DETERMINANTS OF THE SUCCESS OF GLOBAL AND LOCAL BRANDS IN LATIN AMERICA

The purpose of this paper is to address the issue of the implementation of global and local brands in Latin America by drawing on contingency theory to develop and test hypotheses relating to how product category characteristics affect the success of global and local brands in the region. Hypotheses are tested using data obtained from top brands rankings reported in five Latin American markets (Argentina, Brazil, the Caribbean and Central America, Chile and Mexico). The study design considers estimating a logistic regression on a binomial dependent variable measuring whether 475 top brands are global or local brands, with product category characteristics as independent variables. Results reveal that product categories related to subscriptions, local tastes, high-tech, and global citizenship do have an impact on the success of global and local brands in Latin America.

KEYWORDS
Branding; Latin America; local brands; global brands; product category

Dependent variable
Variable	Description	Examples
Local brand success	Top brand is a local brand Global brands are those which are found in many countries around the world, under the same name for the same product, and typically operating under the same (or similar) positioning strategy; whereas local brands are generally defined as those available in one country or in a narrow geographical area (e.g., Latin America), although these brands may be owned by a local, international, or global firm.	Banamex, Banorte, Claro, Coto, Cristal, Easy, Gol, Golden, Jumbo, Líder, Luchetti, Pachuca, Pão de Açúcar, Pilsener, Quilmes, Rede Globo, Swiss Medical, Vital
Independent Variables
Variable	Description	Elements
Local production	It is strongly connected to local production (e.g., buildings, stores, factories)	Conglomerates, department stores, energy distribution, fast food restaurants, health care services, hotels, retail banking, supermarkets, telecommunications services, other brick-and-mortar retailers
Subscriptions	It is strongly connected to periodic (monthly or yearly or seasonal) subscriptions (all customers must pay a subscription price to have access to the product/service)	Credit cards, energy distribution (excluding gas cylinders distribution), pension fund managers, retail banking, telecommunications services
Face-to-face relationships	It is strongly connected to face-to-face relationships (social interaction carried out without any mediating technology) with the customers	Airlines, department stores, fast food restaurants, health care services, supermarkets, other brick-and- mortar retailers
Local tastes	It is strongly connected to local tastes, local flavors, or local needs. When consumer wants, uses, or responses to a product vary with the market.	Beer, breakfast (excluding cereals), clothing, frozen and fresh foods, home appliances, home care, internet sites, meal solutions, media (television, radio, newspapers, magazines), mineral water, soccer teams, soft drinks, snacks, cookies and candy
Trust	It is strongly connected to trust, honesty, fairness, or benevolence. When the complexity of the product/service experience and its associated components (e.g., employee behaviour, tangibles, reliability) is high.	Financial services, health care services, medicines, nonprofit organizations, pension fund managers, retail banking
High-tech	It is strongly connected to the most advanced technology currently available	Cars, computers, electronics, home appliances, internet sites, medicines, personal care, telecommunications services
Global citizenship	It is strongly connected to globalization (interchange of world views, products, ideas, and other aspects of culture) and cosmopolitanism (all human ethnic groups belong to a single community)	Alcoholic beverages, cereals, credit cards, clothing, fast food restaurants, jewelry and accessories, sportswear, tobacco
Market	Five markets (countries or economies)	Argentina, Brazil, Caribbean and Central America, Chile, Mexico

Market	Global/Local	Number of brands	Local production	Subscription	Face-to-face relationships	Local tastes	Trust	High-tech	Global citizenship
Argentina	Global	67	21 (B1.B%)	9 (13.4%)	7 (10.4%)	8 (11.9%)	12 (17.9%)	31 (46.3%)	6 (9%)
Argentina	Local	33	22 (66.7%)	11 (bb.b%)	6 (18.2%)	6 (18.2%)	3 (15.2%)	4 (12.1%)	3 (9.1%)

Brazil	Global	33	4 (12.1%)	3 (9.1%)	3 (9.1%)	9 (27.3%)	1(3%)	18 (54.5%)	5(15.2%)
Brazil	Local	42	22 (52.4%)	10 (23.8%)	11 (26.2%)	14 (33.3%)	7 (16.7%)	10 (23.8%)	2 (4.8%)

Chile	Global	43	2 (4.7%)	0 (0%)	2 (4.7%)	16 (37.2%)	l (2.3%)	20 (46.5%)	10 (23.3%)
Chile	Local	57	16 (28.l%)	4 (7%)	12 (21.1%)	36 (63.2%)	4 (7%)	6 (10.5%)	2 (3.5%)

Mexico	Global	67	6 (9%)	3 (4.5%)	3 (4.5%)	5 (7.5%)	11(16.4%)	33 (49.3%)	21 (31.3%)
Mexico	Local	33	9 (27.3%)	7 (21.2%)	3 (9.1%)	14 (42.4%)	12 (36.4%)	3 (9.1%)	0 (0%)

Caribbean and Central America	Global	80	11 (13.8%)	5 (6.3%)	5 (6.3%)	16 (20%)	1 (1.3%)	46 (57.5%)	25 (31.3%)
Caribbean and Central America	Local	20	9 (45%)	4 (20%)	6 (30%)	9 (45%)	l (5%)	2 (10%)	1 (5%)

	Hypothesis	Estimate	Odds Ratio	p-value
Intercept		-1.006^* * Significant at α = 0.05	0.366	0.048
Local production	H1: +	0.753	2.123	0.081
Subscription	H2: +	1.932^ Significant at α = 0.01	6.904	0.000
Face-to-face relationships	H3: +	0.772	2.163	0.090
Local tastes	H4: +	0.978^* * Significant at α = 0.05	2.659	0.022
Trust	H5: +	-0.078	0.925	0.866
High-tech	H6: -	-2.066^ Significant at α = 0.01	0.127	0.000
Global citizenship	H7: -	-2.488^ Significant at α = 0.01	0.086	0.000
Argentina		-0.130	0.878	0.753
Brazil		1.257^ Significant at α = 0.01	3.514	0.003
Chile		1.305^ Significant at α = 0.01	3.688	0.001
Mexico		0.623	1.864	0.144
Chi-square	220.252^ Significant at α = 0.01
Nagelkerke's R²	0.503

Forecast
Actual	Local brand	Global brand	Total	Classification accuracy
Local brand	131	54	185	70.8%
Global brand	44	246	290	84.8%
Total	175	300	475	79.4%

Fundação Getulio Vargas, Escola de Administração de Empresas de S.Paulo Av 9 de Julho, 2029, 01313-902 S. Paulo - SP Brasil, Tel.: (55 11) 3799-7999, Fax: (55 11) 3799-7871 - São Paulo - SP - Brazil
E-mail: rae@fgv.br

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[TFN01] ^*
Significant at α = 0.05

[TFN02] ^**
Significant at α = 0.01