Just a few times in the recent business history, we have experienced such wonderful opportunity for new brands, to position themselves in the global context.
Indeed, several research studies out there agree that in the years to come, one of the main threats for current leading global brands, is the diminishing of customer loyalty, coupled with price pressures coming from companies based in Emerging Markets. According to executives surveyed in an Economist Intelligence Unit research, competition based on price will be the most challenging business aspect (74% of respondents). The second in importance (60%), will be the need to build an stronger brand.
This fear from established brands, usually controlled by the so-called “Trilogy” (US, Western Europe, and Japan) that has been dominating the world’s economic, military, and business power since the end of the Second World War, seems to be well-grounded. Looking at different global brand rankings, we can clearly see the emergence of new comers from emerging markets, mainly, the ones from China.
Yes, China, the country that many for a long time disregarded as a serious contender quality-wise (some joked saying that “the only Chinese invention that lasted more than a week was the Chinese Wall!). The rise of Chinese brands in the most valuable brands rankings has no precedent. According to Interbrand, there are already five (5) Chinese brands in the top 20.
In this context, the events that have obscured (not just the skies) but also the VW brand, get another dimension, simply because consumers willing to explore new concepts and questioning their loyalty to previous brands, are ready to engage with new comers (even the ones from China!). The perception of quality “made in the Trilogy” comes under scrutinity.
So, putting together all the ingredients that are shaping the world context: a re-design of the world’s economic, military, and business balance of power; the emergence of a new middle class, that is willing to embrace a western-shaped lifestyle (even though not yet ready to afford the price-premium of top global brands); diminishing customer loyalty; and the access to technology, communication tools, and most important, information wherever consumers are around the world; we can foresee a very favourable landscape for new global brands to emerge, appealing to a newly available customer base, with a good price-quality ratio.
New comers, take your chances!
Written by our professor Nicolas Kfuri