Why do local brands often have more success?
Global brands often struggle to succeed in local markets, while local brands meet consumer needs better, according to new research.
Brands with a centralised structure (with brands managed centrally, rather than locally), can lose track of consumer needs and shopper insights, according to the study by Roland Berger and Ipsos.
As a result, centralised product launches suffer significantly higher flop rates (80%) than decentralised ones (50%) posing the question whether companies should opt for global corporate branding or localization.
According to a study conducted by Nielsen, flop rates in the German FMCG market are as high as 85%. Another study found that out of 24,000 new products, only half survived their first year in the market (Source: GfK/Madakom,1998).
In 2001, 32,000 new products were launched, and only 30% survived the first year. Roland Berger and Ipsos cite relevance and differentiation in the market as two top criteria for global brand marketing success.
The starting point, the study suggests, is a clearly positioned international brand portfolio which adds value to consumers.
Further research suggests that true innovations have a higher chance of success than “me-too products”
July 21st, 2010 at 5:56 pm
This is interesting and I agree with you. I feel that if a brand came into the market, the only way for it to really have a chance of survival, depends on how well the company can communicate the value of the brand. I personally wouldn’t buy something because it was new, but rather would buy if I understood the value I would get from it.
Do you know if any of these flops had a unique value model associated with them? Did these companies conduct a detailed analysis to define their differentiation value? If so, how well did they communicate that to their target markets prior to launching their brand?
I’m curious to know answers to these questions.
Thanks,
Christina