Composition with Country and Corporate Brands. Capitalising on the Country Brand Values

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Composition with

Country and Corporate Brands

Capitalising on the country brand values

Silviana Mihalache ~ Polona Vukman

Master Thesis in Business Administration Strategy and Culture

Department of Management and Economics

Linköping University

January 2005

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Department and Division

Department of Management and Economics

Defence date

19. 01. 2005

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Language Report category _ISBN: X English

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Licentiate thesis

Degree thesis ISRN: LIU-EKI/STR-D--05/005--SE ________________ X Thesis, D-levelThesis, C-level Title of series

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Title

Composition with Country and Corporate Brands. Capitalising on the Country Brand Values

Author(s)

Silviana Mihalache, Polona Vukman

Abstract

Background: The concept of countries as brands has been increasingly accredited once the postmodern global world became an every day experience. A strong country brand can provide corporate brands with a unique set of values, which supports their positioning on the international market. Simultaneously, once corporate brands achieve worldwide success, they contribute actively to developing new features of the country brand.

Purpose: The aim of the paper is to design a model with regard to the value-transfer from country brands to corporate brands. The model is evaluated in accordance with the relationship between Sweden and Scania, respectively Oriflame, chosen as frames of research. The researchers assess whether the process occurrence is conscious or not, be it from inside (on the corporate level) or outside (from the audiences perspective), as well as its consistency (the values involved in the transfer). Results: According to the research results, Scania displays a spontaneous value-transfer with Sweden the brand, whereas Oriflame actively capitalises on the national set of common values. Either unconsciously present at the corporate level of Scania, or consciously exploited by Oriflame, these Swedish values repeat for both studied companies.

Keywords

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Pentru to i ai mei. In kon no je posijalo sonce.

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Chapter 1 THE BRANDGROUND

1.1. Background

According to Wally Olins a famous branding professional country branding is old news. Olinss example of Frances five republics, two empires and four kingdoms illustrate convincingly that every country which has had its share of turmoil attempts to create new traditions from the old, along with new ideals (Olins, 1999). And every country, which has not, attempts to make a virtue out of this we might add. Sweden, for instance, is labelled on its official Internet gateway as a country that has lived in peace from the early 19th_{century on, and this fact is regarded as the most important prerequisite for}

the build-up of the modern Swedish welfare state (www.sweden.se). However, either old or new, the concept of countries as brands has been increasingly accredited once the postmodern global world became an every day experience.

Under these circumstances, states are compelled to participate in a global beauty contest and employ in a business-like manner strategic marketing instruments in order to develop themselves and their implicit national identities into brands globally recognised (Strange in van der Westhuizen, 2003). Philip Cerny has described this process as a shift from states defending the borders of their national spirit from the impediment iof a violent and ever-changing global economy, to ones which are demanded by the increased

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globalisation euphoria to become businesses (Cerny in van der Westhuizen, 2003).

State branding is about using strategic marketing to promote different aspects of a countrys identity and image. It implies that countries behave, in many ways, just like brands (); they are perceived in certain ways by large groups of people both at home and abroad; they are associated with certain qualities and characteristics (Anholt, 2003). Nation branding has become a central tool of country competitiveness because having a bad reputation or none at all seriously affects a countrys ability to compete at all levels (de Vicente, 2004). Thus, effective branding can endow a state with competitive advantage in world markets used here in a broader sense that encompasses economic, political, social or cultural aspects and opens many opportunities for its development or further development.

Under these circumstances, countries and corporations are increasingly facing similar challenges, and moreover, are extensively taking each others roles. Firms nowadays are getting a grip on the traditional power of the state mainly because of the demands placed on them to behave socially responsible: corporate social responsibility programs, ethical investments and sponsorships, shareholder involvement, and public-private partnerships with the state are just a few examples as such (van der Westhuizen, 2003). Similarly, countries have to position themselves as attractive markets for investment, tourism, and reliable exports, during a time when drawing capital depends on careful comparison and selection processes (van der Westhuizen, 2003).

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Globalisation and the product diversity it brought along are making it very difficult for companies to accomplish their differentiation strategic plans. The global economy implies homogeneity in terms of products, which means that customers need more and more knowledge in order to spot the differentials between them. A strong country brand can intervene and help position a company and its products/services on the global market by adding its unique national values (Pauli, 2002). It is already common sense that Ikea stands for the Swedish simplicity and elegance in design, as BMWs and Mercedes-Benzes drive with German efficiency and reliability. Simultaneously, once corporate brands achieve worldwide success in their field, they contribute actively to developing new features of the national brand. For example, in many ways, Microsoft and Coca Cola are among the most visible U.S. diplomats, just as Nokia is Finlands accredited messenger to the world (van Ham, 2001). Although a country brand has great significance for its companies domestic performances, our overall problem discussion will approach only the international, global dimension.

1.2. Problem discussion

Both countries and corporations face nowadays a double challenge: they have to perform both with and in front of nearly 200 states and an infinite number of companies, and secondly, they have to build a favourable image (van der Westhuizen, 2003). Companies are often regarded as stakeholders of the state, which means that country brands and corporate ones mutually promote each other in a self-perpetuating cycle (Frost, 2004). This is mainly about transferring and capitalising on the values each of these brands display. Therefore, it is our belief that countries and companies should form

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so-called specialised brand-clusters to mutually potent each other and achieve a sustainable competitive advantage. National brands add soft values to corporate brands (companies, products or services), while branded exports be them products, services, cultural events and a great many other consumption items form one of the most influential way of building and sustaining national image.

Because of its complexity and its multiple dimensions, we argue that the country brand serves as an umbrella (Frost, 2004). Nicolas Papadopoulos believes that once an umbrella brand concept that is unitary and clear is established, individual constituents can go their merry separate ways within it, without the risk of inconsistent messaging (Papadopoulos in Frost, 2004). Implicitly, the national brand has to develop a wide range of values and symbols so that it would support a multitude of subordinate brands. It is only natural to claim that brands create countries reputations and that countries create brands reputations, be it on a planned conscious level or an emergent natural one; values drive value!

The general research model (Fig. 1) extracts our focus from the broader context of the problem discussion presented above. Thus, we will follow the bolded lines in the drawing below, in the attempt to discover the ongoing relation between a strong country brand and one type of such subordinate brands, namely the corporate ones. More explicitly, our problem is to depict how Scania and Oriflame two renowned Swedish companies take influences from Sweden the brand, and value them for the benefit of increased external recognition (Fig. 1). The dashed lines in the figure express the authors belief that the growth is mutual; yet, the reverse value-transfer route Sweden capitalising on the above-mentioned corporate brands as well

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remains to be (dis)covered in future dissertations. The same goes for the way national audiences perceive this mutual relationship.

This general design constituted the map that guided us towards the more specific research model we needed for achieving the purpose of our thesis and answering the research questions.

1.3. Purpose

Our purpose is to depict the value-transfer from the country brand to corporate brands in this case, that is to depict its form and consistency. Choosing the relationship between Sweden and Scania, respectively Oriflame, as frames of research, we will assess whether the process occurrence is

Corporate Brands (Scania, Oriflame) Domestic Audiences

Fig. 1: General research model. The value-transfer route between country brands and corporate brands and the way it is perceived by audiences

Source: own design

Strong Country Brand (Sweden) International audiences (target groups)

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conscious or not, be it from inside (on the corporate level) or outside (from the audiences perspective). In doing so, we will also spot those values that are being transferred.

The relevance of this paper resides in increasing awareness about the positive economic outcomes generated by the relationship between strong country brands and their corporate ones. It gives in-sights on how to consolidate corporate brands in the eyes of international target-publics, and enrich the country image along this process.

1.4. Research questions

From the problem discussion, we have identified the following questions that will guide us throughout the course of action and help to meet the purpose:

• What form takes the value-transfer process from Sweden the brand to Scania/Oriflame brands?

As mentioned previously, the purpose of this thesis is to see whether the value-transfer process is conscious or not. For this reason, we will build a model with respect to the way companies engage (or not) unique values from the countrys value thesaurus. In the end, we will evaluate the model and apply it to our case: Sweden-Scania/Oriflame.

• Which Swedish values are transferred to Scania/Oriflame and acknowledged by the audiences?

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We will analyse on which Swedish values Scania and Oriflame capitalise internationally, consciously or not. More importantly, we will see what associations the audiences perform, independently of companies efforts.

1.5. Disposition

Our research initiative has started with analysing the concepts of country brand and branding. This may be regarded as a pretext to get deeper into the actual research: the value transfer between Sweden the brand and Scania, respectively Oriflame.

In order to provide all readers with an understanding of what is to come, we hereby introduce the disposition of our thesis by shortly describing the content of each chapter.

Chapter 1: The Brandground provides the reader with a glimpse of the subject and purpose of this thesis.

Chapter 2: Brand Wisdom accounts for the description of the scientific outlooks that influenced us in our discourse. We define the concept of brand and branding, followed by discussions on how they apply to both corporate and national context, separately and combined. A short overview of literature based on the inter-relation between the two types of brands is also provided. The final part is dedicated to our own modelling of the researched topic.

Chapter 3: Branded Actors is a symbiotic chapter, meant to establish a relation between the theoretical part and the methodological one. It introduces

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the entities to star in this performance. We present both Sweden as a country brand and the companies employed in our research, as well as the reasons which prompted us to choose them.

Chapter 4: Our Research Strategy explains in practical terms the path we followed when conducting the study. We discuss the methods we used for analysis and also the concepts of validity, reliability and generalisation with regard to our thesis.

Chapter 5: Accounts from the Brands provides the presentation of the empirical data collected along the research. We offer descriptions of the interviews completed within both companies, of the questionnaires performed on target-groups abroad, and also of the secondary data we have gathered. Chapter 6: Perceptions of the Brands explains and settles everything by presenting the end result of our situation. We analyse the empirical findings by following the structure of our model presented in the 2nd chapter, so that we can identify the responses of our research inquiry. The research conclusions is a self-explanatory name for a section that resumes our entire work progress and presents some research remarks. We also list advantages that companies can grip from capitalising on Sweden as a powerful country brand.

Chapter 7: Brand Extensions puts forth our final remarks concerning the general research arena, which is represented by the compositioning of country and corporate brands. Finally, we call for future research in this area since the phenomenon can display other dimensions as well.

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Chapter 2 BRAND WISDOM

2.1. Departure point: defining the brand

As often happens with postmodern concepts, a great many definitions have appeared with respect to brands as part and parcel of postmodern economy. Marketing professionals themselves seem to be in trouble when asked to find consensus and settle on one definition only. In order to provide our audience with a better understanding of the topic, we have consulted several resources to find some of the best explanations with respect to the research topic. This is our departure point for further discussions concerning country and corporate brands.

To start with, we will stress that the brand is not a simple equivalent of a certain product; it encompasses all visual, verbal or conceptual elements that form the identity of product. For this reason, the definition provided by the Oxford Dictionary (www.oup.com) a brand is a type of product made by a particular company is rather restrictive and inappropriate for our purpose. In his work Marketing Management, Philip Kotler defines the brand as name, sign, symbol, drawing or a combination of all these, whose main purpose is to identify the products or services of one companies, and to differentiate from those of the competitors (Kotler, 1997). Although far more complete, this definition does not emphasise enough the abstract dimensions of the brand.

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Walter Landor addresses this issue and says: Simply put, a brand is a promise. By identifying and authenticating a product or service it delivers a pledge of satisfaction and quality (Landor in Building Brands, 2004).

David Aaker compares the brand with a mental box and gives a definition of brand equity as: a set of assets (or liabilities) linked to a brands name and symbol that adds to (or subtracts from) the value provided by a product or service (Aaker in Building Brands, 2004). This definition connects the more visible aspects of a brand such as name, logo, or identifying visual marks, with the abstract ones such as embodied values.

Yet, for the purpose of this thesis, we will regard brands mainly from an abstract perspective, defining them as collections of perceptions in the mind of the consumer. This definition makes it absolutely clear that a brand is differentiated from the simple idea of a product through a set of values that go beyond mere functional performance (Ind, 1997). A brand takes the form of a symbolic construct; it is intangible and exists in the mind of the consumer. Furthermore, a brands success results from being able to sustain these added values in the face of competition (de Chernatony & McDonald, 1992).

It is only recently that marketers came to realise that the principal asset of a company was in fact its brand equity (brand awareness, brand image), which actually represents the added value in customers minds (Kapferer, 2001). Originally, branding was believed to be the producers invention meant to serve primarily their own interests. Today, it is more accurately to assert that buyers demand branding in most of the cases, because it is an important information source and creates a number of buyer benefits (Kotler, 1997). Combining both parties, producers and customers, branding generally brings

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advantages to both. Whichever standpoint we take, customers are always a fundamental entity in branding decisions (Kapferer, 2001), either in the starting point, or as final arbitrators.

However, we should not neglect the third recipient of branding advantages the society as a whole or parts of it. Such a discussion goes beyond the boundaries of this thesis; be that as it may, whenever we use the term audiences throughout our discourse, we will refer to all groups that may benefit from branding: employees, stockholders, customers, activists, suppliers, strategic partners, competitors, media representatives, etc.

2.2. Overview of literature: research on country brands

and their interdependence with corporate brands

Previously dominated by a strong emphasis upon stand-alone products, brands are focusing today on more intangible factors as described by several authors (Kapferer, 1992; Aaker, 1992; Aaker and Joachimstahler, 2000). It is not simply a reference (unique functional benefits) or a personality (incorporated emotional values), but also an icon: it can be used to stand for something beyond itself (de Chernatony & McEnnaly, 1999). In our opinion, this evolution made it possible for countries to use new tools in promoting themselves: logos, branding techniques, advertising campaigns, speeches or trade fairs, to mention just a few.

Following increased globalisation, numerous studies have been carried out on the so-called country-of-origin effect: the consequences that the national image of the producing country has upon the buyers quality perceptions of

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the product. Yet, the country-of-origin concept has smoothly shifted nowadays towards the country-of-brand concept (Hulland, 1998). Due to the more and more frequent outsourcing initiatives, when components are produced and assembled all over the world in countries with cheap labour force, the brand is eventually the only one that carries on the national origins of the product (Goodchild & Callow, 2001; Jaffe & Nebenzahl, 2001).

Preceded by the country-of-origin and country-of-brand concepts, the occurrence of a term such as country brand was quite natural. Its inception has been to some extent announced ever since the 90s, when Philip Kotler approached the topic of place branding and marketing in his book titled The Marketing of Nations (1997). This book is an attempt to show the pathway leading to increased tourism, increased investments or increased exports for cities, regions or countries.

In 2002, Simon Anholt guest editor at The Journal of Brand Management put together a special issue dedicated to the topic of nation branding. He was supported in his efforts by leading experts in the field, such as Kotler, Papadoupulos or Olins. All contributors wanted first and foremost to increase awareness with respect to the way such megabrands should be created and managed, as well as to their significance in the current world. This initiative remains unique in the area of state branding.

Simon Anholt has been previously conversant with the topic of country branding, since he participated in the collective work Destination Branding, first published in 2001. More recently, he has published the book Brand New Justice, which can be regarded as an enlightening manual for developing

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countries that strive for increasing their national wealth by means of effective branding (de Vicente, 2004).

In this context, one should not forget the work of Wally Olins (1999), whose book Trading Identities: Why countries and companies are taking on each others roles establishes a linkage between state branding and companies going global. His hypothesis is that countries should act like companies, whereas global companies, companies that function in foreign markets, represent a state within state entity, so they have to take on different state responsibilities.

Yet, the relation that country brands and corporate brands have beyond the well known country-of-origin or country-of-brand effect needs further debate and analysis.

A significant writing, which provides a glimpse over this subject, is National Image and Competitive Advantage by Eugene D. Jaffe and Israel D. Nebenzahl. The book was published in 2001, and it offers deep in-sights about how a country image can contribute to the customers perceptions of brands originated from there, how this image can be used by companies, or how national image campaigns can be managed. The variety of examples on display makes the book an interesting and captivating lecture.

Thomas Friedman opened the path in the researched field while dramatising the conflict of The Lexus and the Olive Tree the tension between the globalisation system and ancient forms of culture, geography, tradition and community (Friedman, 2000). In his book, he argues that in todays global world, powerful global companies and powerful countries need to have strong

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brands that seduce and take hold of consumers and investors. The unique bond they can develop becomes of crucial importance in the authors opinion. Our paper is an attempt to address the lack of research in this specific area, and to make the issues related to it more visible in the eyes of professionals, be they academics or practitioners.

2.3. Brand essentials

2.3.1. The corporate brand

When it comes to a highly competitive business environment, brands represent the primary capital of many companies. There are a number of definitions of brands that try to explain the invisible, intangible and unwritten of the business, and we discussed them in more detail within the first section of this chapter. As follows, we will focus on some other concepts in branding such as: brand equity, brand identity, brand image, or branding strategies and brand management.

2.3.1.1. The character and looks of a brand: brand identity, brand image

As David Arnold (1992) suggests, branding has to do with the way customers perceive and buy things. In this sense, marketers typically distinguish three levels in a brand: essence, benefits and attributes. The essence of the brand is a single simple value, easily understood and valued by customers. It is the personality of the brand, and the element that is distinctive

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in the market. The benefits delivered by the brand (emotional, status, image) match the needs and wants of the consumer. Finally, one has the attributes, directly noticeable and tangible characters (colours, shapes, functions, and graphics).

Brand identity is the total proposition that a company makes to consumers -the promise it makes. It may consist of features and attributes, benefits, performance, quality, service support, and the values that the brand possesses. Brand identity is everything the company wants the brand to be seen as (Temporal, 2002).

Brand image, on the other hand, is the totality of consumer perceptions about the brand, or how they see it, which may not coincide with the brand identity. More specifically, it is defined as that cluster of attributes and associations that consumers connect to the brand name (Biel in Thackor & Kohli, 1996). Companies have to work hard on the consumer experience to make sure that what customers see and think is what they want them to.

2.3.1.2. Brand equity

Brand equity is the value of a brand based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong brand associations, and other assets such as patents, trademarks, and channel relationships (Kotler & Armstrong, 2001). Thus, brand equity can be defined as the value built-up in a brand, which can be calculated by comparing the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded product. This value can comprise both tangible, functional attributes and intangible, emotional attributes. It can be positive or

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negative. Positive brand equity is created by a history of effective promotions and consistently meeting or exceeding customer expectations (Temporal, 2002).

Positive brand equity can grow into a significant barrier to entry for prospective competitors. The greater a companys brand equity, the greater the probability that the company will use a family branding strategy rather than an individual strategy. This is because family branding allows them to leverage off the equity accumulated in the core brand (Temporal, 2002).

Strategic brand management incorporates decisions about operative combinations of attributes that brands hold, and particularly about brand portfolios. It seeks to increase the products perceived value to the customer and thereby increase brand equity. Brand equity must be managed, nurtured and controlled in a proper way, by integrating the tools of a consistent brand management. Its central concept consists of perceptions of brand identity, and brand image (Kapferer, 1994).

2.3.1.3. Brand management and branding strategies

Brand management is the application of marketing techniques to a specific product, product line, or brand. It seeks to increase the products perceived value to the customer, and thereby increase brand franchise and brand equity (Kapferer, 1994).

A continuous strategic brand building contributes to create value, which lies outside the business, in the minds of potential buyers (Kapferer, 1994), and therefore, it is important for acting in the play of a competitive advantage.

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Branding is an activity whose strategic purpose is to create difference. Companies seek to better fulfil the expectations of specific groups of customers; they do so by consistently and repeatedly providing ideal combinations of attributes identity, principles, values, origin, specificity and difference, systematically collected in a word or a sign under conditions that are economically feasible for the company (Kapferer, 1994).

In practice, brand management can be seen as a set of activities which (Branding UK, 2003):

• Define a consistent product or service based on identified customer needs;

• Associate appropriate values and imagery with the organisation, product or service;

• Communicate consistently through naming, design, and advertising promotions with the market place.

Current thinking about brand management emphasises the necessity of a comprehensive approach in which continuous and extensive advertising, promotion, packaging and design should be consistent with the various components of a brand. Consistency must be achieved to build enduring value. Whatever the brand is, whatever it may be doing, the customers should perceive the brand as a set of clear and consistent values. Therefore, brand management is all about coherent and carefully nurtured programmes for identity implementation and maintenance of a brand. The key concepts and the image of the brand must be carried by all pillars of all the marketing activities. This means that the deployment of all marketing instruments as product, price and distribution as well as communication must be uniform and

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homogenous. The employees must behave both vis-à-vis customers and amongst each other in a way that is typical for the company and in tune with the image of the brand (Aaker & Joachimsthaler, 2002).

The objective of business strategy is to achieve sustainable competitive advantage, which may yield from any part of the organisations operations. Brand strategy is the process whereby the offer is positioned in the consumers mind to produce a perception of advantage (Arnold, 1992).

As part of a strategic or marketing plan of a company, a brand strategy is comprehended as a sum of operational tactics for building a brand, with clearly defined results in creating brand equity (Aaker & Joachimsthaler, 2002).

There are several practices, which a company may pursue while cultivating its brand. The most common ways of effective handling of brands are the general branding strategies a single brand for all of the organisations products, family branding, or the use of individual brand names for all products (Kotler, 1994). However the brand strategy is named, the focus is always on assuring a healthy brand image, while building the essence of the brand and reaching the target market. Formulation of the brand strategy begins with creating the potent brand image. The brand should foremost establish an emotional connection and express the benefits of the product/service to the target group. Consequently, the target group will respond in accordance with collective representation, shaped over time by the accumulated experiences of close relations (Kapferer, 2001). The collective belief is triggered by the abstract values that the brand represents and by the transmission of brand functions to the customers perceived added value. The role of brand strategies is to ensure

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the shift of physical (external) functions towards the hidden values of the product that are inaccessible to contact otherwise. From the perspective of this deeper definition, a brand itself reveals its values and presents a vision (Kapferer, 2001).

2.3.2. And countries became brands as well

2.3.2.1. Country brand and branding

A country brand defines a symbolic construct, which emphasises the positively memorable, attractive, unique, relevant and sustainable qualities of a nation (Allan, 2004). A national brand is a national identity that has been proactively distilled, interpreted, internalised and projected internationally in order to gain international recognition and to construct a favourable national image (Delorie, 2000).

By national identity, we mean the way a country voluntarily positions itself. Accordingly, a national image is the set of beliefs, ideas and impressions that a person holds regarding a specific country (Kotler, 1997). The country brand as any other brand consists of both dimensions, identity and image, but we will refer to a strong country brand as to one for which most of the values that a country voluntarily promotes coincide with the values that audiences perceive. Yet, perfect overlapping is impossible to achieve.

What is true for corporations, products, services or individuals, goes also for countries. Every nation has a certain image, be it favourable or unfavourable, positive or negative. These perceptions and/or preconceptions determine the

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development of the country, most commonly with respect to tourism, exports or foreign direct investments. Therefore, a nations brand is as Jaffe and Nebenzahl (2001) put it an outgrowth of its economic, political and educational systems.

Consequently, country branding is the practice of employing strategic marketing to promote a states image (Anholt, 2002). Yet, there are a great many differences between national branding and corporate one. In national branding, there is not the same level of control over the brand as in a simple business to consumer, or business-to-business situation. Magne Supphellen explains: In principle, [product] and place branding is the same. Its all about identifying, developing and communicating the parts of the identity that are favourable to some specified target groups. (Supphellen in Frost, 2004). Because of the difficulty in getting the publics perceptions, the communication step within the extensive PR process demands more resources and efforts (Supphellen in Frost, 2004).

Philip Kotler acknowledges in his turn the complexity by explaining that countries may be more limited in altering their brands than corporations usually are. Although it may be possible for a nation to attract more foreign direct investment or shift its economic base, there will always be some constraints over which it has little or no control (Kotler, Jatusripitak, & Maesincee, 1997; Kotler in Frost, 2004).

David Gertner makes a point in emphasising the extended time frame when it comes to branding a nation: Products can be discontinued, modified, withdrawn from the market, re-launched and re-positioned or replaced by improved products. Places do not have most of these choices. Their image

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problems may be founded in structural problems that take years to fix (Gertner in Frost, 2004).

2.3.2.2. Dimensions of a country brand. Country equity

It is a rather consented issue that most country brands display a hexagonal dimension, as shown in the figure below.

Tourism the worlds fourth largest export industry is the most visible aspect of a country brand, mainly because it receives large financial support from governments and therefore, turns into the most competent marketing force at the national level. It is a major economic driver through employment, international visitor expenditures, investments, and regional development. As announced by the World Tourism Organisation (www.world-tourism.org), France firmly leads the ranking of the most visited countries and territories with 77 million international tourist arrivals and a share of 11% of worldwide arrivals in 2002. Spain consolidated the second position, conquered from the United States in 2001, as tourist arrivals to the destination grew by more than

Country Brand

Tourism Export brands

Foreign and domestic policies Investments Culture and heritage People

Fig. 2: The six dimensions of a nation brand Source: Placebrands (modified), www.placebrands.com

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3% while arrivals to the United States dropped for the second year in a row (-7%). Italy follows in the ranking with arrival numbers reaching almost 40 million, whereas China, which occupies the fifth position, confirmed its importance as a growing world tourism destination and achieved the fastest growth among these top five countries in 2002 (+11%) (www.world-tourism.org). Spain as a relatively recently emerged country brand has capitalised a lot on tourism when positioning itself. Nurtured by Miros symbolic sun and fortified by the reconstruction and embellishment of major cities such as Valencia, Barcelona or Bilbao, tourism advertising on national, regional and global level managed to position the country among the most purchased holiday destinations (Olins, 2001).

Within the global market, the fight to gain superior export shares has constantly increased. In order to achieve this purpose, the quality of exported products or services has to be superior to that of competitors. Under these circumstances, export brands represent an important mark for each and every country (www.placebrands.com). Consider Finland, a country which was outside the global arena ten years ago, and therefore, it raised few opinions. Today, we label it as the country of high-tech mobile-phone technology, and this is mainly due to Nokias performances. Moreover, we believe that extended exports can raise the self-esteem of a country, which in turn triggers increased self-confidence and success.

The rate of inward investments is also a topical issue in the global contemporary economy because of the multitude of advantages they bring: positive competition; increased quality standards; an enriched flow of skills, knowledge and information between countries; increased employment; technological advances and innovations and so on. All countries, be them

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developing or developed, are now competing for gaining an investment-friendly image. Country brand and everything that it stands for has a lot to say when it comes to attracting foreign direct investments. For this reason, it is no wonder that almost all foreign direct investments have been until recently oriented to six countries: USA, Great Britain, Japan, The Netherlands, France, and Canada (Kotler, Jatusripitak, & Maesincee, 1997). However, from 1990 on, the inflow of foreign direct investment into developing countries has increased considerably, and what triggered our attention was that almost 60% of them went to Asia precisely when the Branding Asia operation was initiated and the Asian tigers showed their potential (Kotler, Jatusripitak, & Maesincee, 1997).

Nations are also regarded in accordance with the foreign and domestic policies that their leaders initiate. These activities, likewise all the others mentioned here, need to be performed with sensitivity to the strategic imperatives of the brand. Foreign and domestic policies must be coordinated so that they would invigorate the national brand (Papadopoulos in Frost, 2004). Sweden is a brand that successfully achieved such coordination. The country has been long praised for its ability to meet the residents needs for health, education, human rights, political participation, population growth, equality of all types, cultural diversity and freedom from social chaos (www.isa.se). The same attitude was adopted externally in 2001, when Sweden took over the six-month rotating presidency of the European Union with a great desire to inject a sense of cool and calm into the activities of the 15-member association (www.worldeyereports.com).

It is worth mentioning that the branding of a country must start from inside because a countrys brand is most frequently promoted by its people. Just as

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corporate branding campaigns can raise the employees morale, team spirit, and motivation, national branding campaigns must provide the people with a common sense of purpose, of belonging and national pride. Yet, according to Papadopoulos, most governments currently do not bother to consult their citizens when putting together national branding campaigns. That may change because widespread buy-in by the population is a critical precondition of the success of any branding program. () To deliver, everyone in the «organisation» must believe in the brand (Papadopoulos in Frost, 2004). It is also important to identify internal and external perceptions/images and the discrepancies between them, which eventually will have to be subject of correction. Internal motivation remains a problem for developing countries, for instance, because they still have to strive for ensuring their citizens with an above-the-average living standard. Until this goal is achieved, such country brands cannot evolve to the international dimension.

Last but not the least, one should not overlook the cultural dimension of a country brand. Culture penetrates all areas of life, all scientific fields, having been integrated in the study of many disciplines: economics, management, politics and psychology to mention just a few. For this reason, culture has turned into the ultimate referential point, into a conventionally accepted solution to all problematic questions. As Adam Kuper points out, the excess lies in culture becoming the source of explanation per se, instead of something to be described and explained (Kuper in Barinaga, 1999). Culture has become the explanation. In this sense, it is worth mentioning a study performed by Richard Franke, Geert Hofstede and Michael Bond (1991), which revealed that cultural influences explain more than 50% of the differences in the economic developments (growth rates) for the periods 1965- 80 and 1980-87. Therefore, national cultures or, better, the differences

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they display trigger differences in economic performances. Consequently, not only is culture the embodiment of the national psyche but is also the only, enduring differentiation marker. As Simon Anholt put it, culture is uniquely linked to the country itself; it is reassuring because it links the countrys past with its present; it is enriching because it deals with non-commercial activities; and it is dignifying because it shows the spiritual and intellectual qualities of a countrys people and institutions (Anholt in van der Westhuizen, 2003). Because of its unique and inimitable features, culture can provide the countrys net asset value with the desired added value.

Tourism, export brands and foreign direct investments influence in a more direct manner the value of the country equity. Based on the concept of brand equity, the term country equity has been coined to mean the emotional value resulting from consumers association of a brand with a country (Kotler & Gertner, 2002). The concept of country equity clearly points to export promotion as the principal actionable dimension in state branding. However, we should also consider tourism, investments, culture or people as elements strengthening or weakening country equity: tourists always come into contact with a countrys products, culture and people during their visits, whereas investment decisions by companies rely a great deal not only on factors of production, but also on national image and name awareness.

2.3.2.3. Country branding strategies

It is important for everybody to understand that branding a nation is not anymore a function individually performed by governments, companies or different associations, but an integrated and concerted effort on behalf of all

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interested stakeholders. Therefore, it demands political, managerial and technical competencies in equal shares (de Vicente, 2004).

According to Wally Olins, there are seven basic stages in building a state brand (Olins, 1999):

• Forming a work group with representatives of government, industry, the arts, education and media.

• Establishing how the nation is perceived both internally and externally by means of qualitative and quantitative research tools.

• Establishing the strengths and weaknesses of the country, and compare them with other similar research data, be they originated within the country or outside.

• Creation of a central idea, powerful and simple, on which the strategy is based on and which captures the unique qualities of the nation.

• Message coordination, especially with respect to tourism, inward investments and exports.

• Formation of a liaison system within the working party to implement the programme and encourage supportive actions from appropriate organisations in commerce, industry, arts, media and so on.

Although somewhat different than commercial identity campaigns due to increased complexity and need for coordination, a national branding plan displays the same essentials: clear, simple, differentiating propositions often built around emotional qualities expressing some kind of superiority, which can be readily symbolised both verbally and visually (Olins, 1999).

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Performing a SWOT analysis for nations is an idea that has been promoted by many others. In his book The Marketing of Nations, Philip Kotler (1997) confirmed the idea that each nation must assess its strengths, weaknesses, threats and opportunities periodically in its five areas of capability:

• Government leadership;

• Factor endowments;

• Industrial organisation;

• Social cohesion;

• Culture, attitudes and values.

A nations capability portfolio gives the measure of a nations wealth. It is driven forward in the right direction through both internal marketing (for building more the internal teamwork) and external marketing (create wealth on the global marketplace).

These are just a few models for building a national brand. Because each country is unique, such branding plans have to be adapted to the circumstances that each provides. Moreover, it is worth mentioning that some nations develop a national brand in a kind of controlled or formalised way, but with others it happens almost spontaneously. India, for instance, has emerged in the last five years in terms of perceptions in a rather uncontrolled way: from spirituality and poverty to software and highly educated people (Olins in Frost, 2004).

There are several examples of country branding campaigns. Some have failed, and among these the most important is Cool Britannia campaign initiated in 1997 by British industrialists, government agencies and advertising agencies

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in order to provide the country with a hip and trendy image. Yet, the results were not as expected mainly due to the fact that the Cool image had little representation for manufacturing and technology. However, there are state brands that have managed to market themselves as powerful brands, and among these campaigns one can mention Scotland the Brand, Deutschland Europe, or New Zealand Way (Jaffe & Nebenzahl, 2001).

Be that as it may, the branding strategy is desirable to focus on the realities that a state experiences, nothing more and nothing less. Promoting false values with respect to a certain country would eventually turn against the brand and destroy it before it has even started to evolve (Olins, 1999).

2.3.3. Country and corporate brands compositioning

The general purpose of the present thesis is to depict whether and how country and corporate brands capitalise on each others values in the most profitable manner. It aims to increasing awareness about the competitive advantage that a nations image can provide to its company/product/service brands, and contrariwise as well.

The importance of national origin is not understood. A great many companies today trumpet themselves as global, and they support this idea with the number of markets they cover worldwide, or the plenitude of foreign locations they own on the same planetary level. Yet, in contempt of their span of operations being global, everyone is global from somewhere; they may be global, but their value set is almost always perceived to be dominated by a single nation (Goodchild, & Callow, 2001). Moreover, when discussing

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global brands, one cannot disregard their place of birth as well. As Aaker (1991) put it, a global brand often provides a country association for a brand which is very established in one country and for which the country association is part of the essence of the brand. For example, Levis is US jeans, Dewars is Scotch whisky.

This is in complete accordance with the categorization theory, rooted in Bruner, Goodnow and Austins work A study of thinking, and briefly described by Jaffe and Nebenzahl (2001) in their book on national image and competitive advantage. The categorization theory describes relevant learning processes in the perception of products and services. Learning controls the perception of information and the reaction that they yield, and it involves two parallel mental processes:

• Abstraction: formation of categories and placement of objects in categories;

• Generalisation: once an object is placed in a category, it is ascribed all the properties of that category.

Categorisation is the joint phenomenon of abstraction and generalisation, and may be performed in two ways, either by:

• Identity categorising: things that seem to be different in their details are identified as belonging to the same entity;

• Equivalence categorising: things that are in reality different are conceived as being similar by their nature, by their belonging to the same class.

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This categorisation process is significant in the way people perceive and construct the image of either corporate brands in accordance with the country-of-brand image, or country brands in accordance with their corporate brands (Jaffe & Nebenzahl, 2001). Categorisation and the associations it drives are fundamental in the value-transfer process.

When a country image category is formed in the consumers mind, they will transfer its attributes to the brands emerging in that specific territory. Likewise, a single company can often dominate national perceptions: Japan is Sony, Germany is Mercedes, Sweden is Ikea, Finland is Nokia, and so on. Of course, this raises entry barriers for other industries. For example, Italys passion, fashion and style capital made it extremely difficult for Olivetti, a computer manufacturer, to create a successful export brand. The same goes for Hugo Boss the German fashion brand in its attempt to overcome the preconception that everything that is German is technical and cold (de Vicente, 2004). However, companies that face such problems could turn everything into their advantage by capitalising on such values in a proper and innovative manner, or by trying to promote pro-actively other values of the national brand that better suit their case. Again, it is important that the country brand would develop a wide range of values in order to assist a wider range of companies and industrial branches.

In conclusion, if a countrys image is negative, this will reflect as well in the perception of the brands originated from there, irrespective of their value. In contrast, when a brand is associated with a country that enjoys a positive image, it will gain acceptance more easily (Jaffe & Nebenzahl, 2001).

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2.4. Our modelling

Our modelling has originated from the general research model presented in the first chapter, and therefore, it focuses on the value-transfer between country and corporate brands, and on the way international target groups perceive this transfer.

As mentioned in the beginning of the present chapter, audiences are important for each branding initiative, be it on an initial stage (how the brand is built to fit the audiences) or as final evaluators (how the audiences assess the brand). Country and corporate brands compositioning in terms of values is better noticeable when companies are present on the global market, and face international audiences. Each country may benefit from certain favourable or unfavourable associations with respect to its nature, culture, national identity and so on. The form that these associations take in the minds of external publics greatly influences the performance of the country in any given field. We have stated that our focus is to acknowledge whether capitalising on a country brand is considered in achieving a sustainable competitive advantage on the global economic arena. Therefore, we will only consider the outcomes that this brand connection has upon global audiences, and more precisely upon customers and potential consuming target-groups.

Our model is built on two dimensions:

• The relationship between corporate brands and the country brand, namely the corporate awareness of country brand values;

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• The audiences associations (see 2.3.3, discussion about categorisation processes, p. 29) between the two types of brands.

The first dimension deals with the inner organisational perspective, that is whether corporate leaders become aware of the benefits of the country brand values. We claim that the value-transfer, be it recognised or not inside the organisation, always exists. This value-transfer can be integrated in Edgar Scheins (1992) third level of organisational culture represented by basic assumptions. Located at the core of the organisational culture, basic assumptions are the ultimate source of underlying values, which cannot be easily deciphered due to the peoples high level of unconsciousness. Country brand values can be identified with some of the values that back up the

Corporate awareness of the benefits that the country brand values hold

AWARE UNAWARE A SS O C IA TE D 1.Obvious value-transfer Companies actively capitalise on or awarely

benefit from country brand values.

2. Spontaneous value-transfer Companies passively

benefit from country brand values. A ud ie nc es p er ce pt io ns N O N -A SS O C IA TE D 3.Un(der)developed value-transfer Companies invest in associations, or ignore them. 4.Latent value-transfer No perception of the value transfer.

Fig. 3: The Value-Transfer Window

The relationship between country-brand values and corporate brand values, and its outcomes for targets

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organisational entity, and consequently, the organisational brand values. When acknowledged, these values can be integrated in the corporate branding strategy, and go up one level in Scheins representation to become espoused values. From our models perspective, when these values or their benefits are not acknowledged, companies are placed in the 2nd_{or 4}th_{quadrant. When}

acknowledged, these values may be considered in strategy formulation, and therefore, companies are placed in the 1st_{or 3}rd_quadrant.

The second dimension shifts the focus on the outer perspective upon corporate brands, namely on the audiences perceptions of country and corporate brands compositioning. As previously discussed, brand image is a cluster of associations that customers develop in relation with corporate brands. We claim that one of these associations is made with the country-brand values, and we support this claim with previous research on the importance of brand origin: the concept of brand origin () has the potential to contribute to our understanding of how consumers perceive brands (Thackor & Kohli, 1996). Obviously, customers can either perform or not associations. These associations connect the country brand values to the corporate ones; by value we mean a measure of what people think is worth, a culturally defined standard of desirability, goodness, and beauty (Macionis, 1999). In opposition, a stereotype is an unreliable generalisation, an exaggerated oversimplified belief about an entire group of people. A prejudice, in its turn, is a negative cultural attitude, directed against an individual or a group of people, which is based on stereotypes (www.encyclopedia.thefreedictionary.com). Having this in mind, associations that we refer to in our model cannot be negative. The values of a country brand are different than other cultural labels, which can always be only preconceptions or stereotypes. That is why we believe that negative associations do not involve values, but subjective judgements of other

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countries images. Therefore, our model does not deal with degrees of positive or negative, but rather with degrees of weak and strong, from associated values to non-associated values.

Following data collection, we will have enough information to place the two analysed companies according to the dimensions discussed above in one of the following quadrants.

1st_{quadrant: Obvious value-transfer (Fig. 4)}

In case corporations are aware of national values that can contribute to the development of their own brands, and simultaneously audiences associate these values with the corporate brands, then the value-transfer has an obvious, explicit form. Companies may choose to invest in maintaining and intensifying the associations by actively using

denotations regarding their home country. The other alternative is for them not to invest, but still benefit from the country brand-values; without specific marketing impulses, audiences still make connections that favour the corporate brand. In our opinion, these alternatives differ in terms of the financial outcomes they yield on the long run: investments trigger the development of the value association, whereas marketing compliance most probably will lead to a constant or vanishing perception.

Country brand values Corporate values Perceived country brand values in corporate brand

Fig. 4: Obvious value-transfer Source: own design

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2nd_{quadrant: Spontaneous value-transfer}

(Fig. 5)

In case corporations are blind to the benefits that country-brand values can bring, and yet, audiences still make associations between country and corporate brand values, the transfer is spontaneous. It emerges as a result of common knowledge about the corporate and country brands. Companies do not invest in marketing their brands in association with the country brand, but such associations exist for the benefit of the corporate brands.

3rd_{quadrant: Un(der)developed}

value-transfer (Fig. 6)

In this case, companies either invest in potenting their own brands with values from the country brand or ignore such possibilities. When investing, marketing efforts are underdeveloped, in the sense that they do not enjoy the expected results from the association process. Companies fail to plan and communicate successful branding strategies in order to trigger profitable associations. On the other hand, corporations may choose to ignore the benefits of national values as a result of an intentional act, which triggers an undeveloped

rd

Fig. 5: Spontaneous value-transfer Source:own design Corporate values Perceived country brand values in corporate brand Country brand values Country brand values Fig. 6: Un(der)developed value-transfer Source: own design

Corporate values Country brand values Country brand values Corporate brand values

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4th quadrant: Latent value-transfer (Fig. 7) In the 4th quadrant, neither corporations nor audiences perceive the value-transfer, although it still takes place on a hidden, latent level (see 2.4., discussion on basic assumptions, p. 32).

Fig. 7: Latent value-transfer Source: own design

Country brand values Country brand values Corporate brand values Country brand values Corporate brand values

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Chapter 3 BRANDED ACTORS

Our research focuses on the relationship between two Swedish companies Scania and Oriflame, and Sweden as a strong country brand. In order to provide our audiences with a clear image of all brands involved, we will pursue in describing each of them from an objective standpoint, using part of the secondary data we have gathered for our study purpose.

3.1. Sweden the brand

We have mentioned throughout the entire dissertation so far concepts such as country brand and branding. It is time for us to apply these concepts to the Swedish case. Although Sweden the brand is not our primary research topic, we believe that briefly analysing it will provide us with some important country brand values, which eventually have a saying in the value-transfer analysis. From all information, we will draw a set of values that Sweden the brand encompasses. This will be further used in correlation with the corporate brand values.

Brand Swedens strapline is Space for minds (www.swetourism.se), which combines the complete Swedish nature with mountains, expanded forests, and waters, and the free thought, openness, lack of hierarchical levels, equality, and the orientation towards innovation that its people display. For foreigners, Sweden holds a lot of labels: model nation, world conscience, the

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country that protects its citizens from the cradle to the grave (www.si.se). By choosing Sweden to be our context, content and process, we intended to inspire those countries that are now striving to gain worldwide recognition. Sweden as a country brand is one of the most powerful in the world.

As follows, we will depict precisely Swedens brand power by making use of the country brand hexagon (Fig. 8) as it was presented in the previous chapter. All facts were provided by official sources state authorities , which ensures their validity.

Tourism

When it comes to the tourist dimension, Sweden differentiates from other place brands by emphasising the sacred feature of its nature, which offers endless possibilities from extreme adventures to utter peaceful moments in wilderness.

The Swedish Tourist and Travel Council is the one that handles the promotion of Sweden as a tourist destination. Yearly, the council plans and carries out

Sweden the brand: Space for

Minds

Tourism: Sacred nature Export brands: Knowledge-based economy

Domestic and foreign policies: Internal and external welfare

Investments: Internationally integrated economy as source of future growth

Culture and heritage People: Lagom

Fig. 8: The six dimensions of Sweden the brand

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marketing events such as: Swedish Workshops, Scandinavian Workshops, Outdoor Academy of Sweden, Press Trips, and a great many other. As mentioned in its statute, marketing is perceived as a way to add value to Swedish tourism products by being responsible for the development of the brand name Sweden as a travel destination. Brand name development means the way in which we decide to act both internally and externally, from personal meetings to mass communication so as to ensure the brand is among the first choices for travellers (www.swetourism.se).

The body is equally commissioned to the Swedish government and the Swedish tourist trade represented by companies and other support organisations. The state is the one that covers base marketing operations as well as the overall image marketing, and its contribution amounted to 87 million SEK in 2004 (www.swetourism.se).

Export brands

When promoting its export activities, Sweden underlines the shift it witnessed from exporting raw materials to exporting knowledge (www.si.se). In this sense, it is worth mentioning that OECD recently ranked Sweden the worlds most knowledge-based economy, and placed it in the second position in terms of international trade levels, exports and imports included (www.oecdobserver.org).

The organism responsible for promoting Swedish exports is The Swedish Trade Council, which represents both the Swedish government and the Swedish business sectors. The main responsibilities that this council holds are the following (www.swedishtrade.se):

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• Export information: disseminating data about Swedish export and international expansion, market information, identification and mediating of business opportunities for companies;

• Export programmes: initiating programmes for those SMEs that strive to expand internationally, cooperation-based activities for companies in national sector-oriented Industry Sector Groups and Industry Sector Programmes;

• Export consulting: counselling offered to individual companies that wish to expand internationally.

In 2003, 44 % of the countrys GDP came from export and 60 % of all goods produced were sold abroad (www.scb.se). According to the Swedish Central Bureau of Statistics first released figures for June last year, the Swedish trade surplus during the first 6 months of 2004 grew to SEK 95.8 billion in current prices compared to 75.2 billion in 2003 (www.scb.se). Exports have grown faster than imports, by 8 and 4 % respectively. This constant increase that Swedish exports display nowadays is mainly generated by the larger amount of knowledge that exported goods include (www.swedishtrade.se).

Investments

Attracting foreign direct investments in Sweden is operated by The Invest in Sweden Agency (ISA) a governmental agency, which guides and informs foreign investors with respect to the investment opportunities that the country provides. Emphasis is placed on the international integrated character of the Swedish economy, based on extensive innovation and IT competencies. Among the attributes that ISA promotes when marketing Sweden as a successful destination for foreign direct investments, one can mention (www.isa.se):

Composition with Country and Corporate Brands. Capitalising on the Country Brand Values