A new position for Central America By Al Ries for Ad Age.com : 7/2009

By Al Ries.



Why is Central America poor while America is rich?

The average per-capita gross domestic product for the seven countries in Central America is $5,650, as compared with $45,800 for the United States.

No country ever got rich by closing its borders and selling things to each other. Switzerland didn’t get rich by selling watches to the 7.6 million people who live there. Switzerland got rich by selling watches to the 6.8 billion people who live in the rest of the world.

And not just watches. But watch brands like Rolex, Piaget, Chopard and Patek Philippe. Actually there are a lot more watches made in Asia than in Switzerland. But you don’t get rich by building products. You get rich by building brands. Global brands.

Every year, Interbrand, a brand valuation company, releases its list of the 100 best global brands. Fifty two of the 100 were from the United States. Ten from Germany. Nine from France. Seven from Japan. Four from Italy. And four from Switzerland.

How many were from Central American countries? None.

Global brands are extremely valuable. According to Interbrand, the seven most valuable global brands are worth $329 billion which is 41 percent more than the $233 billion gross domestic product of the seven Central American countries.

So Central American companies should start to build global brands? Not exactly.

There’s a problem.

A brand might be global, but it has to come from some country. Coca-Cola is a global brand from America. Louis Vuitton is a global brand from France. Mercedes-Benz is a global brand from Germany.

Country identities are so strong that it doesn’t even matter where the product is manufactured. A Toyota made in America by American workers with mostly American-made parts is called a “Japanese car.”

It’s difficult to build a global brand from a country that doesn’t have a favorable perception for that category. Germany has a favorable perception for engineered products like automobiles. But German wine, on the other hand, is not very popular in any country of the world except Germany.

France has a favorable perception for fashion and wine, but not for automobiles and engineered products.

A global brand from Nicaragua, for example, has to be consistent with the global perception of Nicaragua. Which is what?

It’s unfair, but it’s difficult for a small country to become well known around the world. And even more difficult to create a favorable perception for that small country.

What do you know about Côte d’Ivoire (population 18 million)? Or Burkina Faso (14 million)? Or Malawi (13 million)?

These three African countries are each larger than any Central American country, yet they are almost unknown on the global market.

What’s difficult for a small country is easy for a large country. China is the largest country in Asia. Germany is the largest country in Europe. America is the largest country in North America. Brazil is the largest country in South America.

When you’re big, you’re automatically famous, thanks to the media.

Central America should borrow a strategy from the European Union. Form a geo-political entity that can make a name for itself on the global market.

Today, the European Union is famous around the world. It has its own flag and its own currency, yet the countries themselves are independent.

It didn’t happen overnight. The European Union started with six countries under the banner of the European Economic Community and today has 27 members, a majority of the 45 countries in Europe.

As you know, a similar process has started in Central America with the formation of the Central American Parliament, the Central American Bank for Economic Integration and the Central American Common Market.

Then there’s SICA, Sistema para la Integración Centroamericana, which includes the seven nations plus the Dominican Republic. Last year, SICA announced an agreement to pursue a common currency and a common passport.

SICA? That’s a terrible name and a name unlikely to become well known on the global market. But unless the marketing community does something and does something quickly, the game is going to be over. And you are going to miss a golden opportunity to start the global brand-building process.

Project names tend to morph into brand names. Coca-Cola set up a project to develop a calorie-free cola under the name “The alternate beverage.” Sure enough, the new cola brand was called “TAB,” internal shorthand for “the alternate beverage.”

“The name is the hook that hangs the brand on the product ladder in the prospect’s mind,” a quote from the Positioning book that Jack Trout and I wrote many moons ago.

SICA is a lousy hook. It doesn’t mean anything and it’s unlikely to find its way into the minds of those global prospects.

What should the name communicate? The geographical location, of course. Everybody knows that the European Union is in Europe.

But where is SICA? Most people wouldn’t know and most people wouldn’t bother to find out.

There’s another problem. Even if you know that “CA” in SICA stands for Central America, where is Central America?

To a logical person in many countries of the world, Central America is somewhere in the vicinity of Chicago.

“America” as a country has become so well known around the world (and for mostly negative reasons), that relatively few people think of America as the two continents combined and Central America as somewhere in the middle of the two continents.

Furthermore, “Central America” excludes the Dominican Republic, an important country that obviously needs to be part of the deal.

Then, too, what would you call yourself as a person?

• An American is someone from America.

• A European is someone from Europe.

• A Central American? That doesn’t sound right to me.

SICA is a lousy name, but Central America isn’t much better. The truth is, you need a new hook.

Whoa! Inventing a new name for a country or any geographical area is dicey. Twenty years ago, Burma changed its name to Myanmar, but today the country is better known as “Formerly Burma.”

What to do?

No problem. Just borrow an established name and tailor it for your own purposes. My suggestion: “Latin America.”

And the organization of the Latin American nations could be called the “Latin American Union,” a name reflecting the European Union.

Think big. Starting with the seven nations in Central America, the Latin American Union could branch out to include the larger Caribbean nations, starting with the Dominican Republic and eventually Cuba and possibly Puerto Rico.

The next step would be to include some of the countries in the northern half of South America.

So instead of having to call yourself a “Central American,” you could call yourself a “Latino,” or a “Latina.”

If history is any guide, once the Latin American Union becomes well know, people will start calling it the L.A.U. That would mean the logical name for an L.A.U. currency would be the lauro, reflecting the euro of the E.U.

Larger organizations are more stable than smaller ones. The same is true for countries. The current troubles in Honduras might have been avoided if there had been a stabilizing influence called the Latin American Union.

In union, there is strength. In the Latin American Union, there is strength and enormous possibilities.