Wednesday, December 30, 2009

Fauxscaling and the Risks of Repositioning Brands in Asia

Pirate handbags sold on the street aren't the only "brand fakes" around these days. There's a whole sector of the global economy dependent on taking a downmarket to middling brand and -- given the breath of a fresh start -- repositioning in new, developing markets. Often, these strategies rely on something we call "fauxscaling," creating a fake brand story/legacy and using tactics to create an image inconsistent with the brand's more downmarket image in its home market.

One could spend all day making a list of the American or European brands that have:

1. Repositioned themselves from downmarket (or middle-market at best) to "upscale" overseas and/or in doing so have

2. Created some dubious back-story and other propaganda for the brand (read: lying).

I have personally seen a GREAT deal of fauxscaling in Asia. With newly emerging, rapidly growing economies there, Western companies have rushed in to make as much money as fast as possible, creating a brand-land-rush to make a market and establish a brand (no matter how crappy the brand is perceived back home) before the competition.

Examples of fauscaling Western brands abound in Asia:

Buick in China is positioned as upscale.

Haagen-Dazs has created upscale-ish shops in Asia and engages in fauxscale tactics like the "legacy myth" in many markets. In Taiwan, nearly all locals believe the faux-story publicized at Haagen-Dazs shops: that the brand is some kind of vaunted European company with an accompanying false creation story. No one I spoke with in Taiwan is aware that Haagen-Dazs (a phony name, to boot) was started by a couple in Brooklyn and the company is part of the General Mills conglomerate.

Pierre Cardin is STILL considered an upscale brand in some parts of Asia, though the last time it was consider such in the U.S. was probably 30 years ago.

Starbucks is growing its reputation as "upscale" in developing markets, such as China and Thailand.

In Taiwan, TGI Friday's is considered an "upscale" date night option for young adults in the major cities (just TRY impressing your date here in the U.S. by taking them there!).

Mary Kay has fauxscaled its way to its current "upscale" position in Asia. The New York Times recently had a story about this in China. When I worked with a marketing/communications consultancy in Asia, my colleagues in Korea were working on the first wave of this, helping to create the fauxscale myth for Mary Kay there.

So, how hard is it to fauxscale a Western brand in Asia? It's REALLY not that difficult, just follow some steps like these:

1. Hire a multinational marketing/communications consultancy. They will be your fauxscale "bridge," bringing together local market sensibilities and a connection to "main office" U.S. brand leadership.

2. Create a lot of fake creation story buzz and endorsements. This is usually accompanied with the promotion of the brand's tenuous connections with "celebrities" back in the U.S. or other home markets. Even better if you can bring the celebrity to the local market to promote. A great example of this is the Lux brand (VERY downmarket) in Asia. They used Liv Tyler as the spokeswoman/endorser in their ads. I don't think the C-lister would sell much product here in the U.S.

3. Bring your fauxscaling brand to the local market to create a new category. Starbucks is a great example of this. They have had no problem convincing the local market (most of whom have never lived overseas) that they are "upscale" as they open "posh" looking coffee bars and introduce coffee culture to markets where this never existed before ("You don't know what upscale American culture is? Well, look here, THIS is what we are telling you it is.")

4. Focus some of your fauxscaling on markets where: A. There is a built in obsession with anything foreign and/or "upscale: (in China ANYTHING with a brand name/logo is worshipped); and, B. The media is corrupt (or at the least, not very ethical or skeptical) and will collude with you in promoting brands.

BUT, with any fauxscaling strategy, there is the danger of SERIOUS missteps.

A couple of years back, there was a HUGE wave of media sensation throughout greater China regarding a Haagen-Dazs scandal. The tabloid press had a field day showing video of bumbling Chinese workers storing ice cream cakes in filthy bathrooms in an illegal factory, etc. (read the story here)

Gawker has a post on the most recent trouble for fauxscaling Haagen-Dazs in India (item here). The brand's new India branch overreaching in trying to market itself as upscale. In doing so, they've been accused of racism, elitism, and just general cultural insensitivity.

These gaffes have certainly hurt the brand but they are by no means the only risks that may come with fauxscaling.

Along with the risk of global brand confusion and inconsistency that is inherent with these strategies, there is the real possibility that these fauxscaling efforts could backfire and negatively impact the brand back in the home market. What if, for example, 20 years from now China is REALLY dominant. Let's say immigration policies have changed, lots of wealthy (not just poor immigrants) Chinese move to the U.S. They will carry with them the idea that Buick is an "upscale" brand. Well, this is inconsistent with the brand's positioning here in the U.S.

What if all those folks who believe Haagen Dazs to be this upscale European brand with lots of history find out that that is COMPLETELY untrue? Wouldn't there be some backlash against the brand and erosion of brand "trust" and value?

You should multiply all the risks by 1000 due to the tremendous growth of social media and its ability to destroy a brand overnight (Dominos, anyone?).

It is clear that fauxscaling will no doubt continue unabated, but so will the pitfalls experienced as brands try for a second life overseas. The smart companies out there will be successful and stay out of trouble if they have the right counsel and teams in place as they embark on these global ventures.

Thanks for reading.


  1. The Marketing Comms website outlines the basic principles of marketing communications and provides information on working successfully with advertising agencies.

  2. You should see Haagen Dazs in Japan, especially their Ginza store
    note the menu and prices. Also a maitre d' seats you.