEN AND SCHIMMELPFENNIG
represents a promising marketing strategy to introduce a product to the market. Basically, effi cient global marketing means identifying and satisfying global customer needs more precisely than one’s competitors. Thus, a lot of marketing experts fi nd themselves stuck in the fol- lowing dilemma: due to a high cost pres- sure in an increasing global market, it is necessary to generate cost benefi ts while using a global product portfolio combined with a global communications strategy. At the same time, marketing experts realise the economic and cultural disparity of clustered target markets. Consequently, the challenge for marketing is to fi nd a balance between a culturally adequate range of products and its commerciali- sation in order to meet heterogeneous customer needs as well as the use of econ- omies of scope during product develop- ment and communication. Therefore, the marketing has to meet the challenge of designing the product along with its mar- keting as consistently as necessary while being as individual as possible. A ‘glocal’ strategy aligned with the contrary strate- gies ‘global’ and ‘local’ seems to provide a promising way out in a lot of cases. The purpose of this paper is:
ï to explain and discuss the concept of glocalisation from a company perspec- tive, especially the Henkel (Persil) per- spective; ï to develop a theoretical framework for developing a company’s glocalisation strategy and refer to recent empirical results regarding glocalisation from the literature; ï to introduce the case of Henkel’s glocalisation strategy within Persil’s black liquid detergent, especially illus- trated by the penetration of the Middle East market in comparison with the European market;
ï to analyse development in the liquid detergent market in order to document whether the glocalisation strategy was successful for Persil in the Middle East.
GLOCAL MARKETING STRATEGIES
Within the fi eld of international market- ing, the debate over the extent of stan- dardisation or adaptation has occupied a signifi cant part of past research, Supporters of standardisation view markets as increasingly homogeneous and global in scope and scale and believe that the key to survival and growth is a mul- tinational’s ability to standardise goods and services. For example, Levitt argues that the standardisation of the marketing mix and the creation of a single strategy for the entire global market offers econo- mies of scale in production and marketing and moreover is consistent with what he describes as the ‘mobile consumer’. 3 On the other hand, proponents of adaptation such as Kashani argue that there are diffi culties in using a standardised approach and therefore they support mar- ket tailoring and adaptation to fi t the unique characteristics (eg cultural issues) of different international markets. 4 Following this discussion, when a com- pany decides to begin marketing products abroad, a fundamental decision is whether to use a standardised marketing mix with a single marketing strategy in all countries, or to adjust the marketing mix to fi t the unique dimensions of each potentially unique local market. The expanded mar- keting mix of seven ‘Ps’ (product, price, place, promotion, people, physical evi- dence, process) is often appropriate, in order to relate to companies that belong to the service sector and/or have strong service elements. The decision as to whether to stan- dardise or adapt should not be considered
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HOLLENSEN AND SCHIMMELPFENNIG
RECENT EMPIRICAL RESEARCH ON
GLOCALISATION STRATEGY
In what follows, this paper will go through the most recent empirical research on the company’s use of the glocalisation strategy. Jiang and Wei 8 examined the adver- tising strategies of multinational corpo- rations (MNCs), selected from North America, Europe and Asia, which adver- tise in two culturally different markets — the USA and China. Jiang and Wei 8 demonstrate that MNCs are found to be more likely to adopt the glocal advertising strategy in culturally dis- tinct markets, in which creative strategy is standardised and execution is localised and differentiated across borders. The popularity of the glocal strategy makes sense because it follows the contingency perspective — the best advertising strategy depends on the cultural context in which the most effec- tive advertising combines the standardisa- tion and differentiation approaches. According to Jiang and Wei, EU-based MNCs are the most likely to pursue
the standardised advertising approach, whereas North American MNCs tend to standardise less, and Asian MNCs are the least likely to standardise their inter- national advertising. 8 What accounts for these region-based differences? From the global marketing strategy perspective, MNCs are more likely to follow a strategy if the environment from which they orig- inate is conducive to that strategy. As EU markets further integrate, the integration will lead to a higher level of standardisa- tion of advertising across borders. Asian MNCs are less likely to pursue advertis- ing standardisation in the era of globalisa- tion as compared with their counterparts in other continents. Major markets in Asia, such as China, India and Japan, remain dis- tinctively different markets with no inte- gration compared with the EU countries. Finally, and most importantly, Jiang and Wei provide empirical support for the argument that global marketing practitio- ners have experienced a ‘paradigm shift’, from globalisation to glocalisation, where
Figure 1 The overlap of globalisation + localisation = glocalisation Source: Based on Hollensen, S. (2014) ‘Global Marketing’, 6th edn, Pearson Education, Harlow, p. 22.
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DEVELOPING A GLOCALISATION STRATEGY
products and message development no longer rely on maximising economies of scale to be effective, but are focused on developing a strategy where local con- sumers’ specifi c needs and local conditions are being taking into account. 8 According to Chung et al. , 9 in large companies (like Henkel) the use of the glocal strategy leads to higher market shares than the use of localised strategies. These authors show that, if the cultural distance is high, the company’s standardi- sation of the product and the adaptation of the promotion lead to overall higher market shares.
CASE STUDY
A glocal marketing strategy made by
Henkel in the detergent market: Persil
Abaya Shampoo (Middle East) and
Persil Black Gel (Europe)
Before going into the specifi c Henkel (Persil) case, the paper will present a short overview of the detergent market in Europe and the Middle East.
The market for detergents in Europe
and the Middle East
For powder detergent, Western Europe still held 12 per cent of global volume sales in 2010, but demand has been falling as consumers switch to the more conve- nient liquid detergent products. The pow- der detergent category is coming under increasing pressure from liquid detergents. Liquid detergents are particularly popular in North America and Western Europe. In Europe, liquid detergents account for 40 per cent of the detergents category by value. While there are convenience benefi ts for the consumer in using liquid deter- gents, the key benefi ts are for the manu- facturer. They are cheaper to produce and
so their margins are a lot greater — it is therefore in their interests to promote them. The Middle East accounts for only 7 per cent of the worldwide detergent ingredient volumes, but posted the fast- est growth between 2005 and 2010 with a 10 per cent annual growth. The Saudi Arabian laundry detergents market cur- rently stands at US$166m, while that of the United Arab Emirates (UAE) stands at US$45m. While these markets are rela- tively small on a global scale, they are by far the largest of the Gulf nations. In addi- tion, both are currently registering strong growth in the category. 10 Generally in the detergent market, both in Europe and in the Middle East, Procter & Gamble (with Tide and Ariel) stands in the fi rst position regarding mar- ket share, Unilever (with OMO) is second and Henkel is third. While powder detergents are currently most popular in the UAE, accounting for 85 per cent of all detergent sales, the liq- uid detergent trend is beginning to take off, with standard liquid detergents grow- ing by 17 per cent in 2008. Likewise in Saudi Arabia, powder detergents account for the majority (71 per cent) of laundry detergent sales, with liquid detergents remaining a negligible category. In both markets, however, the demand for liquid detergents is steadily growing, although from a small base, and a wider variety of products are hitting the shelves. Recent launches include Procter & Gamble’s Ariel Shampoo,
Henkel and Persil
The Henkel Company was founded in Aachen in 1876 by Fritz Henkel under the name ‘Waschmittelfabrik Henkel & Cie’ and started to produce one sin- gle product: a washing powder named
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DEVELOPING A GLOCALISATION STRATEGY
Western Europe under the name ‘Persil Black Gel’ (see Figure 2). ‘Abaya’ stands for the traditional black Arabian gar- ment worn by most Arabic women. But in Western countries as well, black clothes have gained constant popularity over the last few years. The new formula for black is therefore an excellent addition for both the Arabic and Western European product range. Both products are based on the same chemical components, but they are tai- lored to different cultural regions by using various fragrances. The packaging and product presentation also accommodate differentiated customer expectations. While promoting the product in Western Europe, Henkel mainly uses tele- vision commercials and print advertise- ments, along with social media activities such as a Facebook game. In the Gulf states, however, Persil Abaya Shampoo (see Figure 3) was introduced to the market through a mix of commercials and a viral marketing campaign. An inter- active website was developed, along with a Facebook page that generated over 56, ‘likes’. Moreover, Henkel also strove to
create a media buzz by initiating a tele- vision show named ‘Arwa3 Abaya’, where an amateur designer presents new Abaya styles. This completely new approach enabled Arabic women to present their enthusiasm for Abaya fashion to a broad public on national television. The suc- cess almost doomed the company when competitors introduced a similar cam- paign. Hence, after two successful seasons Henkel looked for a strategy to reposition its product and thereby differentiate itself from its competitors. The locals responsi- ble for marketing knew that no other mar- ket is so susceptible to luxury goods as the Middle East and identifi ed the preferred
Figure 2 Persil Black Gel for the Portuguese market
Figure 3 Persil Abaya Shampoo for the Gulf States
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HOLLENSEN AND SCHIMMELPFENNIG
fashion brands of Arabic women. This led to a new television format and brand partnerships with Swarovski, Armani and Hanayen — a high-end Abaya wholesale chain. The latter integrates the typical elements of reality television shows and thus utilises its huge popularity among Arabic women. These newly published ‘Arwa3 Abaya’ shows contain design chal- lenges which are presented by infl uential celebrities, and the evaluation of these designs by the famous members of a jury. Thereby, top designers invite candidates to Swarovski stores and Hanayen studios, where they get advice on how to enhance their designs. The big fi nale takes place in Armani’s exclusive Privé Hotel Dubai. The show is complemented with inter- active elements and provides the possi- bility of communicating with candidates through a specifi cally created social media platform. And the results? Market surveys showed that more than 50 per cent of the female audience attribute their purchase intentions to the show. Moreover, the data concerning customer loyalty and brand awareness of Persil Abaya Shampoo rose signifi cantly. After the third season, prod- uct sales went up over 80 per cent com- pared with the previous year. 17 Not only the marketing, but also the product name accommodates cultural and regional distinctions. Persil Black Gel is simple and catchy as well as internationally understandable and usable. Therefore, the product was introduced to all the European markets and also to the German-speaking DACH-region (Germany, Austria and Switzerland) under this name (see Figure 4). In the Gulf states, however, shampoos are used for the cleaning of the traditional Arabic garments in order to avoid the fad- ing of precious Abayas by using aggres- sive washing detergents. The name ‘Abaya Shampoo’ supports this acquired product use and refl ects the gentle effectiveness of
this new and technologically sophisticated washing gel. Persil Black Gel or Persil Abaya Shampoo is an excellent example of what can be attained by combining global technology and local market exper- tise, confi rmed Ashraf El Afi fi , Regional President and Corporate Senior President for Laundry & Home Care in MEA. To discuss cultural distinctions and share experiences and expertise regarding the development of regional products, he gets together with his colleagues in the corpo- rate headquarters in Düsseldorf on a regu- lar basis. On these occasions, he also meets with Dr Dagmar Preis-Amberger, Head of Laundry Production, to discuss the cul- tural and local similarities and differences and their impacts on the production of Persil Black Gel.
Figure 4 Persil Black Gel for the German-speaking markets
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HOLLENSEN AND SCHIMMELPFENNIG
the product will actually be used by wives or maids rather than husbands. Persil White liquid detergent, however, is mar- keted as ensuring thobes ‘remain bright white wash after wash’. The product was introduced in two sizes, one and two litres. In 2013, Persil Liquid Detergent for White Thobes (with Oud Fragrances) was voted ‘Product of the Year’ in the Gulf region. Ninety per cent of the consumers who had tried the product would like to re-purchase it,
Results of the Persil glocal marketing
strategy in the Middle East and Europe
In 2008, 25 per cent of women in the Gulf region recognised Persil ‘as an expert in Abaya care’. This fi gure increased to 37 per cent in 2010. The sales volume of Persil Abaya increased 24 per cent in 2009 and a fur- ther 33 per cent in 2010. The Persil mar- ket share of liquid detergent in the Gulf region increased from 25 per cent in 2008 to 40 per cent in 2010. This provided Persil with the fi rst place in the liquid detergent market in 2010. 23 The launch of Persil for White Thobes added a further two percentage points to the brand’s market share of the liquid detergent market in the Gulf region. 11 In Europe, the launch of Persil Black resulted in increasing sales of the black liquid detergent (increased ‘scale of econ- omies’), but in terms of market share it only resulted in a small increase in the European liquid detergent market (less than 1 per cent); however, it created some media buzz that Persil had actually used the same product as in the Middle East. By using a glocal marketing strategy, the resulting increase of Persil’s market shares in the liquid detergent market are by line with the empirical results shown by both Jiang and Wei 8 and Chung et al. 9
CONCLUSIONS AND RECOMMENDATIONS
Starting from the model above (see Figure
- from 100 per cent global to 100 per cent local, it is essential for every com- pany’s marketing to develop an individual strategy in order to balance economies of scope and a higher chance of market success through stronger localisation. The ideal strategy depends on the particular range of products and services, as well as on the cultural sensibility of the tar- get markets. If the latter is rather low, we recommend applying a global marketing strategy to benefi t extensively from econ- omies of scope during product develop- ment, production, commercialisation and communication. If the cultural sensibility is rather high, however, we suggest using an individual marketing strategy in order to tailor products, as well as positioning and communication to the needs and expectations of culturally strong diverging markets and therefore increasing market success through localisation. Ideally, the advantages between the poles of a global versus a local marketing strategy may be combined by using a glocal approach. In the present case of Persil Black Gel and Persil Abaya Shampoo, Henkel chose a suc- cessful strategy to benefi t from the econo- mies of scope in the purchasing department, as well as in production and packaging. But by using an adapted product composition, plus individualised packaging designs, prod- uct positioning and marketing activities, Henkel honoured the cultural heterogene- ity of its target market and used Abayas’ par- ticular signifi cance in the Arab world to its advantage. When Persil had established a sig- nifi cant foothold in the women’s black Abaya market, it further expanded its Middle East market share in the liquid detergent market by launching the Persil liquid detergent for men’s white thobes. The results document that it has been possible for Henkel’s Persil to gain
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DEVELOPING A GLOCALISATION STRATEGY
competitive advantage, in terms of higher market shares, with the glocalisation strat- egy in the (Middle East) liquid detergent market.
ACKNOWLEDGMENTS
Special thanks are due to Dipl.-Kffr. Susanne Röpke, Hamburg, who helped with writing this paper.
References and notes (1) Theodosiou, M. and Leonidou, L. C. (2003) ‘Standardization versus adaptation of international marketing strategy: An integrative assessment of the empirical research’, International Business Review , Vol. 12, No. 2, pp. 141–171. (2) Vrontis, D., Thrassou, A. and Lamprianou, I. (2009) ‘International marketing adaptation versus standardisation of multinational companies’, International Marketing Review , Vol. 26, No. 4/5, pp. 477–500. (3) Levitt, T. (1983) ‘The globalisation of markets’, Harvard Business Review , Vol. 61, No. 3, pp. 93–102. (4) Kashani, K. (1989) ‘Beware the pitfalls of global marketing’, Harvard Business Review , September/ October, pp. 91–98. (5) Robertson, R. (1992) ‘Globalization: Social Theory and Global Culture’, Sage, London. (6) Robertson, R. (1994) ‘Globalisation or glocalisation?’, Journal of International Communication , Vol. 1, No. 1, pp. 33–52. (7) Svensson, G. (2001) ‘Glocalization of business activities: A “glocal strategy” approach’, Management Decision , Vol. 39, No. 1, pp. 6–18. (8) Jiang, J. and Wei, R. (2012) ‘Infl uences of culture and market convergence on the international advertising strategies of multinational corporations in North America, Europe and Asia’, International Marketing Review , Vol. 29, No. 6, pp. 597–622. (9) Chung, H. F. L., Cheng, C. L. and Huang, P. H. (2012) ‘A contingency approach to international marketing strategy and decision-making structure among exporting fi rms’, International Marketing Review , Vol. 29, No. 1, pp. 54–87. (10) Euromonitor (2010) ‘Henkel launches new colour-specifi c laundry detergent for the middle East’, Article, 21st January, Euromonitor , London. (11) Euromonitor (2012) ‘Persil senses a Middle Eastern scent trend’, 12th June, Euromonitor , London.
(12) Henkel (2006) ‘100 years of Persil’, Press release, available at: henkel/about- henkel/2006-18539-100-years-of-persil-11029. htm. (13) Seidel, H. (2007) ‘Markenklassiker Persil wird 100 Jahre alt’, Die Welt , 3rd June, available at: welt/wirtschaft/article916899/ Markenklassiker-Persil-wird-100-Jahre-alt. (14) Henkel (2011) ‘Innovative brands — successful in local markets’, Henkel Annual Report, available at: annualreport2011. com/fi leadmin/GB2011/PDF_EN/Henkel_ AR11_the_company_excellence_is_our_ passion. (15) Henkel (2013) ‘Annual Report 2013’, available at: henkel/com/ content_data/340610_2014.02_FY_2013_ annualreport_en. (16) Weber, S. (2008) ‘Die Rückkehr der “Weissen Dame”’, Süddeutsche , available at: http://www. sueddeutsche/wirtschaft/jahre-persil-die- rueckkehr-der-weissen-dame-1. (17) See creamglobal/case- studies/17798/30508/persil-abaya-mission- innovation-effect. (18) See godubai/citylife/press_ release_page?pr=66976. (19) Amjahid, M. (2012) ‘Konsumgüter: Marokko kauft Tide, Ägypten Persil’, Der Spiegel , available at: spiegel/wirtschaft/ unternehmen/konsumgueter-marokko-kauft- tide-aegypten-persil-a-805929. (20) Euromonitor (2014) ‘Laundry care in Morocco’, May, Euromonitor , London. (21) PRLog (2012) ‘Persil liquid detergent now with oud fragrance’, 20th May, available at: prlog/11879511-persil-liquid- detergent-now-with-oud-fragrance. (22) Dubib (2013) ‘Persil liquid detergent for white clothes with oud fragrance voted as “product of year” in the GCC’, Dubib News Desk , 17th March, available at: http:// fecampaign.dubib/news/46366_persil- liquid-detergent-for-white-clothes-with-oud- fragrance-voted-as-product-of-year-in-the-gcc. (23) See youtube/watch?v= NllybMnrips; however, it should be remembered that Procter & Gamble (with Tide and Ariel brands) is still the Gulf region’s clear market leader in the overall detergent market, with 35– 40 per cent market share, followed by Unilever (OMO) with approximately 15–20 per cent market share. Henkel is third with approximately 10 per cent market share of the overall detergent market.
Developing a glocalisation strategy expe
Course: Marketing quốc tế
University: Trường Đại học Ngoại thương
