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CHAPTER 20
INTERNATIONAL ADVERTISING AND PROMOTION
Chapter Overview
The purpose of this chapter is to introduce the student to the role of advertising and promotion in a
company’s international marketing program. We discuss the growing importance of U.S. companies
being able to compete in the global marketplace and the importance of international advertising and
promotion. The international environment and the major factors influencing marketing and promotional
decisions in foreign markets are discussed and attention is given to the issue of global or standardized
versus local or customized marketing and advertising. This chapter also examines how companies
organize for international advertising, select agencies and make decisions in various areas such as
research, creative strategy, and media selection. While the primary focus of this chapter is on international
advertising, attention is also given to how other IMC tools are used in international marketing including
sales promotion, personal selling, public relations, and the Internet.
Learning Objectives
1. To examine the importance of international marketing and the role of international advertising and
promotion.
2. To examine the various factors in the international environment and how they influence advertising
and promotion decisions.
3. To consider the pros and cons of global versus localized marketing and advertising.
4. To examine the various decision areas of international advertising.
5. To examine the role of other promotional mix elements in the international integrated marketing
communications program.
Chapter and Lecture Outline
I.
THE IMPORTANCE OF INTERNATIONAL MARKETING
Throughout this book attention has been focused on the development of promotional programs for
products and services sold to the U.S. market. However, many companies are recognizing the
opportunities that foreign markets offer for new sources of sales and profits as well as the necessity of
marketing their products internationally. Today, world trade is driven by global competition among global
companies for global consumers. It has become increasingly important for U.S. companies to adopt an
international marketing orientation since imports are taking significant amount of the domestic market for
many products and are likely to continue doing so. The balance-of-trade deficit and movement toward a
global economy is requiring companies to become more adept at marketing their products and services to
other countries.
Professor Notes
278
II.
THE ROLE OF INTERNATIONAL ADVERTISING AND PROMOTION
Advertising and promotion are important parts of the international marketing program of firms competing
in the global marketplace. While the United States still leads the world in terms of advertising,
expenditures outside of the U.S. have increased dramatically over the past decade and now exceed over
$200 billion annually. It is worth noting and discussing the importance of large foreign-based
multinationals such as Unilever, Nestle, and Toyota and their high level of advertising spending in the
international marketplace as shown in Figure 20-1.
Advertising and promotion are the most visible as well as the most culture-bound of a firm’s marketing
functions. Companies planning on marketing and advertising their products or services abroad are faced
with an unfamiliar marketing environment and consumers with different customs, values, consumption
patterns and habits, as well as different purchase motives and abilities. Media options are often more
limited in foreign countries than in the US and different creative and media strategies, as well as changes
in other promotional mix elements, are often required for foreign markets.
Professor Notes
III.
THE INTERNATIONAL ENVIRONMENT
Just as with domestic marketing, companies engaging in international marketing must carefully analyze
and consider the major environmental factors of each market in which they compete. Consideration of
environmental factors is important, not only in evaluating the viability and/or potential of each country as
a market, but also in designing and implementing a marketing and promotional program. Figure 20-2
shows some of the factors marketers must consider in each category when analyzing the environment of a
country or market. The major environmental factors that must be considered include:
A.
Economic Environment—a country’s economic conditions indicate its present and future
potential for consuming. Marketers must consider the economic infrastructure or the
communications, transportation, financial, and distribution networks needed to conduct business
in a particular country. The recent economic crisis in Asia provides a very good example of how
the economic environment impacts demand for products and services in foreign markets.
B.
Demographic environment—international marketers must also examine the demographic
characteristics of a country including factors such as income levels and distribution, age and
occupation distributions, household size, literacy, education and employment rates.
C.
Cultural environment—an aspect of the international marketing environment that is very
important to advertising and promotion is the culture of each country. Among the most important
aspects of culture are the language, customs, tastes, attitudes, life style, values, religion, and
ethical/moral standards of each society.
D.
Political/legal environment—the political and legal environment is one of the most important
factors influencing advertising and promotional programs of international marketers. Government
regulations and restrictions can affect a variety of aspects of a company’s advertising program,
including:
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the types of products and services that can be advertised in a country
the content or creative approach that may be used in advertisements
the media that all advertisers are permitted to employ
the amount of advertising a single advertiser may use in total or in a specific medium
the use of foreign languages in ads
the use of advertising material prepared outside the country
the use of local versus international advertising agencies
specific taxes that may be levied against advertising
IV. GLOBAL VERSUS LOCALIZED ADVERTISING
In recent years a great deal of attention has been focused on the concept of global marketing whereby a
firm utilizes a standard marketing plan for all countries in which it markets its product or service. Global
advertising falls under the umbrella of global marketing as a means of implementing this strategy by
using the same advertising approach in all markets. The theorizing of Harvard professor Theodore Levitt
helped popularize the concept of global marketing. However, not everyone agrees with Levitt’s global
marketing theory, particularly with respect to advertising, as they argue that products and advertising
messages must be designed and/or adapted to meet the differing needs of consumers in various countries.
The advantages and limitations of global marketing and advertising in particular should be discussed.
A.
Advantages of Global Marketing and Advertising—The use of a global marketing and advertising
program offers numerous advantages to a company including:
 Economies of scale in production and distribution
 Lower marketing and advertising costs as a result of reductions in planning and control
 Lower advertising production costs
 Abilities to exploit good ideas on a worldwide basis and introduce
 products quickly into various world markets
 A consistent international brand and/or company image
 Simplification of coordination and control of marketing and promotional programs
B.
Problems With Global Advertising—While the concepts of global marketing and advertising
have received a great deal of attention recently, not everyone agrees with this strategy. Some of
the problems with global marketing and advertising include:
 Differences in culture, market and economic development, consumer needs, media
availabilities and legal restrictions make it extremely difficult to develop an effective
universal approach to marketing and advertising
 Advertising in particular is difficult to standardize because of cultural differences in
circumstances, language, values, beliefs, lifestyle and so on
 Usage patterns and perceptions of a product may vary from one country to another and
require adjustments in the marketing and advertising program rather than just using a global
campaign (i.e. Nescafe instant coffee example on pp. 670-71)
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C. When Is Globalization Appropriate? - While many advertisers view globalization of advertising as a
difficult task, some progress has been made in learning what products and services are best suited to
worldwide appeals. Products and services that can take advantage of global marketing and advertising
opportunities include:
1. Brands that can be adapted for a visual appeal that avoid the problems of trying to translate
words into dozens of languages.
2. Brands that are promoted with image campaigns that lend themselves to themes that play up
to universal appeals such as sex or wealth.
3. High-tech products coming to the world for the first time; new technology products coming
on the world at once and not steeped in the culture heritage of the country.
3. Products with nationalistic flavor if the country has a reputation in the field such as Swiss
chocolate, French wine or German beer
4. Products that appeal to a market segment with universally similar tastes, interests, needs and
values. Examples of global market segments include the wealthy who can afford expensive
clothing, jewelry, automobiles, hotels and other products and services. Teens are another
example of a global market segment that is targeted by many companies.
D. Global Products, Localized Messages—While the pros and cons of globalized marketing and
advertising continue to be debated, many companies are taking what might be called an in-between
approach by standardizing their products and basic marketing strategy but localizing their advertising
messages to appeal to the local realities and conditions of each market. This approach has been given
different labels such as “Think global, act local,” or “Global vision with a local touch.” Although
some marketers use global ads with little or no modification, most companies adapt their messages to
respond to differences in language, market conditions and other factors. Many global marketers use a
strategy called pattern advertising whereby their ads follow the same basic approach, but themes,
copy and sometimes even visual elements are adapted to differences in local markets. Another way
marketers adapt their campaigns to local markets is by producing a variety of ads with a similar theme
and format and allowing managers in various countries or regions to select those messages they feel
will work best in their markets. Coca-Cola uses this strategy in its “Coca-Cola Enjoy” campaign,
which is used in many countries. One of the ads from this campaign is shown in Exhibit 20-12.
A study which examined the international advertising strategy of successful US multinational
corporations found that only 9 percent used totally standardized or global advertising for foreign
markets, 37 percent used all localized advertising, and the remaining 54 percent used a
combination strategy of standardizing some portions of their advertising for local markets. A
more recent study shows a slight revision in this strategy. Many companies are moving toward a
Think globally, act regionally” strategy which involves giving regional offices the autonomy to
adapt the global theme for their local markets.
Professor Notes
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V.
DECISION AREAS IN INTERNATIONAL ADVERTISING
As with domestic marketing, certain organizational and functional decisions must be made by companies
developing advertising and promotional programs for international markets. This section examines these
decision areas.
A.
Organizing for International Advertising—One of the first decisions a company must make when
it decides to market its products to other countries is how to organize the international advertising
and promotion function. There are three basic options for organizing this function.
1. Centralization—all decisions and planning is done at the firm’s home office. Complete
centralization is likely when market and media conditions are similar from one country to
another, when the company has only one or a few international agencies, when it uses global
marketing and advertising, or when it desires a consistent image worldwide.
2. Decentralization—marketing and advertising managers in each market have the authority to
make their own decisions such as selecting agencies, developing budgets, conducting
research, approving creative themes and executions, and selecting media.
2. Combination—many companies actually use a combination of the first two approaches
whereby the home office will have the most control over advertising policy, guidelines and
operations in all markets, while managers in local offices will be responsible for submitting
advertising plans and budgets for their markets which must be reviewed and approved by the
international advertising manager. This approach allows for consistency and uniformity in a
firm’s international advertising program yet still permits local input and adaptation of the
promotional program.
B.
Agency Selection—One of the most important decisions a firm engaged in international
marketing must make is the selection of an advertising agency. The three basic alternatives in
selecting an agency include:
1. Choosing a major agency with both domestic and overseas office. A number of multinational
companies are consolidating their advertising with one large agency to develop a consistent
global image.
2. Choosing a domestic agency that is affiliated with agencies in other countries or belongs to a
network of foreign agencies. Many agencies are now affiliated with agencies in other countries
or belong to a global network of agencies.
3. Selecting a local agency for each national market in which the company sells its products or
services. Some companies prefer to use local agencies because they often provide the best talent
in each market. This also increases the morale and involvement of local managers by giving
them input into the agency selection process.
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Criteria for agency selection—the selection of an agency or agencies to handle a firm’s
international advertising depends on how the firm is organized for international marketing
and the type of assistance it needs to meet its goals and objectives in foreign markets.
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Specific criteria a company might use in making the agency selection decision are shown in
Figure 20-3.
C.
Advertising Research—Research is used in the development of international advertising and
promotion programs to help managers make more informed and better decisions. However, many
companies do not conduct marketing research in foreign markets because of high costs and
budget limitations. Areas where information from research on foreign markets can help firms
make intelligent advertising and promotional decisions include:
 Information on demographic characteristics of markets
 Information on cultural differences such as norms, lifestyles, and values
 Information on consumers’ product usage, brand attitudes, and media preferences
 Information on media usage and audience size
 Copy testing to determine reactions to different types of advertising appeals and executions
 Research on the effectiveness of advertising and promotional programs in foreign markets
D.
Creative Decisions—Creative strategy development for international advertising is basically
similar in process and procedure to domestic advertising as communication objectives must be set
based on the marketing strategy and market conditions for each market, major selling ideas must
be developed, and specific appeals and execution styles must be chosen. An important factor
influencing the development of creative strategy for international markets is the issue of global
versus localized advertising.
Global advertising uses the same basic appeal and execution style in all countries and requires the
development of advertising that will transcend cultural differences and communicate effectively
in every country. Companies following a localized advertising strategy must determine what type
of selling idea, appeal and execution will work in each market. A product or service may have to
be positioned differently in each market depending on consumers’ usage patterns and habits.
E. Media Selection—One of the most difficult decision areas for international advertisers is that of
media strategy and selection. U.S. firms usually find that there are major differences in media outside
this country and media conditions may vary considerably from one area to another, particularly in
developing countries. Problems and differences include the types of media available, the
characteristics of media, availability of media information, and restrictions from one country to
another. Media planners have two basic media options available.
1. Local media—using the local media of a country to reach its consumers, such as local
magazines, newspapers, radio, billboards, direct mail and, where available and/or permitted,
television.
2. International Media—international advertisers can also reach audiences in various countries
through the use of international media that have multimarket coverage. The primary types of
international media are magazines and newspapers. Some multinational commercial
television stations and networks are operating in Europe and are likely to continue to expand
with the growth of direct broadcast by satellite (DBS) to homes equipped with low cost
receiving dishes.
Professor Notes
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V.
THE ROLE OF OTHER PROMOTIONAL MIX ELEMENTS
The focus of this chapter has been on advertising since it is usually the primary element in the
promotional mix of the international marketers. However, as in domestic marketing, promotional
programs for foreign markets will generally include other elements such as personal selling, sales
promotion and public relations. The role of these other promotional mix elements will vary depending on
the firm’s marketing and promotional strategy in foreign markets.
A.
Sales Promotion—Many companies rely on sales promotional tools and techniques to help sell
their products in foreign markets. Promotional tools that are effective in the US such as free
samples, premiums, contests, and gifts may also work well in other markets. One form of sales
promotion that has become very popular among many U.S. firms for use in foreign markets is
sponsorship of sporting events, concerts and other music-oriented radio and television programs.
Unlike advertising, which often can be done on a global basis, sales promotion must often be
adapted to local markets. Kashani and Quelch note several important differences among countries
that must be considered in developing a sales promotion program including:
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Economic development—the ability to use various sales promotion tools can be influenced
by the stage of economic infrastructure and stage of development of a country
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Market maturity—the stage of development of the market for the product or service within a
country. Different types of sales promotion tools are needed to introduce a product or service
versus competing in a mature market
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Consumer perceptions—consumer perceptions of and willingness to use various sales
promotion tools varies by country
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Trade structure – the willingness and ability of channel members to accommodate sales
promotion programs
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Regulations ( the appendix at the end of the chapter show the restriction on sales promotion
in various countries around the world)
Figure 20-5 presents a framework for analyzing the role of centralized or headquarters versus
local management in sales promotion decisions based on various stages of globalization.
Discussion of this exhibit in class is strongly recommended.
B.
Personal Selling—For some companies personal selling may be the most important promotional
element and advertising may play more of a supportive role. Because it involves personal contact
and communication, personal selling is generally even more culture-bound than advertising.
Many companies use sales representatives from the host country to staff their sales force and
personal selling activities and sales programs are adapted to each market. Management of the
sales force is often decentralized to the local subsidiaries. However, the firm may make decisions
regarding general sales policies and offer advice to foreign managers on various aspects of sales
management and the development of sales programs.
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C.
Public Relations—Public relations plays an important role in supporting and enhancing the
marketing and advertising efforts of companies involved in international advertising. Public
relations activities are needed to deal with local governments, media, trade associations and the
general public. The job of PR agencies in foreign markets is not only to help the company sell its
products or services but also to present the firm as a “good corporate citizen” who is involved
with and concerned about the future of the country. Companies must have a favorable reputation
and image if they are to be successful in foreign markets, as groups may feel threatened by the
presence of a foreign multinational in their country. Public relations efforts may also be needed to
deal with specific problems a company faces in international markets. Many multinational
companies are choosing ad agencies that offer public relations capabilities so their entire
communication program can be integrated and conducted on a global basis. Global Perspective
20-5 discusses the major public relations problems that McDonald’s has experienced in Europe
recently.
D.
The Internet—Use of the Internet by consumers as well as marketers is highest in the United
States and Western Europe. In the Asia/Pacific region, Internet use is high in Hong Kong,
Singapore, and Thailand where there are considerable numbers of high-end users and several
domestic service providers. Internet use in international markets is still limited by low number of
consumers with Internet access, but Internet growth is expected to develop quickly as
telecommunications companies move into emerging markets such as Eastern Europe and Latin
America and improve the communications infrastructure.
Professor Notes
Teaching Suggestions
In this chapter we turn our attention to the area of international advertising and promotion. We feel that it
is very important to cover this area as many U.S. companies are finding that our domestic market offers
them limited opportunity for expansion due to slow population growth, saturated markets, and intense
competition. Moreover, imports are taking a larger and larger share of the domestic market for many
products and are likely to continue to do so. American companies must learn how to defend against
foreign inroads into their domestic markets and how to market their products and services to foreign
countries. We are living in very fascinating and rapidly changing time with respect to developments in the
international arena. The impact of the recent economic crisis in Asia can be discussed as well as the
emergence of a strong consumer market in China. It is important that students are encouraged to keep
abreast of these social, political and economic changes, how they are affecting the global marketplace,
and their implications for international marketing and advertising. While most of the chapter discusses
issues of relevance to international advertising, the chapter does include a discussion of the role of other
integrated marketing tools in international marketing including sales promotion, personal selling, public
relations the use of the internet. We use the Quelch and Kashani model as a framework for analyzing the
management of sales promotion in foreign markets. You may want to refer to their article in Business
Horizons (May/June 1990, pp. 37-43) for more insight into this model. You might note that we have
added an appendix to this chapter that shows the legal restrictions on various sales promotion tools in
various countries. This is an excellent resource for understanding the restrictions marketers face as they
develop promotional programs for foreign markets. Another excellent source of information on
international advertising is AdAgeGlobal.com which is available online from Advertising Age.
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Answers to Discussion Questions
1. The opening vignette to the chapter discusses the requirements by the A.C. Nielsen Company to be on
its global brand list. Do you think that a brand should have to meet these criteria in order to achieve
global brand status? Why might marketers disagree with the requirements set by A.C. Nielsen?
To be part of A.C. Nielsen’s global brand list, a brand is required to have sales over a billion dollars
(US), have at least 5 percent of its sales outside of its home region, and have a geographic presence in
all major regions of the world. A.C. Nielsen is trying to set some standards regarding the use of the
term “global” as many companies make very liberal use of this term when describing their brands.
Nielsen wants to bring some common understanding as to what a global brand really is and ensure
that companies rightfully describe their brands as global in scope. Many marketers will label a brand
as global if it is sold in more than one country or if is it has any amount of foreign sales.
Many marketers and advertising executives question the requirements set by A.C. Nielsen for a brand
to achieve global brand status. First of all, the billion dollars sales requirement is very large and only
the world’s largest brands would be able to meet this high level. There are many brands that are sold
all over the world but do not come close to this level of sales. Thus it is unreasonable that these
brands cannot be described as global because they do not achieve a very high level of sales. Also,
many companies market the same basic brand globally but may use different names in various
countries or regions. These companies argue that as long as there is one basic brand platform and
over-arching strategy for the brand, it is reasonable to consider it a global brand. Finally, many
companies have successfully marketed a brand globally on a multi-category basis and Nielsen only
considers a brand to be global if it meets the criteria within any one category. For example, Unilever
considers its Knorr brand of soups and sauces to be global as it achieves over $3 billion in annual
sales across the various product categories.
2. Why are international markets are becoming so important to U.S. companies such as Starbucks,
McDonald’s and Coca-Cola, as well as to European companies such as Nestle, Unilever and Nokia?
Discuss the role of advertising and other forms of promotion in these companies’ international
marketing programs.
There are several reasons why international markets are becoming so important to U.S. companies
such as Starbucks, McDonald’s and Coca-Cola. The U.S. market offers limited growth potential to
many firms because of our slow population growth, saturated markets, and intense competition. Also,
in some industries such as alcoholic beverages and tobacco, socio/cultural and regulatory trends are
causing many markets to stagnate or even decline. U.S. companies are also losing market share to
imports and are likely to continue to do so in the future. As the standard of living and economic
situations improve in many foreign markets, U.S. companies will want to take advantage of the
marketing opportunities in these areas. In some countries such as Japan, changing values and
lifestyles are also resulting in more consumption and spending by consumers and represent an
opportunity to many U.S. companies. A key demographic segment for the three companies mentioned
is the teen market as they are heavy consumers of soft drinks, fast-food and athletic shoes. Many
foreign countries have a very young population with a large number of teens and young adults who
are very receptive to Western ways and products. Thus, these companies have an opportunity to grow
by penetrating foreign markets.
For European companies such as Nestle, Unilever and Nokia, foreign markets are vital to their
success. These companies are based in Switzerland, the Netherlands, and Finland respectively which
are relatively small in size and without foreign markets these companies would not have the large
enough market nor economies of scale to survive against larger U.S. and Japanese companies.
Advertising and promotion play a very important role in many firms’ international marketing
programs as they must communicate information about their products and services to foreign markets
and convince inform consumers of their particular attributes, features and benefits. Advertising and
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promotion are the most visible of all of the firm’s marketing activities as well as the most culture
bound.
3
Discuss the importance of the economic environment in a country in evaluating its market potential.
How do the economic conditions and factors impact the type of integrated marketing communications
program a company can use in a country?
A country’s economic conditions impact the present and future potential for foreign markets, since
demand for products and services are a function of factors such as consumer purchasing power, which
is in turn affected by the strength of the economy. Many companies learned just how important
economic conditions are in a country when the Asian economic crisis hit in the late ’90 and has
continued into the new millennium. Many countries experienced a severe recession that resulted in
major declines in consumer spending. Economic factors impact the type of IMC program a company
can use in several ways. For example, in industrialized countries with well-developed economic
infrastructures, consumers will have the income to buy various products and services and
communication networks and media will be available for advertising. In underdeveloped nations,
such as most third world countries, consumers will not have adequate purchasing power and
communication networks may not be available to reach the mass markets. In less developed countries
such as Vietnam, Kenya, and Egypt, most consumers do not have access to the media and they may
not have any contact with a company’s IMC efforts until they enter a store. Thus, outdoor media,
packaging and other point-of-purchase elements will be more important than print and TV ads.
4. Global Perspective 20-1 discusses how many multinational companies have been focusing more
attention on the 4 billion consumers who live in the remote, rural communities of developing
countries. Discuss the challenges companies face in marketing their products to the world’s poorest
consumers. How do they have to adapt their integrated marketing communication programs in selling
to these consumers?
Marketers face a number of challenges in marketing their product to the world poorest consumers.
Many of these 4 billion people live in remote, rural communities of developing countries such as
India or China. The tiny villages where many of them live are in remote areas that are beyond the
reach of mass media and distribution. Many of these people live in severe poverty and are illiterate or
nearly so. Thus t is difficult to communicate with them as well as to get products to them and they
cannot afford to pay for even the most basic items. Marketers have to adapt their marketing programs
as well as their integrated marketing communication programs in selling to these impoverished
consumers. Products have to be made available in very small, single-use sachets that can be sold for
the equivalent of pennies and easily distributed through small kiosks.
Marketers have to adapt their IMC programs in a number of ways in selling to these consumers. They
cannot use conventional media to reach them since they are not available or cannot be read by most of
them. Other contact tools such as event marketing, road shows, demonstrations and sampling
programs are the primary ways to reach them. Word –of-mouth communication is a very important
and marketers have to find ways to get information to opinion leaders and others and encourage them
to tell others about their products.
5. What are some of the cultural variables that marketers must considering in developing advertising and
promotional programs in a foreign market? Choose one of these cultural variables and discuss how it
has created a problem or challenge for a company in developing an advertising and promotional
program in a foreign market.
Cultural factors influence the development of advertising and promotional programs for foreign
markets in a number of ways. Advertisers must consider the language, customs, tastes, attitudes,
lifestyle, values, religion, and ethical/moral standards of each society when developing an advertising
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campaign. Cultural factors determine what products and services marketers can sell to foreign
markets as well as how they can communicate with consumers. They must understand not only the
language of the country but also its nuances, idioms and subtleties. They must also be aware of the
connotations of words and symbols they use in their ads and how ad copy and slogans will be
translated. Students should be asked to choose a particular cultural variable such as customs, values,
or ethical/moral standards and find an example of how it has created a specific challenge or problem
for a company in a specific country.
6. Discuss the arguments for and against the use of global marketing and advertising. What types of
products and services are best suited for global advertising? What developments have taken place in
recent years that support the use of global advertising and what factors might make this approach
more difficult to use effectively?
There are several advantages to global advertising including lower advertising production costs, the
ability to exploit good creative ideas on a worldwide basis, the opportunity to have a consistent brand
and/or company image all over the world, and the simplification of coordination and control of
advertising programs. Problems with global advertising are that differences in culture, market and
economic development, consumer needs and usage patterns, media availability and regulations make
it extremely difficult to develop an effective universal approach to advertising. Advertising is very
difficult to standardize because of cultural differences such as language, traditions, value, lifestyles,
customs, and the like. Another problem with the use of global advertising is that consumer usage
patterns and perceptions of a product may vary from one country to another and may require
adjustments in marketing and advertising approaches. Marketers must also recognize that the use of a
global advertising campaign can alienate consumers as well as local employees if they feel their
individual differences or cultural diversities are being ignored.
Products and services that can take advantage of global advertising include the following:
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brands that can be advertising using primarily a visual appeal and thus avoiding the problems of
translating words into various languages
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brands that are promoted using image advertising that lend themselves to themes with universal
appeal such as sex, status, wealth, etc.
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high-tech products being introduced to the world market for the first time that are not steeped in
the cultural heritage of the country
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products with strong nationalistic flavor that take advantage of a country’s reputation in the field
Advances in technology such as the Intent, telecommunications, cable and satellite television, travel
and other areas are making the use of global marketing more feasible. Consumers around the globe
are exposed to the same music, movies, TV shows, sporting events and web sites. Advances in travel
are making it possible for consumers to visit other countries and experience their culture. One thing
that is making global marketing more difficult is the trend in many countries to return to more
localized music, TV shows and other forms of entertainment. Some countries are trying to preserve
their local culture and national identity and may be less receptive to brands from foreign countries
that are advertised globally. Global advertising is likely to be inappropriate when there are strong
cultural differences among consumers that may influence their interpretation of, and responses to,
advertising or when consumer usage patterns and perceptions of a product or service may vary from
one country to another. However, these cultural differences are disappearing rapidly, particularly
among certain markets such as young people.
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7.
What is meant by the “think global, act local” approach to global marketing and advertising? Discuss
some of the ways marketers can adapt their advertising to local markets.
Proponents of global marketing such as Professor Theodore Levitt argue that the worldwide
marketplace is becoming homogenized and the basic needs, wants and expectations of consumers
transcend geographic, national and cultural boundaries. They argue that consumers around the world
are very similar with regard to tastes, needs, wants, preferences and emotional desires and motives.
Obviously much has happened over the past two decades that lends greater support to the call for
global marketing. There have been significant developments in communications and technology that
are leading to the globalization of markets. Satellite-delivered programming has resulted in the
television shows being seen by consumers around the world as governments can no longer control
what shows are seen in their countries. The Internet is clearly a new global medium that provides
companies with access to consumers around the globe. Entertainment such as sporting events,
movies, TV shows and concerts are now seen by consumers around the world and having an impact
on them. Thus products and services can be marketed in a similar fashion around the world using
global marketing approaches.
Not everyone agrees with the concept of pure global marketing as they argue that total standardization
is unrealistic and changes need to be made for local markets. They advocate a “think global, act local”
approach whereby the same basic advertising theme or approach is used in each country but
modifications are made to adapt to differences in culture, language, market conditions and other
factors. Marketers use this approach by adapting their campaigns to local markets by producing ads
with a similar theme or positioning platform but with copy, visual, models and other executional
elements that are adapted to the local market.
8. What is meant by a global market segment? Provide an example of a company that has identified a
global market segment and advertises its product or service the same way around the world to this
market.
A global market segment is a group of consumers who are alike in certain ways and will respond
similarly to some aspect of marketing strategy such as advertising. Global market segments have been
identified on the basis of demographics, socioeconomic characteristics or lifestyle. Global
segmentation is also possible on the basis of technology as businesses and consumers around the
world purchase high tech products such as computers and fax machines for the same basic reasons. As
discussed in Global Perspective 20-2, young people (and teenagers in particular) are viewed by many
marketers as a global market segment. Teens around the world show amazing similarities in taste,
interests, language and attitudes. A number of companies whose products have universal appeal to
teens such as Nike, Coca-Cola and Pepsi, and Nintendo can use global advertising strategies. High
tech companies such as IBM, EDS and Hewlett Packard also use global advertising. Students should
have no trouble identifying other companies whose products have universal appeal to global market
segments and discussing how they can reach them with a global marketing and advertising campaign.
9. What are the three basic options a company has for organizing its international advertising and
promotion function? Discuss the pros and cons of each.
There are three basic options for organizing the international advertising and promotion function
including centralization, decentralization or a combination of the two. The centralized organizational
structure involves having all advertising and promotional decisions such as agency selection,
research, creative strategy and campaign development, media strategy and budgeting done at a
company’s home office. Under a decentralized organizational structure, marketing and advertising
managers in each market have the authority to make their own advertising and promotional decisions
for their local markets. Under the combination approach, the home office or headquarters will have
the most control over advertising policy, guidelines and operations in all markets. However, the local
advertising managers will submit advertising plans and budgets and play a major role in working with
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the agency in adapting the advertising appeals to their particular markets and making media selection
decisions.
Centralization works well when market and media conditions are similar from one country to another,
when, the company has only one or a few international agencies handling its advertising, when the
company can use standardized advertising or when it desires a consistent image worldwide.
Centralization also works best when a company’s international business is small and it operates
through foreign distributors or licensees. The decentralized approach is used when companies want
to give more control and authority to local managers and believe they know the situations in their
markets the best. Decentralization also works best in small or unique markets where advertising must
be adapted to fit the conditions of the local market. The combination approach allows for
standardization and consistency in a company’s international advertising yet allows for local input or
adaptation.
10. Discuss the problems and challenges international marketers face in developing media strategies for
foreign markets
Companies face a number of problems in developing media strategies for foreign markets. First, the
types of media available in each country are different. For example, TV sets are not as prevalent in
many homes in developing countries and even if they are, the amount of commercial time available
may be limited. Companies who plan on making the Internet a major part of their integrated
marketing communications strategy must consider the penetration of personal computers in homes
and businesses in foreign markets. The characteristics of media also differ from country to country in
terms of coverage, cost, and quality of reproduction, restrictions and the like. Multinational
companies also face problems in getting reliable media information such as circulation figures of
magazines, audience profiles, and costs. Media rates may also fluctuate because of unstable
currencies and economic conditions. There also may be differences in consumer characteristics and
media usage patterns due to factors such as literacy rates or media preferences.
11. How would the planning of a promotional program differ for a global brand versus a regional or local
brand?
Factors that must be taken into consideration in developing a sales promotion program in different
countries include the stage of economic development, market maturity, consumer perceptions of
promotional tools, trade structure, and legal restrictions and regulations. All of these factors must be
considered for each country as they can have an impact on whether and how sales promotion can be
used. For example, promotions that rely heavily on retailer involvement and cooperation may not be
as effective due to differences in distribution channels in foreign markets. Cultural differences may
affect the type of promotional incentives that will work best with consumers in various countries.
Laws and restrictions for sales promotion are generally more restrictive in other countries than in the
U.S. as shown in the appendix to the chapter.
For global brands the planning of a sales promotional program will occur at a headquarters or
centralized level. Global brands require a high degree of uniformity in marketing communications
and thus the promotional strategy should be determined at this level. However, implementation of the
promotional program should be done at the local level and the responsibility of local managers.
Regional brands do not require the same level of standardization as global brands and the promotional
strategy can be developed by regional offices and implemented at the local level. For local brands,
decisions regarding promotional strategy, program design and execution are left to local managers.
12. Discuss the role of public relations in the integrated marketing communications program for an
international marketer. How would the role of public relations differ from advertising?
Public relations activities in foreign markets are needed to deal with local governments, media, trade
associations, and the general public as these groups may feel threatened by the presence of a foreign
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multinational in their country. A major focus of the public relations effort in foreign countries is to
present the firms as “a good corporate citizen” who is involved with, and concerned about, the host
country. Companies also work on generating publicity for their products in foreign markets just as
they do domestically. Thus the publicity arm of the public relations function is very important for
international marketers. Public relations plays a different role than advertising as the former is more
focused on managing the image of the company and performing many of the functions noted above.
However, the advertising is often the primary element in the promotional mix of the international
marketer as it is designed to communicate information about a company and/or its brands and to
achieve various objectives such as building and maintaining awareness and interest in a brand as well
as helping to create or maintain a brand image or position.
Additional Discussion Questions (not in text)
13. Choose two foreign countries and discuss the problems a U.S. consumer packaged goods company
might encounter in developing an advertising and promotion program in these markets.
Students should choose two countries and discuss some of the problems a US firm might encounter in
advertising in these markets. The potential problems might include the unfamiliar marketing
environment in each country, as there may be different values, customs, consumption patterns, life
styles, purchase motives and abilities. Different economic situations, limited media options and
political/legal restrictions can also create problems for U.S. companies in developing advertising
programs in foreign markets. The various factors that influence the development of sales promotion
programs such as economic development, market maturity, consumer perceptions, trade structure and
regulations might also be discussed.
14. The text discusses how the New Balance 576 model running shoe has become very popular as a
fashion brand in France. Do you think New Balance can maintain the popularity of its shoes as a
fashion brand in the French market? What risk might this pose for the company regarding its
positioning as a manufacturer of high-quality running shoes, both in France and in other countries?
The tremendous popularity of the New Balance 576 running shoe as a fashion brand in France is a
very interesting phenomenon. As the text notes, the company and the buyers from the trendy shops in
Paris help make the brand popular among the city’s fashion elite by limiting distribution to a few elite
stores and increasing the price to give the brand an aura of exclusivity. They also kept introducing
new colors and personalized the shoes by stitching the wearer’s name on the tongue as a retro fashion
statement. The company hopes to maintain this elite image of exclusivity for the brand by keeping
prices high and limiting distribution. However, New Balance may find it difficult to maintain the
popularity of the brand since styles change and fashion-conscious consumers are always looking to
find new brands to maintain their image as being fashionable and trendy. Moreover, as the brand
becomes more popular, more consumers will be seen wearing the shoes which may hurt the 576
image as being a unique and different brand.
New Balance is confronted with an interesting positioning problem. New Balance has always
positioned its running shoes a high quality, high tech brand for the serious runner. The company has
refused to hire athletes to endorse its brand and has even run ads with headlines that read “Endorsed
by no one” and copy that notes how the company invests in manufacturing and product quality rather
than paying athletes or celebrities to endorse its shoes. The company let the local French subsidiary
go with its instinct and pursue the fashion position for the 576. The company will have to pursue a
dual positioning strategy for its brand it wants to pursue the more broad-based performance segment
of the market. Since this market is reached through a different retail channel of sports stores, New
Balance may be able to appeal to the serious runner while continuing its fashion positioning for the
576.
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15. Many large multinational companies are consolidating all of their worldwide advertising with one
large agency. Evaluate the pros and cons of this approach.
A number of factors are driving this consolidation trend. Major corporations recognize they must
develop a consistent global image for the company and/or its brands and speak with one coordinated
voice. For example, the reason given by IBM for consolidating all of its advertising with Ogilvy &
Mather was that the company had been projecting too many images with its advertising divided
among so many agencies. IBM recognizes that it is competing in a global market for computers and
feels it is important to deliver clear, consistent messages that take advantage of the high amount of
equity in the IBM name. The agency consolidation move will allow IBM to gain greater control over
and facilitate coordination of its worldwide advertising. IBM may also feel that a high tech product
such as computers can be advertised using a global advertising campaign since the reasons for
purchasing them are the same the world over. Companies are also consolidating their global
advertising in an effort to increase efficiency and save money. Finally, advances in technology such as
fax machines, e-mail, video conferencing, and airline connections make it much easier to manage
accounts around the globe.
The risk of the consolidation decision is that one centralized agency may not be able to develop as
effective advertising in many foreign markets as a local agency. Local agencies often have a better
understanding of the marketing and advertising environment in their country or region and thus may
be able to develop more effective advertising than a large multinational agency. Using a single agency
also means that a marketer has no backup agency to turn to if there are problems such as ineffective
ad campaign. Companies who consolidate also face the problem of selling the idea to regional offices
and local country managers who may not like having control of advertising taken from them.
16. What are the three basis alternatives a company has in selecting an agency to handle its international
advertising? What are some of the criteria a marketer can use in evaluating and selecting an agency to
handle its international advertising and promotion programs?
There are three basic alternatives a company has in selecting an agency to handle its international
advertising. First, the company can choose a major agency with both domestic and foreign offices.
Many companies prefer to use one large agency, as this gives them greater control and facilitates the
coordination of overseas advertising. Many large agencies offer the multinational marketer the
opportunity for “one-stop shopping” by offering integrated services such as sales promotion and
public relations capabilities. A second option for the international marketer is to choose a domestic
agency that is affiliated with agencies in other countries or belongs to a network of foreign agencies.
The advantage of this arrangement is that the client can use a domestic-based agency yet still have
access to foreign agencies that have detailed knowledge and understanding of each local market. A
third alternative is to select a local agency for each market in which the firm markets its products or
services. Local agencies often have the best knowledge and understanding of the marketing and
advertising environment in a country and thus may be able to develop the most effective advertising.
In many countries, small independent agencies may be doing the best creative work and be more
willing to take risks. The use of a local agency may also increase the involvement and morale of
personnel in foreign subsidiaries.
Specific criteria that might be used by a company to select an agency to handle its international
advertising include the quality of the agency’s creative work, its understanding of the market, the
ability of the agency to coordinate an integrated international marketing communications program
and its market research, public relations, and other IMC related services the agency might offer. As
the text notes, a recent study conducted among marketing directors of European companies found that
creative ability was ranked as the most important factor in selecting an agency followed by
understanding of the market, understanding of the client’s marketing goals, and ability to produce
integrated marketing communications.
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17. Global Perspective 20-5 discusses the public relations problems McDonald’s has been facing in
France while the text discusses the public relations crisis Coca-Cola encountered in Europe during the
summer of 1999. Evaluate the measures each company used to respond to its public relations problem
in Europe.
McDonald’s received a considerable amount of negative publicity from anti-American protests by
angry French farmers who seized on the company as a symbol of American cultural imperialism.
Initially McDonald’s took a low-key approach to the protests as the company declined pressing
charges for vandalism in its restaurants and placing posters in the stores to explain how the company
is a major partner of the French agricultural sector. However, as the protests continued McDonald’s
decided to be more aggressive and use a refutational campaign in the national press. The “Made in
France” campaign consisted of ads that underscored the company’s policy of buying French products
and its role in France’s agricultural sector, while thanking customers who have remained loyal. The
ads were designed to respond to the particular context of the ongoing demonstrations. The messages
also pointed out that McDonald’s 240 French franchise owners employ more than 30,000 workers and
create 2,500 jobs each year. The self-defense campaign was an effective way of informing the French
public that while its brand may be American, the products served in the McDonald’s outlets
throughout the country are overwhelmingly French in origin and the fast-food chain makes significant
contributions to the French economy. In addition to the media campaign, McDonald’s responded to
the farmers concerns by substituting locally produced specialties such as duck breast and Roquefort
cheese, for traditional ingredients in the company’s Big Mac and menu items. This action was
received favorably by the protesters as it signified that McDonald’s was taking measures to address
their concerns.
Coca-Cola has been criticized for its handling of the contamination scare that led to the product recall
in Europe in the summer of 1999. The company waited more than a week before issuing an apology
to consumers and its top executives, including the company chairman, initially assumed a low profile
and waited before becoming involved in the handling of the crisis. As the crisis grew worse, CocaCola ran full-page ads in newspapers, which contained a contrite apology from the company’s
chairman and an acknowledgement that he should have spoken to the public earlier. When the ban on
its products in countries such as Belgium was lifted, Coca-Cola issued vouchers and coupons for free
family-sized bottles of its product and also ran ads thanking consumer for their loyalty and
guaranteeing the safety and quality of locally produced products.
Coca-Cola may have
underestimated the severity of the crisis and might have responded sooner. However, the company
was successful in regaining its market share.
IMC Exercise
In recent years considerable attention has been focused on the debate over global versus localized
marketing strategies for firms competing in international markets. Analyze the debate over global versus
localized marketing from a cross-cultural consumer behavior perspective. Do you feel that global, or even
regional markets such as Western or Eastern Europe, are similar enough in terms of cultural values to
allow for the use of a standardized marketing program? Discuss the types of products or services for
which a global marketing and advertising strategy may or may not be appropriate. Find examples of two
companies using global marketing strategies for one or more of their products or services. Analyze the
logic of this strategy from a consumer behavior perspective. Find an example of a company that uses a
localized a localized marketing strategy for international markets. What are some of the consumer
behavior factors that necessitate the use of a localized strategy by this company?
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