Focus: Welcome to our brand new world

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The Independent Online
THERE IS not a lot in common between a chain of coffee shops and a bank. Yet both have recently found themselves subject to a major force blowing through the business world. That force is global branding. The replacement of the name Seattle Coffee Company with Starbucks, and of Midland Bank with HSBC, is just the latest manifestation of a trend that shows little sign of fizzling out.

John Grant, an independent consultant and author of the new book The New Marketing Manifesto, says: "We're only beginning to see global media." He believes that over 50 years the world's population will cease to think of itself as inhabiting various territories, or islands, and will inhabit "one big island". In this brave new world, there would be one strong brand of, say, washing powder and another of breakfast cereal. Everybody will watch the same big movies and wear the same logoed T-shirts.

Increasing numbers of companies are set upon becoming that one leading brand in their sector. They look at Coca-Cola, which has dominated the soft-drinks market to such an extent that it topped a recent international league table of brand names, compiled by the consultancy Interbrand, with a brand value (before the Belgian health scare) of about US$84bn. Similarly, McDonald's has become almost synonymous around the world with fast food. Others would like to emulate these global brandleaders. HSBC, which since 1992 has included the former Midland Bank in a worldwide portfolio of operations, is vying with the likes of Citibank to do the same in financial services, and Starbucks, which bought its UK imitator Seattle Coffee Company months ago, is keen to establish itself as a business with a coffee shop in every international city its stylish customers are ever likely to visit.

Inevitably, as such examples suggest, global brands of the future look like being - with the odd exception - American. This is partly a reflection of the size and the strength of the US economy. Brands have the chance, like The Gap or Nike, to become large entities before they venture overseas. But it also suggests the US marketers have been alive to the potential of powerful global brands for longer than those in other countries.

Such ambitions are not just born of a desire for world domination for the sake of it. A Starbucks spokeswoman says: "Having the Starbucks brand over here (in Britain) allows them to do a lot more exciting things." By which she means bringing in merchandise, such as coffee cups and baseball caps that would be much more expensive if the company continued to support separate identities within its operations. The company is taking a gamble that the local brand name Seattle Coffee Company is not sufficiently well established for there to be a backlash against its removal. Significantly, the takeover of the London bookshop chain Books etc by Borders has not so far seen the disappearance of the old name.

At HSBC, the management has absorbed the marketing speak about "leveraging the brand". Richard Beck, head of group external affairs, says the group realised not all its operations were achieving the benefits from the group's global reach that they should have done - and reckoned the inconsistency of the name was a prime reason.

Although the advantages of having a consistent presence around the globe are obviously more attractive to a corporation, the company claims it has encountered little antipathy to the disappearance of an old-established name. It says it has anecdotal evidence that suggested many individual customers have been missing out because of a lack of understanding of the bank's scope. For example, customers of part of the bank's operations in the north of the US Mid-west had been tramping miles further to use a cash machine because they had not realised the nearby Canadian bank was part of HSBC and available to them.

"Global recognition is one of our aims," says Mr Beck. The Midland rebranding was completed it the end of June at a worldwide cost of about US$50m. The idea is to offer travellers on business or pleasure "comfort and a feeling of reassurance" through the suggestion that the "HSBC global umbrella is available".

Branding consultants claim it is the ability to offer reassurance or even an effective guarantee that a certain standard will be met which gives powerful brands their strength.

But the trouble with this is that it makes operating a brand a lot more complicated than just coming up with a fancy trademark or logo and spending a lot of money on advertising. John Elkins, head of the international consultancy Futurebrand, says: "It is not a decorative issue." Pointing out that a brand is composed of the twin elements of "promise" and "reality," he adds: "If those two aren't in sync it becomes a hollow promise." To a certain extent, this can be dealt with by zealous management of the brand. At Futurebrand, assisting companies with the internal management of the brand is the fastest-growing part of the practice.

But, given the extent to which the perception of brands can make or break companies, boards are starting to realise it is too important to be left to marketing departments. Mr Elkins says organisations like his are increasingly reaching what he calls "the C-level" or chief executives and chief operating officers, who are seeing that "they have got to manage brands as financial assets because at the end of the day everything stems from it".

Nobody recognises this better than the new entrants. Starbucks is not just a new name. It is credited with changing the perception and experience of coffee and, in particular, with attracting a new generation to coffee consumption. It has done this partly through the quality of its products and through the design of its outlets. But also it stands for something. Founder Howard Schultz's book Pour Your Heart Into It describes how he built the company on a set of values as much as a passion for good coffee.

Values, are also well to the fore at Orange, the telecommunications company that came from out of nowhere in 1994 and has succeeded largely through being different from the competition in all manner of ways - from its name to how it deals with customers. Many companies are nervous about talking about values other than in the abstract, but Orange has set down six values - straightforward, dynamic, friendly, honest, refreshing and innovative - that it wants to live by.

Denise Lewis, director of communications, sees this commitment as "very important to the company's plan to expand aggressively overseas. She says Orange wants to position itself as a global communications brand in three key ways, acquiring licences as they become available, licensing the brand to like-minded companies and creating a "virtual network" of operations. Thus Orange will become a utility that buys up blocks of air time to be supplied under the Orange brand. The company - which has just launched in Switzerland and is initially targeting such countries as Austria, Belgium, Israel and Hong Kong - sees the establishment of a global brand as "a huge opportunity to provide seamless access to a whole range of telecommunications".

And the Internet, which allows start-up companies, such as Yahoo and Amazon.com, to establish powerful brands much more quickly than before is likely to throw up many more examples.

But just announcing a global branding strategy is not the same as successfully establishing brands that work around the world. Nor can brands always be exploited as extensively as consultants would like to think. For example, Bass, the wide-ranging leisure group, has enjoyed great success in its pubs division by converting many traditional pubs into pastiche Irish bars under the name O'Neill's, even managing to outlive the craze by establishing a reputation for what a manager calls "the best party in town".

But its hotel business has come under fire for seeking to extend the Holiday Inn name too far. In their book The 22 Immutable Laws of Branding, Al and Laura Ries point out that, while the old Holiday Inn advertising said "the best surprise is no surprise," the company has created just such a surprise, and a certain amount of confusion, by introducing Holiday Inn Express, Holiday Inn Select and others. It is also possible to go the other way, and have a strong international brand such as Volkswagen keeping alive the name of a former competitor as it is doing with the Seat range. Seats look like VWs, but are marketed slightly differently because although the world has access to the same Hollywood blockbusters and rock bands there are still cultural differences.

Consultants such as Mr Grant might like to think such matters are "traditions" that are rapidly being abandoned, but you only have to look at BA and the problems it has had with its aircraft's tailfins to understand the difficulties of going global. "It's a delicate balance," says Futurebrand's Mr Elkins.

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