La presentazione della dott.ssa Panajia tratta del Global Branding, dei relativi rischi e opportunità che un’impresa transnazionale (Transnational company) incontra nella sua gestione.

1. Global Branding
Chances and risks for a Transnational company
Mara PANAJIA
Roma, May 7th 2008

2. AGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion

3. AGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion

4. Who’s
A more than 130 years old,
German “family owned”,
chemical company, making
business in 125 Countries
with more than 50.000
people employed and 10.000
products.

5. Henkel Headquarter
Düsseldorf-Holthausen

6. Henkel Worldwide
• Sales 13,074 mill. euros • 52,300 employees • 125 countries

7. Fiscal 2007
13.1 bill. € 1.3 bill. € + 15.4 %
Sales Operating profit Return on capital
(EBIT) employed (ROCE)
Organic sales Earnings per
growth Net earnings preferred share
+ 5.8 % 941 mill. € + 7.5 %

8. Our Vision
Henkel is a leader with brands and technologies that
make people's lives easier, better and more beautiful.

9. Three Areas of Competence
Laundry & Cosmetics/ Adhesives
Home Care Toiletries Technologies
Quality with Brands & Technologies

10. AGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion

11. GLOBALIZATION: necessary?
Globalization
Business Business opportunity &
necessity economies of scale
Technologies Laundry & Home Care
Cosmetics/Toiletries
Consumer Adhesives

12. A „Road Map“ On Global Branding
Conflicting
Marketing Targets
• Market Penetration
• Economies of Scale

13. Market Penetration:
Objective: Increase of sales and Market Share
How:
maximizing penetration (reaching as many households as
possible)
maximizing loyalty (keeping as many households as possible)
closing „white (regional / local) spots“
THE „OUTSIDE-IN“ VIEW (Consumer Orientation)
Need for differentiation

14. Economies of Scale:
Objective: Profit increase
How:
maximizing cost efficiency through integration (in design /
advertising / brand / production/ ...... etc.)
minimizing diversity (e.g. going for the smallest number of
brands and SKUs as possible)
Applying Euro learnings (knowledge transfer)
THE „INSIDE-OUT“ VIEW (Company Orientation)
Need for standardization

15. A „Road Map“ On Global Branding
Conflicting
Marketing Targets
• Market Penetration
• Economies of Scale Basic Strategies of Euro-
pean Marketing Operations
• Standardization
• Differentiation

16. How to Make the Right Choice?
There is a perceived dilemma between standardization and
differentiation - entailing different branding strategies.
In order to obtain further evidence in favor of one of the
alternatives we look at:
» the CONSUMER
» the TRADE
» the COMPETITION

17. Consumer:
NO EURO/GLOBAL CONSUMERS!
Purchasing Habits
– normal powder vs. compact powder
– powder vs. liquid detergent
– bleaches (Northern Europe vs. Southern Europe)
– fabric softeners
Usage Habits
– washing temperatures
– washing machine equipment
– fragrance preferences
– per capita volume
– dryer‘s penetration
Need for differentiation

18. The European Trade:
Euro Accounts represent 50% of turnover
Top 10 trade between 50% (I) and 90% (F) of retail turnover
Acquisitions and fusions
Need for standardization

19. Competition:
Different importance of Private Labels in various European
countries
In Western Europe: 5 competitors with more than 33 HDD
brands
In no (!) European core country (i.e. UK, E, F, I, D) same top 3
competitors
Need for differentiation

20. A „Road Map“ On Global Branding
Conflicting Conflicting
Marketing Targets Marketing Factors
• Consumer
• Market Penetration • Trade
• Economies of Scale Basic Strategies of Euro- • Competition
pean Marketing Operations
• Standardization
• Differentiation

21. Branding Strategies:
The Big Soapers
• Global
move towards a reduced portfolio of global brands with identical
features to maximize efficiency (globally fixed strategy)
Example: P&G / Lever
• Multinational
exploit existing local brand heritages to secure current market
penetration (locally fixed strategy)
Example: Benckiser
• Transnational
maintain a balanced portfolio of global and local brands to exploit
economies of scale while securing market penetration; migrate towards
a global portfolio (glocally adaptive strategy)
Example: Henkel

22. A „Road Map“ On Global Branding
Conflicting Conflicting
Marketing Targets Marketing Factors
• Consumer
• Market Penetration • Trade
• Economies of Scale Basic Strategies of Euro- • Competition
pean Marketing Operations
• Standardization
• Differentiation
Henkel Strategy
• Euro-Model
• Euro-Organization
• Euro-Systems
• Euro-Culture

23. Branding Strategies
Standardization
Low-cost- Close to
production consumer
Low think
act Flexible
complexity
Roll-out of
GLOCAL
LOCAL
GLOBAL
response
Regional
concepts/ market
speed penetration
Differentiation

24. The Henkel Strategy:
„Glocally Adaptive“
Grow existing global brands.
Maintain existing national brands - strive to globalize
whenever appropriate (adaptive).
Create economies of scale with existing brands by
successively harmonizing technical product features
(adaptive).
Build new global brands.

25. AGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion

26. TWO EXAMPLES:
1. Convergence Plan of Hand Dish Washing Category
2. Nelsen acquisition from P&G in Italy

27. Why HDW category:
Fully penetrated in all western countries (>90%);
Huge business dimension;
Despite of being a quite “simple” and “standardized”
product, consumer’s habits differ from country to country;
Battlefield for all international players (Henkel, Colgate, RB,
P&G, Unilever).

28. CONVERGENCE PLAN HENKEL HDW
Background and general objective
Henkel HDW-brands are to a great extend acquired brands
with different histories.
All brands have already a patrimony in degreasing, so it
has been chosen as common positioning for the brands.
Since this proved to be feasible, it is felt possible to
converge the different elements of the marketing mix to
achieve a more efficient steering of Henkel’s HDW category.

29. CONVERGENCE PLAN HENKEL HDW
Ex ante portfolio situation

30. CONVERGENCE PLAN HENKEL HDW
Philosophy
Harmonize as much as necessary,
as less as possible.
“Avoid harmonization simply for pleasure
to fulfill with crosses Excel sheets”
G. Archi – Henkel International Management Conference ‘03

31. CONVERGENCE PLAN HENKEL HDW
Strategy
Alignment of the different European Brands towards one “Euro-
Brand” on the base of the HDW Positioning System.
This has been done by:
taking from already existing country solutions (i.e. Vinegar)
development of new “Euro- solutions”
National brand names didn’t have to change!!!

32. CONVERGENCE PLAN HENKEL HDW
European Core Variant Portfolio
OLD NEW

33. CONVERGENCE PLAN HENKEL HDW
Standardization vs Differentiation
Standardized Differentiated
Brand Name X
Subname X
Concept X
Pay off X
Positioning X
Communication X
Product Texture (additional RW) X
Aesthetics
- bottle shape X
- logo X
- lettering X
- caps X
- background X
- key visual X
- colour of the product X
Formula
- base X Convergence of the different
- perfume X
national brands into a
EURO-brand respecting
- active ingredient content X
Format X
Absolute Price level X localities.

34. CONVERGENCE PLAN HENKEL HDW
145
Financial Development HDW Category 139
125 NES
115
109
100
146
130
123
120 C1
100 111
146 162
120 123 133 C2
100
1 2 3 4 5 6
Source: internal figures – index 100 year 1

35. NELSEN ACQUISITION IN ITALY
Nelsen history
1968
Launched by Melli family (local entrepeneur);
positioning: -> FAST & EASY CLEANING
-> MILDNESS
1989
Acquired by Procter & Gamble
positioning: -> GREASE CUTTING POWER
-> MILEAGE (value for money)

36. NELSEN ACQUISITION IN ITALY
Melli Family Age
12,0
10,9
10,0
8,0
6,2 Nelsen
6,0 brand
Core
variant
4,0
2,0
0,0
'83 '84 '85 '86 '87 '88 '89
Just one SKU, the Core variant.
Value market share constantly declining.
Source: Nielsen/IRI Audit

37. NELSEN ACQUISITION IN ITALY
P&G Age
18,0
16,0 14,9
14,0 12,8
12,0 11,7
Nelsen brand
10,0
9,7 Core variant
Perfumed
8,0 Antibacterial
Concentrated
6,0
4,0
2,0
0,0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Top result in 1997, then decline for both Core and Perfumed
variants, while Concentrated disappear.
Source: Nielsen/IRI Audit

38. NELSEN ACQUISITION IN ITALY
P&G ADV Investments
5.000 18
4.500
14,9 14,9 16
14,3
4.000 14,6
12,9 14
3.101 4.058
3.500 SOV 49%
SOV 42% 12
3.000
2.218 10 Media
2.500 SOV 22%
1.994
investments
SOV 28% 8 Mkt. share
2.000
6
1.500
1.000 457 4
SOV 6%
500 2
0 0
1995 1996 1997 1998 1999
Market share poorly reactive to ADV investments
-> limited potential for such a positioning?
Source: Nielsen NASA/IRI Audit

39. NELSEN ACQUISITION IN ITALY
Strategic Issues
Why P&G sold Nelsen Why Henkel bought Nelsen
Focus on global brands To reach 2nd position
(DAWN for hand dish). in the Italian market and
reinforce leadership in Europe
Focus on concentrated
products (whilst Italian
market is 96% diluted). Henkel’s competence in
both diluted and concentrated
No alignement to Euro- products.
pean price harmonization.
LACK OF STRATEGIC FIT STRATEGIC FIT!

40. NELSEN ACQUISITION IN ITALY
Challenges for Henkel
Increase the brand profitability at Henkel’s standards.
Manage two brands in the market (Nelsen and Dixan Piatti).
Reach a continous and profitable growth for the HDW
business in Italy, using Henkel know how.

41. NELSEN ACQUISITION IN ITALY
The new Marketing Mix
Superior aesthetics (new perfumes,
PET bottles, labels)
Superior performance (SAS vs LAS)
New size 1250 ML
Positioning: superior degreasing +
easy dry
Innovation: Active Coal, Fruit Acid

42. NELSEN ACQUISITION IN
ITALY
M/S Development
14,9 14,9
14,6
12,8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
P&G
Source: IRI Audit Tot.Italy w/o Discounts

43. NELSEN ACQUISITION IN
ITALY
M/S Development 20,4
19,9
19,1
17,6
14,9 14,9 15,8
14,6
13,5
12,8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
P&G Henkel
Source: IRI Audit Tot.Italy w/o Discounts

44. AGENDA
1. Who’s Henkel
2. Globalization: a road map on “Global Branding”
3. Two Examples
4. Conclusion

45. TAKE-AWAY
There is not a single answer to the dilemma between standardization and
differentiation. Standardization has to be an opportunity, not the objective!
When dealing with standardization of existing mixes, never change more
parameters than absolutely necessary at the same time a brand is much
more than the sum of its elements, so it has to be managed very carefully
Do not preclude local possibilities in the name of standardization and
harmonization (see Nelsen case)
In FMCG markets we are still very far from a global consumer: local
identities are still predominant and in same cases stronger and stronger!

46. Thank you!