The phenomenon of foreign brands swallowing up established local labels to make inroads into the China market is coming full circle-Chinese brands are trying to employ the same strategy overseas, confirming that names matter.
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Marketing guru Al Ries said: “While we all want to believe that names don’t matter, that what really matters is the strength of our character and the quality of our product… The reality is that names matter enormously.”
Ries gained his fame by putting forward the positioning theory, which explains why some brands outperform their peers even if their products are of similar quality.
According to him, instead of focusing on the product per se, brands should be aware that consumers use categories to store brands in their minds, and the winning recipe lies in creating a new category and becoming the leading brand in that category.
Over the years, he has been delving into the art of names and how they can become a differenting factor in reshaping consumer minds and boost sales.
“Names can be persuasive and consumers assume names have literal meanings,” he said.
Agreed Xu Feifei, assistant partner at branding and marketing consultancy Prophet, who believed that a name is usually the very first thing people experience or encounter about a brand, making it perhaps the most important part of its identity.
“A good name is a one-second invitation, hooking consumers’ interest. It can be a preview of the brand’s promise, purpose and philosophy, or as simple as the name of its founder, communicating what a brand is to the consumers,” she said.
Ries pointed out that one critical barrier for Chinese companies to make a genuine global takeoff is their names, which are generally difficult to pronounce in countries that use the Latin alphabet.
“Today about 2.7 billion people, or 36 percent of the world’s population, use the Latin alphabet. So any brand that wants to become a global brand naturally has to use a brand name that will work in the English language,” he said.
But most Chinese companies use pinyin, or the official system for translating Chinese words into the Latin alphabet. He listed a number of pinyin translations that English-speaking population might find hard to pronounce: Xiaomi, Mengniu, iQiyi to name just a few, even though some of them have reaped initial gains in the global market.
Experts have mixed views on this issue. Xu said the competitive advantage in global markets does not rely only on the Chinese name but comprehensive offerings including products, services, and consumer experiences.
“Although pinyin may make some names difficult to pronounce for foreigners, Huawei is a good example how a strong brand with strong consumer experience and branding effort can cut through the clutter,” she said.
But other studies on brand awareness seem to echo Ries’ judgement. While revenue that Chinese brands gain from overseas has increased significantly over the past five years, Western consumers’ awareness of and familiarity with them remain relatively low, according to a research report from consultancy Kantar Millward Brown.
Few Chinese brands have achieved meaningful success in developed markets, the consultancy said. That is, competition against indigenous brands was not at parity or premium prices.
“For instance, Huawei’s cutting-edge phone, the P20, is up to 50 percent cheaper than Apple and Samsung devices,” said Tom Doctoroff, the chief cultural insights officer at Prophet.
“Chinese brands are still product-driven, as seen in the innovative yet discount-driven tech sector dominated by behemoths Alibaba, Tencent, Baidu and JD,” he said.
Ries believed that companies in China, Russia and other countries that do not use the Latin alphabet actually do have a real advantage when they go global.
“Since their brand names have to be changed anyway, they can use names that work much better on the global market than names that try to replicate the sounds of their brands,” he said.
A global brand does not necessarily have to be an English word, but it has to “sound right” in the English language, as in the case of Nokia and Sony. But being easy to pronounce is not the only requirement. Having the right connotations is critical too.
“Take Snow Beer, the largest-selling Chinese beer brand for example. While it is easy to spell and pronounce, nobody in the English-speaking world wants to drink ‘snow’, which means ‘frozen water’,” he said.
Ries believed that the secret to a successful brand name is to put the position of the brand into the brand’s name, as in the case of iPhone, which is reminiscent of “internet phone”, and Starbucks, a compound of the words “star” and “bucks”. The more connections any single word has in the mind, the more memorable that word will become.
Name is important because a good name can help create a category and help the brand secure the leading position in that category.
For example, many media outlets pointed out that Nikola Tesla invented many of the most-important electrical concepts, such as the alternating current, the electric motor and wireless transmission of energy. Therefore, the connection between the Tesla brand and Nikola Tesla could lock Tesla the brand, with electric vehicles, the category.
“But didn’t General Motors, Ford and every other major automobile company in the world also introduce electric vehicles? Sure, but they didn’t give them different brand names so consumers had no way of filing these names in their minds,” Ries said.
The inability to elevate products into brands capable of sustaining consumer loyalty at premium prices is handicapped by deep-rooted cultural and structural barriers, noted Doctoroff from Prophet, adding that empowered central marketing units must be forged to escape the downward pull of commoditization. (China Daily)