JEDDAH, 7 February 2004 — The result of a survey on customer loyalty to global brands carried out by Harvard University has yielded unexpected results. There seems to have been almost no long-term impact on consumer purchase preferences or brands as a result of 9/11 and what followed.
“This is the complete opposite of what people are saying in the popular media and op-ed pieces,” said Professor John Quelch, Associate Dean at Harvard Business School.
The survey, conducted in 12 countries — including three Muslim ones — looked at actual choice preferences made by consumers between brands. Consumers were not approached for their attitudes towards brands, but were asked to make choices among brands in particular categories. “We avoided ever getting into the issue of anti-Americanism or anti-global brands,” said Professor Quelch.
The results show that there is a segment of consumers — around 13 percent — who are essentially anti-globalists and do not buy global or American brands. “This percentage existed before the Iraq war and has not increased since,” said the professor. “Interestingly, the percentage is about the same in all countries — including the Muslim ones.”
Analysis of the survey leads to the conclusion that there was an initial surge of boycott sentiment against the very active drive towards market penetration and globalization by American companies in the 1990’s. In response, local brands emerged to try and take advantage of that sentiment — Makkah Cola and Zam Zam Cola for example. However, after a couple of months of switching to the new brands, most consumers returned to the global brands because, said Professor Quelch, they simply provide better value and quality than the imitators. The global brands have built solid customer loyalty based, in the case of soft drinks or foods, on the product’s taste.
They have established a reference point in the consumer’s mind. “If the new brand does not live up to that point, the question you have to ask as a consumer is ‘Are you prepared to sacrifice your money to make a political statement?’ The bottom line is that 99 percent of consumers are unwilling to do that,” the professor said. “They are unwilling to blame a brand for the foreign policy of the country in which the brand happens to be headquartered. That shows quite a lot of common sense.”
Many global brands such as PepsiCo have attempted to become good local citizens. They employ local people, partner with local franchisees, make an effort to contribute to the community in the country where they are. This reinforces brand loyalty indirectly as they raise the quality standards of brands and marketing in general in the economies where they are sold. “They provide a tremendous amount of ‘value added’ over and above just the product on offer being a good one.”
Professor Quelch had a word of caution to the multinationals: Do not engage in excessive localization. “Don’t let the fear that you are going to be, or actually are being, boycotted drive you to an excessive level of local accommodation that makes you less authentic as a global brand. One of things that consumers everywhere in the world really want is authenticity and honesty from the brands that they align with. It is impossible,” he went on to point out, “to hide the fact that you are American; you cannot get away with it. Attempting to hide diminishes part of what makes you a valued brand in the market place.”
Western brands that are well established in the Middle East are continuing with their marketing efforts. The last few years’ crises have discouraged new players from the West from entering some Arab and Muslim markets. Professor Quelch sees this as a reluctance to send out expat start-up teams and they are difficult to find. Some judge that the time is wrong — given the easier and rapidly expanding Asian markets. “Why invest in the difficulty in putting these brands into the Arab world, when other, less challenging fields are open?” he asked.
The trend toward more localization by global brands was taking place before Bush, Iraq and 9/11 as a result of both the economic recession that hit in about 2000, and the anti globalization sentiment that was the backlash due to the very successful worldwide market penetration that the Americans achieved in the 1990s. “After the fall of the Berlin Wall, there was an initial surge to globalization — they never had time to localize,” said Professor Quelch. “Hence the backlash at the end of the 90’s.” The pendulum has swung back to slightly more localization in terms of the way the multinationals approach the markets.
“This was happening before 9/11, and that is the whole point,” said the professor. “The notion that Iraq, Bush and 9/11 have created this swing to localization is completely wrong. It had already occurred and probably the fact it had occurred protected some of these brands from being hit a little harder in the post 9/11 arena.”
There is, he said, a window of opportunity for local Arab brands, in Saudi Arabia or the Middle East which have established a brand in one country, to move into the vacuum created by the reluctance of major players to become involved. Given the improvement in the economy, he sees the opportunity to move their brands into a regional presence.
“Now is the perfect time to occupy space that is being left unattended by second tier global players.”
