Not long ago, the Red Peak Group, a global brand-consulting firm with offices in New York, began researching names for a new product in China—a pay-per-view and video-on-demand platform that would allow people to stream licensed Hollywood movies into their homes. Along the way, they market-tested a range of Chinese-style names for the product. But in the end, the feedback was clear. Consumers in China preferred an American-sounding brand. The marketers went with “YOU On Demand.”
“What we found was that if you’re associated with a positive part of America, which Hollywood is, they want you to be more American, rather than more local,” says Red Peak Chief Executive Officer James Fox. “There’s still a status associated with American brands.”
These days the same holds true, marketers will tell you, in the emerging middle classes in developing countries around the world. In Brazil and India, Russia and China, the value of America as a brand-enhancing, anabolic sales booster has never been stronger. Budweiser (BUD), General Motors (GM), Tiffany (TIF), Jack Daniels (BF/A), Levi’s—the more American-sounding, the better. In the first six months of 2012, Harley-Davidson’s (HOG) retail sales were up 16.5 percent in the Asia-Pacific region and 58 percent in Latin America. Tiffany’s sales in Japan jumped 13 percent in the same period. In the past two quarters, Yum! (YUM), the parent company of KFC and Pizza Hut, has opened 328 restaurants in China. “Very American brands are doing incredibly well outside the home market,” Fox says.
U.S. brands have been helped overseas by the Obama administration’s increased focus on trade liberalization. In 2011, the president pushed through three previously stalled free-trade agreements, with Panama, Colombia, and South Korea. Over the past four years, U.S. exports have grown from $133 billion in December 2008 to $183 billion in July 2012.
In May top representatives of America’s liquor industry traveled to Seoul to toast the uncorking of a new market. “We are honored to be here in Seoul to celebrate the U.S.-Korea Free Trade Agreement and to showcase the heritage and flavors of American whiskeys,” said Frank Coleman of the Distilled Spirits Council of the United States. “Premium bourbons and Tennessee whiskeys are experiencing significant growth in global markets because of their authentic heritage, their distinctive flavors, and their versatility in cocktails.”
Translation: U.S.A.! U.S.A.!
Allen Adamson, the managing director of Landor Associates, a global branding firm, says that an association with the U.S. helps companies even more now than four years ago. That’s in part, he says, because the U.S. has emerged from the financial crisis in better shape than many countries in Europe. “Success is a major dimension of the American brand,” he says. “What was derailing that four years ago was the weak business performance with the meltdown of the financial world.”
As the American economy has slowly bounced back, so too has the marketing value of brand USA. These days, says Adamson, American companies are benefiting from the collective glow thrown off by the success and ubiquity of U.S. tech companies like Apple (AAPL), Facebook (FB), and Google (GOOG). The cachet of Silicon Valley looms large in the global imagination.
“The language of the Web is rooted in American brands, American imagery,” Adamson says. “Look at the role the social networking sites played during the Arab Spring. Facebook and Twitter have become ambassadors for the American brand, the way Ford Motor (F) and GM and General Electric (GE) were 50 years ago.”
Source: Bureau of Economic Analysis