Opinion: Internationalisation of Arab Brands: the Journey to the East

| 18/10/2010 | Reply

17 October 2010
Dr. Baker A. Alserhan
Editor in Chief, Journal of Islamic Marketing, UK.
Assistant professor of Marketing, United Arab Emirates University
Judging by the small number of their brands that have international presence, Arab and Islamic companies are commonly described as non-branders i.e. either they do not seek to achieve brand recognition and dominance or they do not know how to do it. The proposition that these companies are not interested in brand dominance can be easily refuted by examining the major branding efforts that are carried out by them. These include noticeable community involvement, in addition to allocating sizeable budgets for elaborate marketing campaigns. Examples of this involvement, to mention only a few, include the annual Charity Caravans of HyperPanda in Saudia Arabia and Al-Islami’s campaign “For Our Children in Gaza” which is carried out in collaboration with the UAE Red Crescent Authority. Arab brands as well as Arab consumers are becoming increasingly important globally. Dr. Bakr Alserhan, Editor in Chief of the Journal of Islamic Marketing and Assistant Professor of Marketing at the United Arab Emirates UniversityUnited Arab Emirates University

United Arab Emirates University
UAE University
UAE | Education

, discusses how the definition of branding keeps evolving, what the internationalisation of a brand involves, and the many facets and emergence of Islamic Branding.

The ‘non-branders’ classification is an unfair one. A more accurate description of Arab and Islamic companies is that they are still engrossed in achieving local and regional rather than global success. This view of brand success is not necessarily flawed, despite of the fact that it leads being defined as ‘non-branders’ by international branding experts. Those experts, unfortunately, remain immersed in the conventional definition of brand success whereby a company is considered a player in the branding field only if it has significant presence in Western markets. Such a view is no longer valid within the new marketplace realities in which Western markets are rapidly shrinking, while others, such as the Islamic and the Chinese markets, are experiencing rapid growth that is forecasted to last for the foreseeable future.

Definition of Branding

Branding is an elusive term that has baffled practitioners and marketing scholars and researchers since the 1960s. Its numerous manifestations make it very confusing to define accurately. The term continues to evolve through incorporating new business realities such as changing customer attitudes and their migration towards generic brands such as Carrefour and Tesco rather than high-end or luxury brands such as Gucci and Dolce. Another important factor throwing traditional thinking on branding and brands off balance is the emergence of new yet massive consumer segments, such as for example the Muslim community, which are more religiously guided and culturally demanding. As a result, whatever definition of branding is accepted at the moment, although beneficial to a certain degree, can never be complete or final due to the evolutionary nature of the concept itself. And, let us not forget that evolution is, by default, very much incremental and does not follow a planned path. A definition of branding that is celebrated today might be obsolete and irrelevant tomorrow. Zealously adopting a definition is a fast way to business oblivion.

One of the most commonly accepted definitions is the one referring to branding as creating a product or service, which customers perceive to have distinctive benefits beyond price and functional performance (Knox et al., 2000). A more detailed definition is that a brand is a distinguishing name and/or symbol intended to identify the products of a seller, and to differentiate those products from competitors’ (Aaker 1991). The careful mixing of a product and the building of a matching and content-loaded symbol, with hard work and a lot of luck, will transform into what is known as a brand; the end result of branding efforts.

Two Sides of the Branding Coin

Brands mean different things to different people. To brand owners a brand is a differentiator i.e. sets apart an offering from others in the marketplace or, more articulately put; it is the living memory and the future of this offering (Kapferer, 1997). For customers on the other hand, the emotional bond that develops has the power to turn the brand into an icon. However, a fully mature brand, or a brand in its best manifestation will represent the firm itself, in addition to its products of course, i.e. the brand becomes the company and the two terms together become inseparable; they become synonyms (De Chernatony and McDonald, 2003).

Benefits of Branding

Branding, or progressing an offering i.e. good or service into a brand, has many advantages. First, it allows the company to increase customer loyalty through increasing the switching cost. This is so because, once consumers become accustomed to a certain brand, they do not readily accept substitutes (Ginden, 1993) and because brands reduce the risk that consumers face when buying something that they know little about (Montgomery and Wernerfelt, 1992). Secondly, it helps prevent potential threats from competitors through raising market entry barriers. Thirdly, a successful brand translates into substantial brand equity i.e. the financial value of the name itself, aside from the product. The fourth advantage is that a well-known brand enhances employees’ satisfaction (O’Malley, 1991). Finally, branding can also accelerate market awareness and acceptance of new products.

‘Born Great’ Brands – Do They Exist?

Contrary to conventional branding wisdom, the concept of ‘born-great’ brands is not supported by facts. While it requires relentless efforts, campaigning, massive resource allocation, considerable patience, and much luck for a brand to mature and thrive, no amount of investment and planning can guarantee a successful brand. A quick look at modern business history will yield shocking examples of things going horribly wrong even for major players in the branding arena. The following few cases illustrate that “all battle plans are shattered with the first bullet fired”, the battle in this particular case being for the minds of consumers:

Jolly Green Giant, for example, was translated into Arabic as ‘Intimidating Green Ogre’. A famous drug company marketing a new remedy in the United Arab Emirates tried to avoid this type of mistake by using pictures instead of words to represent the brand. The first picture on the left was of someone ill, the next picture showed the person taking the medication, the final picture on the right showed a person that had been healed. However, what Arab consumers saw was a healthy person taking the remedy and then falling ill; the company failed to realise that Arabic is read from right to left. The same mistake was made by a manufacturer for a laundry detergent: its advertisement showed a picture of a pile of dirty clothes on the left, a box of the company’s detergent in the middle and clean clothes on the right. Of course, the message was interpreted differently because most people looked at it from right to left, the same direction they are used to read in. Another example is ‘Varta’, a well-thought out name chosen for a battery by a German company. However, what that company failed to acknowledge when introducing the product into the Arab market was that Arabs have a difficulty differentiating between V and F and as a result they read it as Farta (?????), which mean loose, not good, and unreliable. Finally, chances are you have heard about how Chevrolet encountered problems promoting the Chevy Nova car in Latin America. Since no va means “it doesn’t go” in Spanish, Latin American buyers rejected the car, forcing Chevrolet to pull it out of the market (Alserhan 2010).

So, How Do Brands Begin?

Small, humble, and domestic! Two examples, international and Arab, demonstrate this fact. First of these is McDonalds; the big Mac company. It began as a small limited-menu restaurant run by the brothers Dick and Mac McDonald in San Bernardino, California in 1940. From there it grew to a chain that serves more than 60 million customers daily around the world, a number that could hardly have been envisioned by the chain’s founders and the chains humble beginnings.

A local example is Al-Kharafi, a private Kuwaiti based group with international presence and diverse interests, which began trading more than 100 years ago as a small business. It is now one of the top 100 Arab companies.

To have a global vision is good and yet, most international success has its roots in domestic success. For most enterprises, attempting to go global before establishing a strong stand in the local market will be like putting the cart before the horse; it is a no-go. International markets are more mature, strongly competitive, and have stringent, and sometimes, unnecessary standards that are politically motivated, which are hard for Arab firms to comply with before they mature enough to overcome these challenges successfully.

What is Islamic Branding?

Islamic branding, as opposed to conventional branding, can be defined in three different ways, in all of which the descriptor Islamic’ is used; Islamic brands by compliance, by origin, or by customer (Alserhan 2010).

  • Islamic Brands by Compliance-Halal brands. These brands base their appeal strictly on being Sharia-compliant. They are particularly concentrated in the finance and food sectors and, to a lesser degree in the growing of Halal logistics and Islamic hospitality sectors.
  • Islamic Brands by Origin-geopolitical brands. These brands acquire the description ‘Islamic’ mainly because they originate from Islamic countries. Examples include airlines such as Emirates Airlines, telecoms such as the Emirati Etisalat and the Egyptian Orascom, and industry such as the Saudi SABIC.
  • Islamic Brands by Customer. These brands emanate from non-Islamic countries, yet are designed specially to target the Muslim consumer. Although these brands are usually owned by non-Muslims they are described as Islamic based on their target customers i.e. Muslims. They include the Halal brands of multinationals such as Nestle, Unilever, L’Oreal, McDonalds, KFC, and many others.

How Do Arab Brands Fit Within the Overall Framework of Islamic Branding?

Most traditional Arab brands can be classified within the geopolitical category of brands i.e. they are considered Islamic brands because they emanate from an Islamic country, which is now the case for all Arab countries. This classification is however not complete since it leads to the inclusion of brands that are clearly not ‘Islamic’ (Alserhan 2010). For example, the Arab bank before operating its Islamic branch, although originated and remain mostly concentrated in Arab countries is based on transactions that are interest-based or riba, which is clearly not Islamic in the religious sense of the word. Also, the wine brands produced in some Arab countries cannot be classified as Islamic yet they can be wrongly classified so by a consumer.

Do Arabs Have International Brands?

It is true that, according to the current international brand classification standards, the Arab world has few brands that are included in the list of the world’s top brands. However, there are many Arab brands that are well-known at the regional level and there are many that have the potential to emerge as top brands globally.

Aside from oil companies, global Arab brands include companies such as SABIC, the Arab Bank, Al Rajhi, Emirates, Etihad , Emaar , Nakheel, Al-Kharafi, and Dubai Ports. The Arab telecoms are also making significant gains internationalising with Etisalat from the UAE and Orascom from Egypt leading the way. The Arab hospitality sector, particularly Islamic hospitality, with its planned investments worth nearly 2 trillion USD until 2020 is a very promising sector where Arab brands can easily go global for the simple reason that Arab hoteliers are leading the world market in this area.

Can Arab Companies Keep Their Names When They Internationalise?

Yes. McDonald’s is the surname of the founder of the now leading global restaurant with more than 32,000 local branches serving more than 60 million people in 117 countries each day. Bloomberg.com, a premier site for updated business news and financial information is named after its founder Michael Bloomberg, a Harvard graduate who was fired by his employer Salomon Brothers Inc. in 1981. Finally, most people will be familiar with the Hilton hotels with more than 530 hotels and resorts in 76 countries across six continents. The chain, which was founded in 1919 is named after the founder Conrad Hilton.

These examples of successful international businesses that use family names clearly demonstrate that a name can be turned into a brand be that name Arab, Latin, Chinese, or other. Arab brand owners should have no concern over the internationalisation potential of their brands because, once these brands are established locally, establishing them globally is a much easier task. Yet, the degree of success very much depends on the target market that is chosen as a point of entry into the global marketplace.

Where Should Arab Brands Be Heading?

East, South, and Middle East, and later West! Or, in other words, they should target Islamic, Arab, and developing markets in general. Why? Because their brands are well regarded by consumers in these markets; they are seen as an upgrade and as having higher quality than competing local brands. While Egyptian brands can go South and successfully penetrate and establish themselves in African markets, Gulf brands coming from the UAE and Saudi Arabia, for example, can go East and capitalise on the admiration of Eastern Muslims of this part of the world. The Eastern market though places great moral responsibility on Arab companies going there because they are seen as ambassadors of the region. As a result they must endeavour to live up to the image of the region they represent. Indeed, a difficult goal to achieve, yet a clear path towards market domination.

Once well established in these markets Arabic and Islamic brands can go North and involve in Western markets, that is, if they wish to do so; these markets are no longer as lucrative as they once were. Business hubs are migrating East and Arab businesses are well-positioned to make use of this migration due to the advantages in cash, location, and good reputation.

(For references contact Tharawat magazine)

© Press Release 2010

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Category: Branding & Marketing, Middle East & Africa

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