The death of the brand, to paraphrase Mark Twain, has been slightly exaggerated. Barely three years ago The Economist pronounced the death of brands. But branding has not only survived, it has become even more important, especially for Asian marketers, for whom there has never been a more exciting time for branding.

    Nor a more critical one.

    Asian companies have well-deserved reputations for producing quality products at a low price. But competing on cost alone is not enough. "Asian companies must develop and nurture new brands that reflect the dynamic strengths and technological innovations of the region, and compete against established brands from other parts of the world," says Philip Kotler, author of Marketing Management: an Asian Perspective.

    As they face the challenges of saturated domestic markets, competition from other low-cost producers, and tempting opportunities overseas, Asian companies are learning to develop their own brands—or adjust their branding approaches for new markets.

    To be sure, well-known firms from Japan, Taiwan, and Korea have taken this route before. But for some companies in the region, the impetus for global branding is different than that which spurred the Sonys, Acers, and Samsungs. The categories are also new and, in some cases, so are the geographic markets.

    Covering different stages in the branding cycle, the three companies profiled here illustrate the new dynamics of the branding game, and how to play it.

    NO HOUSEHOLD NAME

    Winbond's brand won't ring a bell with consumers. But who says branding is only for consumer goods?

    Unlike makers of finished products for the consumer market, Winbond Electronics Co. doesn't aim to make its brand a household name. Instead, the company, one of Taiwan's leading semiconductor manufacturers with projected 1996 revenues of $440 million, uses branding to impress its customers. Among them, computer and electronics manufacturers Apple, Compaq, Dell, IBM, and Seagate—all of which need to be confident of the quality and reliability of the components it supplies.

    The company's "Winbond" brand has been a central part of the corporate strategy since its founding in 1987. Price was also a consideration in the early decision to stress the company's own brand.

    "Branded products can enjoy a much better profit margin relative to original design manufactured (ODM) products," says Archie Yeh, assistant vice-president in charge of the company's Product Center, the department handling product planning, development, and marketing. Today 80 percent of Winbond's revenue is derived from branded products.

    Non-branded production, which makes up the remaining 20 percent, serves a non-strategic purpose. "We view our ODM business and foundry work as a buffer, enabling us to always operate at full capacity," says Yeh.

    Overseas push. Winbond currently relies on domestic sales for slightly over half of total sales, but the clear-cut trend is toward more concentration on global markets. "From now on growth in Taiwan will be close to the natural growth rate—market expansion will not be easy," says Yeh. "Therefore we have no choice. We have to go abroad."

    That push started in 1990 when Winbond opened subsidiaries in both San Jose, California (to cover the whole of North America) and Hong Kong (for both the Hong Kong and China markets). Of total exports, about half now go to the United States and Canada and 30 to 35 percent to Hong Kong and China.

    One Winbond product that has received an enthusiastic receptionin China (where the absence of cable TV or video infrastructure created a virgin market) is MPEG-1, a decoder chip that allows video or audio disks to be played with high resolution on TV orcom- puter monitors. Winbond has captured a 60 percent worldwide market share for the product, which won a gold medal in Taiwan's Symbol of Excellence contest in 1995.

   上海样本设计; MPEG-1 will soon be replaced by a more advanced MPEG-2, for use mainly on digital video disks (DVD). Other new items beingpromoted by Winbond for 1997 are the W9960 multiprotocol chip for PC videoconferencing and W6690 ISDN S-controller interface chip for high-speed Internet access.

    Winbond has yet to establish beachheads in some major worldmarkets, including Europe and Japan. "You can't tackle the whole world at once, and so we have been moving territory by territory," says Yeh. The company's approach is to begin penetration in a given market with commodity products such as memory and consumer chips. "If your sales activity is strongenough, these can be readily accepted by customers," he notes.

    The next step is to expand the product range, working closely with customers to develop new items that meet their specific needs. When volume is sufficient, establishment of abranch is warranted, with focus first on sales, then marketing, and finally—if appropriate—an R&D function. The San Jose operation includes two R&D labs, one for logic products and one for memory.

    Crucial components. Part of Winbond's global approach is to fully utilize the strengths of each region in which the company operates. It has not yet considered manufacturing offshore, regarding that Taiwan still offers sufficient advantage in cost structure and manufacturing capability.

    But R&D is another matter, and it has sought to reap the benefits of its research outpost in Silicon Valley. Yeh believes Winbond's major strength in the internationalmarket has been its determination "always to try to give thecustomer a cost-competitive solution."

    For example, for customers making video CD players, Winbond has supplied every component except the DRAM—and even that will be coming in 1998 when a new fab plant opens. Similarly for motherboard makers, Winbond can provide every needed item besides the CPU. That total solution includes design support, withoutadditional charge, for regular customers.

    Although Winbond never drew up a concrete master plan for globalization, some crucial components for globalizing were prepared almost unconsciously, says Yeh. An example is the company's communications policy, with all documentation and internal mail in English, and communications infrastructure. From his desk Yeh can dial up colleagues in San Jose as an internalextension. Nearly everyday video- conferences bring together groups in California and Taiwan.

    Some 80 percent of the employees in San Jose are "Orientalfaces," but Winbond's policy is to gradually make the employee mixmore closely resemble that of American society as a whole. "That's one of the ways you have to localize to be part of a society," says Yeh.

    Before it can say that its globalization has succeeded, Winbond will presumably need to extend its network of branches to Europe and Japan. "We're investigating the opportunities in both places all the time, but today we don't yet feel we have the right cutting-edge products to make the move," says Yeh. "We're in the stage of testing the waters. In a few more years we shouldbe ready."— Don Shapiro

    SELLING AN ACQUIRED TASTE

    Yakult proves that once you get the disciplines right, expanding overseas becomes as natural as drinking water—or bacteria.

    Launching a new product is tough enough. But selling a beverage containing bacteria—which, after all, is a word connoting disease and decay—is only for the truly committed marketer.

    "Committed" is certainly a word to describe the late Dr. Minoru Shirota, a Kyoto University medical professor. In 1930, Shirota discovered a strain of lactic acid bacteria beneficial to human intestines. He then formulated a drink—which he called "Yakult"—containing the helpful bacteria. Shirota fervently hoped to spread this health drink's benefits nationwide in Japan and eventually abroad.

    Today, a total of 25 million bottles of Yakult are sold daily—10 million in Japan alone and the rest in Asia, Latin America, the Netherlands, Australia, the United Kingdom, and Germany. Yakult Honsha Co. Ltd., Japan's leading producer of fermented milk products, has grown into a food and beverage giant with 1996 net sales of $1.5 billion.

    Behind Yakult's success is the story of how one company established its category and brand so that everything else, including overseas market expansion, becomes a natural outgrowth of its marketing discipline.

    Natural steps. Since its health drink belongs to a unique category, Shirota decided to establish a company, Yakult Honsha Co. Ltd., to market it. "Yakult was new to the Japanese so we had to work hard to educate them about its effects," says Itsuo Murakami, senior managing director.

    The company worked with medical institutions and professionals, and sponsored symposiums on topics related to intestinal bacteria. It also put together a door-to-door sales delivery system composed of groups of "Yakult ladies."

    In Japan, these saleswomen not only deliver company products. As a public service, they simultaneously check up on elderly residents in certain areas. This encouraged local governments to purchase Yakult products regularly to avail of the convenient monitoring service that freed up its own personnel for other tasks.

    Having achieved its target of 10 percent market share in Japan, Yakult set its sights overseas. The company started marketing its flagship drink in Asia in 1964. Shortly afterwards it established a Latin American base. In 1991 it founded a representative office in the Netherlands and formally began its European and Australian operations in 1994. It launched full-scale sales activities in the United Kingdom and Germany in April 1996.

    Expanding Yakult operations overseas is described by Murakami as a "natural next step" after selling so well in Japan. It is a move that has also been prompted by unfavorable market conditions in Japan. Low population growth, ongoing deregulation, and the yen's dramatic appreciation against the dollar force companies to look beyond domestic markets, reports Nikkei Weekly.

    Says Murakami, "Sales has reached a saturation point in Japan. But, as a company, we still have room for expansion so it is but natural for us to concentrate on untapped markets overseas."

    Asia is still the country's strongest overseas territory. For instance, Yakult holds a 14 percent market share in Korea—even larger than in its own home base. But the company is now trying to increase market share in Europe. It opened a manufacturing plant in Almere, Holland in 1994 which supplies products to the Netherlands, Belgium, Germany, and the United Kingdom.

    For all its markets, Yakult follows the same disciplines—quality, uniqueness, market education. "We concentrate on maintaining the quality and uniqueness of our product and ensuring that people fully realize its benefits," says Murakami.

    Adaptability. The product it sells in all markets may be the same, but Yakult varies elements of its marketing mix where needed. In Japan, the drink is sold in 65 ml. plastic bottles. Consumer in other countries, however, found this package too small. So in Hong Kong Yakult is sold in 100 ml. bottles, while in Singapore it is sold in 125 ml. units.

    This willingness to adapt to local conditions is also evident in Yakult's change of selling strategy. In Europe, Yakult is sold through stores and supermarket chains as labor costs are too high for the "Yakult lady" system to be feasible.

    Deep pockets, a long-term perspective, and a willingness to invest in market research are other aces up Yakult's sleeve. Murakami describes the company's investment policy: "We are a cash-rich company. We see our business as being long-term so we do not worry so much about recovering investments in the first years of operation."

    In some cases Yakult operated in deficit for 10 years and only became profitable in the eleventh year. For example, Yakult (Singapore) Pte. and the Mexican unit both took about 10 years to turn a profit. The company has run market-research programs in the United States since 1990.

    As soon as Yakult's European operations start to become profitable, the company intends to establish a presence in the United States and China. Says Murakami, "These countries' large populations offer great potential for our products.

    "But entering these markets requires much study and large investments," he adds. "Fortunately, Yakult has the resources required for the latter. But now we must study the situation in these countries seriously to determine the timing of the market and the most effective marketing strategies."— Christine O. Cunanan

    A NEW STARTING BLOCK

    Like most companies facing a dead end in the OEM route, Sprandi launched its own brand. Unlike most, it targeted an unconventional geographic market.

    For Dinesh Shahani, the decision to develop his own brand was easy. In fact, he didn't have any choice.

    The CEO of Hong Kong-based original equipment manufacturer (OEM) Espee saw how the OEM market would become more competitive as costs rise in the territory and China undercuts. "We're always trying to cut cents on others' prices, and there's no loyalty from clients," he says.

    So in 1990, Shahani came up with his own fashion sports shoe line, Sprandi. He thought that, if the likes of Guess and Gap could source products in Asia, export to the United States, and then bring successful brand names back into the region—so could he.

    Over the next three years he realized that, as many other Asian brands fail because of blind ambition, lack of marketing expertise, and poor positioning—so could he.

    The Sprandi line was still not making much of an impact, even after an investment of HK$2.5 million. Shahani says that while the distributors who saw the Hong Kong-originated line liked it, convincing them to go the full distance and actually take it on was tougher.

    Establishing footing. He then decided to spin off the Sprandi line, as a separate sister company, and effectively try to take on Espee's own clients at the game they invented.

    But not head-to-head in the big, established markets. Instead, Shahani chose as Sprandi's launching pad an unconventional market—Eastern Europe, where market economies are developing and niches are waiting to be filled. Shahani maintained that while the top end was catered to—by Nike, Reebok or Adidas—ultra cheap imitations had claimed the mass market, leaving a gap in the middle.

    "We've broken each Eastern European country into parts and appointed sub-distributors," he says. "We've taught retailers how to display the goods—to the point of which kind of shelving to use and point- of-sale materials with our name on it."

    Also, breaking into the saturated U.S. and Western European markets now would be near impossible, he believes, for any new brands lacking major resources.

    Underlining the importance of timing, Shahani is also content to view his native India from the sidelines, believing entry conditions at the mid-market level are not yet ripe for newcomers. "I'm waiting for India's sports market to mature. At one level the major brands have just gone in, but there are also a lot of well established Indian manufacturers."

    In the two years since launch, Sprandi claims to have overtaken many in the field to register in third place in terms of volume share in its key market, Poland. In Eastern Europe, mainly Poland, Russia and the Czech Republic, it shifted about two million pairs of leisure shoes in 1996, retailing between $25 to $50, and accounting for around 50 percent of the group's total sales volume.

    With a firm footing thus established, plans have led Sprandi to Egypt and the island of Mauritius, both in late 1995; South Africa in April 1996, where it sponsored the top professional basketball the Johannesburg Spartens as part of its marketing effort; Greece in December 1996; and its home base and neighboring China.

    Changing mindsets. The whole mentality of employees of a company has to change if a successful transition is to be made from OEM to branded products, acknowledges Shahani. Many Asian firms have traditionally been family run and entrepreneurial, but looking for immediate cash returns.

    Shahani himself is reinvesting—having apparently reached breakeven within a year—and has looked to multinationals as his model. He has brought in new company structures and mainly new executives to mold the Sprandi spin-off group. His marketing executive for Asia Pacific, Erick Kwok, for instance, has a track record working with multinationals Reebok, Fila, Ellesse.

    The company has launched an intensive TV ad campaign in Eastern Europe, and a poster campaign to back the launch in Sprandi's home market. The tone of the Hong Kong advertising says much about the desired image: stylish, casual, a leisure shoe for males in the 15- to 28-year-old range, and those that don't really take sports too seriously. "Improve your track record" leers one tag line, alongside a picture of a shoe and an open diary recording dinner dates. The in-the-face approach and the running of the ad copy in English add to the perception of Sprandi as an international label, and therefore a better buy.

    Meanwhile, Espee, Shahani's original company, has lost OEM business. But then Sprandi's revenues have more than made up for the loss. In the Darwinian world of shoe marketing, the dominant species carry brand names. So does Shahani's.—Helen Deal

    Christine Cunanan is Chief Executive Asia's contributing editor in Tokyo. Helen Deal is a Hong Kong-based journalist. Don Shapiro is a Taipei-based journalist.