The Power of Brand in International Trade

It’s time for Italy to further strengthen “the Italian Brand”.

A brand, at its most basic, is a logos.  It creates for consumers a rational link between a product and the producer who made it.  A good brand is an ethos, not only rationalizing the relationship between producer and product but also imbuing a branded product with characteristics extrinsic to the product itself.  But great brands…  Great brands are a pathos.  They rationalize a good and endow it with an exogenous character, but they also elicit consumers’ emotions about that good.  And that is a brand at its most powerful.

Italy is a brand as pathos.  A survey of world opinion leaders carried out by Prometeia and ICE Agenzia for the Comitato Leonardo over the summer confirms the power of the Italian brand to stir emotions in the minds of international consumers.  When asked to name the qualities most identified with Italy, survey respondents reported that consumers in their countries associated Italy with aesthetics (e.g. “beauty,” “elegance”), tradition (e.g. “love and family,” “friendship”), la dolce vita (e.g. “lifestyle,” “passion”), or quality in three-fourths of responses (figure 1).  Obviously “Made in Italy” has done a good job of connecting with people on a deep level.

Figure 1 – Values associated with Italy, percent of total responses
* Question A1c: "Talking about Italy, what first comes to consumers' minds in your country when talking about values?"

Doubtful that other “Made in…” indicators would do the same.  In addition to Prometeia’s opinion leader survey and economic analysis, concomitant social media analysis shows “Made in Italy” competes with economic powerhouses America and Germany (figure 2).  Although social media has an admitted dearth of conversation about anything other than consumer goods, the analysis carried out is still a useful indication of international awareness of the Italian brand, with “Made in Italy” garnering just as much social media conversation as “Made in USA” over the month of June, both far outstripping “Made in Germany.”  But while an effective marketing tool, “Made in USA” merely connotes economic patriotism – supporting jobs at home, stemming the country’s decline as a manufacturing powerhouse – and has little resonance outside of the home market.  Ask consumers what “Made in Germany” means and they will most likely tell you “technology,” “reliability,” “efficiency,” or something of the like.  All positive qualities, to be sure, but certainly lacking an appeal to any of those pesky irrationalities that muck up economists’ otherwise elegant consumption models.  Try selling dresses by rhapsodizing about how efficiently they were produced.

Figure 2 – Total mentions, all social media, for "Made in…" indicators, 1-30 June, 2014

And yet, try selling pharmaceuticals (they’re Italy’s top export, at 5% of total exports) by highlighting their beauty, by capitalizing on la dolce vita.

While revealing the strength of the Italian brand, the survey also revealed its current limitations.  While 86% of survey responses cited one of the three Fs – food, fashion, Ferrari – as the products most associated with Italy, Italian trade is much more than these three things.  Within the top ten exports, industry and high technology – think pharmaceuticals, machinery, and chemicals – sit alongside fashion and footwear.  Yet, when asked to name Italian values, only 3% of responses cited innovation and technology, and when asked to identify Italian enterprises’ strengths compared to their competitors, only a fourth of respondents cited “innovation capacity,” “production flexibility,” and/or “specialization.”  Respondents were also at a loss to name Italy’s competitor countries in the mechanical engineering sector, as if the thought Italy might compete had never crossed their minds.  The response rate for this question was much lower than for questions asking respondents to name competitor countries in the food, wine, fashion, and furniture sectors.  Granted, the average consumer in Tokyo, New York, or London is rarely in the market for hydraulic pumps, but with a brand as strong as Italy’s, there’s space to add new values and associations to the brand profile.  Why can’t Italy be the brand of both tradition and technology, of both fashion and pharmaceuticals?

The survey, then, highlights the discrepancy between perceptions of the Italian economy and the Italian economy in fact.  Within top ten Italian exports for 2013, Italy holds comparative advantage in fashion, footwear, and automotive components, yes; but also advanced pharmaceuticals, machinery, plastics, and hardware (figure 3).[1]  Call these the “forgotten half” of Italian trade.  The Italian brand needs and deserves to reflect both these sets of goods, not just the one.

Figure 3 – Top ten Italian exports by dollar value and corresponding revealed comparative advantage
* Numbers within bars indicate revealed comparative advantage, calculated as the Balassa index, RCA=(xij/Xi)/(xaj/Xa), where xij denotes Italian exports of product j, Xi denotes total Italian exports, xaj denotes world exports of product j, and Xa denotes total world exports. Values > 1 denote comparative advantage. † Values in billions of USD.

No matter what rhetorical level a brand operates at, it remains a commercial tool:  a way to sell more stuff.  Brands of pathos do a better job at this (If in doubt, just ask Pepsi executives how much they’d pay to have a brand like Coca-Cola’s).  Stakeholders in Italian trade are lucky to have a brand that can help them sell more stuff, but if the Prometeia survey is any indication, there’s an opportunity to sell even more stuff.  As one American opinion leader, a third-generation Italian-American marketing executive, put it, there’s a “need to educate […] younger generations that more than cars, food and sexy women come from Italy.”

So why not complement tradition with technology?  The Italian brand can and should encompass both these things; they aren’t mutually exclusive and one doesn’t dilute the other.  Italy itself is proof of this.  International consumers connect with Italy on a level most marketers could only dream of.  As the country tries to jump-start its economy, it’s time to further strengthen the Italian brand, updating its profile to reflect the Italian economy in full.

[1] Revealed comparative advantage computed as Balassa index, RCA=(xij/Xi)/(xaj/Xa), where xij denotes Italian exports of product j; Xi denotes total Italian exports; xaj denotes world exports of product j; and Xa denotes total world exports.

Values > 1 indicate comparative advantage.


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