Global Business Strategy for Managing Marketing: the Case of Coca-Cola Company) Abstract From the Paper “Innovation is certainly always part of the Coca-Cola Company and is why they advertise different styles of bottles, prints on cans, and items which do not have anything to do with a drink such as stuffed animals, T-shirts and caps. Producing different kinds of products involve technology. If a new product is planned to be launched, not only research for demand and possible sales prices should be conducted through an opportunity analysis.
In order to be cost efficient and at least break-even, the kind of production line and machinery needed to produce the item has to be assessed and analyzed. A detailed business plan should show the strengths and weaknesses in order to help managers and executives in the decision making process, also called SWOT analysis. At that point, an idea can become a goal. Technology also helps to communicate the plan via information technology such as e-mail and inter-/intranet to the people who make it happen.
Management needs to plan for the skills necessary to accomplish the task. ” “The culture of the company is thus one that is wedded to its own past and informed by its own self-age as an embodiment of American enterprising excellence. “Further, the company is not beyond drawing faith from its successes in the past after previous reversals. For instance, although Coke appears to be going through somewhat of a fallow period at the moment, close observers are quick to point out that Coke has rebounded from adversity in the past.
Although it is not clear how much Coke reminds workers of how the organization has come back from the brink in the past, the corporate culture is certainly one predicated upon showing an organizational history of success and fortitude. ” History of *C*oca *C*ola Coca-Cola as it was introduced was cocaine based wine and was a huge success throughout the United States. Its battle to fame was a long and treacherous route, impeded by Pepsi and government interference. Still the Coke lived on, it now had a bottling company in every large city and is in no way slowed by downfalls any longer.
The result of the success of the monopolist coke was subsidiaries being formed and the business or industry of coke growing at an alarming rate. Most beverage companies are sprouts of Coca-Cola; one sprout is Grapette who also made a big boom in the beverage industry with their alarmingly tasty beverage Grapette. Others followed this example and tried to “make a name for themselves. ” The formula used by coke was its cornerstone. It was these secrets that keep them in the head of the industry.
From the beginning the formula was passed done from generation to generation by only relatives. Containing the secret that changed Americans way of life this formula presented an interest most people intended to find out about. In every company their formula is like their key and without it they are lost. On to the bottling method and tactics that coke used to further sell its outstanding products. With the help of modern day advertising and mass communication, coke again cornered the market because “Coke is the right thing” and “Always Coca-Cola”.
Bottles were another thing altogether they were the package everyone held and felt down to the last drop. Bottlers’ used their package as a catchy and simplistic final touch defining their product. Coke’s famous artist who produced the cans and bottles with Santa on them was the first to illustrate Santa in a red robe before it had always been a young man dressed in blue. All big companies had to start somewhere as did coke. Their founders were three guys who were all salesmen trying to sell one another products and the option of going together to start up the beverage company of coke.
Next comes the constant pressure of having to deal with outside interference such as the government in their challenging of rights on trademark slogans and tastes and being the first to receive recognition. The crisis coke experienced after changing its formula because the public taste was thought to have changed. Changed respect for coke and reintroduced it as the nation’s number one cola. This all took place during Pepsi’s take the Pepsi challenge, which showed that most American’s actually did like the taste of Pepsi to Coke. Coke’s profile: global soft-drink leader employs 30,000 people, stock symbol of KO.
They sponsor worldwide events such as the World Cup, the National Football League, Tour de France, the Rugby World Cup, COPA America and many other events. Including the Olympic Games since 1928. Coke started with three prosperous working class guys. Two different ideas meeting and the most individual and new product being the best. This turned out to be the high in cocaine and caffeine drink Coca-Cola. From that point on the company grew and mass produced their drink to the upmost of its capability and keep the company at the number one slot in the U. S.
With its secret formula and hidden attributes the drink was quickly winning the hearts of even the most stubborn consumers. Globalization of Markets and Competition Trade is increasingly global in scope today. There are several reasons for this. One significant reason is technological—because of improved transportation and communication opportunities today, trade is now more practical. Thus, consumers and businesses now have access to the very best products from many different countries. Increasingly rapid technology lifecycles also increases the competition among countries as to who can produce the newest in technology.
In part to accommodate these realities, countries in the last several decades have taken increasing steps to promote global trade through agreements such as the General Treaty on Trade and Tariffs, and trade organizations such as the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and the European Union (EU). Stages in the International Involvement of a Firm We discussed several stages through which a firm may go as it becomes increasingly involved across borders.
A purely domestic firm focuses only on its home market, has no current ambitions of expanding abroad, and does not perceive any significant competitive threat from abroad. Such a firm may eventually get some orders from abroad, which are seen either as an irritation (for small orders, there may be a great deal of effort and cost involved in obtaining relatively modest revenue) or as “icing on the cake. ” As the firm begins to export more, it enters the export stage, where little effort is made to market the product abroad, although an increasing number of foreign orders are filled.
In the international stage, as certain country markets begin to appear especially attractive with more foreign orders originating there, the firm may go into countries on an ad hoc basis—that is, each country may be entered sequentially, but with relatively little learning and marketing efforts being shared across countries. In the multi-national stage, some efficiencies are pursued by standardizing across a region (e. g. , Central America, West Africa, or Northern Europe).
Finally, in the global stage, the focus centers on the entire World market, with decisions made optimize the product’s position across markets—the home country is no longer the center of the product. An example of a truly global company is Coca Cola. Note that these stages represent points on a continuum from a purely domestic orientation to a truly global one; companies may fall in between these discrete stages, and different parts of the firm may have characteristics of various stages—for example, the pickup truck division of an auto-manufacturer may be largely domestically focused, while the passenger car division is globally focused.
Although a global focus is generally appropriate for most large firms, note that it may not be ideal for all companies to pursue the global stage. For example, manufacturers of ice cubes may do well as domestic, or even locally centered, firms. Some forces in international trade Comparative advantage, suggests trade between countries is beneficial because these countries differ in their relative economic strengths—some have more advanced technology and some have lower costs. The International Product Life Cycle suggests that countries will differ in their timing of the demand for various products.
Products tend to be adopted more quickly in the United States and Japan, for example, so once the demand for a product (say, VCRs) is in the decline in these markets, an increasing market potential might exist in other countries (e. g. , Europe and the rest of Asia). Internalization/transaction costs refers to the fact that developing certain very large scale projects, such as an automobile intended for the World market, may entail such large costs that these must be spread over several countries. Political and Legal Influences
The political situation The political relations between a firm’s country of headquarters (or other significant operations) and another one may, through no fault of the firm’s, become a major issue. For example, oil companies which invested in Iraq or Libya became victims of these countries’ misconduct that led to bans on trade. Similarly, American firms may be disliked in parts of Latin America or Iran where the U. S. either had a colonial history or supported unpopular leaders such as the former shah.
Certain issues in the political environment are particularly significant. Some countries, such as Russia, have relatively unstable governments, whose policies may change dramatically if new leaders come to power by democratic or other means. Some countries have little tradition of democracy, and thus it may be difficult to implement. For example, even though Russia is supposed to become a democratic country, the history of dictatorships by the communists and the czars has left country of corruption and strong influence of criminal elements.
Laws across borders When laws of two countries differ, it may be possible in a contract to specify in advance which laws will apply, although this agreement may not be consistently enforceable. Alternatively, jurisdiction may be settled by treaties, and some governments, such as that of the U. S. , often apply their laws to actions, such as anti-competitive behavior, perpetrated outside their borders (_extra-territorial_ application). By the doctrine known as compulsion, a firm that violates U. S. aw abroad may be able to claim as a defense that it was forced to do so by the local government; such violations must, however, be compelled—that they are merely legal or accepted in the host country is not sufficient. The reality of legal systems Some legal systems, such as that of the U. S. , are relatively “transparent”—that is, the law tends to be what its plain meaning would suggest. In some countries, however, there are laws on the books which are not enforced (e. g. , although Japan has antitrust laws similar to those of the U. S. collusion is openly tolerated). Further, the amount of discretion left to government officials tends to vary. In Japan, through the doctrine of administrative guidance, great latitude is left to government officials, who effectively make up the laws. One serious problem in some countries is a limited access to the legal systems as a means to redress grievances against other parties. While the U. S. may rely excessively on lawsuits, the inability to effectively hold contractual partners to their agreement tends to inhibit business deals.
In many jurisdictions, pre-trial discovery is limited, making it difficult to make a case against a firm whose internal documents would reveal guilt. This is one reason why personal relationships in some cultures are considered more significant than in the U. S. —since enforcing contracts may be difficult, you must be sure in advance that you can trust the other party. Legal systems of the World There are four main approaches to law across the World, with some differences within each: Common law, the system in effect in the U. S. , is based on a legal tradition of precedent.
Each case that raises new issues is considered on its own merits, and then becomes a precedent for future decisions on that same issue. Although the legislature can override judicial decisions by changing the law or passing specific standards through legislation, reasonable court decisions tend to stand by default. Code law, which is common in Europe, gives considerably shorter leeway to judges, who are charged with “matching” specific laws to situations—they cannot come up with innovative solutions when new issues such as patentability of biotechnology come up. There are also certain differences in standards.
For example, in the U. S. a supplier whose factory is hit with a strike is expected to deliver on provisions of a contract, while in code law this responsibility may be nullified by such an “act of God. ” Islamic law is based on the teachings of the Koran, which puts forward mandates such as a prohibition of usury, or excessive interest rates. This has led some Islamic countries to ban interest entirely; in others, it may be tolerated within reason. Islamic law is ultimately based on the need to please God, so “getting around” the law is generally not acceptable.
Attorneys may be consulted about what might please God rather than what is an explicit requirements of the government. Socialist law is based on the premise that “the government is always right” and typically has not developed a sophisticated framework of contracts (you do what the governments tells you to do) or intellectual property protection (royalties are unwarranted since the government ultimately owns everything). Former communist countries such as those of Eastern Europe and Russia are trying to advance their legal systems to accommodate issues in a free market.
Culture Culture, as a “complex whole,” is a system of interdependent components. Knowledge and beliefs are important parts. In the U. S. , we know and believe that a person who is skilled and works hard will get ahead. In other countries, it may be believed that differences in outcome result more from luck. “Chunking,” the name for China in Chinese, literally means “The Middle Kingdom. ” The belief among ancient Chinese that they were in the center of the universe greatly influenced their thinking. Other issues are relevant.
Art, for example, may be reflected in the rather arbitrary practice of wearing ties in some countries and wearing turbans in others. Morality may be exhibited in the view in the United States that one should not be naked in public. In Japan, on the other hand, groups of men and women may take steam baths together without perceived as improper. On the other extreme, women in some Arab countries are not even allowed to reveal their faces. Notice, by the way, that what at least some countries view as moral may in fact be highly immoral by the standards of another country.
Culture has several important characteristics: (1) Culture is comprehensive. This means that all parts must fit together in some logical fashion. For example, bowing and a strong desire to avoid the loss of face are unified in their manifestation of the importance of respect. (2) Culture is learned rather than being something we are born with. We will consider the mechanics of learning later in the course. (3) Culture is manifested within boundaries of acceptable behavior. For example, in American society, one cannot show up to class naked, but wearing anything from a suit and tie to shorts and a T-shirt would usually be acceptable.
Failure to behave within the prescribed norms may lead to sanctions, ranging from being hauled off by the police for indecent exposure to being laughed at by others for wearing a suit at the beach. (4) Conscious awareness of cultural standards is limited. One American spy was intercepted by the Germans during World War II simply because of the way he held his knife and fork while eating. (5) Cultures fall somewhere on a continuum between static and dynamic depending on how quickly they accept change. For example, American culture has changed a great deal since the 1950s, while the culture of Saudi Arabia has changed much less.
Dealing with culture Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may violate the cultural norms of another country without being informed of this, and people from different cultures may feel uncomfortable in each other’s presence without knowing exactly why (for example, two speakers may unconsciously continue to attempt to adjust to reach an incompatible preferred interpersonal distance). Warning about stereotyping When observing a culture, one must be careful not to over-generalize about traits that one sees.
Research in social psychology has suggested a strong tendency for people to perceive an “outgroup” as more homogenous than an “ingroup,” even when they knew what members had been assigned to each group purely by chance. When there is often a “grain of truth” to some of the perceived differences, the temptation to over-generalize is often strong. Note that there are often significant individual differences within cultures. Cultural lessons We considered several cultural lessons in class; the important thing here is the big picture.
For example, within the Muslim tradition, the dog is considered a “dirty” animal, so portraying it as “man’s best friend” in an advertisement is counter-productive. Packaging, seen as a reflection of the quality of the “real” product, is considerably more important in Asia than in the U. S. , where there is a tendency to focus on the contents which “really count. ” Many cultures observe significantly greater levels of formality than that typical in the U. S. , and Japanese negotiator tend to observe long silent pauses as a speaker’s point is considered.
Cultural characteristics as a continuum There is a tendency to stereotype cultures as being one way or another (e. g. , individualistic rather than collectivistic). Note, however, countries fall on a continuum of cultural traits. Hofstede’s research demonstrates a wide range between the most individualistic and collectivistic countries, for example—some fall in the middle. High vs. low context cultures In some cultures, “what you see is what you get”—the speaker is expected to make his or her points clear and limit ambiguity. This is the case in the U.S. —if you have something on your mind, you are expected to say it directly, subject to some reasonable standards of diplomacy. In Japan, in contrast, facial expressions and what is not said may be an important clue to understanding a speaker’s meaning. Thus, it may be very difficult for Japanese speakers to understand another’s written communication. The nature of languages may exacerbate this phenomenon—while the German language is very precise, Chinese lacks many grammatical features, and the meaning of words may be somewhat less precise.
English ranks somewhere in the middle of this continuum. Ethnocentrism and the self-reference criterion The self-reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one’s own culture to evaluate others. For example, Americans may perceive more traditional societies to be “backward” and “unmotivated” because they fail to adopt new technologies or social customs, seeking instead to preserve traditional values.
In the 1960s, a supposedly well read American psychology professor referred to India’s culture of “sick” because, despite severe food shortages, the Hindu religion did not allow the eating of cows. The psychologist expressed disgust that the cows were allowed to roam free in villages, although it turns out that they provided valuable functions by offering milk and fertilizing fields. Ethnocentrism is the tendency to view one’s culture to be superior to others. The important thing here is to consider how these biases may come in the way in dealing with members of other cultures.
It should be noted that there is a tendency of outsiders to a culture to overstate the similarity of members of that culture to each other. In the United States, we are well aware that there is a great deal of heterogeneity within our culture; however, we often underestimate the diversity within other cultures. For example, in Latin America, there are great differences between people who live in coastal and mountainous areas; there are also great differences between social classes. Language issues Language is an important element of culture.
It should be realized that regional differences may be subtle. For example, one word may mean one thing in one Latin American country, but something off-color in another. It should also be kept in mind that much information is carried in non-verbal communication. In some cultures, we nod to signify “yes” and shake our heads to signify “no;” in other cultures, the practice is reversed. Within the context of language: There are often large variations in regional dialects of a given language. The differences between U. S. Australian, and British English are actually modest compared to differences between dialects of Spanish and German. Idioms involve “figures of speech” that may not be used, literally translated, in other languages. For example, baseball is a predominantly North and South American sport, so the notion of “in the ball park” makes sense here, but the term does not carry the same meaning in cultures where the sport is less popular. Neologisms involve terms that have come into language relatively recently as technology or society involved.
With the proliferation of computer technology, for example, the idea of an “add-on” became widely known. It may take longer for such terms to “diffuse” into other regions of the world. In parts of the World where English is heavily studied in schools, the emphasis is often on grammar and traditional language rather than on current terminology, so neologisms have a wide potential not to be understood. Slang exists within most languages. Again, regional variations are common and not all people in a region where slang is used will necessarily understand this.
There are often significant generation gaps in the use of slang. Writing patterns, or the socially accepted ways of writing, will differs significantly between cultures. In English and Northern European languages, there is an emphasis on organization and conciseness. Here, a point is made by building up to it through background. An introduction will often foreshadow what is to be said. In Romance languages such as Spanish, French, and Portuguese, this style is often considered “boring” and “inelegant. Detours are expected and are considered a sign of class, not of poor organization. In Asian languages, there is often a great deal of circularity. Because of concerns about potential loss of face, opinions may not be expressed directly. Instead, speakers may hint at ideas or indicate what others have said, waiting for feedback from the other speaker before committing to a point of view. Differences in cultural values result in different preferred methods of speech. In American English, where the individual is assumed to be more in control of his or her estiny than is the case in many other cultures, there is a preference for the “active” tense (e. g. , “I wrote the marketing plan”) as opposed to the passive (e. g. , “The marketing plan was written by me. ”) Because of the potential for misunderstandings in translations, it is dangerous to rely on a translation from one language to another made by one person. In the “decentering” method, multiple translators are used. The text is first translated by one translator—say, from German to Mandarin Chinese.
A second translator, who does not know what the original German text said, will then translate back to German from Mandarin Chinese translation. The text is then compared. If the meaning is not similar, a third translator, keeping in mind this feedback, will then translate from German to Mandarin. The process is continued until the translated meaning appears to be satisfactory. Country Entry: Decisions and Strategies Segmentation, Targeting, and Positioning Segmentation, in marketing, is usually done at the customer level.
However, in international marketing, it may sometimes be useful to see countries as segments. This allows the decision maker to focus on common aspects of countries and avoid information overload. It should be noted that variations within some countries (e. g. , Brazil) are very large and therefore, averages may not be meaningful. Country level segmentation may be done on levels such as geography—based on the belief that neighboring countries and countries with a particular type of climate or terrain tend to share similarities, demographics (e. g. population growth, educational attainment, population age distribution), or income. Segmenting on income is tricky since the relative prices between countries may differ significantly (based, in part, on purchasing power parity measures that greatly affect the relative cost of imported and domestically produced products). The importance of STP. Segmentation is the cornerstone of marketing—almost all marketing efforts in some way relate to decisions on who to serve or how to implement positioning through the different parts of the marketing mix.
For example, one’s distribution strategy should consider where one’s target market is most likely to buy the product, and a promotional strategy should consider the target’s media habits and which kinds of messages will be most persuasive. Although it is often tempting, when observing large markets, to try to be “all things to all people,” this is a dangerous strategy because the firm may lose its distinctive appeal to its chosen segments. In terms of the “big picture,” members of a segment should generally be as similar as possible to each other on a relevant dimension (e. . , preference for quality vs. low price) and as different as possible from members of other segments. That is, members should respond in similar ways to various treatments (such as discounts or high service) so that common campaigns can be aimed at segment members, but in order to justify a different treatment of other segments, their members should have their own unique response behavior. Approaches to global segmentation. There are two main approaches to global segmentation.
At the macro level, countries are seen as segments, given that country aggregate characteristics and statistics tend to differ significantly. For example, there will only be a large market for expensive pharmaceuticals in countries with certain income levels, and entry opportunities into infant clothing will be significantly greater in countries with large and growing birthrates (in countries with smaller birthrates or stable to declining birthrates, entrenched competitors will fight hard to keep the market share). There are, however, significant differences within countries.
For example, although it was thought that the Italian market would demand “no frills” inexpensive washing machines while German consumers would insist on high quality, very reliable ones, it was found that more units of the inexpensive kind were sold in Germany than in Italy—although many German consumers fit the predicted profile, there were large segment differences within that country. At the micro level, where one looks at segments within countries. Two approaches exist, and their use often parallels the firm’s stage of international involvement.
Intramarket segmentation involves segmenting each country’s markets from scratch—i. e. , an American firm going into the Brazilian market would do research to segment Brazilian consumers without incorporating knowledge of U. S. buyers. In contrast, intermarket segmentation involves the detection of segments that exist across borders. Note that not all segments that exist in one country will exist in another and that the sizes of the segments may differ significantly. For example, there is a huge small car segment in Europe, while it is considerably smaller in the U.
S. Positioning across markets. Firms often have to make a tradeoff between adapting their products to the unique demands of a country market or gaining benefits of standardization such as cost savings and the maintenance of a consistent global brand image. There are no easy answers here. On the one hand, McDonald’s has spent a great deal of resources to promote its global image; on the other hand, significant accommodations are made to local tastes and preferences—for example, while serving alcohol in U. S. estaurants would go against the family image of the restaurant carefully nurtured over several decades, McDonald’s has accommodated this demand of European patrons. Methods of entry With rare exceptions, products just don’t emerge in foreign markets overnight—a firm has to build up a market over time. Several strategies, which differ in aggressiveness, risk, and the amount of control that the firm is able to maintain, are available: Exporting is a relatively low risk strategy in which few investments are made in the new country.
A drawback is that, because the firm makes few if any marketing investments in the new country, market share may be below potential. Further, the firm, by not operating in the country, learns less about the market (What do consumers really want? Which kinds of advertising campaigns are most successful? What are the most effective methods of distribution? ) If an importer is willing to do a good job of marketing, this arrangement may represent a “win-win” situation, but it may be more difficult for the firm to enter on its own later if it decides that larger profits can be made within the country.
Licensing and franchising are also low exposure methods of entry—you allow someone else to use your trademarks and accumulated expertise. Your partner puts up the money and assumes the risk. Problems here involve the fact that you are training a potential competitor and that you have little control over how the business is operated. For example, American fast food restaurants have found that foreign franchisers often fail to maintain American standards of cleanliness.
Similarly, a foreign manufacturer may use lower quality ingredients in manufacturing a brand based on premium contents in the home country. Contract manufacturing involves having someone else manufacture products while you take on some of the marketing efforts yourself. This saves investment, but again you may be training a competitor. Direct entry strategies, where the firm either acquires a firm or builds operations “from scratch” involve the highest exposure, but also the greatest opportunities for profits.
The firm gains more knowledge about the local market and maintains greater control, but now has a huge investment. In some countries, the government may expropriate assets without compensation, so direct investment entails an additional risk. A variation involves a joint venture, where a local firm puts up some of the money and knowledge about the local market. Product Issues in International Marketing Products and Services
Some marketing scholars and professionals tend to draw a strong distinction between conventional products and services, emphasizing service characteristics such as heterogeneity (variation in standards among providers, frequently even among different locations of the same firm), inseperability from consumption, intangibility, and, in some cases, perishability On the topic of services, cultural issues may be even more prominent than they are for tangible goods. There are large variations in willingness to pay for quality, and often very large differences in expectations.
In some countries, it may be more difficult to entice employees to embrace a firm’s customer service philosophy. Labor regulations in some countries make it difficult to terminate employees whose treatment of customers is substandard. Speed of service is typically important in the U. S. and western countries but personal interaction may seem more important in other countries. Product Need Satisfaction. We often take for granted the “obvious” need that products seem to fill in our own culture; however, functions served may be very different in others—for example, while cars have a large transportation role in the U. S. , they are impractical to drive in Japan, and thus cars there serve more of a role of being a status symbol or providing for individual indulgence. In the U. S. , fast food and instant drinks such as Tang are intended for convenience; elsewhere, they may represent more of a treat. Thus, it is important to examine through marketing research consumers’ true motives, desires, and expectations in buying a product. Approaches to Product Introduction. Firms face a choice of alternatives in marketing their products across markets.
An extreme strategy involves customization, whereby the firm introduces a unique product in each country, usually with the belief tastes differ so much between countries that it is necessary more or less to start from “scratch” in creating a product for each market. On the other extreme, standardization involves making one global product in the belief the same product can be sold across markets without significant modification—e. g. , Intel microprocessors are the same regardless of the country in which they are sold.
Finally, in most cases firms will resort to some kind of adaptation, whereby a common product is modified to some extent when moved between some markets—e. g. , in the United States, where fuel is relatively less expensive, many cars have larger engines than their comparable models in Europe and Asia; however, much of the design is similar or identical, so some economies are achieved. Similarly, while Kentucky Fried Chicken serves much the same chicken with the eleven herbs and spices in Japan, a lesser amount of sugar is used in the potato salad, and fries are substituted for mashed potatoes.
There are certain benefits to standardization. Firms that produce a global product can obtain economies of scale in manufacturing, and higher quantities produced also lead to a faster advancement along the experience curve. Further, it is_ more feasible to establish a global brand_ as less confusion will occur when consumers travel across countries and see the same product. On the down side, there may be significant differences in desires between cultures and physical environments—e. g. , software sold in the U. S. nd Europe will often utter a “beep” to alert the user when a mistake has been made; however, in Asia, where office workers are often seated closely together, this could cause embarrassment. International Promotion Promotional tools. Numerous tools can be used to influence consumer purchases: Advertising—in or on newspapers, radio, television, billboards, busses, taxis, or the Internet. Price promotions—products are being made available temporarily as at a lower price, or some premium (e. g. , toothbrush with a package of toothpaste) is being offered for free.
Point-of-purchase—the manufacturer pays for extra display space in the store or puts a coupon right by the product Other method of getting the consumer’s attention—all the Gap stores in France may benefit from the prominence of the new store located on the Champs-Elysees Promotional objectives. Promotional objectives involve the question of what the firm hopes to achieve with a campaign—“increasing profits” is too vague an objective, since this has to be achieved through some intermediate outcome (such as increasing market share, which in turn is achieved by some change in consumers which cause them to buy more).
Some common objectives that firms may hold: Awareness. Many French consumers do not know that the Gap even exists, so they cannot decide to go shopping there. This objective is often achieved through advertising, but could also be achieved through favorable point-of-purchase displays. Note that since advertising and promotional stimuli are often afforded very little attention by consumers, potential buyers may have to be exposed to the promotional stimulus numerous times before it “registers. ” Trial.
Even when consumers know that a product exists and could possibly satisfy some of their desires, it may take a while before they get around to trying the product—especially when there are so many other products that compete for their attention and wallets. Thus, the next step is often to try get consumer to try the product at least once, with the hope that they will make repeat purchases. Coupons are often an effective way of achieving trial, but these are illegal in some countries and in some others, the infrastructure to readily accept coupons (e. . , clearing houses) does not exist. Continued advertising and point-of-purchase displays may be effective. Although Coca Cola is widely known in China, a large part of the population has not yet tried the product. Attitude toward the product. A high percentage of people in the U. S. and Europe has tried Coca Cola, so a more reasonable objective is to get people to believe positive things about the product—e. g. , that it has a superior taste and is better than generics or store brands. This is often achieved through advertising.
Some cultural dimensions: Directness vs. indirectness: U. S. advertising tends to emphasize directly why someone would benefit from buying the product. This, however, is considered too pushy for Japanese consumers, where it is felt to be arrogant of the seller to presume to know what the consumer would like. Comparison: Comparative advertising is banned in most countries and would probably be very counterproductive, as an insulting instance of confrontation and bragging, in Asia even if it were allowed.
In the U. S. , comparison advertising has proven somewhat effective (although its implementation is tricky) as a way to persuade consumers what to buy. Humor. Although humor is a relatively universal phenomenon, what is considered funny between countries differs greatly, so pre-testing is essential. Gender roles. A study found that women in U. S. advertising tended to be shown in more traditional roles in the U. S. than in Europe or Australia. On the other hand, some countries are even more traditional—e. g. a Japanese ad that claimed a camera to be “so simple that even a woman can use it” was not found to be unusually insulting. Explicitness. Europeans tend to allow for considerably more explicit advertisements, often with sexual overtones, than Americans. Sophistication. Europeans, particularly the French, demand considerably more sophistication than Americans who may react more favorably to emotional appeals—e. g. , an ad showing a mentally retarded young man succeeding in a job at McDonald’s was very favorably received in the U. S. but was booed at the Cannes film festival in France. Popular vs. raditional culture. U. S. ads tend to employ contemporary, popular culture, often including current music while those in more traditional cultures tend to refer more to classical culture. Information content vs. fluff. American ads contain a great deal of “puffery,” which was found to be very ineffective in Eastern European countries because it resembled communist propaganda too much. The Eastern European consumers instead wanted hard, cold facts. Advertising standardization. Issues surrounding advertising standardization tend to parallel issues surrounding product and positioning standardization.
On the plus side, economies of scale are achieved, a consistent image can be established across markets_, creative _talent can be utilized across markets, and good ideas can be transplanted from one market to others. On the down side, cultural differences, peculiar country regulations, and differences in product life cycle stages make this approach difficult. Further, local advertising professionals may resist campaigns imposed from the outside—sometimes with good reasons and sometimes merely to preserve their own creative autonomy. Legal issues.
Countries differ in their regulations of advertising, and some products are banned from advertising on certain media (large supermarket chains are not allowed to advertise on TV in France, for example). Other forms of promotion may also be banned or regulated. In some European countries, for example, it is illegal to price discriminate between consumers, and thus coupons are banned and in some, it is illegal to offer products on sale outside a very narrow seasonal and percentage range. Pricing Issues in International Marketing Price can best be defined in ratio terms, giving the equation esources given up price goods received This implies that there are several ways that the price can be changed: “Sticker” price changes—the most obvious way to change the price is the price tag— you get the same thing, but for a different (usually larger) amount of money. Change quantity. Often, consumers respond unfavorably to an increased sticker price, and changes in quantity are sometimes noticed less—e. g. , in the 1970s, the wholesale cost of chocolate increased dramatically, and candy manufacturers responded by making smaller candy bars.
Note that, for cash flow reasons, consumers in less affluent countries may need to buy smaller packages at any one time (e. g. , forking out the money for a large tube of toothpaste is no big deal for most American families, but it introduces a greater strain on the budget of a family closer to the subsistence level). Change quality. Another way candy manufacturers have effectively increased prices is through a reduction in quality. In a candy bar, the “gooey” stuff is much cheaper than chocolate.
It is frequently tempting for foreign licensees of a major brand name to use inferior ingredients. Change terms. In the old days, most software manufacturers provided free support for their programs—it used to be possible to call the WordPerfect Corporation on an 800 number to get free help. Nowadays, you either have to call a 900 number or have a credit card handy to get help from many software makers. Another way to change terms is to do away with favorable financing terms. Constraints on Global Communications Strategies
Although firms that seek standardized positions may seek globally unified campaigns, there are several constraints: Cultural barriers. Subtle cultural differences may make an ad that tested well in one country unsuitable in another—e. g. , an ad that featured a man walking in to join his wife in the bathroom was considered an inappropriate invasion in Japan. Symbolism often differs between cultures, and humor, which is based on the contrast to people’s experiences, tends not to travel well. Values also tend to differ between cultures—in the U. S. nd Australia, excelling above the group is often desirable, while in Japan, “The nail that sticks out gets hammered down. ” In the U. S. , “The early bird gets the worm” while in China “The first bird in the flock gets shot down. ” Local attitudes toward advertising. People in some countries are more receptive to advertising than others. While advertising is accepted as a fact of life in the U. S. , some Europeans find it too crass and commercial. Media infrastructure. Cable TV is not well developed in some countries and regions, and not all media in all countries accept advertising.
Consumer media habits also differ dramatically; newspapers appear to have a higher reach than television and radio in parts of Latin America. Bennett, Roger; Jim Blythe (2002).
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