Creating a competitive advantage for small nations through branding

Contents

Abstract

1.0 Introduction
1.1 Limitations of Study
1.2 Definitions used in Study and Practice
1.2.1 Small Nation

2.0 Literature Review
2.1 The rise of nation branding and its definition
2.2 Difficulties & Ethics of Nation Branding
2.3 Difference between product and nation branding processes
2.4 Competitive Advantage through creation of Reputational Capital
2.4.1 Competitive Advantage in Context of Small Nations
2.5 Select Case Studies of Small Nation Branding
2.5.1 Eastern Europe - Repositioning in a post-Soviet reality
2.5.2 New Zealand – When a successful destination brand becomes the ‘umbrella’ nation brand
2.6 Review of Nation Branding Conceptual Models
2.6.1 Communications Models
2.6.2 Brand Perspective Models
2.6.3 Nation Brand Hierarchical Models

3.0 Discussion
3.1 The role of social media in facilitating stakeholder involvement and nation brand development
3.2 Industry cluster brands operating under the nation brand umbrella
3.5 Proposed model for further practice and study of nation branding

4.0 Concluding Remarks

5.0 References

6.0 Appendix

1.0 Introduction

The concept of nation branding has been given significant attention in recent years. Much of this attention in practice and study has referred to large nations such as the United Kingdom, United States, China, Spain and others. Large nations maintain a significant presence in the global consciousness due to pervasive communications from media, interactions with foreign nationals and ethnic communities created though diasporas, and their exported goods and services. These nations project a rich milieu of imagery and are renowned for quality and competence in multiple fields. But what of the smaller nations, those with populations less than 10 million, how do they rise through the ‘global clutter’? Whilst nations such as Switzerland are well known, the majority of small nations elicit limited impressions, rarely making international headlines, marginalised in the global consciousness by larger more influential powers. The purpose of nation branding from the perspective of government agencies, has been to rid themselves of undesired perceptions, in search of a competitive advantage for the nation’s firms. This is achieved through attracting the best and brightest talent, increasing foreign investment, creating awareness of their goods and services as well as promoting the nation for tourism. The other elements of nation branding concern cultural change, instilment of national pride, socio-political development and as a tool for ‘soft power’^[1]. If a small nation is to spend considerable time and effort in attainment of competitive advantage over rival nations, then there should be a measurable return on investment, rather than the assumption that visually stimulating branding campaigns will produce likeability heuristics for a nation’s goods and services.

The motivation for focusing on the context of the small nation is best summed up by Peterson (2006), as in today’s global economy with increasing interconnectivity, there is a potential marginalisation of small nations. This is due to their vulnerability to foreign exchange, trade, cultural, and political risks beyond their capacity to control. In addition there is a diminished ability to respond to natural or environmental disasters due to a smaller pool of available resources. Therefore small nations through pursuing nation branding can mitigate some of this risk in their global interactions. Interbrand (2011) state that the purpose of a brand in a financial sense is to build a strong competitive position that reduces risk for the business, a successful nation brand^[2] should also reduce risk, not for a business, but for the entire political-economy when undertaking foreign engagements. In addition small nations have a realistic opportunity of turning existing theory into realistic working practice, due to a smaller scale of implementation.

Nation branding arose in practice as an extension of brand management of products and corporations. There have been many attempts to transpose the practitioner brand management processes upon nations, regions and cities alike, known collectively as ‘place branding’. These attempts have been met with mixed success, and whilst empirical studies show some successes, there has been little study into the efficacy of nation branding as a practice. This is because much of the application involves subjective intangibles - cultural values, which are difficult to measure. In this study several case studies from the literature are highlighted with some of the key insights, giving support for the need of new theory that is based on competitive advantage and contextualised for application to the small nation brand.

Whilst by in large a review of the literature reveals much in the way of imagery and how that informs perceptions by foreigners in regards to the home nation, perceptions are by definition a subjective phenomenon, developing over time, geography and culture, regardless of the intended message carried in the imagery. So rather than attempting to ascertain what communicative imagery may be the most preferential for generating positive perceptions, this study looks at what tangible strategies could objectively enhance a small nation’s competitive advantage in global markets, achieving certain aspects of a successful commercial brand, without subjecting it to similar brand management processes which imply almost totalitarian control over their identity.

The literature review therefore tests the hypothesis, “that branding can create a competitive advantage for small nations”. This study examines and discusses the practice and study of nation branding and the possibility of imposing strategic management frameworks upon what has been largely a marketing communications led concept. The existing scholarly frameworks are reviewed and an integrative framework is proposed augmenting several attributes of extant theories, following on from this is the application cluster-based theory into a nation brand context. This is built upon the premise that a nation’s reputational capital, or brand equity is created more through perceived offerings and propositions, rather than pure imagery, which is what a considerable number of nation branding practices have employed. Nation branding is perceived to occur at several degrees of application, with each successive degree involving more stakeholders and resources in the development, implementation and on-going management of the nation brand. In addition to practical elements of this integrative framework, there is also the possibility of further research into each of the degrees of nation branding, both in qualitative and quantitative studies.

A nation brand strategy begins with a general statement regarding long term vision of the nation which is then developed into objectives and goals deployed across all departments of a nation’s public sector and if necessary, across the private sector as well. This study does not seek to postulate - as in commercial brand management, whether an identity and set of values should be created to define a nation as a brand. But the study seeks to contribute to the discourse as to whether certain aspects of brand strategy theory are of beneficial utility for a nation’s firms and its people in their engagement with global markets.

1.1 Limitations of Study

This study focuses largely on the economic and political elements of nation branding, which also reflects the nascence of cultural elements in nation branding literature. Whilst there is some mention of cultural elements in this study, for the purpose of a focused review and discussion, much of the literature pertaining to national identity and cultural elements of a nation brand are excluded unless pertinent to the discussion^[3]. In addition, there is a diminutive availability of quantitative research related to nation branding, so this is absent from the study.

1.2 Definitions used in Study and Practice

One of the issues common in branding is the diverse set of terms used, which tend to differ between practitioners and also academics. Much of the literature reviewed use the somewhat term defined by the American Marketing Association (AMA, 1960), which defines a brand as a “name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers”. This term is suggestive of the old concept of brand, as opposed to more contemporary concepts as espoused by Interbrand, a brand and branding consultancy cited in often in scholarly literature. It refers to a brand in a different manner, and that regardless of how the word is used in its passive form it is the object by which impression is made, with the active form being the process to which this impression is created (Blackett, 2011).

1.2.1 Small Nation

As this study treats nation branding in the context of the ‘small nation’, it is of importance to articulate a term that is relative to various measures. Kuznets (1960) defines a small nation as having a population of ten million people or less. Whilst there are many measures to define a small nation, such as gross national product, land or overall territory, number of global media impressions, or even its impact upon international relations. However since the term ‘nation’ is defined as consisting of a large body of people belonging to one or more ethnicities or cultures that have been organised into a singular state (Collins, 2011), then the measure of population would seem most suitable to define a small nation. Nation refers to its people, rather than necessarily its geographical boundary (‘country’) or its government, (‘state’) (Collins, 2011). The terms (‘nation’) and ‘country’ however, are used interchangeably throughout the literature in regards to nation branding. With an antecedent of nation branding in literature, ‘country-of-origin’ (hereinafter COO), using the term ‘country’ extensively. Therefore for purposes of consistency and accuracy of meaning, ‘nation’ will be used exclusively in this paper in context of nation branding.

2.0 Literature Review

2.1 The rise of nation branding and its definition

There are multiple definitions of the practice and study of nation branding, depending on the understanding and involvement of the author. In the literature, some authors refer to the hierarchical term of ‘place branding’ (Aitken & Campelo, 2011; Freire, 2009; Kavaratzis, 2005; Sevin, 2011; Skinner & Kubacki, 2007; Therkelsen & Halkier, 2008) which refers to not only the nation, but also domestic and supranational regions, cities and geographic features. So where necessary, these have been phrased in context of nation branding. Branding of the nation is defined by the scholar Keith Dinnie (2008), author of the first academic textbook on the subject as being the “unique multi-dimensional blend of elements that provide the nation with culturally grounded differentiation and relevance for all of its target audiences (p. 15). With Fan’s (2006) definition referring to the practice concerning the application of branding and marketing communications techniques to promote the image of a nation. Aronczyk (2008) writes that nation branding can be seen as a “soft” power in contrast to the “hard” power of the military and economic assets.

The commercial practice of branding nations is linked to the rise of globalisation discourses at the close of the Cold War, whereby globalisation sought to create a ‘brand for the world’ in accordance with prevailing market-led processes of the day (Jansen, 2008). The prevalent use of commercial language, practices and assumptions reflects this, rather than socio-political rhetoric, with creation of partnerships between public and private actors in order to advance trade and corporate interest in line with the national interest (Jansen, 2008). Simon Anholt (2000, 2002a, 2002b, 2005a, 2005b; 2007; 2007; 2003), who is the self-proclaimed developer of the concept as well as a leading practitioner defines it as a consistent and comprehensive national brand strategy, which determines the most realistic, competitive and externally compelling vision for the nation, with the branding input ensuring that this is supported and reinforced by all acts of communication between the nation and the outside world. To differentiate it from the marketing of nation’s Hospers (cited in Skinner & Kubacki, 2007) describes it as telling the outside world what the nation is, and how it should be perceived; an inside-out approach. This is opposed to nation marketing, which is an outside-in approach, starting to form the image outsiders have of the nation.

COO (Country of Origin), refers to the nation with which the firm producing the branded product or service is associated and is seen as having a significant effect on consumers evaluative decision criteria (Agrawal & Kamakura, 1999). In literature much of the research has had a focus on nation image, leading to some academics (Fan, 2010; O’Shaughnessy & O’Shaughnessy, 2000; Pappu & Quester, 2010) to propose that a higher order of reputational capital should be used, incorporating factors such as nation loyalties and perceived quality by outsiders, supportive of the evolution of the COO in study to that nation branding which features the creation and management of reputational capital^[4] as one of its core elements.

Because of consumers’ perceptions of quality in relation to product-nation imagery, COO is believed to be a persistent method of enhancing reputational capital (Agrawal & Kamakura, 1999; Keller, 1993) . The reputational capital derived from COO is surmised to extend to other product categories due to stereotypical bias, in a halo effect (Leuthesser, Kohli, & Harich, 1995), with the consequence of commanding premium in pricing (Aaker, 1996; Agrawal & Kamakura, 1999; Keller, 1993).Nation branding as a consequent to COO has attracted considerable attention and financial capital from the governments of both mature capitalist economies and emerging economies (Aronczyk, 2008). Anholt (2007) proposes that just like firms operating in a competitive environment, nations’ as existing in the modern global economy must compete for limited resources as well as investors, tourists and consumers. A focus on increasing reputational capital for a nation brand therefore has the outcome of increasing competitive advantage for the nation. Aronczyk (2008) affirms this argument in stating that branding allows governments to manage and control the image they project to the outside world, attracting preferential investment, tourism, trade and talent whilst competing with increasing numbers of contending nations for available resources.

In the technologically capable world of high interconnected and a wealth of information, there is the emerging poverty of attention in the global context (Davenport & Beck, 2001). By authorities Anholt (2000, 2002a, 2002b, 2005a, 2005b; 2007; 2007; 2003), Aronczyk (2009) and Olins (2002), it is seen as a public good, facilitating alignment across municipal, regional and national levels in the overarching national interests of creating legitimacy and providing financial windfalls for a nation’s offerings in the increasingly trade-liberalised global marketplace, whilst fostering national loyalty at home.

Gilmore (2002) in a discussion on successes of nation branding affirms that it must be “an amplification of what is already there and not a fabrication” (p. 284). Referring to the failure of the large nation branding campaign “Cool Britannia”, whereby despite the modern fashion that was emulated in the brand, less than half of the population of United Kingdom were interested in the theme of the values and imagery promoted. Whilst the government and branding practitioners were enthusiastic about projecting a modern fashion, design, music and arts scene, many relied on the ‘historic heritage’ to promote their goods and services abroad (Gilmore, 2002). Due to a lack of diverse stakeholder involvement, the brand positioning became more of what the government and practitioners wanted the United Kingdom to be, rather than reflecting its existing capabilities. However in a nation of so many millions, it would be a vast endeavour to orchestrate extensive stakeholder involvement, which is why this study asserts that small nation branding as a concept is more easily realised in effective practice than the immense scale of branding a large nation.

It should be noted however that despite the decision to adopt the construct of a ‘nation brand’, all nations are already brands in their own right as they all possess varying levels of reputational capital (Fan, 2006). Some scholars (Kaneva, 2011; Loo & Davies, 2006), affirm that every nation is a brand and whilst some are developed deliberately, others are brands by default, they are formed by a myriad of different sources, mass media, product purchases, travel, or through education, word of mouth and dealing with the nation’s people. Therefore the process of ‘nation branding’, is really a process of ‘re-branding’. It serves to alter or filter the reputation and perceptions of a nation to outsiders. Nations engage in nation branding in their need to fulfil four main objectives. The attraction of tourists, to encourage inward investment, boost their national exports and the attraction of talent, which draws higher educated students and skilled migrant workers (Dinnie, 2008). As expressed by Fan (2006) the nation brand is distinctive and hard to protect, as the nation does not have a monopoly on the qualities it is attempting to promote. The development of a nation brand requires sustained attention and action with clear definition of who owns the brand in respect to the activities undertaken, be it public, private, civil or a combination of all three. The branding practitioner, Frost (2008), surmised that a nation branding campaign stands to benefit the nation’s citizens above all other factors, just as corporate branding can raise organisational morale and sense of purpose and pride amongst employees, a nation branding campaign can provide a nation with a sense of pride and purpose as well as an improved living standard. The relationship between corporate, product and nation branding will be discussed more extensively later in this study.

One of the concepts borrowed from product brand management and transposed in the context of the nation brand, is that of positioning (Dinnie, 2008), or in the case of the nation as it already exists as a ‘brand, ‘re-positioning’ (Fan, 2006). As outlined by Keith Dinnie (2008), in terms of communications campaigns many nations fall short in their points of difference in regards to their tourism claims, with generic geographic elements, such as beaches, mountains, sunny climates the typical cues. So as a way to overcome this, certain attributes namely values, are used in defining a nation brand’s positioning, Scotland’s nation brand positioning was based on the values of ‘integrity, inventiveness, independence of spirit and quality (Lodge, 2002, cited in Dinnie, 2008). Whilst Estonia, described later in detail, sought to reposition from being a Baltic nation, which carried somewhat unfavourable historical overtones, to that of Northeast European.

Anholt (2007, cited in Sevin, 2011), owing to his dissatisfaction with the practice of ‘nation branding’, coined the term ‘competitive identity’. This concept refers to a combination of brand management, trade, tourism, investment and promotion across multiple media channels. The disproval to which Anholt (2007) and others have demonstrated arises from the typically superficial process and implementation that occurs in nation branding. It is a process that seldom promotes alignment across departmental management strategies let alone their marketing and promotional strategy. In an essay in Dinnie’s (2008) book, Anholt affirms that it should be a component of national policy, rather than as a campaign that is segregated from planning, economic development or governance. If it is reduced to being an area of communications either as a department or role then it will be largely ineffective. However if it informs policy making and is utilised as a tool throughout the nation’s system of governance then it can be effective in driving change (Dinnie, 2008). Unlike advertising campaigns that utilise media channels for short durations, nation branding should be treated as a long term programme engaging national and municipal governments and all the constituent authorities and employing a comprehensive strategy that builds on existing realities and communicates them effectively to the outside world (Aronczyk, 2008).

2.2 Difficulties & Ethics of Nation Branding

In light of these affirmations for the use of nation branding, there exist many strong caveats for its wholehearted use, especially in its relation to transposing extant commercial brand management study and practice. Various scholars (Aitken & Campelo, 2011; Kavaratzis, 2005; Trueman, Klemm, & Giroud, 2004) note that as a brand, nations are a very complex construct, serving various aims and targeting disparate groups and individuals at the same time, therefore makes them difficult to control as practiced for commercially managed brands, generating doubts as to how applicable branding as a tool in its existing form might be.

If a public good is by definition an object of democracy, encouraging collective participation from its citizenry for the sake of benefits for all, what would be the consequence when this public good falls under the authority of private branding and advertising agents? (Aronczyk, 2008). The problem lies in the moral basis of citizenship. Aronczyk (2008) surmises that it is affected when authority is transferred from citizens’ elected officials to marketing practitioners who discuss the nation in categories that serve to privilege certain groups over others. These are discussions without necessary representation of stakeholder groups. In terms of the practitioners who act as advisers to governmental bodies, Kavaratzis (2005) states that these marketing consultants do not have the knowledge and skills required to facilitate the branding of a nation. Whilst the consultants have realised the advantages of branding the nation, they do not have the resources to translate branding techniques for the nebulous complexities of a nation, perhaps as a result their interest typically lying in the more ‘product’-orientated areas of a nation, namely tourism development and foreign investment.

Governments in search of quick and highly visible results are frequent users of place and nation branding campaigns (Iversen & Hem, 2008). Jansen (2008) criticises practitioner or commercially centric viewpoints, such as those held by Anholt (2003) in relation to democratic discourses. Anholt (2003) endorses a tight vertical hierarchy, verging on totalitarian control over the implementation of a nation’s branding efforts, with the aim of ensuring all messages that emanate from the nation are within the themed boundaries established to position the nation brand. This is where the similar brand management styles as seen in corporate branding come into play, and if nations cannot develop a similar single-minded sense of control then their programmes are “doomed to fail” (Anholt & van Gelder, 2003, p. 135)

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^[1] To foreign nations ‘soft’ power is attractive – promise or use of economic or cultural incentives, whilst ‘hard power’ is coercive – threat or use of economic sanctions or conflict.

^[2] The nation brand differs from ‘national brand’ as this refers to the prominent brands located within a nation, rather than the nation itself (Fan, 2006).

^[3] Whilst culture plays a role, political and economic factors are more visible elements to creating competitive advantage. For insight into literature on cultural aspects of nation branding see Aronczyk (2008); Skinner & Kubacki (2007); Schiller (1989); Leonard (1997).

^[4] In the literature this term is used interchangeably with ‘brand equity’ and ‘nation equity’