Executive Forum 2002
Managing Competitive Advantage:
The Values of National Strategy

SESSION 4 SUMMARY

Friday, 27 September, 2002

Session 4: Projecting Value: Is there a case for national branding? 

Session manager Morten Scholer, Senior Marketing Adviser at ITC, began by noting that with globalization, as more products and services are offered, they tend to become more uniform in quality design, price delivery, etc. As a result, you get information overload on almost similar products. “This makes country of origin a more decisive factor for buyers. Therefore, a good national brand or image has become a trade parameter of growing importance.” 

He defined national branding as establishing an image, both internally and externally for a country, based on positive and relevant values and perceptions. And emphasising that image when promoting trade tourism and inward investments. 

The two main groups involved are national strategy-makers and the companies who have to live with and adapt to the national image. 

Panel Chair David Syz, Swiss Secretary of State for Economic Affairs, noted that Switzerland’s image of quality and reliability had evolved from inside because Swiss had to become good technicians and inventors to survive. The country did not have a strategy to create a national brand – to promote its image – but it does have a commitment to maintain the brand the country now has. He advised that Switzerland had created an organization, Presence Suisse, specifically for this purpose. 

He stressed that 1) a national identity has to grow from inside, and 2) An image is easier to destroy than build up, as Switzerland had found in the case of Swissair’s collapse. 

Michel Ferla, Vice-Director of Switzerland Tourism, whose office is involved in rethinking Switzerland’s brand, said that tourism accounts for close to 7% of GNP and is the country’s leading employer. But there were now lots of competitors, who have become much more sophisticated. Customer care is part of brand building and maintenance. “We are not just selling a nation, but expressing a way of life,” he said. “We are transporting emotions to people.” As important as selling the nation, is to ensure that corporates maintain the country’s image of reliability and security. 

Ferla also said it was important to focus on what you have: “ You can’t be everything for everyone.” He also noted how Switzerland had been able to draw on the services of celebrities such as Michael Schumacher and Sophia Loren because of their past positive experiences with the country. 

Johannes Frey, Head of Corporate Affairs, Novartis, outlined how this leading Swiss pharmaceutical company had turned away from tradition (it was the product of a recent merger) refocused away from agricultural chemicals towards a more hi-tech approach. In terms of branding, the firm had focused more on developing its corporate citizenship approach said Frey. He noted that branding originally came from the stamping of ownership on cows: “It’s easy to put a label on a product; much harder on a service. Branding has to happen from inside out.” 

As Switzerland’s largest corporate (it is bigger than Nestle), Novartis also had to be aware of how its actions would reflect upon the country brand. Novartis aimed to position itself as a good citizen with society, governments, doctors, to overcome the stereotypes of the bad corporate/MNC, or the mad scientist meddling in genetics. “We needed to position ourselves in alignment with the positive stereotypes. We’re doing this from the bottom up, with written policies, explicit standards and independent verification.” 

Comments from Floor:

Nigeria: Commented on the big divide, probably created by the North, in terms of how developing countries were perceived. “ We need to change the brand imposed on us.”  

Syz responded: “You have to find your strengths and build up… it has to really come out of the country itself.” 

Pakistan: Commented that a country has limitation on how much it can regulate and how much it can control. We’ve got all kinds of suppliers, good, bad and indifferent. 

Syz responded that Switzerland had the same problems and that sometimes the government had to intervene, but that it was not done by regulatory means. Feria stressed the need for programmes to enhance quality and pride. 

Mexico: Commented that it was easier for developed countries like Switzerland. Many developing countries like Mexico had to first take care of people and their environment.  

Frey responded that countries cannot fight reality and stamp an image on top. You have to look at situation in your country. Syz added the importance of seeking the characteristics available to build on.   

Nigeria: Said much centered on standard and level of living. Countries that have excelled because your economy is performing well had no cause to resort to crime. Others had to deal with being associated with fraudulent emails, drugs and corruption.As long as these countries stay in the state they are, problems will persist, and the branding will remain as it is.  

Branding guru Wally Olins, Chairman, Saffron Brand Consultants, kicked off a lively second half with a presentation on brand building. He began by noting that, yes, there were brands strongly associated with countries, such as Mercedes and Germany, or Gucci and Italy, Sony and Japan. But there were also significant exceptions, such as Samsung, Daewoo and Hyundai, where, because there was a less clear image of Korea, the product brand predominated over the country. 

An even more strange case was Nokia. While Finland regarded it as being a representative brand, most of the world didn’t know where it came from or where Finland was. “The issues around nation and the brand, and what they do for each other, is perhaps a bit more complicated than it appears,” said Olins. 

Some brands – Scotch whiskey, Olive oil – were clearly identified with countries. Others, such as Orange mobile phone had gone through five different national ownerships over 10 years without affecting the brand identity because there were no national associations. And Bailey’s Irish Cream liqueur was in fact invented in London in the 70s, and had since spawned imitators worldwide. “It is increasingly the case in service brands, that the idea of associating country name and brand has no relevance.”  

Citing studies done on country and brand perceptions, Olins noted, that the reality was, in terms of perceptions, even when you think you know a country, you don’t. Perhaps only the US could be said to be known to everybody and to which everybody had some opinion. And the US provoked very confused responses, largely because it had made no attempt to try and create an image for itself that reconciled the various conflicting images.  

That wasn’t the case with most countries, he said, citing Honduras as one amongst many who for the most part were only perceived by their nearest neighbours. “A key issue is who are you trying to influence? Honduras may wish to influence its neighbours, but it can’t influence Saudi Arabia.” 

The key question to resolve is why there was need to create a national brand. Overt reasons included the competition factor: to win the war for tourists, inward investment and trade. And to gain political influence, or to influence other country perceptions especially when there had been changes, as in some of the former Soviet satellites now in transition.  

Olins noted that important elements in national branding included the existence of a loyal and emotional diaspora, such as in the case of Ireland. And inward investment did not always mean finding the cheapest factory, but often revolved around issues of distribution and market access.  

Tourism was a major motivating factor in branding. Now the world’s 4^th largest industry, and growing at 9% a year, tourism was frequently a commodity business. Most countries compete on sun, sea and sand. “If you sell a commodity there are no margins, so you differentiate on history, food, architecture, culture. If you’re going to price up, you have to use the national brand, otherwise you will be a commodity supplier.” 

Olins cited the example of Portugal, where his firm had drawn upon Portugal’s Atlantic-facing, more international outlook, to differentiate it from other southern European countries when it began to change in the 70s. It was important to seek out individual characteristics that could be identified and asserted. “We were able to change the nature of tourism market, focusing on historical and cultural issues, and change the profile quite markedly.” 

The most successful example of national re-branding was Spain, he said, which in 1975, was still a totalitarian, autarkic (enclosed economic system) and poverty-stricken nation. “What happened? Because Spain joined the EU in 1986, it had a number of years in which to become competitive,” said Olins. Key to Spain’s experience, he said, was to understand that while governments later claimed credit for its transformation, the reality was that an atmosphere of change developed, drawing on everyone from engineers to film-makers.  “It wasn’t created by government decree, but rather people, who felt the spirit of the time. Changes were individual to them, but recognisable as Spanish. So yes, there was a kind of plan, but it was mostly informal, quite unorthodox and consensual arrangements that did it.”  

Are you ready? It was important to make sure that perceptions and reality matched, he said. “If your reality is not worth talking about, do not start promoting. A lousy low profile brand is better off than a lousy high-profile brand.”  

How to begin? Once you’ve decided the time is right, you need to set up a working party including politicians, civil servants, industry, media, artists and educators. And sport was the most powerful medium for conveying national imagery. It was also important to have an outside consultant, to help manage internal arguments. 

“You have to identify and define your critical audiences internal and external.” Olin suggested first influencing your own nation, second immediate neighbours, third intra-government bodies. By going through the process, audiences will define themselves. It was also important to check on how the nation is actually perceived, both through qualitative and quantitative surveys.  

The core idea: You have to create the core idea from which the entire programme can be developed. There is inside every nation a unique individual idea, he said. “Find out what you’ve got that makes you different. Then perhaps you have to maybe create something, a building, an idea, a university, a something.” 

Coordinate the messages: Tourism, investment people, exporters, have to understand they have to use the core message to articulate their view of the national identity to their own audiences.  

Differentiating the message: In terms of differentiating the brand for different audiences, Olin said that there could be considerable overlap. Once the core idea had been developed, it could be modulated  for each audience. “Create a visual idea, which you can also put into words, which encapsulate what the nation stands for in different circumstances. On the basis of that framework, you can communicate in different ways, recognisably for a different audience, but also recognizably what that country represents, using typefaces, recurring words, images etc. 

Management: This is not three minute stuff, it is very long term, he said. “Governments are very short term, and there are no votes in it. You have to create a structure that is going to be there when this government falls and the next government comes, that coordinates by a secretariat, funded by all. Do not let government run it, because when the government turns it will die.” 

Comments from Floor: 

Sri Lanka: Please elaborate on structures.

Olins responded: First, aggragate what the current institutions are spending: airlines, exporters, investment people, trade people, embassies etc. “In my experience, the figures involved are quite staggering. There is almost always enough money to do what is needed.” Only advertising tended to be high budget and this was often simply an ego trip. Small countries, could construct a framework in three hours in a  room. Others could take months or years. Countries with high levels of regionalization could be difficult. Do not let government get too involved. 

Teresa Houston, Scotland the Brand: Commented that Scotland was lucky, in having a whole range of brands and images and icons. It’s one of the easier countries to brand, and the images tend to be on the positive side. We are very much building fairly high value, premium brands and we need to protect that. In contrast to the Swiss approach, we are regulating use of the brand. But although we can lay down a criteria, it is more difficult when you’re dealing at an emotional level. But she stressed that one of the things we didn’t do at the beginning, and should have, we didn’t sell it sufficiently internally. Now after seven years we’re realizing we have to sell it to the Scots, to ensure that when people come in, the country is living up to the very high perception. 

St Lucia: Commented that it was difficult for very small nations such as St Lucia, to claim brand recognition for West Indian styles and tastes adopted abroad.

Olins responded: Think about branding “the original. Authenticity can be a valuable commodity in certain types of marketplace, especially premium marketplaces.”