The Hindu Business Line : The decline and decline of Brand America

BRAND creation, promotion, and positioning are the pet themes of business school analysts. Even as the literature on brand equity has grown into an industry, the subject has moved away from the confines of B-Schools. While business theorists concentrate on the strategic and promotional role of brands, sociologists, psychiatrists, and international relations theorists go deeper in their search.

Vintage economists writing in textbooks about the virtues of competition were worried about the ``vociferous tooting of mendacious propaganda'' spoiling the fun of the market.

For a long time, Leftists have been attacking brand usage as a capitalist conspiracy to exploit innocent consumers. Consumers, in their view, become pawns in the hands of global companies with huge advertisement budgets.

In more recent times, NGOs (non-governmental organisations), agitating against consumerism, have turned into anti-brand ideologues. Soon enough it became the slogan of the anti-globalisation movement.

In 1999, Ms Naomi Klein, a young journalist, created a stir against brands with her book, No Logo. The book played a significant role in the anti-globalisation movement.

Her analysis was that brands represented "a fascist state where we all salute the logo and have little opportunity for criticism because our newspapers, television stations, Internet servers, streets and retail spaces are all controlled by multinational corporate interests."

Add to this the power and reach of brand publicity and its ability to curtail choice. Another ingredient to the brew was that multinational corporations manufactured those branded goods in sweatshops in developing countries. They displaced local manufacturing and denied labour human rights and the minimum living conditions.

There was also the anxiety over the destruction of ethnic groups, local cultures and enforcement of standardised products across countries and cultures. This phenomenon was described as as the McDanoldisation or CocaColisation of the world.

When the anti-globalisers rose against the World Trade Organisation at its meeting in Seattle in November 1999, they demonstrated their anger by ransacking the outlets of McDonald's, Starbucks, etc.

Since then it has moved to many other countries. It was clear that the attacks on American brands were an expression of anger against the US and its policies.

As Prof John Quelch of Harvard Business School said, "We have reached the tipping point where Pax Americana now threatens Brand America." The unanticipated decline of Brand America is indeed a sad story. How did it happen?

The post-war years saw the rise of American brands. America then was seen as a dominant power that was also benign. Going back to the years of Pilgrim Fathers, it held on to certain values and emigrants were attracted to the American dream.

As Kishore Mahbubani, the Singaporean scholar-diplomat, puts it: "It has conquered the world with its ideas, values and management systems — and not, as commonly believed, with its military might." (Rehabilitating America, Far Eastern Economic Review, December 2004).

It aided the European reconstruction efforts through Marshal Plan and the establishment of the European Community. On the other side of the Pacific, it helped turn Japan and Korea into economic miracles. In later years, more East Asian countries joined them.

American investment abroad was the impetus for much of this growth and development. The post-War resurgence of US investment saw the prominent role of brands.

US companies created and drove big brands and were, in turn, driven by the markets created by their brands. The multinational reach of American companies would not have been possible without them. Their rise did create fear in Europe, especially France.

The initial fear of American reach receded when the European companies also grew and could compete with the US firms. They would also copy the American systems, marketing and, more important, brand publicity.

These years saw the surge of American brands all across the globe. It was more like a global celebration of a new culture surging across the Atlantic and the Pacific.

As David Usborne put it, "Made-in-America has sold, in part, because of what the country has represented — above all, prosperity and capitalist freedom.

A pair of Nike trainers could signify dollar-wealth to an Asian slum dweller. A black market pair of Levi 501s symbolised protest in Eastern Europe before the fall of Berlin" (The Independent/UK, July 17, 2003).

It was the goodwill shown to the US, which was transmuted into goodwill for its brands.

Even Japan and China began to boast of American brands in their major cities as also in the interior, including Tibet! There were indeed currents, cross-currents and conflicts along the way, though largely the passage was smooth.

Somewhere in the early 1990s, especially after the collapse of the Soviet Union, the harmony was lost. There was evidence of lack of coherence in the US policies and cohesion with other countries in Europe or Asia.

As Mr Mahbubani puts it, "The essential problem is that there is no built-in coherence in American policies toward the world because no major strategic decision has yet been taken to achieve such coherence." Decisions are made on the demands propelled by short-term considerations and by lobbies ranging from agriculture, textiles to oil.

Another disturbing trend is that the US, which sought to evolve and adopt global governance models — for finance under the IMF, or trade under the WTO, or for environment under the Kyoto Protocol or for disarmament under ABM — thought it fit to abuse them for its own narrow interests or renege them unilaterally.

One of the founding members of the UN thought it fit to bypass the world body and engage in a pre-emptive war to dislodge a legitimate government abroad. By such acts, the American dream turned into a nightmare.

Moreover, after 9/11, the extreme postures of the US strategists blame it on the rise of Islamic fundamentalism. In their anti-Islamic campaigns, they forget that they themselves had inflamed it earlier in the Cold War days and also that the rise of Islamic fundamentalism was the consequence of their own and policies and actions in the Gulf or elsewhere.

Having whipped up the fury, it was assigned to Mr Colin Powell to declare during his current visit to Indonesia, "America is not an anti-Islamic, anti-Muslim nation. America is a diverse society. We respect all religions" (Financial Times , January 4, 2004).

Tragically, the damage was done. With strident neocons holding all important positions under Mr Bush's second term, there won't be Powells any longer in the US administration to engage in such damage containment speeches.

Curiously, in 2001, Mr Powell had appointed Ms Charlotte Beers, a Madison Avenue top brand manager, as Undersecretary of State for public diplomacy and public affairs. Her role was to counter anti-Americanism and overhaul the US' image abroad. Mr Powell defended her appointment saying, "We are selling a product... We need someone who can re-brand American foreign policy, re-brand diplomacy." Poor Ms Beers had to quit her job within 18 months. It was clear that she had no acceptable product to sell abroad! The ways and workings of brands became murkier after 9/11 and the pre-emptive Iraq war.

Many analysts have studied the impact of the Iraq war on the American corporate balance-sheets. As an analyst in the Independent of UK put it, "Little attention has been paid to another consequence of the campaign in Iraq. Call it corporate collateral damage. And the victim is brand America." When the US strategists calculated the cost of Iraq war, they assumed that the war would be over in a matter of days if not hours and the cost would be minimal. They also anticipated that the gain on account of additional oil supplies from Iraqi fields would more than offset the initial war expenditure. Not included in their calculations was the collateral damage to companies caused by the wrong foreign policies of the US Government.

Recent surveys show how deepening opposition to American foreign policy is threatening the long-term strength of these products. Major journals, including Time, reported last month the findings of the polls undertaken by GMI, a Seattle-based market-research company. GMI reported that "nearly 20 per cent of consumers abroad say they will avoid US companies and products such as McDonald's, Starbucks, American Airlines and Barbie Dolls because of US' unilateral policies. And the more American it is perceived to be, the more resistance it encounters." These developments have rudely shocked the corporate executives who had, for long, been unshaken in their faith in the ability of their brand names moving or creating markets. It is now assessed that it takes more than mere brand qualities to create markets abroad. Global concerns have to be addressed even while promoting markets and brand names.

As Prof Quelch puts it, "Never before have global concerns about foreign policy so threatened to change consumer behaviour. We are not speaking here for frivolous grandstanding associated with temporary boycotts by a student minority. We are witnessing the emergence of a consumer lifestyle with broad international appeal that is grounded in rejection of American capitalism, American foreign policy, and Brand America."

The question is, will there be changes in the US policies to take note of these concerns to revive faith in the US brands? It seems doubtful that the neocon hardliners under the new Bush administration will budge. It leads to the sober conclusion that Brands are not forever.

(The author, a former Finance Ministry official, has experience in international, financial and trade issues.)

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