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Global Marketing Tom Gillpatrick, Ph.D. Juan Young Professor of Marketing & Executive Director, FILC Master International Management Program School of Business Administration Portland State University 3 December 2003 1 Selected Issues of Global Marketing Strategies IV. Global Communication Issues - Global advertising & culture - Global budgeting - Creative strategy - Global media - Global regulations - Agency selection & coordination - Global IMC and other promotion - Marketing and the internet 2 Week Seven Objectives 12-3-03 P1: Global Marketing Communications Promotion Goals/Objectives Promotion Flows Promotion Mix P2: Global Communications Issues P3: Guest Speaker: Jim Thayer, President OSS (Overseas Strategic Services) Case Discussion: Motorola China Experience 3 Basic Promotional Goal Shift the Demand function Price D2 D1 Quantity 4 Marketing Communications & Managing Customer Response Market Based: Promotion Strategies Promotion Objectives Build Awareness Reinforcement or Change Attitudes or Behavior Action Increasing Customer response Develop measures to evaluate effectiveness 5 The Dual Role of Marketing Communications Investing in the Enablers of Growth Product Price/ Cost Place Processes People/ Climate Positioning Promotion “Sales over night” ... Keeping the engine running ... Tactical ... Share of the market “Brand over time” ... While changing the fan belt ... Putting the pitch before the product (Strategic) ... Share of mind ... Making the latent blatant 6 Hierarchy of Effects Model Awareness Implications for promotion mix Knowledge Media Advertising Publicity Liking Sales Promotion Preference Conviction Personal Selling Purchase 7 Promotion Flows Manufacturers Distributors Retailers Consumer response 8 Communication Tasks Market- ID target market, PLC Message- content, structure,format, source Media/channels Mix- promotion mix- IMC, push/pull Money- budget Measures 9 Customer Response Strategies Pull Push Customer Preference Customer Loyalty Market Coverage Distributor Push • Attraction • Search Eff. • Stock-outs • Mktg.-Effort • Awareness • Commitment • Availability • Merchandising Communications Mix Customer-Pull Communications Advertising Sales Promotion Catalogs Direct Marketing Telemarketing Electronic Marketing Public Relations Customer-Push Communications 10 Customer Response Index Action (10%) Intentions (32%) Interested (23%) Comprehend (54%) Aware (63%) Not Interested (77%) Don’t Comprehend (46%) Unaware (37%) No Intentions (68%) CRI .3% No Action (90%) 2% 5% 26% 29% 37% 100% 11 Causes of Poor Customer Response Poor Response Marketing Problem Underlying Cause Low Awareness Marketing Communications • Poor Media Selection • Insufficient Frequency • Poor Ad Copy Poor Comprehension Marketing Communications • Insufficient Frequency • Poor Ad Copy Low Interest Product Positioning Low Intentions Product Positioning Low Purchase Level Distribution and In-Store • Insufficient Benefits • High Price • Poor Ad Copy • Weak Value Proposition • Need for Low-cost Trial • Not Readily Available • Not Available • Hard to Find In-store • Insufficient In-store Services 12 13 The International Communications Process Cultural Context B Cultural Context A Message channel Encoding Message translated into appropriate meaning Noise Competitive activities, other salespeople, confusion and so on Advertising Media and or personal sales force Decoding Encoded message interpreted into meaning Feedback Information source Marketer with a product Evaluation of communications process and measure of action by receiver Receiver Action by consumer responding to decoded message 14 A Model of the International Mass Communications Process Producer/ marketer/ advertiser Sets objectives and advertising budget Advertising agency Mass Media Develops message (encoding) and selects media Carries the message Coordination and control Sender’s cultural setting Generate feedback on effects Opinion leaders, individuals Receive the message and interpret (decoding) Individuals Think, feel and act (hierarchy of effects) Receiver’s cultural setting 15 The Four Components of Global Advertising The Four Components of Global Advertising 1. Message and Creative 2. Media 3. Strategy 4. Organization 16 Global Advertising is Most Powerful When: Global Advertising is Most Powerful When: • the image communicated can be identical across countries • the symbols used carry the same meaning across countries • the product features desired are the same • the usage conditions are similar across markets 17 Advertising Intensity in Selected Nations Country North America Canada United States Latin America Argentina Mexico Asia India Indonesia Japan Malaysia South Korea Australia Europe Belgium France Germany Italy Sweden United Kingdom Advertising as percent of gross domestic product 1.17% 2.49 1.08 0.16 0.28 0.39 0.82 0.85 1.21 1.20 0.54 0.65 0.82 (1990) 0.57 0.63 1.35 18 Text Overview 1. Global Advertising and Culture 2. Setting the Global Advertising Budget 3. Creative Strategy 4. Global Media Decisions 5. Advertising Regulations 6. Choosing an Advertising Agency 7. Coordinating International Advertising 8. Other Forms of Communication 9. Globally Integrated Marketing Communications (GIMC) 19 Introduction There are many cultural challenges that advertisers face in global marketing. Global advertising encompasses areas such as advertising planning, budgeting, resource allocation issues, message strategy, and media decisions. Other areas include: local regulations, advertising agency selection, coordination of multi-country communication efforts and regional and global campaigns. 20 1. Global Advertising and Culture Language Barriers Language is one of the most formidable barriers in global marketing. Three types of translation errors can occur in international marketing: Simple carelessness Multiple-meaning words Idioms Other Cultural Barriers Religion 21 1. Global Advertising and Culture (contd.) Cultural traps/cultural dimensions Geert Hofstede’s cultural grid can be used to assess the appropriateness of comparative advertising campaigns (see Exhibit 14-2). The five cultural dimensions include: Power distance Uncertainty avoidance Individualism Masculinity Long-termism 22 2. Setting the Global Advertising Budget Companies rely on different kind of advertising budgeting methods which include: See Exhibit 14-3 Percentage of Sales Competitive Parity Objective-and-Task Method Resource Allocation 23 Creative Challenges of Global Advertising Legal and Tax Considerations Language Limitations Cultural Diversity Media Limitations Production and Cost Limitations 24 Media Usage in Various Countries* Nation Print Radio Cinema Transit Argentina 148 155 43 16 47 Brazil 126 77 10 — 4 France 2,712 4,717 611 57 1,108 Germany 2,826 13,423 641 157 550 133,434 12,900 1,913 — 5,231 South Korea 1,083 1,755 188 — 708 Spain 2,386 4,569 873 62 384 143 1,560 — 13 82 4,621 9,071 287 84 530 45,410 67,536 14,022 — 1,672 Japan Sweden United Kingdom United States * 1995 TV 25 3. Creative Strategy The “Standardization” versus “Adaptation Debate” Merits of Standardization: Scale Economies Consistent Image Global Consumer Segments Creative Talent Cross-Fertilization Barriers to Standardization: Cultural Differences 26 3. Creative Strategy (contd.) Advertising Regulations Market Maturity “Not-Invented-Here” (NIH) Syndrome Approaches to Creating Advertising Copy: “Laissez Faire” Export Advertising Global Prototype Advertising Prototype Standardization 27 3. Creative Strategy (contd.) Regional Approach Pattern Standardization Modular Approach 28 4. Global Media Decisions Media Infrastructure Media infrastructure differs from country to country Media Limitations The major limitation in many markets is media availability. Recent Developments in the Global Media Landscape: Growing commercialization and deregulation of mass media 29 4. Global Media Decisions (contd.) Shift from radio and print to TV advertising Rise of global and regional media Growing spread of interactive marketing Growing popularity of text messaging Improved monitoring Improved TV-viewership measurement 31 Global Marketing Communications In the U.K., all advertising is allowed if not specifically forbidden. In Germany, everything is forbidden if not specifically allowed. In Italy, everything is allowed, even if forbidden, and In Belgium, nobody knows what’s forbidden. Angela Mills 33 5. Advertising Regulations The major types of advertising regulations include: Advertising of “Vice Products” and Pharmaceuticals Comparative Advertising Content of Advertising Messages Advertising Targeting Children Other Advertising Regulations: Issues of local languages, tax issues, and advertising rates. 34 5.Advertising Regulations (contd.) Strategies to deal with advertising regulations: Keep track of regulations and pending legislation Screen the campaign early on Lobbying activities Challenge regulations in court Adapt marketing mix strategy 35 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries Country Category Australia Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions Austria Canada Denmark No restrictions or minor ones Authorized with major restrictions General ban with Almost important total exceptions prohibition x x x x x x x x x x x x 36 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries Country Category France Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions Germany Hong Kong Japan No restrictions or minor ones Authorized with major restrictions General ban with Almost important total exceptions prohibition x x x x x x x x x x x x 37 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries Country Category Premiums Gifts Competitions United Premiums Kingdom Gifts Competitions United States Premiums Gifts Competitions Venezuela Premiums Gifts Competitions No restrictions or minor ones Korea 13-9 x x x x x Authorized with major restrictions General ban with Almost important total exceptions prohibition x x x x x x x Source: Source: Jean Jean J. J. Boddewyn, Boddewyn, Premiums, Premiums, Gifts, Gifts, and and Competitions, Competitions, New New York: York: (International (International Advertising Advertising Association, Association, 1988. 1988. © 38 © 1988 1988 International International Advertising Advertising Association Association 6. Choosing an Advertising Agency In selecting an ad agency, the international marketer has several options: 1. Work with the agency that handles the advertising in the firm’s home market. 2. Pick a purely local agency in the foreign market. 3. Choose the local office of a large international agency. 4. Select an international network of ad agencies that spans the globe. 39 6. Choosing an Advertising Agency (contd.) When screening ad agencies, the following set of criteria can be used: Market coverage Quality of coverage Expertise with developing a central international campaign Creative reputation Scope and quality of support services 40 6. Choosing an Advertising Agency (contd.) Desirable image (“global” versus “local”) Size of the agency Conflicting accounts 41 7. Coordinating International Advertising Global or pan-regional advertising approaches require a great deal of coordination. The following mechanisms can help: Monetary Incentives (cooperative advertising) Advertising Manuals (brand book) Lead-Country Concept Global or Pan-Regional Meetings: Six guidelines to implement a global or panregional advertising approach include: 42 7. Coordinating International Advertising (contd.) (1). Top management must be dedicated to going global. (2). Use a third party (e.g., the ad agency) to help sell key managers the benefits of a global advertising approach. (3). A global brief based on cross-border consumer research can help persuade managers to think in terms of global consumers. 43 7. Coordinating International Advertising (contd.) (4). Find product champions and give them a charter for the success of the global marketing program. (5). Convince local staff that they have an opportunity in developing a global campaign. (6). Get local managers on the global marketing team -- have them do the job themselves. 44 8. Other Forms of Communication Sales Promotions: Sales promotion refers to a collection of short-term incentive tools that lead to quicker and/or larger sales of a particular product by consumers or the trade. Rationales explaining the local character of promotions: Economic development Market maturity Cultural perceptions Trade structure (pull vs. push promotions) 45 8. Other Forms of Communication (contd.) Government regulations Direct Marketing Event Sponsorships Trade Shows: When attending an international trade show, the following guidelines might prove useful: Decide on what trade shows to attend at least a year in advance. Prepare translation of product materials, price lists, selling aids. 46 8. Other Forms of Communication (contd.) Bring plenty of literature. Bring someone who knows the language or have a translator. Send out, ahead of time, direct-mail pieces to potential attendees. Find out the best possible space, for instance, in terms of traffic. Plan the best way to display your products and to tell your story. Do your homework on potential buyers from other countries. 47 8. Other Forms of Communication (contd.) Assess the impact of trade show participation on the company’s bottom line. Performance benchmarks may need to be adjusted when evaluating trade show effectiveness in different countries since attendees might behave differently. 48 Market Facilitators The Company The Competition Government Institutions Securities Analysts Interest Groups Advertising Agencies Market Research Firms Business Journalists PR Firms Trade Journalists Distributors suppliers of Complementary Products & Services Consultants Trade Associations OEM’s VAR’s The Customer 49 Brand Management Wheel Word of Mouth Advertising HR, Employee Morale, Brand Culture Scholarships and Endorsements Service Standards and Behavior Product Performance and Development BRAND Promotions STRATEGY Packaging Channel management, CRM, Internet Physical Premises Public Relations Corporate Events Adapted from P. Temporal “Advanced Brand Management: from Vision to Valuation” 50 9. Globally Integrated Marketing Communications (GIMC) Integrated Marketing Communications (IMC): IMC coordinates different communication vehicles – mass advertising, sponsorships, sales promotion, packaging, point-of-purchase displays, so forth. Globally Integrated Marketing Communications (GIMC): GIMC is a system of active promotional management that strategically coordinates global communications in all of its component 51 9. Globally Integrated Marketing Communications (GIMC) parts. Both horizontally (country-level) and vertically (promotion tools) are used in GIMC. 52 Strategic Matrix Interpretation Areas/Priorities for image correction Areas w/ no clear image position Reasons for current franchise – must be maintained Relative Performance STRONG Threats (Remedy) Competitive (Enhance) Core Strengths (Maintain) MEDIUM Weaknesses (Enhance) Lower Priority Opportunities (Increase salience) Low Priority Potential Opportunities (Increase salience) LOW AVERAGE HIGH Relative Importance WEAK Lower Priority Increased salience of such existing strengths can significantly enhance positioning Source: Asia Market Intelligence 53 AMI’s Pinpoint™ Analysis Beverage Market Example PERFORMANCE WEAK AVERAGE HIGH Attractive Packaging Growing Brand Easy in Pubs STRONG MEDIUM IMPORTANCE Always Fresh Buy Best High Quality Good Tasting Modern Promoted in Bars Easy to drink International standards Trendy Good Advertising Easy shop LOW Good value Locally made Younger Hear a lot about brand Expensive Special Occasion Strong Source: Asia Market Intelligence 54 Emotional Brand Relationship Process Togetherness/partnership Loyalty Trust Friendship Respect Information Awareness Adapted from P. Temporal “Advanced Brand Management: from Vision to Valuation” 55 56 57 58 Marketing to the New Asia “Typical” Japanese: What is the extent of staff understanding? Does it affect decision-making? Are the insights still valid? More sophisticated marketing research: How to understand markets better? Does research account for: Reticent focus groups? Middle-of-the-road responses to surveys? Should marketing research resources be increased given: Growing heterogeneity of the Japanese market? Competition for segments? 59 Distribution of Consumer Advertising and Sales Promotion Expenditures in Asia (by percentage) Media Total Advertising and Promotion Advertising in the Four Mass Media Newspapers Magazines Radio TV Sales Promotions Expenditures DM Inserts Outdoors Transportation POP Telephone Directory Exhibitions, visuals, etc. New Media Advertising Expenditures 1986 1987 1988 1989 1990 1991 1992 100.0 100.0 100.0 100.0 100.0 100.0 100.0 66.0 25.1 6.5 4.5 29.9 33.9 3.9 6.2 6.5 4.4 3.2 2.1 7.6 0.1 65.7 25.0 6.5 4.4 29.8 34.1 3.9 6.1 7.0 4.3 3.0 2.1 7.7 0.2 66.3 25.5 6.7 4.3 29.8 33.5 3.8 5.8 7.0 4.3 2.7 2.1 7.8 0.2 64.6 25.1 6.6 4.1 28.8 35.2 3.6 5.9 6.9 4.4 2.8 2.0 9.6 0.2 64.2 24.4 6.7 4.2 28.9 35.6 3.5 5.9 6.9 4.5 2.7 2.2 9.9 0.2 63.8 23.8 6.8 4.2 29.3 36.0 3.5 5.9 6.9 4.6 2.8 2.5 9.7 0.2 63.6 22.3 6.7 4.3 30.3 36.2 4.1 5.9 6.9 4.9 2.7 2.9 8.8 0.2 60 New Rules of Communications Current advertising: What is the extent of Mood over Message? Importance of cognitive messages – does balance need to be shifted? Advertising by a non-Japanese firm: How can Mood be utilized? Other distinctively Japanese features to address? Who are best advertising partners? Given changes in industry Given new marketing challenges 61 Shifting Realities of Marketing Strategies Old Model New Model Relationship with Passive Consumer Customers Customer Needs Articulated Co-producer Segmentation Mass Market Customized segments of one Product and Service Offerings Line extensions and Customer-driven: modifications; R&D Customization of drives new products products and services Unarticulated Marketing interactions drive new product development 62 Shifting Realities of Marketing Strategies Old Model New Model Pricing Fixed prices and discounting Communication Advertising and PR Value-based pricing – models and emergence of consumer-determined pricing Integrated, interactive customized marketing communication, education and entertainment 63 Shifting Realities of Marketing Strategies Old Model Distribution Strategic Intent Supply chain New Model Traditional retailing Direct (electronic) and direct marketing distribution and rise to segments of third-party logistics services Market Participation Leadership and innovation in target segment Inventory Integrated global supply chain including global delivery; justin-time 64 Shifting Realities of Marketing Strategies Old Model New Model Geographic scope Domestic and international Global Competitive advantage Marketing finesse Marketing power 65