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Svend Hollensen GLOBAL MARKETING 4th Edition Lecture by Ewa Baranowska-Prokop, Ph.D. Communication decisions De Beers: forward integration What could be De Beers motives for making forward integration into the retail & consumer market? Is it a wise decision? How should De Beers develop its Internet strategy following this forward integration strategy? Would it be possible for De Beers, with its branded diamonts, to standardize the international marketing strategy across borders? Hollensen, Global Marketing 4e, © Pearson Education 2008 17-2 BMW Motorcycles: A case study (1) Should BMW use standardization or adaptation in promoting the motorcycles outside the US and Germany? Requires web access Hollensen, Global Marketing 4e, © Pearson Education 2008 17-3 BMW Motorcycles: A case study (2) Why is BMW using its website as a virtual showroom rather than also selling online directly to consumers? Should BMW develop and promote a new motorcycle brand to differentiate its motorcycles from competing motorcycle brands as well as differentiating them from BMW cars? Hollensen, Global Marketing 4e, © Pearson Education 2008 17-4 Learning objectives Define and classify the different types of communication tools Describe and explain the major steps in advertising decisions Describe the techniques available and appropriate for setting the advertising budget in foreign markets Hollensen, Global Marketing 4e, © Pearson Education 2008 17-5 Learning objectives (2) Discuss the possibilities of marketing via the Internet Explain how important personal selling and sales force management are in the international marketplace Define and explain the concept of ‘viral marketing’ Discuss how standardized international advertising has both benefits and drawbacks Hollensen, Global Marketing 4e, © Pearson Education 2008 17-6 Figure 17.1 The shift from seller initiative to buyer initiative Hollensen, Global Marketing 4e, © Pearson Education 2008 17-7 Figure 17.2 Elements of the international communication process Hollensen, Global Marketing 4e, © Pearson Education 2008 17-8 Figure 17.3 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Advertising evaluation Hollensen, Global Marketing 4e, © Pearson Education 2008 17-9 What is this? Which form of budgeting means that the firm simply allocates a fixed proportion of sales to the advertising budget? Percentage of sales method Hollensen, Global Marketing 4e, © Pearson Education 2008 17-10 Percentage of sales method Advantages Guarantees equality among markets Easy to justify Guarantees only what is affordable is spent Disadvantages Based on historical performance Ignores necessity of increased spending during declining sales Does not consider goals Fails to address relationship between advertising and sales Hollensen, Global Marketing 4e, © Pearson Education 2008 17-11 What is this? Which form of budgeting simply duplicates the amounts spent on advertising by major rivals? Competitive parity Hollensen, Global Marketing 4e, © Pearson Education 2008 17-12 What is this? Which form of budgeting starts with determining the advertising objectives and then ascertaining the tasks needed to attain the objectives? Objective and task approach Hollensen, Global Marketing 4e, © Pearson Education 2008 17-13 What is this? What term refers to the total portion of the target market exposed to at least one ad in a given time period? Reach Hollensen, Global Marketing 4e, © Pearson Education 2008 17-14 What is this? What term refers to the average number of times within a given timeframe that each potential customer is exposed to the same ad? Frequency Hollensen, Global Marketing 4e, © Pearson Education 2008 17-15 European agency selection factors National Supports national subsidiary Investment in existing brand best handled nationally Closer to marketplace Personalized service and greater creativity Diversity of ideas Pan-European Reflects new European reality Economies of scale in new product development and branding Uniformity of treatment across Europe Resources and skills of major agency Easier to manage one agency group Source: adapted from Lynch, 1994, Table 11-4. Hollensen, Global Marketing 4e, © Pearson Education 2008 17-16 Aspects of advertising evaluation Communication impact Pretesting of print and broadcast ads Testing finished ad Sales impact Hollensen, Global Marketing 4e, © Pearson Education 2008 17-17 Public relations Possible PR methods Event sponsorship Prizes at events Press releases Announcements Lobbying Possible PR targets Employees Shareholders Suppliers Customers General public Governments Financial markets Hollensen, Global Marketing 4e, © Pearson Education 2008 17-18 What is this? What term refers to a short-term effort directed primarily to the consumer and/or retailer to achieve specific objectives such as product trial? Sales promotion Hollensen, Global Marketing 4e, © Pearson Education 2008 17-19 Factors leading to expansion of sales promotion activities Greater retail competition Higher levels of brand awareness Improved retail technology Greater integration of promotional mix in media campaigns Hollensen, Global Marketing 4e, © Pearson Education 2008 17-20 Factors leading to expansion of international direct marketing activities Developments in mailing technology Escalating costs of other forms of promotion Increasing availability of quality lists Developments in information technology Increasing availability throughout developed world of interactive television facilities Hollensen, Global Marketing 4e, © Pearson Education 2008 17-21 Questions to ask when assessing sales force effectiveness Is the selling effort structured for effective market coverage? Is the sales force staffed with the right people? Is strong guidance provided? Is adequate sales support in place? Does the sales compensation plan provide the proper motivation? Hollensen, Global Marketing 4e, © Pearson Education 2008 17-22 Using expatriates Advantages Product knowledge Training for promotion Greater home control Disadvantages Highest costs High turnover High training costs Source: Reprinted from Industrial Marketing Management, Vol. 24, Honeycutt, E.D. and Ford, J.B. (1995) ‘Guidelines for managing an international sales force’, p. 138, Copyright 1995, with permission from Elsevier. Hollensen, Global Marketing 4e, © Pearson Education 2008 17-23 Staffing the sales force from the host country Advantages Economical High market knowledge Language skills Best cultural knowledge Faster implementation Disadvantages Needs product training May be held in low esteem Importance of language skills declining Difficult to ensure loyalty Hollensen, Global Marketing 4e, © Pearson Education 2008 17-24 Staffing the sales force from a third country Advantages Cultural sensitivity Language skills Economical Allows regional sales coverage May allow sales in a country in conflict with home country Disadvantages Face identity problems Blocked promotions Income gaps Needs product/company training Loyalty assurances Hollensen, Global Marketing 4e, © Pearson Education 2008 17-25 What is this? What term refers to a marketing technique that seeks to exploit existing social networks to produce exponential increases in brand awareness through online word-of-mouth communication? Viral marketing Hollensen, Global Marketing 4e, © Pearson Education 2008 17-26 Viral marketing Advantages Inexpensive Active and participatory Effectively targeted through peer-to-peer networks Disadvantages Requires technologically compatible programs Filtering programs may prevent receipt Must be easy Hollensen, Global Marketing 4e, © Pearson Education 2008 17-27 Developing a viral marketing campaign Step 1: Create compelling content Step 2: Target the right audience Step 3: Seed the message Step 4: Control/ measure results Hollensen, Global Marketing 4e, © Pearson Education 2008 17-28 Courvoisier cognac used a localization strategy http://www.courvoisier.com/ Hollensen, Global Marketing 4e, © Pearson Education 2008 17-29 Negotiation A negotiation process can be defined as a process in which two or more entities come together to discuss common and conflicting interests in order to reach an agreement of mutual benefit Hollensen, Global Marketing 4e, © Pearson Education 2008 18-30 Figure 18.1 The cross-cultural negotiation process Non-task related interaction Seller’s cultural background 1 Status distinction 2 Impression formation accuracy 3 Interpersonal attraction Task related interaction Cultural distance between seller and buyer 4 Exchange of information 5 Persuasion and bargaining strategy 6 Concession making and agreement Buyer’s cultural background 7 Negotiation outcome Source: Adapted from Simintiras, A.C. and Thomas, A.H. (1998) and Simintiras, A.C. and Reynolds, N. (2001). Hollensen, Global Marketing 4e, © Pearson Education 2008 18-31 What is this? The best alternative to a negotiated agreement is known as ______. BATNA Hollensen, Global Marketing 4e, © Pearson Education 2008 18-32 Hofstede’s cultural dimensions Masculinity/femininity Uncertainty avoidance Power distance Individualism/collectivism Hollensen, Global Marketing 4e, © Pearson Education 2008 18-33 Figure 18.2 Gap analysis in a cross-cultural negotiation Hollensen, Global Marketing 4e, © Pearson Education 2008 18-34 Disney had to adapt to European cultures Hollensen, Global Marketing 4e, © Pearson Education 2008 18-35 Approach to general intercultural preparation (1) Build awareness about how cultural differences impact upon them in the sales organization Motivate salespeople and managers to ‘rethink’ behaviour and attitude towards customers Allow salespeople to examine their own biases in a psychologically safe environment Hollensen, Global Marketing 4e, © Pearson Education 2008 18-36 Approach to general intercultural preparation (2) Examine how stereotypes develop and how they can create misunderstandings between buyers and sellers Identify diversity issues that need to be addressed in the international sales organization Hollensen, Global Marketing 4e, © Pearson Education 2008 18-37 Steps for improving crosscultural negotiation competences Assess communication competences of salespersons Assess communication competences of negotiators in the buying firm Match communication and negotiation competences of buying and selling firm Hollensen, Global Marketing 4e, © Pearson Education 2008 18-38 What is this? What term refers to employees who are sent out from the headquarters to work for the company in the foreign markets, often in its subsidiaries? Expatriates Hollensen, Global Marketing 4e, © Pearson Education 2008 18-39 Attributes to consider when selecting expatriates Foreign-language skills General relational abilities Emotional stability Educational background Past cultural experience Ability to deal with stress Hollensen, Global Marketing 4e, © Pearson Education 2008 18-40 Risk of culture shock is lower when expatriate exhibits Open-mindedness Empathy Cultural sensitivity Resilience Low ego identity Hollensen, Global Marketing 4e, © Pearson Education 2008 18-41 Expatriate training methods Area/country descriptions Cultural assimilation training Role playing Handling critical incidents Case studies Stress reduction training Field experience Extensive language training Hollensen, Global Marketing 4e, © Pearson Education 2008 18-42 Figure 18.3 ‘Bottom-up’ learning in global marketing Hollensen, Global Marketing 4e, © Pearson Education 2008 18-43 For discussion (1) Identify and discuss problems associated with assessing advertising effectiveness in foreign markets Compare domestic communication with international communication. Explain why ‘noise’ is more likely to occur in the case of international communication processes Explain how personal selling may differ overseas from how it is used in the home market Hollensen, Global Marketing 4e, © Pearson Education 2008 17-44 For discussion (2) Why do more companies not standardize advertising messages worldwide? Identify the environmental constraints that act as barriers to the development and implementation of standardized global advertising campaigns What is meant by saying that advertising regulations vary around the world? Hollensen, Global Marketing 4e, © Pearson Education 2008 17-45 For discussion (3) Evaluate the ‘percentage of sales’ approach to setting advertising budgets in foreign markets Explain how the multinational firm may have an advantage over local firms in training the sales force and evaluating its performance Identify and discuss problems associated with allocating the company’s promotion budget across several foreign markets Hollensen, Global Marketing 4e, © Pearson Education 2008 17-46