Brands poised to compete on world stage during Rio Olympics

Rio Olympics 2Brazil’s image is being battered by concerns about bacteria in the water and Zika, economic recession and questions about whether Rio’s infrastructure is ready for the 2016 Summer Olympics.

Hosting the Olympics is a chance to build a country’s brand on the world stage. Millions will be watching to see how well the athletes – and the host country – perform during the Games. If Rio does well, the halo effect could benefit Brazilian firms competing in global markets.

To succeed beyond their own borders, companies in emerging markets like Brazil can follow different routes to build a global brand. In my book “Brand Breakout: How Emerging Market Brands Will Go Global,” which I wrote with Nirmalya Kumar, I explore three strategies used by Brazilian firms.

  • Route 1: Cultural resources

Use positive cultural myths for positioning. 
Countries can elicit unique, positive associations that extend to a product category in the minds of global consumers – think silk from China, yoga from India and beach culture from Brazil.

Alpargatas, the largest public footwear company in Latin America, capitalized on a “cultural resource” with Havaianas, their blockbuster brand of flip flops. With its vibrant designs and bright color, Havaianas convey joy, youth and fun – characteristics widely associated with Brazilian beach culture.

The firm conquered Brazil – where it positioned Havaianas across all social classes – and then targeted middle and upper classes in the U.S. and international markets. It now sells through international websites and stores in Europe and Singapore, along the way improving attitudes toward Brazilian products and transforming an unglamorous product line into a lifestyle brand.

The 2014 World Cup exposed many more people to the Brazilian culture of fun, sun, beaches and parties. Havaianas will have an official presence at Rio 2016, including a series of Rio-inspired flip-flops.

  • Route 2: National champion

Leverage strong support from the state.
Some firms become global brands because they are championed by the state and receive subsidies or preferential treatment, such as state resources to expand both domestically and, subsequently, internationally.

While there is plenty of evidence that this pathway doesn’t always produce winning brands, it worked for Brazilian aircraft manufacturer Embraer. Founded by presidential decree in 1969, the company benefited from Brazil’s tax policies, injections of capital and preferential purchase agreements. Today, Embraer is a dominant player in the regional jet market.

  • Route 3: Natural resources

Brand commodities in four steps
A brand can be created for natural resources, standing in as both a quality guarantee and as a provider of emotional satisfaction. This is often done by either explicitly linking the commodity to a country or by branding the commodity itself. The principle is to brand a natural resource in a sequence of four interlocking steps: define the geographical region; specify the production standards; authenticate the ingredients and processes; and take the brand international.

Natura, the largest cosmetic maker in Latin America, used this strategy to capitalize on Brazil’s image of beautiful, untamed nature and biodiversity with its Natura Ekos line. Its products use traditional plant ingredients, amplifying the country’s environmental heritage and promoting quality of life. Natura’s concern for the environment translates into its elaborate production system, which enhances brand credibility and perceptions of quality. Its green production and product specifications also raise entry barriers for competitors. Natura has annual sales of about $3B and became a certified B Corp in 2014.

Will Brazil emerge as a champion?
Critics say Brazilian leaders didn’t go the “national champion” route to develop a coordinated national brand strategy for the country.

“Given the stage and the visual image of the games against the backdrop of one of the most beautiful, unusual cities in the world, it’s a pity that they’ve not carried that opportunity into product,” according to a former head of marketing for the Olympic Games.

Could controversy over the environmental risks in Rio harm the positive associations that brands like Havaianas and Natura evoke? Will firms tap Brazil’s Olympic opportunity?

We’ll have to watch and see.