INVESTIGATION OF THE BRANDING STRATEGIES THAT ARE USED BY MULTINATIONALS OPERATING IN THE INTERNATIONAL MARKETS

Introduction

            Amidst globalization, many firms have realized the need to expand their market share in foreign markets. Firms that have successfully ventured in both domestic and foreign markets are called multinationals. In order to succeed in the expansion into foreign markets, it has become imperative for firms to adopt specific branding strategies that would make them and their products and services appeal to the targeted consumers in international markets (Hollensen, 2007). In consideration of this, this chapter gives a background of the branding strategies adopted by multinationals to make them competitive in international markets, followed by brief explanations of problem statement, aim and objectives of the study, research questions, purpose statement, and significance of the study.

Background

            There are different branding strategies available for use by multinational companies. A multinational company selects the most suitable branding strategy depending on its structure and nature of its products and services (Kotler & Keller, 2006). Although most multinational firms tend to have standardized branding strategies, they are recently trying to mould their branding strategies with consideration to the local cultures and preferences. The term” branding” is derived from the word “brand,” which simply refers to a design, symbol, sign, term, name, or a combination of them, meant to identify meant to differentiate an organization and its products and services and to mark a difference from competitors and their products and services. The ultimate goal of a brand is to increase sales of an organization’s products and services (Hsieh & Lindridge, 2005). While a brand may simply involve naming a product o service, branding involves more than that. In branding, an organization has to engage in additional activities that are meant to sensitize the targeted consumers about a brand. In other words, an organization has to engage in marketing activities to ensure that consumers come into contact with a brand. The eventual impact of branding is that consumers make perception of a brand in their minds (Kotler & Keller, 2006). In most cases, consumers are faced with many products and services offered by different organizations. Branding enhances the likelihood that consumers will recognize products and services of a particular organization. The effectiveness of branding strategy determines the extent to which consumers recognize an organization’s products and services and their inclination to look for further details of those products and services (Yu Xie & Boggs, 2006).

As Yu Xie and Boggs (2006) explained, branding influences purchasing behaviors and decisions of consumers as well in cases of business-to-business situations. Ultimately, the effectiveness of a brand influences an organization’s level of total returns. Kotler and Keller (2006) noted that branding is valuable to multinational companies since it facilitates easy entry into new markets. As multinational firms market their brands in a given market, the brand awareness may expand to other markets where the firm’s products and services are not physically present. In such cases, customers who are aware of those brands are likely to accept the products or services more easily when they are introduced later than in cases where they do not have prior awareness of a brand. Yu Xie and Boggs (2006) explained, there are low chances for emerging firms to compete with established brands in most markets since establishing a brand and making it known to customers involves enormous investments. Also, returns from investment in branding are usually well realized after the branding strategy adopted by an organization successfully leads to brand awareness, unique image and brand loyalty among consumers.

 As Keller (2007) explained, multinational firms should create and use different marketing programs that are suitable to different markets in order to succeed. In order to achieve this, multinational organizations should first focus on understanding consumers’ preferences and purchasing behaviors in the targeted markets. As Yin Wong and Merrilees (2007) noted, multinational firms start by establishing their brands in the local markets. Precisely, most firms establish themselves locally and when well established in the domestic markets, they start extending their presence in the foreign markets. In the international markets, multinational firms compete with national, regional and international firms. Firms have opportunities to expand in the international strategies through adopting expansion strategies such as franchising, engaging in joint ventures and acquiring firms in the foreign markets.

There are different reasons why firms decide to invest in international markets. A firm may be driven by presence of business opportunities in foreign markets and chances for expanding its total returns. An organization may also expand its operations in the foreign markets in order to diversify risks. In some cases, firms expand their operations in foreign markets due to presence of good and supportive business environments in the foreign markets (Yin Wong & Merrilees, 2007). In short, there are varied factors that influence different organizations to consider expanding into foreign countries. Some multinational companies, such as Coca-Cola and IBM, have brands that are well established around the world, which represent the same values, and are called global brands. Although such brands are well known across the world, multinational companies try to design them with regard to the preferences and cultures of the targeted companies (Albaum et al., 2005). The companies retain some unique elements in those brands, which are meant to enable consumers identify the origin of products. Although such brands may lack local flavor, as Albaum et al. (2005) explained, they are highly accepted by a large number of intermediaries and consumers. The most successful global brands are those associated with products and services that are identical across the globe and have similar marketing strategies, such as industrial products, pharmaceuticals, beverages, and luxury products. Multinational organizations have to make solid strategic decisions regarding the brands to adopt in order to succeed in international markets. As Albaum et al. (2005) explained, a multinational firm needs to select a brand and then make decisions such as the number of products to be associated with the brand, the market to be targeted, whether to come up with new products or modify the existing ones, and whether to adopt multiple brands or one brand. In other words, multinational organizations need to take time to make effective decisions regarding the brands to adopt in the targeted markets.

Problem statement

            As mentioned earlier, there are different branding strategies that multinational firms can choose to use in the international markets. However, not all branding strategies are suitable for all multinational firms. For some firms, corporate branding, which involves using the same name for a brand and the corporation, works best (Yu Xie & Boggs, 2006). For others, the best strategy is product branding, which involves using different brand names for different products, and not using the name of the corporation that owns them. In some cases, the best strategy may involve integrating the two strategies, but concentrating more on either product branding or corporate branding. Scholars have extensively explored those strategies and their use in international markets, as Yu Xie and Boggs (2006) noted. However, there has been no significant attention about the factors that influence choices for branding strategies adopted by multinational organizations, an area that needs further exploration.

Aim and objectives

The key aim of the study is to investigate the branding strategies that are used by multinationals operating in the international markets. The specific objectives are;

1. To determine the branding strategies used by multinationals operating in the international markets
2. To determine factors that influence the branding strategies adopted by multinational organizations in international markets

Research questions

1. What are the branding strategies used by multinationals operating in the international markets
2. What are the factors that influence the branding strategies adopted by multinational organizations in international markets

Purpose statement

            With regard to the gap in literature explained in the problem statement, the key purpose of the study will be to determine the branding strategies used by multinational organizations in international markets and the factors that influence multinational firms to choose those strategies.

Significance of the Study

            The outcomes of the study will be useful in augmenting the existing body of knowledge regarding branding strategies adopted by multinationals in international markets. Importantly, it will play a major role in filling the existing gap in literature about the factors that influence multinationals to choose specific branding strategies during the 21^st century. Further, the outcomes will be vital in informing leaders of multinational organizations about the available branding strategies for use in international markets, the factors that affect those strategies, and how they can choose the most suitable strategies.

Research Method

            The research method to be used is qualitative research design that will involve exploration of case studies of multinational organizations.

Limitations

            The key limitation of the study is that first-hand and updated information about the reasons why multinational firms chose specific branding strategies may be difficult to find. As such, the study will have to rely more on secondary information, yet the firms explored may have recently changed their branding strategies.

Conclusion

            The importance adopting the most suitable branding strategies by multinationals in international markets cannot be gainsaid, as explained in this chapter. The next chapter presents previous literature on the branding strategies used by multinational firms.

Literature Review

Introduction

            Branding and the importance of incorporating it in marketing for multinational firms was explained in the first chapter. In this chapter, literature related to branding strategies used by multinational firms and the factors that influence their choices will be explored. First, the chapter presents literature on branding strategy in the international markets and how it is undertaken. Second, the section presents brief explanation of the two main branding strategies adopted by multinational firms, namely corporate branding and product branding, before explaining their differences. Last, the section presents theoretical framework discussing the factors that influence choices of branding strategies among multinational organizations and the gap that exists in literature.

Branding in International Markets

            As mentioned earlier, a brand plays an important role of distinguishing an organization and its products and services from others. Without having a unique brand, an organization is likely to experience difficulties in achieving marketing goals. As Kotler et al. (2009) noted, there are instances whereby a brand is confused with a product. A brand has several characteristics that differentiate it from a product. One of the differences, as Kotler et al. (2009) explained, is that a brand gives reference point of a product to consumers during and after purchasing, which may not be always the case for a product. Second, a brand provides information about the nature of a product or service offered as well as the values attached to it. Brands that are successful have balanced discriminating benefits and functional benefits (Kotler et al., 2009). The first step in establishing a branding strategy, as noted earlier, is to select a brand or brands and then make decisions that lead to selection of the most suitable strategy. During the selection of a brand, the decision-makers should have a long-term perspective. Precisely, the decision-makers should determine how consumers, shareholders and other stakeholders would perceive the brand. Also, there must be a plan to manage the brand professionally and effectively in order to keep it alive and meet consumers’ needs.

            As Yin Wong and Merrilees (2007) noted, branding among multinational corporations enables them to exploit economics of scale since they are able to pursue many market segments in different parts of the world. However, undertaking a given branding strategy in various market segments does not give a guarantee for success. A firm has to modify its branding strategy to meet the expectations, culture and values of the targeted consumers. Yin Wong and Merrilees (2007) noted that in addition to putting into consideration expectations, values and culture of the consumers, a multinational firm has to focus on enhancing quality and performance of its products and services in all market segments. Consumers usually recognize the goodwill of an organization as it offers its products and services, which translates into a positive image of that organization.

Furthermore, Yin Wong and Merrilees (2007) noted that for multinationals to remain successful in their branding strategies and maintain competitive edge in the industries they operate, they must focus on maintaining achievement through brand equity. Achievement through brand equity is realized through investing in continuous and relevant innovation, adopting differentiation strategies that meet needs of consumers, engaging in effective marketing communication with consumers across all market segments with consideration to different cultures and establishing relevant and balanced product portfolio with regard to consumers’ needs. Another important factor is financial strength, characterized by strong cash flow in a firm’s local market and significant share in terms of returns in large domestic markets. Also, a multinational firm should have strong internal distribution networks as well as an established comprehensive distribution system.

According to Bradley (2002), there are two key factors that influence the extent of brand sustainability in the international market, namely brand image and brand popularity. In some cases, a brand that becomes popular in one country ends up becoming popular in other countries. Brand popularity, as Bradley (2002) noted, is achieved through engaging in marketing activities to promote it in the targeted markets. When consumers become aware of the brand the next step involves continuous promotion of the brand to enhance its sustainability. Sustainability leads to establishment of brand royalty and brand image among consumers, and eventually, brand equity. Sustainability has a positive impact on the performance of a brand in the targeted market segments in the long-run. Bradley (2002) found that in most cases, consumers tend to perceive brands from the same country as similar. For instance, consumers from other countries tend to perceive all cars from England as having the same quality, and as having a different quality from cars manufactured in Japan. The perception may have a positive or negative impact to brand establishment and sustainability in a given market. If the consumers associate brands from a given country as having the qualities they desire, the eventual impact is a boost in the establishment and sustainability of a firm’s brand in that market.

 On the other hand, consumers may not be ready to accept a brand owned by a firm from a home country that is associated with inferior brands by consumers (Bradley, 2002). The impact of this is that multinational organizations should always determine which values they should build their brands on. In case brands from home country are associated with positive values and attributes, incorporating them may enhance establishment and sustainability of market for a firm’s brand on foreign countries. On the other hand, in case domestic brands are perceived as inferior by consumers in the foreign markets, a multinational firm may need to develop its brands without incorporating the domestic values. Instead, a firm should focus on incorporating values associated with brands developed in the targeted markets or different markets where brands are associated with positive values (Bradley, 2002).

            Hatch and Schultz (2003) noted in a study on effectiveness of branding strategies among multinational firms that in contemporary business environment, most multinational firms have established too many brands to the extent that it has become difficult to differentiate various product brands from the same corporation. The authors noted that the effect of this is that different brands from the same corporation end up competing against each other in the same market segments. According to Hatch and Schultz (2003), the issue is becoming more complex as the world becomes more globalized. As such, Hatch and Schultz (2003) suggested that multinational organizations should stop focusing on branding that involves product differentiation and shift focus towards corporate branding. However, this does not mean that an organization should focus only on corporate branding and sell only one brand; rather, Hatch and Schultz (2003) suggested that multinational firms should ensure there is a balance between product branding and corporate branding. Bradley (2002) noted that popularity of global brands has been facilitated by different aspects of globalization, including telecommunication development and economic integration. Increased economic integration has facilitated multinational companies to sell products in different regions and countries without facing significant inhibiting barriers from governments.

According to Bradley (2002) people travel more than in mid 20^th century from one country to another. Also, development of technological gadgets such as televisions and growth of the media in the contemporary world have provided opportunities for multinational companies to advertise their products across the globe. As a result of increase in communication across the globe and cultural and social interactions between different communities, consumers have been assimilating some values that are borrowed from other societies. For instance, the emerging middle class in China has been preferring products imported from America and other countries. As a result of all these aspects of globalization, some multinational companies, such as Coca Cola, have been able to sell their brands across the globe. However, this is not typical of all foods or beverages since such products are usually culturally bound, as Bradley (2002) noted. Firms selling electronic equipments, such as SONY and IBM, are in a better position to develop global brands.

Bradley (2002) noted that the global brands are very few across the world, are similar, and are design to meet needs of consumers globally. The companies that sell global brands position those brands in the same way in all market segments and in most cases, consumers consider country of origin before purchasing them. For instance, consumers usually consider the country of origin of producers of computers before purchasing them (Bradley, 2002). When selling a global brand, it is usually difficult to engage in extensive product differentiation, since consumers’ purchasing behavior is usually influenced by image, loyalty and reputation of a corporation. This explains the fact that most sellers of global brands rely on the same product line across the globe (Bradley, 2002). Despite a global brand having same attributes or qualities in all market segments, multinational companies have to take consideration of some key factors such as Language. The consumers should be able to read, understand and use the products without significant difficulties, as Bradley (2002) noted. Something written on a product may have different meanings to different communities. In some cases, failure to consider such things may make a brand inappropriate to consumers in some of the targeted communities. Although global brands are marketed in the same way in all market segments, there might be need for slight modifications in some markets to suit the needs of the targeted consumers. Among the top global brands known in the last two decades are Nike, Microsoft, GE, Toyota, Nokia, Mercedes-Benz Intel, IBM, Kodak, Sony, Disney, McDonald’s, Marlboro and Coca-Cola (Businessweek, 2007). In almost all cases, the names of those companies are the same for their brands.

According to the report produced by Businessweek (2007), around 80 percent of the strongest brands sold in the international market were global brands. The report also indicated that around 50 percent of those global brands were from the US. In addition to the benefits associated with the other multinational brands, global brands give firms cultural benefits, allow for cross-border learning, lower costs and give customers added value. As mentioned earlier, the products most suited for global branding are those that are not culture bound. In addition, luxury goods can be sold as global brands since they are mainly purchased by young people who live in urban areas, are rich and do not concentrate much on culture. Pharmaceuticals can also be sold as global brands since they usually have the same formula across the world. Most remarkably, industrial goods and services, including electronic equipments are the most suited for global branding (Fan, 2006).

According to Yin Wong and Merrilees (2007), brand management can involve focusing on corporate dominance, equal dominance or brand dominance. Corporate dominance occurs in situations where the name of a corporation is used as the name for all brands and activities of a firm. This is mainly evident in organizations that sell global brands, as explained earlier. Brand dominance, on the other hand, occurs in situations where products and services bear different names from the name of the firm that owns them (Yin Wong & Merrilees, 2007). A good example of a company that uses product branding is P&G. In the case of equal dominance, brands have the names of products and also names of the firms that own them. This is evident in the case of BBC Corporation that has brands such as BBC World Service and BBC Radio. According to Yin Wong and Merrilees (2007), branding should be focused beyond marketing communications, and it should be past of an organization’s total business strategy.

Urde (2003) paid attention to the importance of brand architecture to multinational companies. According to Urde (2003), brand architecture is vital to an organization since it influences aspects such as the type of brand to be selected, number of brands to be used and how the brand will be used. Urde (2003) identified four categories of brand architectures, namely product brands, company brands, product brands and corporate brads, and corporate and dominant brands. Product brands architectures are those that have exclusive use of product brands. Corporate brands are architectures where corporate brands are exclusively used. Product brand and corporate brand architectures are those in which use of product brands is dominant to the use of corporate brands. In corporate and product brands architectures, use of corporate brands is dominant to the use of product brands. In corporate brand architecture, products and services share attributes and values of a corporation. On the other hand, in product brand architecture, each brand has its own attribute and values, and the brands hardly share the corporate values and attributes.

According to Kim et al. (2008), product brands and corporate brands are linked despite having different roles. Kim et al. (2008) noted that one of the advantages of corporate branding is that when consumers purchase and use an organization’s brand, the image of the organization is enhanced. This enhances sales of a corporation’s products since consumers transfer the image to those products. Ultimately, consumers also spread information about the corporation to others, which further leads to improvement in sales of a firm’s products. However, corporate branding can have a major negative effect when the image of an organization gets damaged. For instance, negative information about how Toyota manufactures defective cars can lead to loss of sales for the company across the world. In case the company had cars with different brand names instead of using Toyota as the brand name, the information may possibly relate to a given brand of cars, and not all brand it makes. Bradley (2002) argued that although the standardization strategy adopted by firms that sell global brands has benefits that are not enjoyed by the other multinational companies, multinational firms that adopt customization strategy may have some benefits that are not realized by those that adopt standardization strategy. This is particularly applicable in cases where culture, values and preferences of consumers vary between different segments within international market. In case the purchasing behaviors of consumers towards a given brand are affected by the aforementioned factors, adopting a standardization process may not lead to effectiveness in expansion into the global market (Bradley, 2002). A good example is the case of restaurants. A restaurant based in US but with subsidiaries in other continents may not succeed in those continents in case it specializes in selling American dishes only. Similarly, adopting American culture throughout all subsidiaries may lead to failure (Bradley, 2002). A US-based multinational restaurant selling American foods in Thailand and Pakistan at standardized prices may only attract customers in urban areas where there are young, rich people who would like to taste the American food. A better approach would be to customize the brands. A US restaurant can be more successful in Thailand if it sells foods that reflect values and culture of the local people than when adopting a standardized strategy (Bradley, 2002).

In their study, Yin Wong and Merrilees (2007) found that different scholars have taken different sides regarding the issue; some have supported standardization strategy, whereas others have supported customization strategy. Yin Wong and Merrilees (2007) also noted that marketers have mainly been adopting customization strategy as a way of trying to make their products unique from those of competitors or as a way of adapting to the culture, values and preferences of different market segments. Further, Albaum et al. (2005) noted that customization strategy has benefits such as meeting the ultimate needs of consumers, averting legal constraints and designing suitable promotion and distribution methods. According to Palumbo and Herbig (2000), a multinational firm does not have to necessarily standardize both the brand and the product; a firm selling a brand within a given region may incorporate local features or brand names may be incorporated in a standardized brand. A good example is the case of Unilever, which sells the same cleaning liquid in different countries, but uses different brand names for the liquid in those countries. Palumbo and Herbig (2000) argued that it is quite difficult to standardize a brand on local basis. The authors noted that some organizations such as McDonald’s, Coca-Cola and Nike have been successful in implementing standardization strategy. However, the percentage of multinational organizations that succeed in the strategy is very small. Palumbo and Herbig (2000) noted that most of the multinationals that try to adopt the standardization strategy fail.

According to Hsieh and Lindridge (2005), it is difficult for multinational firms to completely adopt standardization strategy since different societies have different values, preferences and cultures. However, an organization may overlook such factors and then proceed with implementation of the strategy. Usually, the ultimate effect of ignoring the aspects of the local markets in the targeted segments is diseconomies of scale. However, Keller (2007) argued that standardization strategy enables corporations to produce products in large-scale, leading to the benefit of economics of scale. Keller (2007) argued that the advantage of customization strategy over standardization strategy is that customization may lead to better returns in case a multinational firm sells its products to market segments where consumers have varying cultural aspects, values and preferences. Keller (2007) noted that during the 21^st century, multinational firms are increasingly adapting hybrid strategy, which involves adding some customization aspects to standardization strategy or adding some standardization aspects to a customization strategy. According to Keller, the main limit of global strategy emanates from making assumption that a brand will be accepted universally, yet it is perceived differently by different consumer groups in different segments. As such, Keller proposed for a hybrid strategy that involves striking a balance between what a firm should customize and what it should standardize. When making decisions regarding what to customize and what to standardize, Keller (2007) suggested that multinational firms should consider the costs and expected benefits of the investments. The least costly and most beneficial hybrid strategy should be adopted. In short, different scholars offer varying views regarding the best branding strategies that multinational firms should adapt in the international market.

            Corporate Branding

            Some scholars have given significant attention to the various aspects of corporate branding and product branding. Yu Xie and Boggs (2006) argued that corporate branding plays a key role of simplifying communication between a multinational firm and stakeholders, unlike in the case of product branding where communication process may be more complex. With regard to corporate branding, Yu Xie and Boggs (2006) argued that a multinational firm communicates the same values to all stakeholders, including consumers, government agencies, activist groups and the surrounding communities, which are usually simplified and well conveyed. Yu Xie and Boggs (2006) gave examples of how multinational firms such as Sony, IBM, Virgin and Nike convey the same values to all stakeholders. According to Yu Xie and Boggs (2006), the approach reduces chances of confusion among stakeholders regarding the core values that an organization upholds. However, Yu Xie and Boggs (2006) noted that corporate branding strategy can only be successful when a multinational firm has positive core values consistently. In case of a negative aspect of its core values emerges, it spreads quickly to all or most of the targeted consumers, leading to loss of reputation and image, which eventually leads reduction in sales of a brand. In extreme cases, a corporation’s operations fail (Yu Xie & Boggs, 2006). As such, Yu Xie and Boggs (2006) suggested that multinational firms involved in corporate branding should pay significant attention to conveying positive values to stakeholders in all targeted markets consistently.

            Kay (2004) explored the distinct characteristics of corporate brands. The author suggested that corporate brands are characterized by the way multinational firms communicates identity of those brands. Kay (2004) identified several characteristics of corporate brands. The first aspect relates to culture. According to Kay (2004), corporate brands are based more on the cultures or cultural values of the firms that produce them than the cultural values of the consumers in the targeted markets. Second, Kay (2004) noted that corporate brands are intricate since they are designed with interest of consumers from different market segments as well as with regard to different stakeholders across the globe with varying interests. Third, Kay (2004) argued that corporate brands usually “encompass tangible elements such as business-scope, geographical coverage, performance related issues, profit margins, pay scales and recruitment (p. 24). Further, Kay argued that corporate brands are ethereal in the sense that stakeholders of multinational firms that sell those brands tend to be emotional in judging the brands. For instance, they tend to judge a global brand based on country of origin (Kay, 2004). Last, Kay argued that corporate brands require extreme commitment from a firm’s management from inception to brand management in the targeted markets. Yu Xie and Boggs (2006) identified two concepts related to corporate branding, namely corporate association and corporate identity. Corporate association, as Yu Xie and Boggs (2006) explained, refers to the feelings and beliefs held by individuals towards a firm. On the other hand, Yu Xie and Boggs (2006) regarded corporate identity as the associations or attributes of a brand that a corporation wants to implant into the minds of stakeholders.

            Van Gelder (2003) suggested that the most effective corporate branding strategy is “umbrella branding,” which involves selling different types of products under the same corporate name. Van Gelder (2003) gave the example of Yamaha Corporation, which sells different products such as guitars and motorbikes, under the brand name Yamaha. Van Gelder (2003) argued that the main advantage of the approach is that a firm can modify a product to suit the interests of stakeholders in a given consumer segment without having to change its brand name. Van Gelder (2003) also argued that new products under the same brand name are readily accepted by the consumers especially in cases where the targeted consumers have a positive image of a firm. As such, the marketing process for a new product becomes easy and the marketing cost involved in introducing the new product is low. Van Gelder (2003) argued that, however, the main disadvantage of the strategy is that in case one of the products of a firm causes harm to users or is associated with negativity, it affects the sales of all the other products.

            Hatch and Schultz (2001) argued that when managing corporate brands in multinational firms, managers should take concise steps to involve the interests of all stakeholders. The authors argued that one of the most important aspects of corporate brand management is the vision that the managers have. Hatch and Schultz (2001) explained that managers have to come up with a clear vision that is based on expectations of higher levels of performance or success. Further, Hatch and Schultz (2001) argued that the managers have a responsibility of communicating the vision clearly to stakeholders, especially those with a high interest in how an organization performs or with high influence in an organization, such as employees, customers and suppliers. Hatch and Schultz (2001) suggested that the most effective methods of communicating the vision to the stakeholders should be adopted. The second important aspect, as Hatch and Schultz (2001) noted, is culture cultivated among the workers within a corporation. Hatch and Schultz (2001) defined culture as the attitudes, beliefs and value cultivated within a corporation, which influence the behaviors of the workers. Culture within a corporation, as Hatch and Schultz (2001) argued, is highly influenced by an organization’s vision. For instance, a clear vision focusing on achievement of certain objectives and goals influence workers to believe that they have the responsibility of meeting those objectives and goals. Also, the vision influences the values that workers view as their priority.

With regard to corporate branding, Hatch and Schultz (2001) suggested that multinational organizations should cultivate a culture that facilitates workers to focus on producing quality products in order to enhance or sustain corporate image or reputation. The corporations, as Hatch and Schultz (2001) suggested should motivate the workers and make them feel as if they own the corporation and they have the responsibility of enhancing or sustaining its success and performance. The third aspect noted by Hatch and Schultz (2001) is the image that consumers and other stakeholders have towards a corporation. Image, according to Hatch and Schultz (2001), refers to how stakeholders perceive a brand. Image influences whether a product is accepted by consumers and other stakeholders in the market or not. For instance, a brand that is perceived by consumers as conveying negative values may not be accepted. In the same vein, government agencies may not accept a brand that is likely to have negative impacts on the consumers or the natural environment. However, with corporate branding, the image attached to a brand is based on the image of the corporation. In this regard, Hatch and Schultz (2001) suggested that it is paramount for multinational organizations to ensure that they support employees to cultivate positive image to all stakeholders.

Product Branding

            Unlike in corporate branding, which involves establishing brands that exist in the long-term, product branding involves establishing brands that are usually short-lived. A multinational firm adopting the strategy aims to meet customer needs through developing new brands for new consumer segments or modifying the existing brands (Yu Xie & Boggs, 2006). A good example of a multinational firm that adopts the strategy is Unilever, which designs different brands of soaps and detergents, such as Lux and Dove, with different designs to suit different markets. In other words, every new product in a product branding strategy gets a new name that is not the same as the name of the corporation that produces it. As Yu Xie and Boggs (2006) noted, sometimes the difference in brands emanates only from packaging. A firm can package the same product differently and modify the name of the brand to suit the interests of new segments. This is effective approach especially in cases where consumers from different market segments perceive the color and other elements in the packaging differently. The unique characteristic of product branding, as Yu Xie and Boggs (2006) argued, is that it is flexible, hence allowing a multinational firm to position itself differently in different markets. According to Yu Xie and Boggs (2006), this is the main attribute of product branding and also its main advantage. Yu Xie and Boggs (2006) argued that, however, firms involved in product branding usually incur high marketing costs for new products since there is little connection of the brand to the corporate image in the minds of the consumers.

Van Gelder (2003) argued that product branding should be adopted when a firm is investing in acquisitive growth, where there is need to modify product or service to meet the needs of consumers in different market segments, in case a firm’s strength lies in its brands, and when there are numerous products within a firm’s portfolio. Van Gelder (2003) argued that the main benefit of product branding is that in case one of a firm’s brands fails, it does not have a huge impact on the image of the firm that owns it. In the same vein, the failure of one brand may not have a significant effect on the performance of to other brands. However Van Gelder (2003) noted that as a result of the relationship between brands in product branding, individual brands hardly benefit from the success of others. Another issue raised by Van Gelder (2003) is that product branding leads to high costs associated with marketing new and modified products.

Disparities between Corporate Branding and product Branding

            Yu Xie and Boggs (2006) and Hatch and Schultz (2003) examined in detail differences between corporate branding and product branding. According to Yu Xie and Boggs (2006), multinational firms that succeed in implementing corporate branding strategy are usually more competitive in the international market than those that adopt product branding strategy. However, Yu Xie and Boggs (2006) noted that corporate branding is much more complex than product branding, since the former requires consistent effective brand management. Hatch and Schultz (2003) noted that the main difference between the two strategies is that the focus of corporate branding is on corporation whereas the focus in product branding is on products or services. As Hatch and Schultz (2003) explained, corporate branding involves wider perspective than product branding. Hatch and Schultz (2003) further noted that in corporate branding, the CEO has the responsibility of managing the brand, whereas middle managers are given the responsibility of managing product brands. In addition, Hatch and Schultz (2003) noted that the key goal of corporate branding is to attract attention of various stakeholders, whereas the focus of product branding is to attract the attention of the customers. While the whole company is involved in delivering a corporate brand, a product brand is usually delivered by subsidiaries or distribution channels. Last, the life cycle of corporate brand is long, whereas that of a product brad is short.

Theoretical Framework

            The framework developed by Yu Xie and Boggs (2006) is one of the most relevant in explaining the factors influencing choices for branding strategies made by multinational organizations. Yu Xie and Boggs (2006) noted that one of the factors influencing the choices for branding strategies of multinational firms is the need to adapt to the demands of the local markets in the targeted consumer segments, especially in the emerging markets. Yu Xie and Boggs (2006) further suggested that in the emerging countries, the choice of strategy adopted is influences by the levels of competitiveness, and social-cultural, economic and technological conditions.

Yu Xie and Boggs (2006) noted that in some cases, the choice of branding strategy by those corporations is influenced by the stakeholders that the firm is targeting. In case the key aim of a corporation is to meet the interests of consumers, the firm is likely to find product branding as being more suitable than corporate branding. In case the corporation targets many stakeholder groups, it is likely to adopt corporate branding strategy (Yu Xie & Boggs, 2006). Yu Xie and Boggs (2006) suggested further that corporate image and reputation may influence whether a firm chooses corporate branding strategy or product branding strategy. If a firm has a positive and well established image and reputation in the international market, it is likely to opt for corporate branding strategy. On the other hand, a firm that does not have a well established positive image and reputation in the international market is likely to find product branding strategy as being the most suitable especially when penetrating into new consumer segments.

Yu Xie and Boggs (2006) further argued that market complexity also influences choices of branding strategies by multinational firms in some cases. Multinational organizations operate in different markets with varying factors such as level of education, language, level of technological development or awareness of technology, level of income, level of economic development and religion. Such factors influence decisions regarding whether a firm is going to introduce the same brand in all market segments or whether it is going to modify it to meet the fundamental needs of the targeted consumers (Yu Xie & Boggs, 2006). For instance, a firm that sells electronic products may be compelled by market factors to modify the existing products to meet the religious beliefs of the targeted consumers.

Another issue considered by Yu Xie and Boggs (2006) is the marketing cost involved in adopting a branding strategy. At the initial point, corporate branding involves very high costs associated with marketing a new product globally. As such, only firms with the needed financial resources can afford it. Firms that do not have the financial resources needed are likely to opt for product branding when penetrating into new markets. On the other hand, established and successful global corporations opt for corporate branding since they are likely to incur lower marketing costs when introducing products in new consumer segments than the corporations specializing in product branding. Product branding involves higher costs than corporate branding when marketing products in new market segments for established and successful multinationals (Yu Xie & Boggs, 2006). Last, Yu Xie and Boggs (2006) argued that the choice of branding strategy by multinational firms is influenced by product characteristics. For instance, industrial products and pharmaceuticals can be easily marketed as global brands, whereas consumer products such as foods are not likely to lead to success when marketed as global brands. The latter are better-off customized to meet consumer needs in different market segments (Yu Xie & Boggs, 2006).

Gap in Research

            Different scholars have given significant attention to the different branding strategies that are adopted by multinational corporations in international markets, as indicated in the literature review. The scholars have paid attention to corporate branding and product branding as the main strategies adopted, although they have pointed out about how the two strategies can also be integrated. Although the scholars tend to agree on the advantages and disadvantages of each of the two strategies, they have not agreed on the most the most suitable approach that all multinationals should adopt. This is mainly due to the presence of varying and integrated factors that influence the choices of branding strategies. As a result, each firm decides that most suitable branding strategy that it should adopt, with consideration of the factors involved. However, as it can be revealed in literature, the factors that influence the choices of branding strategies are mainly in theory form, and no significant empirical research as been conducted to determine whether the suggested factors actually influence choices of branding strategies among the multinational firms. In this regard, the study will focus to fill the gap through testing the suggestions of the theory of Yu Xie and Boggs (2006) empirically.

Conclusion

            Overall, branding is one of the most important marketing strategies that all multinational organizations should invest in. As indicated in the literature review, there are different branding strategies, and multinational firms should focus on adopting the most suitable. The existing theory suggests different factors that influence choices of branding strategies in multinational organizations, but there is lack of significant empirical studies to test the theory. This informs need for further empirical research, which is the aim of the proposed study.

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