Quick, answer these questions::

• Where is there more hostility to global brands - UK or Islamic countries?

• Which was the most successful year for Coke and Pepsi in Islamic countries?

• There is more hostility in UK and China to global brands than there is Islamic countries; and

• The most successful year for Coke and Pepsi in Islamic countries was 2003, right in the middle of the invasion of Iraq.

American multinational corporations have grown increasingly concerned that U.S. unilateral foreign policy initiatives might undermine their brand narratives. They are particularly worried about their businesses in Islamic countries, where anti-American feelings are fierce. The Booz Allen research suggests, however, that the narrative of of strong public antagonism to American foreign policy doesn’t necessarily devalue the narrative of the consumer brands. They are for the most part separate narratives. 

Islamic countries represent a small but potentially part of the global marketplace. They account for only a small fraction of business for most multinationals, even though Muslims represent more than 20 percent of the world’s population. Coca-Cola derives only 2 to 3 percent of sales from the Islamic world; only 1 percent of McDonald’s restaurants worldwide are in Islamic countries. Furthermore, only 5 percent of people in Islamic countries can afford Western brands. But multinationals must succeed in Islamic countries to grow. By 2015, Muslims will account for 30 percent of the world’s population. Flat population growth in the developed world overall will require multinationals to seek incremental business in those markets.

Multinationals began to expand in Islamic countries in the 1990s. They paid more attention to local cultures to improve their penetration of fast-growth markets. They appointed experienced expatriate managers and established Arab regional headquarters in places like Dubai, instead of directing operations from their European headquarters. But since September 11, 2001, many American multinationals lowered their profile in Islamic countries, withdrawing senior expatriate staff for security reasons, and generally deciding to "lie low". 

The results of the survey

Booz Allen surveyed consumers in 11 countries about their preferences for American global brands. They looked at preferences for seven global U.S.-based brands in six categories: athletic wear (Nike); dairy products (Kraft); cell phones (Motorola); petroleum products (Exxon-Mobil); automobiles (Ford); and soft drinks (Coca-Cola and Pepsi).

They examined whether these brands were valued differently in Islamic countries. We looked at consumer perceptions in Egypt, Indonesia, and Turkey, and then compared them with perceptions in other countries — the United Kingdom, Japan, France, Poland, South Africa, Brazil, China, and India. They measured the extent to which our respondents attributed American values to each brand. Then they solicited preferences for these brands over other global corporate brands. 

Surprisingly they found no correlations between the brands' American values either in Islamic or in any other countries.

Apparently the narrative of an American global brand — whether it is Coke, Pepsi, Nike, Motorola, Ford, or Kraft — is understood foremost as global, not American. Even brands that use American values as part of their symbolism don’t seem to positively or negatively sway consumers’ opinions of the brand. 

They also found that Islamic consumers were even more favorably disposed toward the positive characteristics of global brands — their reputation for quality and status value in particular — than were consumers in non-Islamic countries. 

Brand strategy in Islamic countries

What strategy should companies adopt? In non-Islamic countries, multinationals increasingly seek the advice of local partners and franchisees on how to adapt products and advertising to local tastes. They delegate more product development and marketing-budget authority to local managers, and emphasizing their local ownership. They use more local raw materials and employ more local people so that they can be seen as local companies in the eyes of suppliers and customers. 

This looks like the right strategy for Islamic countries as well. To pursue these courses of action in the Islamic world, however, multinationals will need senior executives who actually understand the local narratives in Islamic countries - something that is currently rare in corporate boardrooms.

Read the full article in Spring 2004 strategy+business

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