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The Global Brand Face-Off by Anand P. Raman

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Should Espoir take its new branding initiative global?

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The Global Brand Face- Off by Anand P. Raman

harvard business review • june 2003 page 1

HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts.

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Espoir Cosmetics wants to make a big splash with a new global branding initiative. What should headquarters do when a country manager says his market will never go for it?

Natasha Singh was amused to see almost every guest at the black-tie gala sporting the same fu- turistic sunglasses. It was past 10 pm in Los An- geles, and the party to celebrate the release of the summer’s most anticipated movie, The Grid Revisited, was heating up. Earlier that evening, a select audience had watched the long- awaited sequel to the 1998 blockbuster The Grid, and the scene-stealers had once again proved to be the lead pair’s eyewear. In fact, there had been a near stampede when the invi- tees realized that each of the goody bags of TGR memorabilia contained a pair of the new shades, designed by the legendary Tom Strider.

Singh, the executive vice president and glo- bal marketing officer of one of the world’s best- known cosmetics companies, $1.1 billion Espoir Cosmetics, rarely found the time to attend such events. When she wasn’t visiting one of the 75- odd countries where the company marketed lipstick and nail polish, she liked to spend time

with her husband and 12-year-old daughter. But her friends at Supreme Studios, which had pro- duced the blockbuster, had insisted that she should attend, along with Espoir’s chairman and CEO, Ed Johnson—and Tasha knew why.

Just as she had given up hope of spotting her boss in the melee, she heard his deep baritone behind her. “There you are. I knew I’d eventu- ally find you,” Johnson called out. As she turned to greet him, Singh was surprised to see Johnson triumphantly brandishing a pair of Strider shades. Noticing her expression, he chuckled. “My son, who’s studying Spanish in Peru this summer, wanted them. You gotta hand it to this guy Strider, eh? He’s got a global cult following for his product, thanks to some sci-fi movie” Johnson said as he looked around the crowded ballroom.

Singh couldn’t have asked for a better cue. She grabbed two flutes of champagne, handed one to Johnson, and determinedly steered him

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The Global Brand Face-Off•••HBR CASE STUDY

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to a deserted alcove. “Ed, I want to bounce an idea off you, and it can’t wait. I started talking to some people at Supreme Studios six months ago, and they’ve offered Espoir the cosmetics sponsorship for the second Diana’s She Devils movie.”

“Is that why those folks were so keen to have me come here tonight?” asked Johnson, his eyebrows shooting into his hairline.

“They’d want you here anyway, I’m sure. But it’s true they’re looking for a decision. And I’d love to ink the deal soon,” replied Singh en- thusiastically. “Diana’s She Devils was a hit two years ago, and our research suggests that the sequel will probably be an even bigger draw. There are more romantic elements in it, by the way. Most important, I’ve seen the studio’s publicity plans. They’re huge. And we can asso- ciate Espoir’s new summer line with the release all over the world.”

“We’ve been offered deals like this in the past” Johnson pointed out. “But we never thought it was worth the money. And particu- larly if it’s only our summer products range—”

“Here’s why I think it’s right for us now” Singh cut in. “First we should be doing some- thing splashy—next year is our 50th anniver- sary, after all. Second, this is an ideal vehicle to launch a global brand-building strategy. Think about it, Ed. The three stars are from Europe, Asia, and South America—our fastest-growing markets. And they’re all on board for the se- quel. What if we created three new lipstick and nail polish combinations, in the right palette for each of the three stars, and then associated the stars with the advertising? As the film gets released in each country, we can launch the new products in specially designed combination packs.”

“And call it Espoir’s anniversary line” Johnson chimed in. “Interesting. But where does the money for the promotion and the re- lated advertising come from? I don’t think you have enough in your budget.”

“I don’t” replied Singh her nose wrinkling slightly. “But I know where to find it. I had lunch last week with Brian Davis.” She was re- ferring to the marketing head for North Amer- ica. “He loved the idea. As he sees it, two of the stars also happen to represent big ethnic mar- kets in the U.S., so he’s more than willing to foot some of the bill. Now I just need to get the other regions to chip in, which shouldn’t be so hard.”

Johnson frowned. “I wouldn’t be too sure about that,” he said slowly. “If the recession in the U.S. gets any worse, and it may, I’ll have to cut marketing budgets again. In that case, the country heads will have little left for local ad- vertising or promotion initiatives after paying for your global promotion. They aren’t going to like that very much, and they’ll blame you if they don’t meet targets. If I were you, I’d check with the regions before going any further.”

“Well, I’m off next week to Europe and South Asia, so I’ll sound them out in person” said Singh, a trifle defensively.

“Good” said Johnson, ushering Singh back into the thick of the party. “Let’s talk when you get back.”

Je Reviens As the airplane rose into the bright blue sky over Paris, Singh’s spirits soared with it. She pulled out a laptop to write up her notes on her discussions with Jacques Dubois, Espoir’s newly appointed marketing head for Europe. Belying her apprehension, the young French- man had warmed to the idea of a big movie- based promotion to mark the company’s golden anniversary. He admitted that Espoir’s archrival, Revlon, had boosted top-of-mind awareness by tying in with movies like the 2002 Bond film, Die Another Day, and he was ready to fight fire with fire.

A flash of European pride had, however, showed itself when Singh mentioned her wish to set up a central Web site t hat would allow people to buy customized products from Es- poir. She wanted to test the initiative first in North America and extend it to Europe once the logistics were in place. “That will not work. A Web site for European customers must have a different look and feel from the American site. It should also have a different name if it is to appeal to them” Dubois had immediately declared.

Although Singh had agreed to think about it, she wondered if the possibility that he could be wrong ever crossed Dubois’s mind. Now, re- flecting on that moment of irritation, she couldn’t help but smirk; that must have been how she had seemed to her own colleagues back in 1994. After all, she’d been more than a little self-confident when she took over as the company’s marketing head in India. Espoir, which sold a wide range of cosmetics and ac- cessories, was the leading mass-market brand

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The Global Brand Face-Off•••HBR CASE STUDY

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in North America and Western Europe. De- spite the global cachet and the pent-up de- mand for foreign cosmetics, however, the company had been unable to make any head- way in the competitive South Asian market.

When Singh was being interviewed for the job in Delhi, she had been quick to point out why. “I can get a facial for Rs 300 [$6.66] and a manicure for Rs 75 in a beauty parlor. Why would I pay Rs 120 for a lipstick or Rs 75 for a nail polish?” she demanded. Although the comment annoyed the multinational’s top brass, they gave her the job. Those had been heady days, recalled Singh, who had cut her marketing teeth at two British multinationals in India after graduating from the prestigious Indian Institute of Management at Ahmeda- bad. She had slashed product prices, reduced pack sizes, and used, for Espoir, unusual retail- ing tactics. For instance, since there were no chains like CVS and Walgreen’s in India, Espoir had been selling its products only at the hand- ful of department stores in the four largest metropolitan areas. So Singh reduced prices and sizes and made sure Espoir items were available in all the hole-in-the-wall grocery stores in the cities and, later, even many of the towns. Espoir couldn’t use large counters in those stores, so trays of lipsticks and nail pol- ishes were placed invitingly near the cashiers. That was a tactic Espoir’s top brass hadn’t even considered. In five short years, the company became one of the market leaders in the In- dian market.

Johnson was so impressed by Singh’s perfor- mance that after three more years he offered her the newly created position of global mar- keting officer. By that time, Espoir’s sales were growing faster in Western Europe, Asia, and South Asia than in North America. “We need to develop a more cohesive brand identity by coordinating local strategies and find a way of leveraging synergies across markets” Johnson said at the time of her promotion, about a year ago now. “You’re in an ideal position to do that, because people respect you—but they also know you’ll be sensitive to local issues. The job might not win you any popularity con- tests, but I know you’ll get it done.”

The announcement that the aircraft was be- ginning its descent into Kiev’s Boryspil Airport interrupted Singh’s reverie. As she leaned for- ward to look down at the Dnieper River, she wondered how her old colleague in arms, Va-

sylko Mazur, the head of Espoir’s operations in Eastern Europe, was faring. They had first met five years ago at a leadership training program in Los Angeles and had spent some long eve- nings sampling California wines and griping about top management attitudes toward devel- oping markets. They had stayed in touch until recently. Singh realized that Mazur had dropped out of sight after taking over as the head of Espoir’s Eastern European operations six months ago. It would be good to talk to him again, she thought as she fastened her seat belt.

An Ugly Wrinkle Kiev was glowing green and gold at the end of a perfect summer day. The gilded tower atop St. Sophie’s Cathedral cast burnished shadows on Mykhailiwska Square, a short distance from Espoir’s offices. But neither Singh nor Mazur noticed. They had been at each other’s throats from the moment she broached the idea of a global promotion.

“Vasylko, you are being entirely unreason- able” said an exasperated Singh.

“Me? Or you?” retorted Mazur, puffing furi- ously at the cigarette that never seemed to leave his lips. “Tasha, you don’t realize how dif- ferent Eastern Europe is from the rest of the world. Movie-based promotions won’t do any- thing for my sales. We are in the beauty busi- ness, not the movie business.” He tried again to convince Singh that appointing beauty queens like Miss Russia and Miss Ukraine as brand ambassadors would strike a chord with customers in Eastern Europe. Not only would it be cost-effective, it would also allow Mazur to create a contest-based promotion. “Custom- ers will write in with suggestions for new col- ors, each beauty queen will pick her favorite, and there will be lots and lots of prizes. You, of all people, should know what I’m talking about” he said pointedly.

Singh winced. Her rows with Espoir’s head- quarters were part of company folklore. She had insisted on launching nail polish in eight- milliliter bottles (price: Rs 35) in India rather than the standard 12-milliliter bottles (price: Rs 75). That would encourage customers to sample, she argued, and allow Espoir to take on the local market leader, which sold a 12- milliliter bottle for Rs 30. “You do know that we have sold our products in only one size all over the world” she had been told initially. The

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The Global Brand Face-Off•••HBR CASE STUDY

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Anand P. Raman is a senior editor at HBR. Write to araman@ hbsp.harvard.edu.

next year, Singh had insisted that Espoir create a range of products in purple because that had been the rage in traditional Indian dresses like the sari and the lehnga that year. The palette was alien to Espoir, which usually stuck to beiges and reds, but it did wonders for the brand in India.

“Vasylko, you are being unfair. First, I did all that ten years ago,” argued Singh. “It was a dif- ferent world then, and India was different, too. Second, I’ve stayed away from beauty contests because they are off brand. The Espoir woman is smart, independent, a risk taker. She doesn’t identify with pageant queens. Third, I’ve cho- sen colors for the global promotion that will work in Eastern Europe. If you won’t believe me, test-market them yourself, and I’ll be re- ceptive to any changes you can show me we need.”

“You should hear yourself talk” scoffed Ma- zur. “Do you remember how we used to mock HQ, saying how little it knew of our countries? You now sound like an HQ person, who can only see the logic of creating a global brand, using a global campaign, and sticking to a glo- bal positioning. Very little of that works here! You must let me handle the market the way I think best. Did a global strategy work for you in India? If it didn’t, how can you try to sell me one now?”

“Because a global strategy can work, in India and in Eastern Europe, too,” Singh shot back. “Do you remember Operation Second Coat, which I spoke about at our annual con- ference three years ago? We had to launch glo- bal colors in India because our customers started asking why they weren’t available. We used those products to segment the market and shifted many customers from a less expen- sive local line to a more expensive interna- tional range. By the time I left, we were increasingly using global ad campaigns. I’ll admit we modified them sometimes, but they were essentially—”

“That’s not what you used to say” Mazur in- terrupted, grinding his cigarette into an over- flowing ashtray. “In any case, I want no part of your global promotion. It smacks of a narrow vision, and there is no scope to adapt it for this market. Moreover, the promotion will eat into my marketing budget, and I cannot afford that. I need to be quick, tactical, and responsive to local needs, and your templates and rules about standardization only slow me down. I

will worry about being in sync with the global brand after Espoir has become the market leader in Eastern Europe.”

Cosmetic Differences The weekend at her parents’ farmhouse on the outskirts of Delhi was a welcome break for Singh. Family gossip relegated the tensions of Kiev to the back of her mind and helped her recover a little from jet lag.

As she walked briskly into the glass-and- concrete tower that housed Espoir’s India of- fice in the city of Gurgaon, near Delhi, on Monday morning, Singh literally bumped into Ravi Narayan, who had taken over from her as the head of South Asia marketing. “Good job on the signage at the airport, Ravi,” she said enthusiastically. “I saw the new backlit signs at JFK and Charles De Gaulle, and it’s great to see them at Indira Gandhi International too. How are we doing?”

“Not badly” Narayan replied as he escorted her to the 20th-floor conference room that served as Singh’s office when she was visiting. “Our market share rose by two points last quarter. However, the market isn’t growing as fast as I thought it would. In addition, competi- tion is getting stiffer since several Asian brands have launched their products in India in the last six months. Local brands are offering large discounts, and direct marketing in cosmetics is catching on. It’s a cruel market.”

“Is that putting pressure on prices?” Singh asked immediately.

“No” replied Narayan. “We’ve managed to hold prices until now. In fact, our premium line is doing quite well in the metropolises. Many more department stores have opened in the last 12 months, and that has eased the re- tailing bottlenecks.”

“I was amazed to see two more department stores in this area since my last trip” agreed Singh. “I went to one over the weekend and felt I was already back in L.A. Almost every big American brand seems to be available here now.”

Narayan laughed. “That’s nothing, Tasha” he said. “You should see how things are chang- ing beyond the big cities. A couple of months ago, I went on a market reconnaissance trip to Chandigarh and decided to drive the 260 kilo- meters there. I couldn’t believe my eyes. All along the way, I saw farmers using cell phones, there was an Internet café every two miles, and

“Your global promotion smacks of a narrow vision, and there is no scope to adapt it for this market. Moreover, the promotion will eat into my marketing budget, and I cannot afford that.”

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The Global Brand Face-Off•••HBR CASE STUDY

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rooftops were crowded with satellite televi- sion dishes. Almost every town I drove through had billboards for Cosmo, Elle—or Friends!”

“What does that mean for us?” asked Singh, all ears now.

“I suspect consumer habits are changing faster than we imagine” replied Narayan. “I stopped at a gas station in the small town of Shahabad and checked out a nearby grocery store. The shop counter was full of trays con- taining cosmetics, and I counted at least three local brands and two global brands, including Espoir. Two teenagers were looking for a nail polish but couldn’t find what they wanted. They kept asking for the latest color that they had seen advertised on an English serial the previous evening. The shopkeeper had to promise to order it for them before they would go away. What struck me later was that not once did the girls ask how much the latest nail polish would cost.”

“I guess the cost-benefit equation in towns works closer to the way it opertes in cities to- day” suggested Singh. “All our customers want to be, for want of a better phrase, with it. Ear- lier, the point of reference used to be the near- est big city; it’s the world now. Don’t forget that the 100-odd satellite television channels we receive in Delhi are available in small towns, too. The Internet allows people to ac- cess information about the rest of the world from anywhere. People are traveling abroad much more than they used to. That’s why I’ve believed for some time that we can afford to be more global in our approach to markets like India.”

Narayan shot Singh a wary glance. “That’s tricky. A global strategy will resonate in India in some cases, but I doubt if we will be able to do away with local marketing initiatives. There are large income differences in India, and it all depends on the market you want to tap. More- over, it’s tough to overcome cultural differ- ences. You’ve lived in the U.S. for over a year, but that’s tea you’re drinking—not coffee. In any case, what do you have in mind?”

Hope Springs Eternal Three days later, Singh walked into Johnson’s penthouse office suite in Espoir Tower in downtown Los Angeles. She handed him a box of the champagne-filled truffles from Paris that he loved.

“That means trouble” groaned Johnson in

mock despair. “By the way, the Supreme Stu- dios people have been hounding me in your absence.” He popped a chocolate into his mouth and commanded: “Talk.”

“I’ve had mixed reactions to the global pro- motion. Dubois was supportive, Mazur hated it, and Narayan was willing to give it a shot” Singh reported.

“Really?” Johnson asked. “I thought India would be the least interested in a Hollywood film-based promo. Aren’t Bollywood films more popular there?”

Singh snorted. “Last year, Bollywood had just one hit while Hollywood had six hits at the Indian box office. Spider-Man, Harry Potter, Lord of the Rings, et cetera, et cetera, et cetera—they all made more money in India than Bollywood productions.”

“Interesting” said Johnson. “What’s changed?”

“For one thing, the international studios have improved the dubbing of English movies in local languages” Singh explained. “And im- port regulations have eased, so films can be re- leased in India a lot faster, sometimes within days of the U.S. release. Basically, people like good films regardless of where they’re made. So tying in with the Diana’s She Devils project makes sense for India—and most of our other markets, too.”

“But not everyone agrees?” asked Johnson. “No” sighed Singh. “And of course I see

why. Every country head believes his or her country is unique. And it’s risky for them to pin their hopes on a global promotion when they’ve never done so before. But what’s the point of doing business in a global marketplace if we don’t leverage the opportunities that glo- balization presents?”

“Let me play devil’s advocate for a moment. Most companies I’ve seen try global game plans have failed at them,” cautioned Johnson. “The global tactics tend to either over stan- dardize or oversimplify, and they discourage local innovation. What’s more, I’m not sure our brand has the same image all over the world. Why should we waste money on a glo- bal campaign that may end up confusing our customers?”

“We will save costs by building brands through global strategies and allowing local ini- tiatives to drive sales” Singh pointed out. “Most managers concede that the quality of campaigns we produce is better than those done locally.”

“A global strategy will resonate in India in some cases, but I doubt if we will be able to do away with local marketing initiatives. It’s tough to overcome cultural differences.”

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The Global Brand Face-Off•••HBR CASE STUDY

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“I need to see some research to prove that a worldwide initiative will save Espoir money. Barring a handful of exceptions, I have yet to see global projects generate economies of scale” Johnson said. “There are also organiza- tional issues. Who will take responsibility for the success of the anniversary line after its launch? You? Or the regional heads, who fol- low your dictates without conviction? The pro- motion won’t be a success if it proceeds on autopilot.”

“Those issues can be worked out. In fact, I’ve been meaning to talk to you about the kind of global-brand team we need to have” said Singh. “But we should go ahead with the movie tie-in. At best, it will reinforce the brand’s equity. At worst, we will learn some les- sons about where global promotions don’t work. Since the initiative will boost sales in North

America at least, what do we have to lose?” “Vasylko Mazur, for one,” said Johnson som-

berly. “After your visit to Kiev, he wrote to me. He’s pretty upset at the prospect of our trying to control his marketing strategy.”

“Are you saying he’s threatened to put in his papers?” asked Singh, startled.

“It was more than implied. But look, I only mention it because it raises the larger issue. How hard should we be pushing a global strategy?”

Should Espoir take its new branding initiative global?

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