How much does the ‘Made in…’ tag matter?

 

Around the world:

An extract from a Nielsen study on perceptions about brand origins and how they shape purchase intentions

 

• Nearly three-quarters of global respondents, on average, say brand origin is as important as or more important than nine other purchasing drivers, including selection/choice, price, function and quality.

 

• There are exceptions to every category and in every country, but preferred brand origin for major product categories are generally grouped as follows:

 

GLOBAL

::   Baby diapers

::   Personal/beauty care

::   Carbonated beverages

::  Cars and electronics

::  Cigarettes

 

LOCAL

:: Fresh foods

:: Packaged foods/snacks

:: Carbonated beverages

::  Juice/water/milk

 

MIXED

:: Baby food/formula

:: Home-cleaning supplies

:: Alcoholic beverages

:: Pet food

 

• The top reasons for choosing a brand are the same for both global and local brands: better price/value, positive experience with the brand, safer ingredients and processing, better product benefits, and sales/promotions.

 

• Nearly six in 10 global respondents (59%) say they buy local brands because they support local businesses, with sentiment highest in North America (65%). Developing-market respondents are more likely than their developed-market counterparts to say that local brands are more attuned to their personal needs/tastes and that global brands offer the latest product offerings/innovations and are of better quality.

 

• When it comes to online shopping, global respondents are more likely to seek out global brands for durable and electronic products and local brands for consumable products.

 

Over the past few decades, companies in search of new growth opportunities expanded beyond their borders to find a world of new consumers eager to try their brands. French retailer Carrefour, for example, started with a single storefront in 1958 and now operates stores in more than 30 countries, including Brazil, China and Indonesia. Likewise for U.S.-based Walmart, which now has stores in 27 countries. And some companies reach consumers in virtually every corner of the world: U.S.-based Procter & Gamble sells brands in more than 180 countries, and Japanese automaker Toyota sells vehicles in more than 170 countries.

 

The entry of multinational companies (MNCs) into new markets—while a boon for local consumers who gain access to a greater range of products—can sometimes cause the demise of local companies, which are suddenly faced with daunting foreign rivals that have an array of advantages, including vast financial resources, diverse talent pools and sophisticated technology infrastructures, supply chains and operating practices.

 

But just as David slew Goliath (not the other way around), many local companies have not only survived the multinational competition, but thrived. Indeed, some local companies’ flexibility and agility, as well as their superior grasp of the domestic operating environment, have propelled them past their global rivals. For example, in the Philippines, Jollibee has a greater share of the fast-food market than McDonald’s and has expanded to become a multinational company, operating restaurants throughout Southeast Asia, the Middle East and the U.S., while Mexico-based Bimbo not only edged out other on-the-ground rivals but expanded beyond their border to become the largest baking company in the world. And in China, whose Haier has long been the world’s leading manufacturer of a range of large appliances, not only is Huawei gaining share in the country’s midrange and high-end smartphone market, its telecommunication devices are gaining a stronger foothold in the global market.

 

All of this cross-border expansion, however, has greatly complicated traditional definitions of country of origin. Some iconic “local” brands are actually manufactured abroad, while some foreign brands have built a manufacturing presence in local markets. And some global brands have been in a market so long that many consumers actually perceive them to be local. Nonetheless, brand origin can be an extremely valuable asset for both global and local companies.

 

“One of the more surprising findings from the survey is that country of origin is as important as—or even more important than—other purchasing criteria such as price and quality,” said Patrick Dodd, president, Nielsen Growth Markets. “In a crowded retail environment, brand origin can be an important differentiator between brands, but sentiment varies by category and by country, and leveraging a powerful brand presence needs to be managed carefully regardless of whether it is global or local. Ultimately, the brands that deliver on a strong value proposition and connect personally to consumers’ needs will have the advantage in any given market.”

 

The Nielsen Global Brand-Origin Survey polled more than 30,000 online respondents in 61 countries to understand consumer sentiment about product origin across 40 categories, from consumables to durables. We examined whether consumers prefer goods produced by global/multinational brands (defined as those that operate in many markets) or by local players (those operating only in a single market—the respondent’s home country). While respondents were asked to consider these definitions in their selections, preexisting notions about brand origin could prevail—a global brand might be so pervasive in a local market that a respondent may think it is a dominant local brand. We also explored the factors driving brand preference and the role of the Internet in purchasing decisions for local and global companies. Finally, we examined what local and global players can learn from each other, so we can offer insights into how each can succeed in the changing retail landscape.