international marketing
TRANSCRIPT
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International Marketing Pan African e-Network The course introduces the student to the various aspects of international marketing with
the principle objective of developing skills in the identification, analysis and solution of
the problems encountered in the theories and the practice international marketing abroad.
Amity University Mr. Nishant Singhai
Semester II
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Course Contents:
Module I: Global Marketing: An Overview Introduction to Global Marketing Reasons / Objectives Environment of International Marketing Transnational Marketing – Domestic to global Various terms EPRG framework Driving & Restraining Forces
Module II: Social & Cultural Environment Basic aspects of culture Cultural Knowledge Culture and its elements Analytical Approaches to Cultural Factors Maslow’s hierarchy of needs Hofstede’s Cultural Typology The SRC Enviromental Sensitivity
Module III: Global Advertising Global Advertising and Branding .Selecting an advertising agency Creating Advertising
Module IV: Global Marketing Channels and Physical Distribution Channel objectives and Constraints Distribution Channels: Terminology and Structure Physical Distribution and Logistics
Module V: Global Marketing Information Systems Overview of GMIS Sources of Market Information Formal marketing Research
Module VI: Global segmentation Targeting & Positioning Global Market Segmentation Geographic Psychographic Behaviour Benefit Vertical Vs Horizontal Global Targeting Criteria for Global targeting Selecting a GTMS Global Positioning Marketing in a Developing Country
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Module VII: Global e-marketing The Death of Distance Relationship marketing Living in an Age of Technological Discontinuities Components of the Electronic value chain
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Index: Module I: Global Marketing: An Overview 5
Module II: Social & Cultural Environment 39
Module III: Global Advertising 66
Module IV: Global Marketing Channels and Physical Distribution 83
Module V: Global Marketing Information Systems 104
Module VI: Global segmentation Targeting & Positioning 128
Module VII: Global e-marketing 149
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Module 1
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Introduction to Global Marketing
Whether an organization markets its goods and services domestically or
internationally, the definition of marketing still applies. However, the scope of
marketing is broadened when the organization decides to sell across
international boundaries, this being primarily due to the numerous other
dimensions which the organization has to account for. When a company becomes
a global marketer, it views the world as one market and creates products that will
only require weeks to fit into any regional marketplace. Marketing decisions are
made by consulting with marketers in all the countries that will be affected. The
goal is to sell the same thing the same way everywhere.
Whether an organisation markets its goods and services domestically or
internationally, the definition of marketing still applies. However, the scope of
marketing is broadened when the organisation decides to sell across
international boundaries, this being primarily due to the numerous other
dimensions which the organisation has to account for. For example, the
organisation's language of business may be "English", but it may have to do
business in the "French language". This not only requires a translation facility, but
the French cultural conditions have to be accounted for as well. Doing business
"the French way" may be different from doing it "the English way". This is
particularly true when doing business with the Japanese.
Let us, firstly define "Marketing" and then see how, by doing marketing across
multinational boundaries, differences, where existing, have to be accounted for.
S. Carter defines marketing as:
"The process of building lasting relationships through planning, executing and
controlling the conception, pricing, promotion and distribution of ideas, goods
and services to create mutual exchange that satisfy individual and organisational
needs and objectives".
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The long held tenants of marketing are "customer value", "competitive
advantage" and "focus". This means that organisations have to study the market,
develop products or services that satisfy customer needs and wants, develop the
"correct" marketing mix and satisfy its own objectives as well as giving customer
satisfaction on a continuing basis. However, it became clear in the 1980s that this
definition of marketing was too narrow. Preoccupation with the tactical workings
of the marketing mix led to neglect of long term product development, so
"Strategic Marketing" was born. The focus was shifted from knowing everything
about the customer, to knowing the customer in a context which includes the
competition, government policy and regulations, and the broader economic,
social and political macro forces that shape the evolution of markets. In global
marketing terms this means forging alliances (relationships) or developing
networks, working closely with home country government officials and industry
competitors to gain access to a target market. Also the marketing objective has
changed from one of satisfying organisational objectives to one of "stakeholder"
benefits - including employees, society, government and so on. Profit is still
essential but not an end in itself.
Strategic marketing according to Wensley (1982) has been defined as:
"Initiating, negotiating and managing acceptable exchange relationships with
key interest groups or constituencies, in the pursuit of sustainable competitive
advantage within specific markets, on the basis of long run consumer, channel
and other stakeholder franchise".
Whether one takes the definition of "marketing" or "strategic marketing",
"marketing" must still be regarded as both a philosophy and a set of functional
activities. As a philosophy embracing customer value (or satisfaction), planning
and organising activities to meet individual and organisational objectives,
marketing must be internalised by all members of an organisation, because
without satisfied customers the organisation will eventually die. As a set of
operational activities, marketing embraces selling, advertising, transporting,
market research and product development activities to name but a few. It is
important to note that marketing is not just a philosophy or one or some of the
operational activities. It is both. In planning for marketing, the organisation has to
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basically decide what it is going to sell, to which target market and with what
marketing mix (product, place, promotion, price and people). Although these
tenents of marketing planning must apply anywhere, when marketing across
national boundaries, the difference between domestic and international
marketing lies almost entirely in the differences in national environments within
which the global programme is conducted and the differences in the organisation
and programmes of a firm operating simultaneously in different national
markets.
It is recognised that in the "postmodern" era of marketing, even the assumptions
and long standing tenents of marketing like the concepts of "consumer needs",
"consumer sovereignty", "target markets" and "product/market processes" are
being challenged. The emphasis is towards the emergence of the "customising
consumer", that is, the customer who takes elements of the market offerings and
moulds a customised consumption experience out of these. Even further, post
modernisim, posts that the consumer who is the consumed, the ultimate
marketable image, is also becoming liberated from the sole role of a consumer
and is becoming a producer. This reveals itself in the desire for the consumer to
become part of the marketing process and to experience immersion into
"thematic settings" rather than merely to encounter products. So in consuming
food products for example, it becomes not just a case of satisfying hunger needs,
but also can be rendered as an image - producing act. In the post modern market
place the product does not project images, it fills images. This is true in some
foodstuffs. The consumption of "designer water" or "slimming foods" is a
statement of a self image, not just a product consuming act.
Acceptance of postmodern marketing affects discussions of products, pricing,
advertising, distribution and planning. However, given the fact that this textbook
is primarily written with developing economies in mind, where the
environmental conditions, consumer sophistication and systems are not such
that allow a quantum leap to postmodernism, it is intended to mention the
concept in passing. Further discussion on the topic is available in the
accompanying list of readings.
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When organisations develop into global marketing organisations, they usually
evolve into this from a relatively small export base. Some firms never get any
further than the exporting stage. Marketing overseas can, therefore, be
anywhere on a continuum of "foreign" to "global". It is well to note at this stage
that the words "international", "multinational" or "global" are now rather
outdated descriptions. In fact "global" has replaced the other terms to all intents
and purposes. "Foreign" marketing means marketing in an environment different
from the home base, it's basic form being "exporting". Over time, this may evolve
into an operating market rather than a foreign market. One such example is the
Preferential Trade Area (PTA) in Eastern and Southern Africa where involved
countries can trade inter-regionally under certain common modalities. Another
example is the Cold Storage Company of Zimbabwe.
Case 1.1 Cold Storage Company Of Zimbabwe
The Cold Storage Company (CSC) of Zimbabwe, evolved in 1995, out of the Cold
Storage Commission. The latter, for many years, had been the parastatal (or
nationalised company) with the mandate to market meat in Zimbabwe. However,
the CSC lost its monopoly under the Zimbabwean Economic Reform Programme
of 1990-95, which saw the introduction of many private abattoirs. During its
monopoly years the CSC had built five modern abattoirs, a number of which were
up to European Union rating. In addition, and as a driving force to the building of
EU rated abattoirs, the CSC had obtained a 9000 tonnes beef quota in the EU.
Most of the meat went out under the auspices of the Botswana Meat
Commission. For many years, the quota had been a source of volume and
revenue, a source which is still continuing. In this way, the CSC's exporting of beef
to the EU is such that the EU can no longer be considered as " Foreign" but an
"Operating" market.
Organisations begin to develop and run operations in the targeted country or
countries outside of the domestic one. In practice, organisations evolve and Table
1.1 outlines a typology of terms which describes the characteristics of companies
at different stages in the process of evolving from domestic to global enterprises.
The four stages are as follows:
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1. Stage one: domestic in focus, with all activity concentrated in the home
market. Whilst many organisations can survive like this, for example raw milk
marketing, solely domestically oriented organisations are probably doomed to
long term failure.
2. Stage two: home focus, but with exports (ethnocentric). Probably believes
only in home values, but creates an export division. Usually ripe for the taking by
stage four organisations.
3. Stage three: stage two organisations which realise that they must adapt
their marketing mixes to overseas operations. The focus switches to
multinational (polycentric) and adaption becomes paramount.
4. Stage four: global organisations which create value by extending products
and programmes and focus on serving emerging global markets (geocentric). This
involves recognising that markets around the world consist of similarities and
differences and that it is possible to develop a global strategy based on
similarities to obtain scale economies, but also recognises and responds to cost
effective differences. Its strategies are a combination of extension, adaptation
and creation. It is unpredictable in behaviour and always alert to opportunities.
There is no time limit on the evolution process. In some industries, like
horticulture, the process can be very quick.
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Table 1.1 Stages of domestic to global evolution
Management
emphasis
Stage one
Domestic
Stage two
International
Stage three
Multinational
Stage four
Global
Focus Domestic Ethnocentric Polycentric Geocentric
Marketing
strategy
Domestic Extension Adaption Extension
Structure Domestic International Worldwide area Adaption
creation
matrix/mixed
Management
style
Domestic Centralised top
down
Decentralised
bottom up
Integrated
Manufacturing
stance
Mainly
domestic
Mainly domestic Host country Lowest cost
worldwide
Investment
policy
Domestic Domestic used
worldwide
Mainly in each
host country
Cross
subsidization
Performance
evaluation
Domestic
market
share
Against home
country market
share
Each host
country market
share
Worldwide
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EVOLUTIONARY PROCESS OF GLOBAL MARKETING
Global marketing ’a gradual process occurring in stages’. The evolution of
marketing across national boundaries has identifiable stages, which are discussed
in the following:
DOMESTIC MARKETING
In the initial stages, most companies focus solely on their domestic markets. A
marketing restricted to the political boundaries of a country, is called "Domestic
Marketing". A company marketing only within its national boundaries only has to
consider domestic competition. The marketing mix decisions are invariably based
on the needs and wants of the domestic customers. These decisions are taken so
as to respond competitively and effectively to the domestic environmental
factors.
Market Focus Domestic Orientation Ethnocentric
Marketing Mix Decisions Focused on domestic customers
EXPORT MARKETING
The stage models suggest that generally a firm focused on domestic markets
begin to export unintentionally by receiving unsolicited orders from overseas
markets. The firm tries to fulfill such orders reluctantly with little strategic
orientation. Thus, the initial entry of a firm in international markets may be
characterized as a consequence of responding to unsolicited export enquiries.
However, the positive experience in fulfilling such overseas market requirements
serves as a stimulus to look for repeat orders.
Marketing Focus Overseas(Targeting and entering foreign markets)
Orientation Ethnocentric Marketing Mix Decisions Focussed mainly on domestic
customers.
Overseas marketing-generally an extension of domestic
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marketing.
Decisions made at headquarters.
The major marketing decision areas at this stage include market
identification and selection, timing and sequencing of entry and selection
of an appropriate entry mode.
The marketing mix decisions are primarily made at the headquarters.
INTERNATIONAL MARKETING
International marketing is defined as the marketing activities carried out
across national boundaries.
International marketing involves:
1) Identifying needs and wants of customers in international markets
2) Taking marketing mix decisions related to product, pricing, distribution and
communication keeping in view the diverse consumer and market behaviour
across different countries on one hand and firm’s goals towards globalization on
the other hand
3)penetrating into international markets using various mode of entry and taking
decisions in view of dynamic international marketing environment.
Marketing Focus Differentiation in country markets by way of developing or acquiring new brands
Orientation Polycentric Marketing Mix Decisions Developing local products depending upon
country needs. Decision by individual subsidiaries.
The extreme form of international marketing is multi-domestic
marketing, where a company establishes an independent foreign
subsidiary in each and every foreign market. The foreign subsidiaries
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operate independently without any measureable control from the
headquarters.
MULTINATIONAL MARKETING
Once a company establishes its manufacturing and marketing operations in
multiple markets, it begins to consolidate its operations on regional basis so as to
take advantage of economies of scale in manufacturing and marketing mix
decisions. Various markets are divided into regional sub-segments on the basis of
their similarity to respond to marketing mix decisions. It is known as
multinational marketing.
Marketing Focus Consolidation of operations on regional basis. Gains from economies of scale.
Orientation Regiocentric
Marketing Mix Decisions Product standardization within regions but not across them on regional basis
GLOBAL MARKETING
The extreme view of global marketing refers to the use of a single marketing
method across the international markets with little adaptation.
Marketing Focus Consolidating firm’s operations on global basis Orientation Geocentric
Marketing Mix Decisions Globalization of marketing mix decisions with local variations. Joint decision making across firm’s global operations.
The globalization of markets leads to:
Reduction of cost in efficiencies and duplication of efforts among
national and regional subsidiaries,
Opportunities for the transfer of products, brands and other ideas
across subsidiaries
Emergence of global customers
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Improved linkage among national marketing infrastructures leading to
the development of a global marketing infrastructure.
In practice, global marketing hardly means complete standardization of the
marketing mix decisions, but it increasingly means a strategic approach to have a
global perspective to have economies of scale.
Transnational Marketing Transnational marketing involves entering foreign markets with a solid marketing
plan that helps a company create a positive brand presence and resonates with
residents of the foreign country Transnational marketing requires extensive
market research, a solid understanding of a country's cultures and consumer
behavior trends and the identification of socio/cultural influences on consumer
spending habits for particular products and services. Capitalizing on offshore
opportunities is only possible with an accurate assessment of a country's overall
spending habits, needs and desires; this requires ongoing research and analysis of
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EPRG
E: - Ethnocentric orientation
P: - Polycentric orientation
R: - Egocentric orientation
G: - Geocentric orientation
The key assumption of EPRG is the degree of internationalization to which the
management is committed or willing to move affects the specific international
strategies and decision rule of the firm
Ethnocentric Orientation
• Domestic strategies, techniques, and personnel are perceived as superior • International customers are considered as secondary • Guided by domestic market extension concept: • International markets are regarded primarily as outlets for surplus
domestic production • International marketing plans are developed in-house by the international
division • try to market those product in other countries which have demand equal
to domestic market
Polycentric Orientation
• Guided by the multidomestic market concept:
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• Focuses on the importance and uniqueness of each international market • Likely to establish businesses in each target country • Fully decentralized, minimal coordination with headquarters • Marketing strategies are specific to each country • in the effort to satisfy local customer needs and wants, full product
modification is implemented or separate product lines are developed • Result: No economies of scale, duplicated functions, higher final product
costs
Regiocentric Orientation
• Guided by the global marketing concept: • World regions that share economic, political, and/or cultural
traits are perceived as distinct markets • Divisions are organized based on location • Regional offices coordinate marketing activities
Geocentric Orientation
• Guided by the global marketing concept: • The world is perceived as a total market with identifiable, homogenous
segments • Targeted marketing strategies aimed at market segments, rather than
geographic locations • Achieve position as low-cost manufacturer and marketer of product line • Provides standardized product or service throughout the world • analyze and manage the marketing strategies with integrated global
marketing program • The objective of a geocentric company is to achieve a position as a low-
cost manufacturer and marketer of its product line. Such firms achieve competitive advantage by developing manufacturing processes that add more value per unit cost to the final product than do their rivals.
REASONS FOR ENTERING INTERNATIONAL MARKETS.
The reasons for entering international markets vary from firm to firm and country
to country depending upon the market characteristics. However, firms often
decide to enter into international market due to the following reasons:
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GROWTH
Firms enter international market when the domestic market potential saturates
and they are forced to explore alternative marketing opportunities overseas.
It may be observed that countries with smaller market size such as Singapore,
Hong Kong etc. had no other option but to internationalize.
PROFITABILITY
The price differential among markets also serves as an important incentive to
internationalize. Exporters benefit from the higher profit margins in the foreign
markets. Sometimes, strong competition in domestic market limits a firm’s
profitability in that market. Price differentials and enhanced profits in the
international markets are some of the fundamentals motives of exporting.
ACHIEVING ECONOMIES OF SCALE
Why should a firm
enter international
market?
Risk spread
Access to
imported inputs
Achieving
economies of scale
Spreading
R&D cost
Marketing
opportunities due
to life cycle Growth Uniqueness of
product or services
Profitability
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Large scale production capacities necessitate domestic firms dispose of their
goods in international markets once the domestic market become saturated.
RISK SPREAD
A company operating in domestic markets is highly vulnerable to economic
upheavals in the home market. Overseas markets provide an opportunity to
reduce their dependence on one market and spread the market risks.
ACCESS TO IMPORTED INPUTS
The national trade policies provide for import of inputs used for export
production, which are otherwise restricted. Besides, there are a number of
incentive schemes which provide duty exemption or remission on import of
inputs for export production. It helps the companies in accessing imported inputs
and technical know-how to upgrade their operations and increase their
competitiveness.
UNIQUENESS OF PRODUCT OR SERVICE
The product with unique attributes is unlikely to meet any competition in the
overseas markets and enjoy enormous opportunities in international markets.
E.g. herbal and medicinal plants, handicrafts, value added BPO services and
software development at competitive prices provide Indian firms an edge over
other countries and smoothen their entry into international market.
MARKETING OPPORTUNITIES DUE TO LIFE CYCLES
Each market shows a different stage of life cycle for different products, which
varies widely across country markets. When product or service get saturated in
the domestic or an international market, a firm may make use of such challenges
and convert them into marketing opportunities by operating into international
markets.
SPREADING R&D COST
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By way of spreading the potential market size, a firm recovers quickly the cost
incurred on research and development. It is especially true for products involving
higher cost of R&D. International markets facilitate speedy recovery of such costs
because of the large market size and also due to larger coverage of the right
market segments in international markets.
There have been many underlying forces, concepts and theories which have
emerged as giving political explanation to the development of international
trade. Remarkably, despite the trend to world interdependency, some countries
have been less involved than others. The USA, for example, has a remarkably
poor export record. About 2000 US companies only account for more than 70%
of US manufacturer's exports. This has been mainly due to its huge statewide
domestic market, which is almost tantamount to "international trade", for
example, Californian fruit being sold three thousand kilometres away in New
Jersey. Japan has risen fast to dominate the export rankings, with countries of
Africa struggling to make a significant mark, mainly because of their emphasis on
exporting primary products. This section will briefly examine the forces which
have been instrumental in the development of world trade.
Elements of the global marketing mix
Product
A global company is one that can create a single product and only have to tweak elements for different markets.
Price
Price will always vary from market to market. Price is affected by many variables: cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and much more. Additionally, the product’s position in relation to the competition influences the ultimate profit margin.
Placement
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How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market. Using Coca-Cola as an example again, not all cultures use vending machines.
Promotion
After product research, development and creation, promotion (specifically advertising) is generally the largest line item in a global company’s marketing budget. At this stage of a company’s development, integrated marketing is the goal. The global corporation seeks to reduce costs, minimize redundancies in personnel and work, maximize speed of implementation, and to speak with one voice. The goal of a global company is to send the same message worldwide.
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DRIVING FORCES/ PUSH FACTORS
Driving Forces: - Driving forces are the forces that help in achieving greater
globalization. They are also known as the push factors. The main driving forces
can be explained under the following headings.
Technology. Saturated Markets. Improvement of Communication/Transport. Removal of trade Barriers. Profitability Growth/Expansion Cost Consideration Image of the Company
The driving forces or the push forces are described briefly below:-
1. Technology: - Perhaps the single most important innovation has been the development of the micro processors, yet enabled the explosive growth of high power, low cost computing, vastly increasing the amount of information that can be processed by individuals and firms. The cost of micro processors continues to fall, while their power continues to increase. The rapid growth of the internet and the associated World Wide Web is the latest expression of this development. In 1990 fewer than 1 million users were connected to the internet. By the year 2005 about 1.12 billion or 18% of the world’s population were found to be using internet. The increasing use of better technology is resulting in better trade and business between different countries thus leading to globalization.
2. Saturated Markets: - When the companies face the problem of saturated markets in the home country they have to go to foreign markets in search of better markets. They find markets where there is demand for the
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products that they produce and thus help in making the world a global market.
3. Improvement of Communication/Transport: - As the technology improved the global communication have been revolutionized by the developments in satellite, optical fiber, and wireless technologies. Thus between 1930 and 2000 the cost of a three minute phone call between New York and London fell from $244.65 to 36 cents. Better and cheaper communication leads to better trade which eventually leads to globalization. In addition to developments in communication technology, several major innovations in transportation technology have occurred since World War II. In economic terms the most important are probably the development of commercial jet aircrafts and super freighters and the introduction of containerization, which simplifies transshipment from one mode of transport to another. The advent of commercial jet travel, by reducing the time needed to get from one location to another, has efficiently shrunk the globe. In terms of travel time, New York is now “closer” to Tokyo then it was to Philadelphia in the colonial days. Better transport led to doing better business by reducing the distances between two countries by great margins thus leading to globalization.
4. Removal of trade Barriers: - With the establishment of World Trade Organization whose main objective was to remove the trade barriers that existed between two countries, doing trade has been much easier. WTO as it is known is one of the main factors why the average tariff rates of countries like France, Germany and United States have fallen from about 45% in 1920s to about 3.9% in 2000. Lower tariff allows the system of free trade in the global market thus helping in greater globalization.
5. Profitability: - All the business firms have one common objective which is to earn profits. When the profit margin in the home country diminishes gradually the firms starts looking for other partners who are often from other countries thus leading to globalization.
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6. Growth/ Expansion: - The firms also want to expand and grow with time. Therefore they spread their business to other parts of the world. They trade with different partners all over the world which leads to globalization.
7. Cost Consideration: - The firms often to minimize the cost of production start their operations in different parts of the world. For example a country from Europe may start its production operation in a country in Asia for reducing its cost of production since the cost of labor is cheaper in Asia then in Europe. By spreading their operations the firms are eventually helping in globalization.
8. Image of the company: - The Company often to enhance its image in the eyes of the customers starts its global operations. They join foreign partners for this reason thus leading to globalization.
Restraining Forces/PULL FACTORS
Restraining forces are the forces that act as obstacle in the process of
globalization. They are also known as the pull factors of globalization. The main
restraining forces can be explained under the following headings.
Cultural Myopia Concentration of Power
The restraining forces or the pull forces are described briefly below:-
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1. Cultural Myopia Culture is one of the major obstacles in the process of globalization. Since the culture of different countries all over the world is different sometimes this acts as an obstacle in the globalization process. Different beliefs, rituals, customs and traditions which together are known as the culture of a particular region or a country often become a problem. A country which wants to start its global operation in a foreign country must first analyze the culture of that country which may be quite difficult in some cases.
2. Concentration of Power Critics of globalization argue that despite the supposed benefits associated with free trade and investment, over the last hundred years or so the gap between the rich and the poor nations of the world has gotten wider. In 1870 the average income per capita in the world’s 17 richest nations was 2.4 times that of all other countries. In 1990 the same group was 4.5 times as rich as the rest. This proves that the globalization process is helping the rich grow richer and eventually making the poor poorer. The reasons behind this are the concentration of power in the hands of few countries.
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Extra Reading material
Market forces and development
Over the last few decades internationalism has grown because of a number of
market factors which have been driving development forward, over and above
those factors which have been attempting to restrain it. These include market
and marketing related variables.
Many global opportunities have arisen because of the clustering of market
opportunities worldwide. Organisations have found that similar basic segments
exist worldwide and, therefore, can be met with a global orientation. Cotton, as
an ingredient in shirtings, suitings, and curtain material can be globally marketed
as natural and fashionable. One can see in the streets of New York, London, Kuala
Lumpar or Harare, youth with the same style and brand of basketball shirts or
American Football shorts. Coca Cola can be universally advertised as "Adds Life"
or appeal to a basic instinct " You can't beat the Feeling" or "Come alive" as with
the case of Pepsi. One can question "what feeling?", but that is not the point. The
more culturally unbounded the product is, the more a global clustering can take
place and the more a standardised approach can be made in the design of
marketing programmes.
This standardised approach can be aided and abetted with technology.
Technology has been one of the single most powerful driving forces to
internationalism. Rarely is technology culturally bound. A new pesticide is
available almost globally to any agricultural organisation as long as it has the
means to buy it. Computers in agriculture and other applications are used
universally with IBM and Macintosh becoming household names. The need to
recoup large costs of research and development in new products may force
organisations to look at global markets to recoup their investment. This is
certainly true of many veterinary products. Global volumes allow continuing
investment in R & D, thus helping firms to improve quality. Farm machinery, for
example, requires volume to generate profits for the development of new
products.
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Communications and transport are shrinking the global market place. Value
added manufacturers like Cadbury, Nestlè, Kelloggs, Beyer, Norsk Hydro, Massey
Ferguson and ICI find themselves "under pressure" from the market place and
distributors alike to position their brands globally. In many cases this may mean
an adaption in advertising appeals or messages as well as packaging and
instructions. Nestle will not be in a hurry to repeat its disastrous experience of
the "Infant formula" saga, whereby it failed to realise that the ability to find,
boiled water for its preparations, coupled with the literacy level to read the
instructions properly, were not universal phenomenon.
Marketing globally also provides the marketer with five types of "leverage" or
"advantages", those of experience, scale, resource utilisation and global strategy.
A multi-product global giant like Nestle', with over £10 billion turnover annually,
operates in so many markets, buys so much raw material from a variety of
outgrowers of different sizes, that its international leverage is huge. If it
consumes a third of the world's cocoa output annually, then it is in a position to
dominate terms. This also has its dangers.
The greatest lift to producers of raw agricultural products has been the almost
universal necessity to consume their produce. If one considers the whole range
of materials from their raw to value added state there is hardly a market segment
which cannot be tapped globally. Take, for example, oranges. Not only are
Brazilian, Israeli, South African and Spanish oranges in demand in their raw state
worldwide, but their downstream developments are equally in demand. Orange
juice, concentrates, segments and orange pigments are globally demanded. In
addition the ancillary products and services required to make the orange industry
work, find themselves equally in global demand. So insecticides, chemicals,
machinery, transport services, financial institutions, warehousing, packaging and
a whole range of other production and marketing services are in demand, many
provided by global organisations like Beyer, British Airways and Barclays Bank. Of
course, many raw materials are at the mercy of world prices, and so many
developing countries find themselves at the mercy of supply and demand
fluctuations. But this highlights one important global lesson - the need to study
markets carefully. Tobacco producing countries of the world are finding this out.
With a growing trend away from tobacco products in the west, new markets or
increasing volumes into consuming markets have to be prospected and
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developed. Many agricultural commodities take time to mature. An orange grove
will mature after five years. By that time another country may plant or have its
trees mature. Unless these developments are picked up by global intelligence the
plans for a big profit may be not realised as the extra volume supplied depresses
prices. This happened in 1993/94 with the Malawian and Zimbabwean tobacco
companies. The unexpected release of Chinese tobacco depressed the tobacco
price well below expectations, leaving farms with stock and large interest
carrying production loans.
A number of suppliers of agricultural produce can take advantage of "off season"
in other countries, or the fact that they produce speciality products. This is the
way by which many East African and South American producers established
themselves in Europe and the USA respectively. In fact the case of Kenya
vegetables to Europe is a classic, covering many of the factors which have just
been discussed-improved technology, emerging global segments, shrinking
communications gaps and the drive to diversify product ranges.
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Case 1.5 Kenya Off Season Vegetables
Kenya's export of off season and specialty vegetables has been such that from 1957 to the
early 1990s exports have grown to 26 000 tones per annum. Kenya took advantage of:
a) Increased health consciousness, increased affluence and foreign travel of West European
consumers;
b) Improved technologies and distribution arrangements for fresh products in Western
Europe;
c) The emergence of large immigrant populations in several European countries:
d) programmes of diversification by agricultural export countries and
e) Increased uplift facilities and cold store technologies between Europe and Kenya.
Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the
European "off season" trade by sending small consignments of green beans, sweet peppers,
chilies and other commodities to a London based broker who sold them to up market hotels,
restaurants and department stores. From these beginnings Kenya has continued to give high
quality, high value commodities, servicing niche markets. Under the colonialists, production
remained small, under the misguided reasoning that Kenya was too far from major markets.
So irrigation for production was limited and the markets served were tourists and the settlers
in Kenya itself.
The 1970s saw an increased trade as private investment in irrigation expanded, and air
freight space increased, the introduction of wide bodied aircraft, and trading relationships
grew with European distributors. Kenya emerged as a major supplier of high quality sweet
peppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra,
chillies etc.) to the UK growing immigrant population. Kenya was favored because of its
ability to supply all year round - a competitive edge over other suppliers. Whilst the UK
dominated, Kenya began supplying to other European markets.
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Kenya's comparative advantage was based on its low labor costs, the country's location
and its diverse agro-ecological conditions. These facilitated the development of a
diversified product range, all year round supply and better qualities due to labor
intensity at harvest time. Kenya's airfreight costs were kept low due to government
intervention, but lower costs of production were not its strength.
This lay in its ability for continuance of supply, better quality and Kenyan knowledge of
the European immigrant population. Kenya's rapidly growing tourist trade also
accelerated its canning industry and was able to take surplus production.
In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables
(courgettes etc.) to lower cost Mediterranean countries, it increased its share in French
beans and other specialty vegetables significantly getting direct entry into the
supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major
success. With the development and organization or many small "out growers",
channeled into the export market and thus widening the export base, the industry now
provides an important source of income and employment. It also has a highly developed
information system, coordinated though the Kenya Horticultural Crops Development
Authority.
Kenya is thus a classic case in its export vegetable industry of taking advantage of global
market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to
develop as another source of flowers and vegetables, particularly the former.
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Environment of International Marketing.
The marketing environment consists of all factors that can affect the organization’s marketing activities. These factors are largely uncontrollable. The global marketing environment comprises the intermediate and the macro environment.
Intermediate environment: This is also known as Micro environment.
The intermediate environment contains those factors which are semi-controllable through contracts. This environment influences the organization directly. Micro tends to suggest small, but this can be misleading they will be categorized as: Employees: Labor of the company
• Hire good people • Empower them • keep them happy otherwise how can they keep your customers happy ?
Stockholders
• Mergers and acquisitions require support • Institutional investors • can buy and sell huge volumes Shareholder value
Suppliers: The suppliers of a company are an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship.
• Crucial when there are lots of parts • Car industry • JIT • Few suppliers only (following Japanese)
Customers: There are different types of customer markets including consumer markets, business markets, government markets, international markets, and reseller markets. The consumer market is made up of individuals who buy goods
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and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and includes customers from the previous categories.
• Consumer Movement • Thus, the importance of relationship marketing
particularly, when times are hard
Competitors: is also a factor in the microenvironment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors.
Macro environment
The macro environment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture.
Demography
Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is a very important factor to study for marketers and helps to divide the population into market segments and target markets. This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment. Demography covers many aspects that are important to marketers including family dynamics, geographic shifts, work force changes, and levels of diversity in any given area.
Economic environment
Another aspect of the macro environment is the economic environment. This refers to the purchasing power of potential customers and the ways in which
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people spend their money. Within this area are two different economies, subsistence and industrialized. Subsistence economies are based more in agriculture and consume their own industrial output. Industrial economies have markets that are diverse and carry many different types of goods. Each is important to the marketer because each has a highly different spending pattern as well as different distribution of wealth.
Natural environment
The natural environment is another important factor of the macro environment. This includes the natural resources that a company uses as inputs and affects their marketing activities. The concern in this area is the increased pollution, shortages of raw materials and increased governmental intervention. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder. Also, pollution can go as far as negatively affecting a company’s reputation if they are known for damaging the environment. The last concern, government intervention can make it increasingly harder for a company to fulfill their goals as requirements get more stringent.
Technological environment
The technological environment is perhaps one of the fastest changing factors in the macro environment. This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. They must stay informed of trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially.
Political environment
The political environment includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex. Some products are regulated by both state and federal laws. There are even restrictions for some products as to who the target market may be, for example, cigarettes should not be marketed to younger children. There are also many restrictions on subliminal messages and monopolies. As laws and regulations change often, this is a very important aspect for a marketer to monitor.
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Cultural environment
The final aspect of the macro environment is the cultural environment, which consists of institutions and basic values and beliefs of a group of people. The values can also be further categorized into core beliefs, which passed on from generation to generation and very difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it is important to know the difference between the two and to focus your marketing campaign to reflect the values of a target audience.
Globalization has generated increased demands on multinational enterprises (MNEs) to formulate and implement international strategies that respond to pressures for both external flexibility and internal efficiency. Which international strategy is pursued will depend upon the characteristics (e.g., opportunities, constraints) of the external environment, the firm's internal capabilities, and the tradeoffs associated with responding to the pressures for external flexibility.
SWOT analysis
It is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
Strength are:
Your specialist marketing expertise.
A new, innovative product or service.
Location of your business.
Quality processes and procedures.
Any other aspect of your business that adds value to your product or service.
Weaknesses are:
Lack of marketing expertise.
Undifferentiated products or services (i.e. in relation to your competitors).
Location of your business.
Poor quality goods or services.
Damaged reputation.
Opportunity are:
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A developing market such as the Internet.
Mergers, joint ventures or strategic alliances.
Moving into new market segments that offer improved profits.
A new international market.
A market vacated by an ineffective competitor.
Threats are:
A new competitor in your home market.
Price wars with competitors.
A competitor has a new, innovative product or service.
Competitors have superior access to channels of distribution.
Taxation is introduced on your product or service.
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Case Studies
ARIZONA SUNRAY, INC.
Buy American or Look Abroad?
JEFFREY A. FADIMAN
San Jose State University
Arizona Sunray is one of the pioneering companies in solar energy within that state. Its founding generation consisted of third-generation Arizonans, descendants of the state's earliest pioneers. The founders took great pride in that pioneering heritage, often boasting that the family's rise to relative prosperity was a result of "thinking Arizona." To them, the phrase meant a ceaseless search for business opportunities within the state.
In the late I 950s, one member of this generation emerged as a new type of pioneer-one of a cluster of scientists and businessmen who hoped to develop the first practical applications of solar energy on a scale available to home owners. In the early 1960s, he pio-neered the use of solar energy in offices and homes, incorporating, with other members of his family, into what proved to be a surprisingly successful firm, eventually named Arizona Sunray. After some experimentation, the firm chose the slogan "Follow the Sun: It's Arizona's Way." Reasoning that the way to acquire new business was to follow the sun, the firm expanded into every area of Arizona, and then into Nevada and New Mexico.
The next generation took control of the business in 1965. As a result, a decision was made to redirect expansion away from the relatively unpopulated states of the Southwest and move due, west into the larger urban population centers of coastal California. The Los Angeles/Orange County area was considered particularly favorable for potential expansion, with relatively affluent target populations that might show considerable interest in the use of solar energy within their homes. Several aspects of the marketing program were reshaped to appeal more directly to coastal Californians, including a change in the firm's slogan, which became "Catch the Rays: It's California's Way." The concept proved quite successful, and the firm continued to expand.
By 1995 members of the next generation were just beginning to reach positions of influence and authority within the firm. Their relative affluence, however, had permitted them to acquire both travel experience and education abroad. As a consequence, they proposed a further expansion, seeking to "follow the sun" on a scale undreamed of by their elders. They argued that Arizona Sunray should spread around the entire Pacific Rim, taking appropriate advantage of new techniques in miniaturization to fulfill an entire range of solar-powered needs-from solar-powered calculators to rural solar cookers-permitting Arizona Sunray (to be renamed Pacific Sunray) to take maximum advantage of both current opportunity and long-range planning for expansion.
Surviving members of the founding generation instantly rejected the proposal, refusing to contemplate such radical ideas. "Why even bother?" the firm's first president asked. "We're doing fine right in America. We know our product, we know our clientele, and we know the West. This market's huge! We're making steady profits. Every member of this family and every
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worker in this firm is doing fine. Why would we want to dissipate our capital in marketing to places we know next to nothing about? The money's in America; why look abroad?"
Members of all three generations met to thrash out the issue. The oldest, though now retired held considerable influence. The youngest, though lacking power, felt they held a wider and more flexible perspective. The middle generation, though holding formal decision-making powers, felt pulled both ways and wondered if there might be ways to satisfy both sides.
Questions
1. As a member of the youngest generation, present your case. What advantages could Arizona Sunray derive from an attempt to expand its goods and services abroad? 2. As a member of the oldest generation, present your case. Why should the firm remain within America? What hard questions could you ask of members of the youngest generation that' might suggest weaknesses in their proposal? 3. As a member of the middle generation, what compromise can you propose that might prove acceptable to both sides?
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Can Mac Fight Back?
LEAD STORY-DATELINE: Marketing, 17 October 2002.
McDonald's is the world's biggest restaurant chain, and according to Interbrand, the 8th most valuable brand. It seems everyone recognizes the golden arches. The company is extremely successful despite being a symbol of American imperialism, and being hated by animal rights activists, groups promoting healthy diets, and anti-capitalists. There are signs that McDonald's is having difficulty keeping up with the trends in the restaurant industry, maintaining its positive brand image, and getting the message out about its products. The company's share price stands at a seven-year low, and in September 2002; Salomon Smith Barney forecasted McDonald's stock would under perform.
McDonald's is experimenting with new restaurant designs, diversifying its menu offerings to include healthier choices or touches of cuisines favored in the local area, and lowering prices on various items to try to appeal to more people, keep its image fresh, and increase sales. Yet Mark Kalinowski of Salomon Smith Barney says those things do not make up for rude McDonald's workers, order mistakes, or sluggish service. And Kalinowski is not the only one to have noticed. Many people around the world are questioning McDonald's ability to meet its commitment of quality and service in its restaurants. Even the role of Ronald McDonald in the company's communications may be faltering. Leaked internal memos suggest company executives are questioning his relevance for today's children.
The company's commercials in the UK have taken a turn for the worse lately, lacking a cohesive message. The company has been beleaguered by bad press - vegetarians suing over eating its beef-based cooking oil, teenagers accusing the restaurant of making them fat, popular books criticizing the fast food industry, and fears of mad cow disease. The company seems to be responding by supporting more community programs and increasing its sponsorship of charitable causes, such as funding Unicef's World Children's Day. Whether McDonald's strategy to stay ahead of the competition will be effective remains to be seen.
Questions
1. In general, where do you think McDonald's stands on the range from standardization to adaptation in terms of its global marketing?
2. What are some of the issues in having a mascot like Ronald McDonald in another culture besides the U.S.? How can it be effective in other national settings?
3. The text discussion refers primarily to manufactured products. However, do you think that it applies to the problems that McDonald's has in the restaurant business?
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Module II
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CULTURE is a pattern of shared basic assumptions that the group
learned as it solved its problems of external adaptation and internal integration
that has worked well enough to be considered valid and therefore, to be taught
to new members as the correct way to perceive, think, and feel in relation to
those problems. Culture is the way that we do things around here. Culture could
relate to a country (national culture), a distinct section of the community (sub-
culture), or an organization (corporate culture). It is widely accepted that you are
not born with a culture, and that it is learned. So, culture includes all that we
have learned in relation to values and norms, customs and traditions, beliefs and
religions, rituals and artifacts.
Organizational culture is an idea in the field of Organizational studies and
management which describes the psychology, attitudes, experiences, beliefs and
values (personal and cultural values) of an organization. It has been defined as
"the specific collection of values and norms that are shared by people and groups
in an organization and that control the way they interact with each other and
with stakeholders outside the organization. Organizational Culture refers to the
values, beliefs and customs of an organization. Whereas Organizational structure
is relatively easy to draw and describe, organizational culture is less tangible.
CROSS CULTURAL MARKETING: culture is collective programming of the mind
which distinguishes the members of one group or category from the others. The
oxford encyclopedia English dictionary defines culture as “the art and other
manifestation of human intellectual achievement regarded collectively as the
customs, civilization and achievements of a particular time or people: the way of
life of a particular society or group”. The consumer behavior is greatly influenced
by culture, which varies widely among countries. Most Indians find difficult to
understand how people in the west eat cow which gives milk and is other East
Asian countries love for food such as blood worm soup, snake soup and dog meat
is not easy to rationalize for the people of other cultures. Such unintentional
reference to context, known as self reference criteria (src), often interferes in
analyzing and interpreting the marketing problems in its true sense. A social
group acquires culture through learning and experience. Culture is shared among
the members of a group, organization, or society and passed from one
generation to the other. In-Culture Marketing is a methodology applied to
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Marketing that recognizes the existence of cultural programming and that there
are consumer groups that have life experiences “in a different cultural setting”
than ours, and therefore their tastes, values, expectations, beliefs, ways of
interaction, ways of entertainment, music, dressing preferences, food, etc. they
tend to be different than ours, because their cultural programming is different.
What is culture?
Much has been written on the subject of culture and its consequences. Whilst on
the surface most countries of the world demonstrate cultural similarities, there
are many differences, hidden below the surface. One can talk about "the West",
but Italians and English, both belonging to the so called "West", are very different
in outlook when one looks below the surface. The task of the global marketer is
to find the similarities and differences in culture and account for these in
designing and developing marketing plans. Failure to do so can be disastrous.
Terpstran9 (1987) has defined culture as follows:
"The integrated sum total of learned behavioral traits that are manifest and
shared by members of society"
Culture, therefore, according to this definition, is not transmitted genealogically.
It is not, also innate, but learned. Facets of culture are interrelated and it is
shared by members of a group who define the boundaries. Often different
cultures exist side by side within countries, especially in Africa. It is not
uncommon to have a European culture, alongside an indigenous culture, say, for
example, Shona, in Zimbabwe. Culture also reveals itself in many ways and in
preferences for colours, styles, religion, family ties and so on. The color red is
very popular in the west, but not popular in Islamic countries, where sober colors
like black are preferred.
Much argument in the study of culture has revolved around the "standardization"
versus "adaption" question. In the search for standardization certain "universals"
can be identified. Murdock7 (1954) suggested a list, including age grading,
religious rituals and athletic sport. Levitt5 (1982) suggested that traditional
differences in task and doing business were breaking down and this meant that
standardization rather than adaption is becoming increasingly prevalent.
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Culture, alongside economic factors, is probably one of the most important
environmental variables to consider in global marketing. Culture is very often
hidden from view and can be easily overlooked. Similarly, the need to overcome
cultural myopia is paramount.
Elements of culture:
1. Religion: Generally the consumption patterns are considerably influenced by religious beliefs. As most of the Indian do not eat beef and India has the second largest Muslim (who do not eat pork) population in the world, McDonald’s serves neither beef nor pork in India. Besides Indian vegetarianism is too difficult for foreign to understand, where even changing of cooking utensils between two groups is frowned upon. As a result and in an effort to respect the sensibilities of the two large consumer groups. India is perhaps the only country where McDonald’s has separate kitchens for vegetarian and for non vegetarian’s food. In Islamic countries, the meat of animals slaughtered through the Halal process can alone be consumed. There fore all meat and Meta products exported to Muslim countries have to be certified by a recognized agency to this effect.
Religion can affect marketing in a number of ways:
· Religious holidays - Ramadan cannot get access to consumers as shops are closed. · consumption patterns - fish for Catholics on Friday · economic role of women - Islam · caste systems - difficulty in getting to different costs for segmentation/niche marketing · joint and extended families - Hinduism and organizational structures; · institution of the church - Iran and its effect on advertising, "Western" images · market segments - Maylasia - Malay, Chinese and Indian cultures making market segmentation · sensitivity is needed to be alert to religious differences.
2. Value system: Values are the shared assumption of a group about how things ought to be or abstract ideas about what a group believes to be good or
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desirable or right. The consumer behavior in international market is considerably affected by their value system.
3. Norms: Norms are the guidelines or special rules that prescribe appropriate behavior in a given situation. For instance, aggressive selling in Japan is not taken in positive spirit. Many companies including Dell computers, instead of aggressive selling emphasize the benefits in terms of lower price by direct selling. Cultural norms affect the consumption patterns and habits too. Indians and other south Asian generally use spoons of different sizes while eating. Chinese and Japanese people use chopsticks as the meat is cut into small pieces, but European and Americans use knives and forks to cut the meat on the dining table. Norms are sub divided into
a) Mores: Norms that carry a strong social sanction if violated because the members of a culture consider adherence to them essential to the well-being of the society e.g. The prohibition against destroying other people's property b) Folkways: Norms that carry only a weak social sanction if violated because the members of the society do not consider adherence to them essential to the well-being of the society e.g. washing one's clothes, eating with your mouth closed c) Laws: Norms that the governing body of a society officially adopts to regulate behavior e.g. Speed limits d) Taboos: Norms so strongly held by the members of a society that to violate them is virtually inconceivable e.g. the prohibition against incest, the prohibition against cannibalism.
4. Aesthetics: Ideas and perceptions that a cultural group in terms of beauty and
good taste is referred to as aesthetics. It includes music, dance, painting,
drama etc. Colors have different manifestations across cultures. For African
consumers, bright colors are favorite colors, while in Japan pastel colors are
considered to express softness and harmony and are preferred over bright
colors. America’s corporate color blue is associated with the evil and the
sinister in many African countries. In China, red color is lucky, while it is
associated with death and witchcraft in a number of African countries. An
international marketer has to address these issues especially in
communication and product decisions.
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5. Language: Language is a “systematic means of communicating ideas or feelings
by the use of conventionalized signs, gestures, marks, or especially articulate
vocal sounds. Language differs widely among the nations and even regions.
Language reflects the nature and value system of culture. Despite of linguistic
difference, English has become the lingua-franca to communicate with people
around the world. Conducting cross country market research in English often
fails to provide non- verbal cues to the respondents. Besides the issue related
to translation of questionnaire or by use of interpretation needs to be
addressed so as to ensure data compatibility. Therefore, use of initiative and
communicating in local languages are of extreme importance in international
market research across regions with linguistic diversity.
6 Ideologies: Ideologies are integrated and connected systems of beliefs. Sets of beliefs and assumptions connected by a common theme or focus. They are often are associated with specific social institutions or systems and serve to legitimize those systems.
1. Some prominent American ideologies. a. Capitalism. b. Christianity (Protestantism). c. Individualism d. Sexism. e. Racism . 7 Statuses and Roles: Status, although related, is not a measure of a person’s
wealth, power, and prestige. To speak of "high" or "low" status is somewhat misleading. A status is a slot or position within a group or society. They tell us who people are and how they "fit" into the group. Roles are norms specifying the rights and responsibilities associated with a particular status. The term role is often used to mean both a position in society and role expectations associated with it. Roles define what a person in a given status can and should do, as well as what they can and should expect from others. Roles provide a degree of stability and predictability, telling how we should respond to others and giving us an idea of how others should respond to us.
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Analytical Approaches to Cultural Factors
Maslow's Hierarchy of Needs: If motivation is driven by the existence of unsatisfied needs, then it is worthwhile for a manager to understand which needs are the more important for individual employees. In this regard, Abraham Maslow developed a model in which basic, low-level needs such as physiological requirements and safety must be satisfied before higher-level needs such as self-fulfillment are pursued. Maslow’s hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation. Maslow subsequently extended the idea to include his observations of humans' innate curiosity.
Maslow's Hierarchy of Needs
Physiological Needs
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Physiological needs are those required to sustain life, such as:
air water nourishment sleep
According to Maslow's theory, if such needs are not satisfied then one's motivation will arise from the quest to satisfy them. Higher needs such as social needs and esteem are not felt until one has met the needs basic to one's bodily functioning.
Safety
Once physiological needs are met, one's attention turns to safety and security in order to be free from the threat of physical and emotional harm. Such needs might be fulfilled by:
Living in a safe area Medical insurance Job security Financial reserves
According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs will not receive much attention.
Social Needs
Once a person has met the lower level physiological and safety needs, higher level needs become important, the first of which are social needs. Social needs are those related to interaction with other people and may include:
Need for friends Need for belonging Need to give and receive love
Esteem
Once a person feels a sense of "belonging", the need to feel important arises. Esteem needs may be classified as internal or external. Internal esteem needs are those related to self-esteem such as self respect and achievement. External
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esteem needs are those such as social status and recognition. Some esteem needs are:
Self-respect Achievement Attention Recognition Reputation
Maslow later refined his model to include a level between esteem needs and self-actualization: the need for knowledge and aesthetics.
Self-Actualization
Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of reaching one's full potential as a person. Unlike lower level needs, this need is never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow.
Self-actualized people tend to have needs such as:
Truth Justice Wisdom Meaning
Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of self-actualization.
Physiological needs are at the bottom of the hierarchy. These are basic needs to
be satisfied like food, water, air, comfort. The next need is safety - a feeling of
well being. Social needs are those related to developing love and relationships.
Once these lower needs are fulfilled "higher" needs emerge like esteem - self
respect - and the need for status improving goods. The highest order is self
actualisation where one can now afford to express oneself as all other needs
have been met.
Whilst the hypothesis is simplistic it does give an insight into universal truisms. In
Africa, for example, in food marketing, emphasis may be laid on the three lower
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level needs, whereas in the developed countries, whilst still applicable, food may
be bought to meet higher needs. For example, the purchase of champagne or
caviar may relate to esteem needs.
The Case Of Maize Meat In Africa
Introduced by the white settler, maize meat is the staple diet of the
population of countries in Eastern and Southern Africa, Zambia, for
example is capable of producing over 30 million x 90Kgs bags with a
marketable surplus of 20 million x 90Kg bags, most of which goes to
feed the urban population. For a lot of people, unable to improve their
lot, this remains as the staple diet throughout their lives. However,
many Africans who are able to improve their lot, progress on to other
forms of nourishment -fish. potatoes, good meat cuts and even fast
foods, some of this brought about by social interaction. Interestingly
enough, maize is still often eaten despite the social and economic
progression that an individual may make.
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Hofstede’s Classification
The most widely used tool to study the cross-cultural behavior is Hofstede’s
classification. It identifies cross cultural differences by collecting data on
employee attitudes and values for 1, 16,000 respondents from 70 countries
working in IBM subsidiaries. Hofstede isolated four dimensions that he claimed
summarized different cultures are defined as:
1) Power Distance:
The degree of inequality among the people that are viewed equitably is known as
power distance. It focused on how a society deals with the fact that people are
unequal in physical and intellectual capabilities. Power Distance in Malaysia is
highest while it is lowest in the case of Austria. In UK, Scandinavia and the Dutch
countries managers expect their decision making to be challenged, while the
French consider the authority to take decision as their right. Germans feel more
comfortable in formal hierarchies while Dutch have a more relaxed approach
towards their higher authorities.
In countries with high power distances, hierarchical organizational structures are
based on inequality among the superiors and subordinates, and juniors blindly
follow the orders of their superiors. Generally, high social inequalities are
tolerated in culture with wide differentiation in power and income distribution.
Small power distance is characterized by egalitarian societies, where superiors
and subordinates consider each other as equal. Organizations in such societies
are flat and decision making is decentralized.
Power Distance greatly affects the customer’s decision making process. In view of
power distance, researches have to find out the key persons involved in buying
decisions and formulate their field surveys accordingly.
2) Individualism vs. Collectivism
Individualism Collectivism 1 The tendency of people to look
after themselves and their immediate family’s interest alone is termed as Individualism
The tendency of people to belong to groups and to look after each other in exchange of loyalty is termed as collectivism.
2 Such societies have strong ethics, Such societies do not have such
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promotions are based on merits and involvement of the employee in the organizations is primarily calculative.
criteria.
3 Ability to be independent considered to be a key criterion for success in such societies.
The interest of group have precedence over
individual interest 4 Examples of such countries are
USA, France. Examples of such countries are Pakistan, Singapore, and Malaysia.
International Marketing decisions are greatly influenced by individualism vs.
collectivism appeal a product to be successful in collective societies should have a
acceptability by a group while in individualistic societies there be no need of a
product t be accepted by a group of people to be successful.
3) Masculinity vs. Femininity
Masculinity Femininity
1 In masculine societies, the dominant values emphasize work goals such as earnings, advancement, and success and material belongings.
In feminine societies ,the dominant values are achievement of personal goals such as quality of life, care for others and friendly atmosphere
2 In masculine societies, people live to work’
In feminine societies, people ‘work to live’
3 Examples of such countries are Japan, Austria, Italy and US.
Examples of such countries are Sweden, Norway, Netherlands and Denmark.
4 Sex roles are highly distinguished Sex roles were less sharply distinguished and there is little differentiation between men and women in the same job
4) Uncertainty Avoidance
Uncertainty Avoidance refers to the lack of tolerance for ambiguity and the need
for formal rules. It measures the extent to which people feel threatened by
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ambiguous situations. Greece, Poland and Japan are the most uncertainty
avoidance societies and thus lifetime employment is common while Singapore,
Denmark and India are the least uncertainty avoidance societies and thus the job
mobility is common in these countries.
Culture context
The context of a culture has crucial implications in communicating and
interpreting verbal and non verbal messages .Different cultures interpret
verbal and non –verbal cues differently
.
High-context Culture Low-context Culture
1 Implicit communications such as non-verbal and subtle situational cues are extremely important,
Communication is more explicit and relies heavily on words to convey the meaning
2 Relationship is long-lasting Relationship is temporary
3 Verbal communication are given greater sanctity
Commitments are written.
4 Knowledge is situational, relational.
Knowledge is more often transferable
5 Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority.
Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities.
6 EXAMPLES:- Small religious
congregations, a party with friends,
family gatherings, expensive gourmet
restaurants and neighborhood
restaurants with a regular clientele,
undergraduate on-campus friendships,
EXAMPLES:-Large US airports, a chain supermarket, a cafeteria, a convenience store, sports where rules are clearly laid out, a motel.
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regular pick-up games, hosting a friend
in your home overnight.
7
High context cultures are more common
in the eastern cultures than in western,
and in countries with low racial
diversity. For example:-INDIA. New
Zealand and the Native Americans
Low context culture are common in U.S., Western Europe.
Difference in marketing decisions due to culture context
Marketing decisions in High-context culture
Marketing decisions in Low-context culture
1 Market promotion and advertising is subtle
Market promotion and advertising focus on explicit display of information and facts
2 In this building relationship with clients is extremely important, therefore sales team tend to have longer duration of operation in the assigned territory.
Marketing firms rotate sales team more frequently
3 Market researchers focus on subtle and non-verbal expressions of the respondents.
Market researchers focus on factual information
Factors/Dimensions High context Low context Lawyers Less important Very important
A person’s word Is his or her bond Is not to be relied on, ”get it in writing”
Responsibility for organization error
Taken at highest level Pushed to lowest level
Space People breathe on each other
People maintain a bubble of private space and resent intrusions
Time Polychromic - everything in life must be dealt with
Monochromic - time is money. Linear-one thing at a time.
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in its own time
Negotiations Are lengthy –a major purpose is to allow the parties to get o know each other.
Proceed quickly
Competitive bidding Infrequent Common Country /Regional e.g.
Japan , Middle East United States, Northern Europe
Cultural Homogeneity
Cultural homogeneity is defined as the number of shared facts across all possible
pairs of agents divided by the total possible number of shared facts across all
agents in a population. Cultural homogeneity is equal to one only if all agents
know precisely the same facts. A society that achieves a cultural homogeneity of
one is "perfectly stable." Perfect stability means that the society is in a steady
state and no further connections can change any agent's knowledge
On the basis of homogeneity, culture may be divided into following subsets:
Homophilous Culture:
In countries where people share same beliefs, speak the same language. And
practices the same religions are known to have a Homophilous Culture. Japan,
Korea and Scandinavian countries have homophilous culture. It takes less time
for new product diffusion in homophilous culture and relatively uniform
marketing mix decisions can be taken.
Heterophilus Cultures:
In countries with Heterophilus Cultures there is a fair amount of differentiation
in language, beliefs and religion followed .India and China fall under this category
wherein he variations in culture within a single province is quite significant .The
marketing communication strategies, in such cases, will have to incorporate new
changes and adapt to given sets of cultural norms from region to region.
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ENVIRONMENTAL SENSITIVITY
Environmental sensitivity is the extent to which products must be adapted to the
culture specific needs of different national markets. A useful approach is to view
products on a continuum of environmental sensitivity. At one end of the
continuum are environmentally insensitive products that do not require
significant adaptation to the environments of various world markets. At the other
end of the continuum are products that are highly sensitive to different
environmental factors. A company with environmentally insensitive products will
spend relatively less time determining the specific and unique conditions of local
markets because the product is basically universal. The greater the product’s
environmental sensitivity, the greater the need for managers to address country-
specific economic, regulatory, technological, social and cultural environment
conditions.
The sensitivity of products can be represented on a two-dimensional scale as
shown below:
High
Product
Adaptation
Low
Low High
Environmental sensitivity
ENVIRONMENTAL SENSITIVITY PRODUCT ADAPTATION MATRIX
Any product exhibiting low levels of environmental sensitivity e.g. highly
technical products like microprocessors belongs in the lower left of the figure.
Moving to the right on the horizontal axis, the level of sensitivity increases, as
does the amount of adaptation. Computers are characterized by low level of
environmental sensitivity but variations in country voltage requirements require
some adaptation.
Food
Computers
Integrated
Circuits
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At the upper right are the products with high environmental sensitivity. Food ,
especially food consumed in the home, falls into this category because it is
sensitive to climate and culture. Particular food items such as chocolate, however
must be modified for various differences in taste and climate. The consumers in
some countries prefer a milk chocolate; others prefer a darker chocolate while
other countries in the Tropics have to adjust the formula for their chocolate
products to withstand the high temperature.
SELF REFERENCE CRITERION
When a company starts its international business, the most important thing is its
marketing strategies .The key for successful international marketing is adaptation
to the environmental differences from one market to another. The primary
obstacles to success in international marketing are person’s Self Reference
Criterion. It is an unconscious reference to one’s own cultural values,
experience, and knowledge as a basis for decisions.
Definition:
Having sold a product successfully in the domestic market a firm may assume
that the product will, without adaptation, also be successful in foreign markets.
Frequently this assumption leads to failure. The SRC refers to the assumption
that what is suitable for the home market will be suitable for the foreign market
and therefore there is no need to test whether or not the product should be
altered.
When faced with a problem of another culture, the tendency is to react
instinctively. The reaction is based on meanings, values, symbols, and behavior
relevant to one’s culture a usually different from those of the foreign culture.
Such decisions are not correct ones.
The self reference criterion can prevent from being aware that there are cultural
differences or from recognizing the importance of those difference. Thus one
might fail to recognize the need to take action, or might discount the cultural
differences that exist among countries. One might also react to a situation in a
way offensive to the host. SRC can evaluate the appropriateness of a
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domestically designed marketing mix for a foreign market. Example, In U.S a
polite refusal to food or drink is acceptable but, but in Asia or Middle East a host
is offended if one refuses hospitality.
When marketers take the time to look beyond their own self-reference criteria
the results are more positive. Example, British manufacture ignoring its SRC could
sell in Japan, McVitie’s chocolate biscuits are wrapped individually, packed in
presentation cardboard boxes, and priced about three times higher than in U.K.
another best example is of Mc Donald’s which shifted to Big Mac in India where it
is known as Maharaja Mac. This burger features two mutton patties because
most Indians consider cow sacred and don’t eat beef.
The most effective way to control the influence of SRC is to recognize the effect
on one’s behavior.
To avoid errors in business decisions, it is necessary to conduct a cross culture
analysis that isolates the SRC influences and to maintain a vigilance regarding
ethnocentrism. The following steps are
Define the business problem or goal in home-country cultural traits,
habits or norms.
Define the business problem or goal in foreign-country cultural traits,
habits or norms through consultation with natives of the target country.
Make no value judgments.
Isolate SRC influence in the problem and examine it carefully to see how it
complicates the problem.
Redefine the problem without SRC influence and solve for the optimum
business goal situation.
The cross culture analysis approach requires an understanding of the culture of
the foreign market as well as one’s own culture. It is accepted that you are not
born with a culture, and that it is learned. So, culture includes all that we have
learned in relation to values and norms, customs and traditions, beliefs and
religions, rituals and artifacts.
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Case Studies
CULTURE SHAPES FOREIGN MARKETING
International marketers all have stories to tell of their adventures-and misadventures-in foreign market cultures. These cultural constraints can affect all aspects of the marketing program. A couple of examples:
1. Cosmetics- Maybelline and Max Factor add brighter colors to their lipstick and makeup for Latin America. Vidal Sassiin adds more conditioner and a pine aroma to some shampoos in the Far East. Amway’s skin care line in Japan has less lather and Amway removes the pork proteins found in some of its products for Muslim markets, such as Malaysia.
2. Promotion- Hollywood has found the best way to promote its movies in Asia is to use popular local musicians. When Warner Bros released “Lethal Weapon 4” in Hong Kong, its major promotion was a music video with a very popular heavy-metal band. Though music didn’t relate to the film, scenes from the film were interspersed on the video. The song became the movie’s “Asian theme song”.
In Taiwan, a leading female singer made a music video based on “The English Patient”. The studios usually don’t even have to pay the local artists because both parties benefit.
IT’S NOT THE GIFT THAT COUNTS, BUT HOW YOU PRESENT IT
Giving a gift in another country requires careful attention if it to be done properly. Here are a few suggestions:
Japan
Do not open gift in front of a Japanese counterpart unless asked and do not expect the Japanese to open your gift.
Avoid ribbons and bows as part of gift-wrapping. Bows as we know them are considered unattractive and ribbon colors can have different meanings. Do not offer a gift depicting a fox or badger. The fox is the symbol of fertility, the badger, and cunning.
Europe
Avoid red roses and white flowers, even numbers, and the number 13. Do not wrap flowers in paper. Do not risk the impression of bribery by spending too much on a gift.
Arab World
Do not give a gift when you first meet someone. It may be interpreted as a bribe. Do not let it appear that you contrived to present the gift when the recipient is alone. It looks bad unless you know the person well. Give the gift in front of others in less personal relationships.
Latin America
Do not give a gift until after a somewhat personal relationship has developed unless it is given to express appreciation for hospitality. Gifts should be given during social encounters, not in
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the course of business. Avoid the colors black and purple; both are associated with the Catholic Lenten season.
China
Never make an issue of a gift presentation-publicly or privately. Gifts should be presented privately, with the exception of collective ceremonial gifts at banquets.
CROSSING BORDERS 1
Jokes Don't Travel Well
Cross-cultural humor has its pitfalls. What is funny to you may not be funny to others. Humor is culturally specific and thus rooted in people's shared experiences. Here are examples:
President Jimmy Carter was in Mexico to build bridges and mend fences. On live television President Carter and President Jose Lopez Portillo were giving speeches. In response to a comment by President Portillo, Carter said, "We both have beautiful and interesting wives, and we both run several kilometers every day. In fact, I first acquired my habit of running here in Mexico City. My first running course was from the Palace of Fine Arts to the Majestic Hotel where my family and I were staying. In the midst of the Folklorico performance) I discovered that I was afflicted with Montezuma's Revenge; Among Americans this may have been an amusing comment but it was not funny to the Mexican. Editorials in Mexico and U.S. newspapers commented on the in appropriateness of the remark.
'Most jokes; even though well intended, don't translate well. Sometimes a translator can help you out. One speaker, in describing his experience, said,"1 began my speech with a joke that took me about, two minutes to tell. Then my interpreter translated my story. About thirty second later the Japanese, audience laughed loudly. I continued with my talk which seemed' well received," he said, "but at the end, just to make sure, I asked the, interpreter, 'How did you translate my joke so quickly?' The interpreter replied, 'Oh I did not translate your story at all. I did not understand it. I simply said our foreign speaker has just told a joke so would you all please laugh. “
Who can say with certainty that anything is funny? Laughter, more often than not, symbolizes embarrassment, nervousness, or even scorn. Hold your humor until you are comfortable with the culture.
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CROSSING BORDERS 2
Meishi-— Presenting Business Card in Japan
In Japan the business card, or Meishi, is the executive's trademark. It is both a mini resume and a friendly deity that draws people together. No matter how many times you have talked with a businessperson by phone before you actually meet, business cannot really begin until you formally exchange cards.
The value of a Meishi cannot be overemphasized; up to 12 million are exchanged daily and a staggering'4. 4 billion annually. For a businessperson to make a call or receive a visitor without and is like a Samurai going off to battle without his sword. There are a variety of ways to present a card, depending on the giver's personality and style:
Crab style -held out between the index and middle fingers. Pincer-clamped between the thumb and index finger. Pointer - offered with the index finger pressed along the edge. Upside down - the name is facing away from the recipient Platter fashion - served in the palm of the hand.
The card should be presented during the earliest stages of introduction, so the Japanese recipient will be able to determine your position and rank and know how to respond to you. The normal procedure is for the Japanese to hand you their name card and accept yours at the same time. They read your card and then formally greet you either by bowing of shaking hands or both.
Not only is there a way to present a card, there is also a way of received a car. It makes a good impression to receive a card in both hands, especially when the other party is senior in age or status. Do not put the card away before reading or your will insult the other person, and write on a person’s card in their presence as this may cause offenses.
As businesses grow and professional management develops, there is a shift toward decentralized management decision-making. Decentralized decision-making allows ex-ecutives at different levels of management authority over their own functions. This is typical of large-scale businesses with highly developed management systems such as those found in the United States. A trader in the United States is likely to be dealing with middle management, and title or position generally takes precedence over the individual holding the job.
Committee decision-making is by group or consensus. Committees may operate on a centralized or decentralized basis, but the concept of committee management implies something quite different from the individualized functioning of the top management and decentralized decision-making arrangements just discussed. Because Asian cultures and religions tend to emphasize harmony and collectivism, it is not surprising that group decision-making predominates there. Despite the emphasis on rank and hierarchy in Japanese social structure, business emphasizes group participation, group harmony, and group decision making-but at top management level.
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The demands of these three types of authority systems on a marketer's ingenuity and adaptability are evident. In the case of the authoritative and delegated societies, the chief problem would be to identify the individual with authority. In the committee decision setup, it is necessary that every committee member be convinced of the merits of the proposition or product in question. The marketing approach to each of these situations differs.
CROSSING BORDERS 3
The Engle: An Exclusive in Mexico
According to legend, the site of the Aztec city of tenochtitlan, now Mexico City, was revealed to its founders by an eagle bearing a snake in its claws and alighting on a cactus. This image is now the official seal of the country and appears on its flag. Thus, Mexican authorities were furious to discover their beloved eagle splattered with catsup by an interloper from north of the border: McDonald’s.
To commemorate Mexico’s Flag Day, two golden Arches outlets in Mexico City papered their trays with placemats embossed with a representation of the national emblem. Eagle eyed government agents swooped down and confiscated the disrespectful placemats. A senior partner in McDonald’s of Mexico explained, “Our intention was never to give offense. It was to help Mexicans learn about their culture. “
It is not always clear what symbols or what behavior patterns in a country are reserved exclusively for locals. In McDonalds’s case there is no question that the use of the eagle was considered among. Mexicans as an exclusive for Mexicans only.
Management Objectives and Aspirations
The training and background (i.e., cultural environment) of managers significantly affect their personal and business outlooks. Society as a whole establishes the social rank or status of management, and cultural background dictates patterns of aspirations and objectives among businesspeople. These cultural influences affect the attitude of managers toward innovation,
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new products, and conducting business with foreigners. To fully understand another's management style, one must appreciate an individual's objectives and aspirations that are usually reflected in the goals of the business organization and in the practices that prevail within the company. In dealing with foreign business, a marketer must be particularly aware of the varying objectives and aspirations of management.
1. Personal Goals. In the United States, we emphasize profit or high wages while in other countries security, good personal life, acceptance, status, advancement, or power may be emphasized. Individual goals are highly personal in any country, so it is hard to generalize to the extent of saying that managers in anyone country always have a specific orientation. For example, studies have shown that Kuwaiti managers are more likely than American managers to make business decisions consistent with their own personal goals. Swedish managers were found to express little reluctance in bypassing the hierarchical line, while Italian managers believed that bypassing the hierarchical line was a serious offense.
2. Security and Mobility Personal security and job mobility relate directly to basic human motivation and therefore have widespread economic and social implications. The word security is somewhat ambiguous and this very ambiguity provides some clues to managerial variation. To some, security means good wages and the training and ability required for moving from company to company within the business hierarchy; for others, it means the security of lifetime positions with their companies; to still others, it means adequate retirement plans and other welfare benefits. In European companies, particularly in the countries late in industrializing such as France and Italy, there is a strong paternalistic orientation, and it is assumed that individuals will work for one company for the majority of their lives. For example, in Britain managers place great importance on individual achievement and autonomy, whereas French managers place great importance on competent supervision, sound company policies, fringe benefits, security, and comfortable working conditions. There is much less mobility among French managers than British.
3. Personal Life. For many individuals, a good personal life takes priority over profit, security, or any other goal. In his worldwide study of individual aspirations, David Mc-Clelland discovered that the culture of some countries stressed the virtue of a good personal life as being far more important than profit or achievement. The hedonistic outlook of ancient Greece explicitly included work as an undesirable factor that got in the way of the search for pleasure or a good personal life. Perhaps at least part of the standard of living that we enjoy in the United States today can be attributed to the hardworking Protestant ethic from which we derive much of our business heritage.
To the Japanese, personal life is company life. Many Japanese workers regard their work as the most important part of their overall lives. Metaphorically speaking, such workers may even find themselves "working in a dream." The Japanese work ethic maintenance of a sense of purpose-derives from company loyalty and frequently results in the Japanese employee maintaining identity with the corporation.
4. Social Acceptance. In some countries, acceptance by neighbors and fellow workers appears to be a predominant goal within business. The Asian outlook is reflected in the group decision-making so important in Japan, and the Japanese place high importance on fitting in with their group. Group identification is so strong in Japan that when a worker is asked what he does for a living, he generally answers by telling you he works for Sumitomo or Mitsubishi or Matsushita, rather than that he is a chauffeur, an engineer, or a chemist.
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5. Power. Although there is some power seeking by business managers throughout the world, power-seems to be a more important motivating force in South American countries. In these countries, many business leaders are not only profit-oriented but also use their business positions to become social and political leaders.
CROSSING BORDERS 4
Business: Protocol in a Unified Europe
Now that 1992 has come and gone and the European community is now a single market, does it mean that all differences have been wiped away? For some of the legal differences, yes! For cultural differences, not!
There is always the issue of language and meaning even when you both speak English. English and American English are often miles apart. If you tell someone his presentation was “quite good”. An American will beam with pleasure. A brat will ask you what was working with it your have just told him politely that he barely scraped by. Then there is the matter of humor. The anecdote you open a meeting with may fly well with your American audience; however, the French will smile the Belgians will laugh, the Dutch will be Puzzled, and the Germans will take you literally. Humor doesn’t travel well.
And then there are the French, Who are very attentive to hierarchy and ceremony. When first meeting with a French speaking businessperson. Stick with monsieur, Madame, or mademoiselle; the use of first names is disrespectful to the French. If you don’t speak French fluently, apologize. Such apology shows general respect for the language and dismisses any stigma of American arrogance.
The formality of dress can vary with each county also. The Brit and the Dutchman will take off their jackets and literally roll up their sleeves; they mean to get down to business. The Spaniard will loosen his tie. While the German disapproves - he thinks they look sloppy and un-business like and he keeps his coat on throughout the meeting. So does the Italian, but that was because he dressed especially for the look of the meeting.
With all that, did the meeting decide anything? It was, after all a first meeting. The Brits were just exploring the terrain, checking out the broad perimeters and all that. The French were assessing the other payers’ strength and weaknesses and deciding what position to take at the next meting. The Italian also won’t have taken it too seriously. For them it was a meeting to arrange the meeting agenda for the real meeting. Only the Germans will have assumed it was what it seemed and be surprised when the next meeting starts open ended.
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CROSSING BORDERS 5
YOU DON’T HAVE TO BE A HOLLYWOOD STAR TO WEAR DARK GLASSES
Arabs may watch the pupils of your eyes to judge your responses to different topics.
A psychologist at the university of Chicago discovered that the pupil is a very sensitive indicator of how people respond to a situation. When you are interested in some thing, your pupils dilate; if your hear something your don’t like, your eyes tend to contract, the Arabs have known about the pupil response for hundreds if not thousand s of years, and because people can’t controls the response of their eyes, many Arabs wear dark glasses, even indoors.
These are people reading the personal interaction on a second to second basis. By watching the pupils, they can respond rapidly to mood changes, that one of the reasons why they use a close conversations distance than Americans do. At about five feet, the normal distance between two Americans who are talking, we have a hard time following, eye movement. But if your use an Arab distance, about two feet, you can watch the pupil of the eye.
Direct eye contact for an American is difficult to achieve because we are taught in the United States not to star, not to look at the eyes that carefully. If you stare at some one, it is too intense, too sexy, or too hostile. It also may mean that we are not totally tuned in to the situation. May be we should all wear dark glasses.
CROSSING BORDERS 6
When yes means no, or maybe or I don’t know, or?
Once my youngest child asked if we could go to the circus and my reply was, “may be.” My older child asked the younger sibling, “What did he say?” The prompt reply, “ he said NO!’
All cultures have ways to avoid saying no when they really mean a. After all, arguments can be avoided. Hurt feelings postponed, and so on. In some cultures, saying “no” is to be avoided at all costs - to say no is rude, offensive, and disrupts harmony. When the maintenance of long lasting stable personal relationships is of utmost importance, as in Japan to say no is to be avoided because of the possible damage to a relationship. As a result the Japanese have developed numerous euphemisms and paralinguistic behavior to express negation. To the unknowing American, who has been taught not to take no for an answer, the unwillingness to say no is often misinterpreted to mean that there is hope - the right argument or more forceful persuasions is all that is needed to get a yes. But don’t be misled - the Japanese listen politely and, when the American if finished, respond with hai. Literally it means yes, but usually it only means, “I hear you.” When a Japanese avoids saying yes of no clearly, it most likely means that
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he or she wishes to say no. one example at the highest levels of government occurred in negotiations between the Prime Minister of Japan and the President of the United States. The prime minister responded with, “we’ll deal with it,” to a request by the president. It was only later that the U.S. side discovered that such a response generally means no - to the frustration of all concerned. Other euphemistic, decorative no’s sometimes used by Japanese: “ it’s very difficult.” We will think about it.” “I’m not sure.” We’ll give this some more thought.” Or they leave the room with an apology.
Americans generally respond directly with a yes or no and then give their reasons why. The Japanese tend to embark on long explanation first, and then leave the conclusion extremely ambiguous, Etiquette dictates that Japanese may tell you what you want to hear, may not respond at all, or are evasive. This ambiguity often leads to misunderstanding and cultural friction.
Negotiations Emphasis
All the just-discussed differences in business customs and culture come into play more frequently and are more obvious in the negotiating process than any other aspect of business. The basic elements of business negotiations are the same in any country; they relate to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers. But it is important to remember that the negotiating process is complicated and the risk of misunderstanding increases when negotiating with someone from another culture. This is especially true if the cultures score differently on Hofstede's PDI and IDV value dimensions.
Attitudes brought to the negotiating table by each individual are affected by many cultural factors and customs often unknown to the other individuals and perhaps unrecognized by the individuals themselves. Each negotiator's understanding and interpretation of what transpires in negotiating sessions is conditioned by his or her cultural background the possibility of offending one another or misinterpreting each other's motives is especially high when one's SRC is the basis for assessing a situation. One standard rule in negotiating is "know thyself' first, and second, "know your opponent." The SRCs of both parties can come into play here if care is not taken.
Gender Bias in International Business
The gender bias toward women managers that exists in many countries creates hesitancy among U.S. multinational companies to offer women international assignments. Questions such as, Are there opportunities for women in international business? And should women represent U.S. firms abroad? Frequently arise as U.S. companies become more international. As women move up in domestic management ranks and seek career-related international assignments, companies need to examine their positions on women managers in international business.
In many cultures-Asian, Arab, Latin American, and even some European women are not typically found in upper levels of management. Traditional roles in male-dominated societies often are translated into minimal business opportunities for women. This cultural bias raises questions about the effectiveness of women in establishing successful relationships with host country associates. An often-asked question is whether it is appropriate to send women to
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conduct business with foreign customers. To some it appears logical that if women are not accepted in managerial roles within their own cultures, a foreign woman will not be any more acceptable. This is but one of the myths used to support decisions to exclude women from foreign assignments.
It is a fact that men and women are treated very differently in some cultures. In Saudi Arabia, for example, women are segregated, expected to wear veils, and forbidden even to drive. Evidence suggests, however, that prejudice toward foreign women executives may be exaggerated and that the treatment local women receive in their own cultures is not necessarily an indicator of how a foreign businesswoman is treated.
When a company gives management responsibility and authority to someone, a large measure of the respect initially shown that person is the result of respect for the firm. When a woman manager receives training and the strong backing of her firm, she usually receives the respect commensurate with the position she holds and the firm she represents. Thus, resistance to her as a female either does not materialize or is less severe than anticipated. Even in those cultures where a female would not ordinarily be a manager, foreign female executives benefit, at least initially, from the status, respect, and importance attributed to the firms they represent. In Japan, where Japanese women rarely achieve even lower-level management positions, representatives of U.S. firms are seen first as Americans, second as representatives of firms, and then as males or females.
Similarly, women in China are seen as foreigners first and women second. Being foreign is such a major difference that being a woman is relatively minor. As one researcher notes, in China "businesswomen from the West are almost like 'honorary men’ once business negotiations begin, the willingness of a business host to engage in business transactions and the respect shown to a foreign businessperson grow or diminish depending on the business skills he or she demonstrates, regardless of gender. As world markets become more international and as international competition intensifies, U.S. companies need to be represented by the most capable personnel available; it seems shortsighted to limit the talent pool simply because of gender.
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Module III
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Marketing has entered an exciting new age. New social networking technologies make marketing truly interactive and allow for the development of relationships. Consumers control what they watch and when, but marketers have the ability to tailor their messages very precisely and can leverage these technologies to build communities.
Amid the rush to use these new technologies, marketers must not forget that the key to marketing remains people; specifically, understanding their lives and needs and being able to connect with them emotionally. Today's new tools and technologies are simply a means to build a relationship and convey a brand's consistent emotional message.
Global Brands
Advertisers who want to reach the Bublitz family of Montgomery, Ohio, have to
leap a lot of hurdles. Telemarketing? Forget it -- the family of five has Caller ID.
The Internet? No way -- they long ago installed spam and pop-up ad blockers on
their three home computers. Radio? Rudy Bublitz, 47, has noncommercial
satellite radio in his car and in the home. Television? Not likely -- the family
records its favorite shows on TiVo and skips most ads. "The real beauty is that if
we choose to shut advertising out, we can," Rudy says. "We call the shots with
advertisers today."
The Bublitzes and other ad-zapping consumers like them pose an enormous
challenge these days to marketers trying to build new brands and nurture old
ones. To get a reading on which brands are succeeding -- and which aren't -- take
a look at the fifth annual BusinessWeek/Interbrand ranking of the 100 most
valuable global brands. The names that gained the most in value focus ruthlessly
on every detail of their brands, honing simple, cohesive identities that are
consistent in every product, in every market around the world, and in every
contact with consumers. (In the ranking, which is compiled in partnership with
brand consultancy Interbrand Corp., a dollar value is calculated for each brand
using publicly available data, projected profits, and variables such as market
leadership.)
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The best brand builders are also intensely creative in getting their message out.
Many of the biggest and most established brands, from Coke to Marlboro,
achieved their global heft decades ago by helping to pioneer the 30-second TV
commercial. But it's a different world now. The monolithic TV networks have
splintered into scores of cable channels, and mass-market publications have given
way to special-interest magazines aimed at smaller groups. Given that
fragmentation, it's not surprising that there's a new generation of brands,
including Amazon.com, eBay, and Starbucks, that have amassed huge global value
with little traditional advertising. They've discovered new ways to captivate and
intrigue consumers. Now the more mature brands are going to school on the
achievements of the upstarts and adapting the new techniques for themselves.
So how do you build a brand in a world in which consumers are increasingly in
control of the media? The brands that rose to the top of our ranking all had
widely varied marketing arsenals and were able to unleash different campaigns
for different consumers in varied media almost simultaneously. They wove
messages over multiple media channels and blurred the lines between ads and
entertainment. As a result, these brands can be found in a host of new venues:
the Web, live events, cell phones, and handheld computers. An intrepid few have
even infiltrated digital videorecorders, devices that are feared throughout the
marketing world as the ultimate tool for enabling consumers to block unwanted
TV ads.
Some marketers have worked to make their brand messages so enjoyable that
consumers might see them as entertainment instead of an intrusion. When
leading brands are seen on TV they're apt to have their own co-starring roles -- as
No. 9 Toyota Motor Corp. did in reality show The Contender -- rather than just
lending support during the commercial breaks. All are trying to create a stronger
bond with the consumer. Take No. 41 Apple Computer Corp., which last fall
launched a special iPod MP3 player in partnership with band U2. Not only did the
"U2 iPod" say "U2" on the front and have band signatures etched into the back,
but the band starred in a TV ad and buyers got $50 off a download of 400 U2
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songs. No. 8 McDonald's Corp.'s sponsorship of a tour by R&B group Destiny's
Child means that fans who want access to exclusive video and news content
about the band have to click first on the company's Web site. "It's hard here to
tell where the brand message ends and where the entertainment and content
begins," says Ryan Barker, director of brand strategy at consultancy The
Knowledge Group.
It's no accident that most of the companies with the biggest increases in brand
value in the 2005 ranking operate as single brands everywhere in the world.
Global marketing used to mean crafting a new name and identity for each local
market. America's No. 1 laundry detergent, Tide, is called Ariel in Europe, for
example. The goal today for many, though, is to create consistency and impact,
both of which are a lot easier to manage with a single worldwide identity. It's also
a more efficient approach, since the same strategy can be used everywhere. An
eBay shopper in Paris, France, sees the same screen as someone logging in from
Paris, Texas. Only the language is different. Global banks HSBC, No. 29, which
posted a 20% increase in brand value, and No. 44 UBS, up 16%, use the same
advertising pitches around the world. "Given how hard the consumer is to reach
today, a strong and unified brand message is increasingly becoming the only way
to break through," says Jan Lindemann, Interbrand's managing director, who
directed the Top 100 Brands ranking.
Possibly no brand has done a better job of mining the potential of these new
brand-building principles than Korean consumer electronics manufacturer
Samsung Electronics Co. Less than a decade ago, it was a maker of lower-end
consumer electronics under a handful of brand names including Wiseview,
Tantus, and Yepp, none of which meant much to consumers. Figuring that its only
shot at moving up the value chain was to build a stronger identity, the company
ditched its other brands to put all its resources behind the Samsung name. Then it
focused on building a more upscale image through better quality, design, and
innovation.
Beginning in 2001, the newly defined Samsung came out with a line of top-notch
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mobile phones and digital TVs, products that showed off the company's technical
prowess. By vaulting the quality of its offerings above the competition in those
areas, Samsung figured it could boost the overall perception of the brand.
Besides, consumers form especially strong bonds with cell phones and TVs. Most
people carry their mobile phones with them everywhere, while their TV is the
center of the family room. "We wanted the brand in users' presence 24/7," says
Peter Weedfald, head of Samsung's North American marketing and consumer
electronics unit.
Now that strategy is paying off. Over the past five years, No. 20 Samsung has
posted the biggest gain in value of any Global 100 brand, with a 186% surge. Even
sweeter, last year Samsung surpassed No. 28 Sony, a far more entrenched rival
that once owned the electronics category, in overall brand value. Now, in a nod to
Samsung, Korean electronics concern LG Electronics Inc. has followed its rival's
playbook. Cracking this year's global list for the first time at No. 97, LG has also
sought to elevate its product under a single brand led by phones and TVs.
Some of the older brands in our ranking are clearly struggling to remake their
marketing and product mix for a more complex world. This year's biggest losers in
brand value include Sony (down 16%), Volkswagen (down 12%), and Levi's (down
11%). VW acknowledges its brand value slippage. "Volkswagen is well aware of
the current deficiencies," says VW brand chief Wolfgang Bernhard. Sony, which
disputes that it is losing brand value, has suffered from an innovation drought.
The electronics giant pioneered the Walkman, but left Apple to revolutionize
portable MP3 players, as well as digital downloading and organizing of music.
Meanwhile, Sony's moves into films and music put it into areas where its brand
adds no value. Worse, those acquisitions made Sony a competitor with other
content providers. That, notes Samsung's Weedfald, gives his company an
advantage in linking to the hottest music and movies. Samsung, for example, is
lead sponsor of this summer's much-hyped movie, The Fantastic Four, in which a
variety of Samsung gadgets play a part. VW faces different problems. It has
attempted to move upmarket with the luxury Touareg sport-utility vehicle and
Phaeton sedan models; but that has left car buyers, who associate VW with zippy,
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affordable cars, confused. Similarly, Levi's introduction of its less pricey Levi's
Signature line in discount stores means it now competes on price at the low end,
while trying to fend off rivals like Diesel at the upper end with its core "red tab"
brand.
Of course, defining the essence of a brand is only part of the battle.
Communicating it to the consumer is the other. On this front, there has clearly
been a divide between newer brands that use traditional advertising as just one
tool in an overall marketing plan and older ones that grew up with it. Sony, for
example, far outspends Samsung on traditional advertising in the U.S. on
electronics products. (Samsung advertises on TV only during the last six months of
the year, its peak sales period.) Many young brands that scored big gains in value,
like Google, Yahoo!, and eBay, depend on their own interactive Web sites to
shout about their brands.
Now some older brands, like Coke, ranked No. 1 in overall brand value, and
McDonald's are decreasing traditional ad spending. In the past four years,
McDonald's has cut TV advertising from 80% of its ad budget to 50%. Most of the
shift has gone to online advertising. What's evolving, then, is a model in which
most brand builders use a variety of marketing channels. HSBC has branded taxis
to carry customers for free. And although eBay spends most of its marketing
budget on Internet advertising, it also relies on TV to some extent to boost simple
brand awareness. "With fragmentation and ad evasion, you can't count on one
medium," says Tom Cotton, president of Conductor, a branding strategy firm.
Marketers who do turn to TV are trying to make brand messages as engrossing as
the programming. Last year Toyota, whose brand value rose 10%, paid $16 million
to have its vehicles be part of the storyline on NBC reality show The Contender,
about small-time boxers competing for a nationally televised bout. The grand
prize: a million dollars and a Toyota truck. Rival Nissan, up 13%, has been parking
its Titan pickups on Wisteria Lane in hit ABC show Desperate Housewives. The
trucks will also ride into the new Dukes of Hazzard movie this month.
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Nor are TV and movies the only target. No. 1 Coke, McDonald's, No. 88 Smirnoff,
No. 16 BMW, No. 23 Pepsi, and No. 61 KFC are among brands striking deals to
plant their brands in video games and even song lyrics. Deborah Wahl-Meyer,
who headed Toyota marketing until recently moving to the company's Lexus
division, says both divisions attempt to seed magazine and newspaper articles
with vehicle references and pictures. "We have to be more a part of what people
are watching and reading instead of being in between what people are watching
and reading," Meyer says.
In an echo of Procter & Gamble Co.'s creation of the soap opera on radio and then
TV, some brand builders are taking control of the programming themselves and
creating content that tries to draw in ad-allergic consumers. BMW, whose brand
value rose 8% over the past year, turned out a series of popular short films on the
Internet starting in 2001. The seven-to-ten minute films starred BMW cars and
were produced by A-list Hollywood directors like John Woo. The German auto
maker has moved onto comic books based on the films aimed at Bimmer-aspiring
teens and adults alike. "It's imperative to create media destinations that don't
look like advertising," says James McDowell, who headed marketing for the BMW
brand before recently taking over as chief of the parent company's MINI USA
business. BMW has also embraced the enemy, TiVo, the television-top gadget
that consumers use to skip ads altogether. Since last year, BMW has produced
short films and long-form ads accessible through TiVo's main menu page. BMW
fans are alerted to the films in the on-demand video menu when a BMW ad runs.
Such old-line brands as No. 14 American Express Co. are heading down the
entertainment path, too. Tipping its hat to BMW, AmEx ran long-form Internet
ads/films starring Jerry Seinfeld last year that succeeded in drawing consumers to
its Web site and Webcasted concerts. AmEx Chief Marketing Officer John Hayes
says flatly: "Brands are not being built on [traditional] advertising."
Still, none of these marketing ploys are sure bets in a world where old-school
advertising means less. That's why more marketers are investing in design as a
fundamental way to distinguish their brands and to stay on the leading edge of
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technology. "Design isn't just the promise of a brand, like TV advertising -- it's the
reality of it," says Marc Gobe, chief executive of design consultancy Desgrippes
Gobe. Samsung has tripled its global design staff to 400 over the past five years.
No. 73 Motorola, whose brand value rose 11%, and No. 53 Philips Electronics
have boosted design spending. The move sparked the launch of Motorola's hot-
selling Razr phone, the thinnest flip phone ever made. No. 85 Nissan gained 13%
last year on a wave of bold designs, like its curvy Murano SUV and Altima sedan,
as the Japanese company differentiates itself from Toyota and Honda through
design rather than quality.
Good design implies more than just good looks. It's also about ease of use. Apple
demonstrated this with its iPod. Users can pick songs or download music from the
iTunes music bank with the swipe of a finger. That's blunted sales of Sony's
Walkman MP3 player, which has been criticized as too cumbersome. Design can
also mean sound. Samsung insists that all its products make the same reassuring
tone when turned on. The Samsung tone is even being used in some advertising.
"We want to have the same sound, look, and feel throughout our products so it
all works toward one Samsung brand," says Gregory Lee, Samsung's global
marketing chief.
The era of building brands namely through mass media advertising is over. The
predominant thinking of the world's most successful brand builders these days is
not so much the old game of reach (how many consumers see my ad) and
frequency (how often do they see it), but rather finding ways to get consumers to
invite brands into their lives. The mass media won't disappear as a tool. But smart
companies see the game today as making bold statements in design and wooing
consumers by integrating messages so closely into entertainment that the two are
all but indistinguishable.
Sansung is the world's largest ship producer. It has been steadily gaining market
share on ship building from Japanees companies. That is the sole reason for their
brand value. So SONY and Apple are top in the consumer electronics still. Wait till
Chineese eat into Samsung's Ship building. They will come down to where they
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belong then. The new era is totally about integrating entertainment into the
theme. I read other people stating Interbrand was not a reliable source. However
this is absurd. Interbrand understands the future of how consumers' minds will
work. Everyone is changing day to day. The best brands are the ones that know
their products are excellent. They do not need to try and educate you or inform.
Branding and advertising in recession
What do brands do when faced with falling sales and declining profitability? In a word, they “change”. While that may not be the most comprehensive answer, it is in part true that brands do not have a comprehensive answer to an economic recession yet. Companies indulge in brand building exercises in better times, with advertising and promotions tailored to make them fit into the brand image that they try to project. In rough weathers, though, companies would not be able to change course at the stroke of a button. That’s why companies review vital variables to suit the changed scenario.
Vodafone announced earlier that it was reviewing its global advertising strategy as part of its restructuring efforts – the idea was to bring all its advertising projects under one umbrella so that Vodafone could give out a uniform message to the market. And Vodafone is not the only company to rethink its advertising strategy.
Volkswagen announced similar intentions as it sought to review its current advertising and promotional programme. Its “Das Auto” tag line was learnt to be under scrutiny and its advertising was pruned to give out a more contemporary message. The latest to join the bandwagon of companies attempting to recast their advertising platforms to give a twist to their messages and fuel their brand images is the electronics retailer from UK, Comet.
Comet lost on its sales year on year marginally, but more profoundly hit was its profit margin, which fell from 44 million pounds to 10 million. Comet has been fighting it out on price and has been doing business with Saatchi & Saatchi. Now, Comet has called for fresh proposals and ideas from advertising agencies, including a change in its message from its existing account with Saatchi & Saatchi. Comet wants to have a message that would be more competitive and give it an edge over competitors.
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Sales declines bring about new necessities and churn out new ideas to focus campaigns on; the whole process of change, however, seems to be focused on advertising messages and on advertising agencies, across industries. Naturally, deep impacts are felt on the consumer’s perceptions on the brand and that is one area that companies wouldn’t want to lose out on. Hopefully, these are part of a larger strategy and not just knee-jerk reactions to a tough business environment and falling sales.
Global advertising and brand management Good ideas cannot happen in the abstract. They are born out of specificity. Only
individuals can have ideas. Groups can't. It may seem counterintuitive, therefore,
but in the case of global brand ideas the only good ones will come from creative
people working to real life briefs with real life consequences in real life
geographies and in real life markets. And they need real life clients with real life
pressures. Local specificity is the agar in the petrie dish of the imagination.
The pressurised air of a business class cabin is not a workable substitute.
But that doesn't mean you have to rely on luck. It is quite possible to manage
great global ideas into existence. It's just a question of knowing when and where
to apply the pressure.
There is a simple solution, but it demands a deep understanding of the creative
process, which in turn demands the kind of patience marketing and advertising
people seldom have space for in their diaries.
During his international tenure in the advertising industry, Gordon Torr worked
with an extraordinary variety of creative people on many of the world's largest
multinational brands. From teas to telephones — he created campaigns for a
challenging variety of clients including Unilever, Ford, Nestle, Kellogg’s, Kraft,
Kodak, Philips, Shell, Vodafone, ABN AMRO, De Beers and the Diamond Trading
Company as well as Smirnoff, Baileys, J&B, Malibu and Tanqueray for Diageo.
Gordon believes that his book, Managing Creative People, could not have been
written without the extensive experience he gained working as Global Creative
Director on these brands. All of these clients wanted global advertising ideas. The
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most liberal of them were happy with local brands working within global
strategic templates. Others wanted single global executions. There is no simple
answer to which approach works most effectively for which type of category, but
there's a rule of thumb that suggests that if your brand isn't in Duty Free you're
better off looking at meta-ideas, that is, generalised concepts that can be
reworked strategically and creatively at the local level.
The problem with looking at things globally is that you start seeing the world from
the window of a 747, and you forget that geography still matters. Most people on
the planet — the vast majority of the consumers of these goods and services —
live in particular places and cultures, so they view brand communications and
brand experiences through the prism of their language and locality.
There's an obvious wisdom in "think globally, act locally", but it clearly hasn't
helped the majority of clients or their advertising agencies to solve the problem or
where these big brand ideas should come from. Centralist agendas favoured
by marketing or advertising people with global hats on are unlikely to succeed as
long as budgets are held anywhere outside the centre. The collaborative
approach, which has local marketers nodding to the global PowerPoint
presentation in a basement conference room in Florida, only exacerbates the
divide. Local ideas get patronised; global ideas get ignored.
The default way to solve the issue is to appoint a network agency, or a network
creative director, to police the planet on behalf of the global marketer, a practical
enough idea on paper but a recipe for inevitable political disaster. Centralized
creative resource makes the problem worse, not better. Global creative
gangbangs are an enormous amount of fun but rarely produce anything other
than great Facebook photos. So sooner or later someone - or everyone - gets
fired and the whole process starts over again.
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Branding strategies and challenges google’s strategy in china
Businesses generally like to give out consistent messages to their target markets as to what they are and what they stand for. Consumers would like to identify the product and the company with specific images and ideas and hence, the importance of branding in strategy. Branding strategies are carefully crafted around ideas that give business the identity that marks it apart from its competitors. And brands talk about values that the company vouches for and would stand by. This makes branding – and consistent branding – an essential aspect of business. In the long run, consumers go for the company’s products because of the brands that they have created in the consumers’ minds.
However, there are business decisions that test the character of the business, where the opportunities in the market may be so tempting that to ignore them and go past them would go against the grain of the business objective. The most astute businesses wouldn’t want to let opportunities go. Such was the case with Google, as it tried to gain market share in China. Google was pulled up by China for being too transparent in its search results – the conservative regime in China was for information censorship and Google had to abide by the Government’s restrictions if it had to operate. Compliance led to search results being modified or not being shown, which required programs resulting in search results taking time to appear.
Further, Google faced a contradiction that went against its brand image. Google has built its brand around the proposition of transparency where it always maintained information was free for all. However, what China offered was a growing market – and a huge one in that – which required Google to compromise on its brand equity and go with the tide in the domestic search industry, if it were to stay in it for the long term.
Google faces the prospect of choosing between whether to go in line with its brand positioning and abandon China altogether or to compromise on the quality of its search results and give in to the Chinese Administration’s demands.
Google’s choice to stay with its branding and values would mean loss of market share and revenues, but it would make sure Google as a brand stays intact in the wider global arena. On the other hand, if Google compromises in China, Google’s
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brand may lose its standing and lose much on what it has built over the years. Business choices are tricky; but business decisions must be made in line with the overall corporate branding agenda and values, even if it means loss of short term gains.
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Top 7 Factors When Choosing An Advertising Agency
Your business has been done well the last couple of years, and you’ve every reason to be proud. Your small but sharp sales force has stretched every limb and sinew to cover the local market – ask them to work harder, and they’ll drop dead! The brand’s a household name in your town, and your customers are your best ambassadors. Now what?
If you dare to dream big, you need to act that way too. While personalized selling and word of mouth works wonders, it does limit the number of potential customers you can reach out to. When you think it’s time to widen your customer base, and quickly, it’s only mass media that can do the trick. And for that to happen, you have to find the right advertising agency.
Ahhh… we hear the alarm bells in your head already. Advertising and us? That costs big bucks, and we don’t know the first thing about it! Chill. You may know nothing about the world of media and communications, but loads of advertising agencies do. That being said, choosing an advertising agency is not something you can do with your eyes closed.
Before you zero in on “the one”, make a checklist of the parameters you must include in your evaluation. There are lots of points to be considered in order to narrow down your search while selecting an advertising agency. Some of them are below:
1. Size does not matter. Big is not necessarily better and small advertising
agencies have proved that time and again. In fact, choosing an advertising
agency that’s aiming to be among the Fortune 500 could work against your
business, especially if you want to start small. Heavyweight agencies are
likely to put larger clients on priority, at the expense of smaller firms, and
sooner or later it will tell on their work. Instead, sign on an agency that is
interested in the creative challenge that your business offers, or one that is
really keen to work with you for the long term.
2. Let their work speak for itself. Every advertising agency will talk about how
creativity is its life blood, but as with most things, one man’s food might be
another’s poison. Look at some of their prior work to decide whether their
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particular brand of ideas is what your business needs. A lot of agencies will
brag about the awards that they’ve won – forget them. Listen to the one
that talks about how their work has helped build their clients’ businesses.
3. Look for all round capability. Choosing an advertising agency is time
consuming, so you don’t want to have to do that every time you opt for a
different medium of advertising. Make sure the agency can provide 360◦
support – that includes not only advertising in print, audiovisual media and
the internet, but also direct marketing and public relations. At the same
time, enquire about their infrastructure – do they own a design studio or do
they outsource; what contacts do they have with printing companies and
above all, are they proficient in media buying activities? However, if your
business is highly internet-oriented, and you’d like your advertising to
follow suit, specialized agencies might make sense.
4. Talk deliverables. Everyone loves advertising. It’s glamorous, exciting,
creative… and expensive as hell! But talk about measurable results, and the
rosy hues fade away faster than you can blink. Measuring the ROI on an
advertising campaign is well nigh impossible, or at best, a difficult task.
Sales might go up, but that could be due to any number of reasons. And
what happens once the campaign is over? It’s not like sales will drop down
to pre-campaign levels, so how do you measure the benefits over the long
term? There are no clear answers and you’ll have to learn to live with this
fact. However, while choosing an advertising agency, keep your discussions
as specific as possible. Ask whether they can guarantee a certain impact – it
need not be a rise in sales alone. Increased brand recall and customer
enquiries are equally important fallouts of a campaign.
5. Work the numbers. We’ve said it before, advertising doesn’t come cheap.
Assess what the agencies charge and when. Some might work for a success
fee; others stick to a traditional commission or flat remuneration. Whatever
be the case, make sure it’s spelt out clearly in the contract.
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6. Look for chemistry. Advertising is first and last, a people driven business.
Make sure you know who is going to work on your account, and put it in
writing! Access to the top dog in the agency is usually restricted once your
account is in the bag, but that should make no difference, as long as the
guys on the ground know what they are doing.
7. Look for reliability. Your advertising agency is going to be privy to a lot of
your plans, so you need to ensure they can keep confidential information to
themselves. Most advertising agencies will tell you that they do not handle
competing accounts - but don't let it rest there - check if the agency has a
smaller division or another group company that's serving your competitor!
Finally, insist on a confidentiality clause that protects your interest in the
contract.
8. Full service agency or part- time agency. The full-service agency is involved
completely in the advertising functions. It has a large number of expert
employees. The organization is typically useful for performing advertising
agencies. It looks upon customers as key clients. It communicates with the
prospective purchasers. The distinguishing characteristics of the various
agencies lie in the creative skills of the personnel of each organization and
in the philosophy of advertising. Larger agencies offer better services.
The part-time agency offers service on free of cost or project basis. These
agencies perform various outside activities and co-ordinate the activities of
the advertiser and media men. Clients have greater control over advertising
campaigns. Advertiser’s research agencies generally perform job of part-
agencies. The selection of a particular agency depends on its size, its
services, knowledge and growth
9. Compatibility. The selection of an advertising agency depends on the
compatibility of the agency. The needs of the company determine the
fitness of the agency. The advertiser visits several agencies and chooses the
best agency on the basis of its merits, demerits, accreditation, its methods
of handling the accounts and using the available opportunities.
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10. Agency Team. This includes management specialists, market researchers,
copywriters, media experts, production managers and art directors. The
attitude, thinking, experience and personalities of the team members have
positive effects on the selection process.
11. Agency Stability. An agency, which has been long in existence generally,
performs efficiently and effectively. The greater the investment in the
agency, the more vital the contribution of the agency to the advertising
activities. The personnel, finance, management and credit are examined
before selecting a suitable advertising agency.
12. Services. The services rendered by the agency are evaluated with a view to
choosing the best advertising agency. Cost accounting, general agreements,
project estimates, selling attitudes and other services performed by the
advertising agencies are considered to evaluate their efficiency and
credibility in performing advertising jobs. The greater the range of an
agency’s services, the more fully it can serve the clients’ needs. The agency
can serve the clients by its potential capacity for advertising, sales
promotion, media placement, public relations, market research, sales
training and distribution channels.
13. Creativity. Creativity is the main element in advertising. If the advertising
agency is capable of great creative efforts, it is selected for the purpose.
Style, clarity, impact, memorability and action- these are taken into account
while evaluating creativity.
14. Problem-solving approach. The agency which has a problem solving
approach is considered to be superior and useful. The importance of
choosing the right agency cannot be ignored. Caliber, compatibility,
balanced services, responsiveness, talent an equitable compensation-these
are important factors in selecting an advertising agency.
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Module IV
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Since the early l960s, standardization has often been viewed as an efficient strategy for global marketers while others have argued for the relative merits of adaptation. A review of the literature reveals two important points: First, relative to other areas of marketing, channels of distribution are given short shrift in the standardization versus adaptation debate; Second, of the existing literature on the standardization of global marketing channels, academicians and practitioners generally concur that marketing channels cannot be standardized. This conclusion may be premature. Thus, this chapter offers a conceptual framework for the possible standardization of global marketing channels. A schematic model of the domestic marketing channel development process is extended to the global arena and a framework for the evaluation of the standardization alternatives in the international marketing channels development context is presented. The globalization of business over the past ten years has increasingly attracted the attention of those interested in international marketing. In fact, a Delphi study of respondents from upper-level positions in business, government, and academia from the US., Japan and Europe found globalization to be one of the top three trends affecting international marketing in the 1990s (Czinkota and Ronkainen 1991). Given the importance of this trend, more scholars and practitioners have become interested in determining the appropriate strategic responses to the changing global marketplace. Global standardization is one such strategic response that has attracted renewed attention. Since the early 1960s, global standardization has often been viewed as a efficient strategy for international marketers. However, others have argued for the relative merits of adaptation, the tailoring of marketing efforts to meet local preferences. An extensive literature on the debate exists (see for instance, Aggarwal 1995; Buzzell 1968; Jam 1989; Keegan 1969, 1993; Levitt 1983; Porter 1986; Wind and Douglas 1986). This debate has continued on for decades without a clear resolution. The recent resurgence of interest in the topic indicates that the potential of global standardization is still of considerable import to marketers. A review of the global standardization literature reveals two key points. First, relative to other areas of marketing, channels of distribution arc given short shift in the standardization versus adaptation debate. Second, of the existing
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literature on the standardization of global marketing channels that does exist, academicians and practitioners generally concur that marketing channels cannot be standardized. Specifically, a schematic model of the domestic channel development process is extended to the global arena.
STANDARDIZATION VERSUS ADAPTATION DEBATE The standardization debate has centered on the question of whether or not organizations should customize their domestic marketing strategies for foreign markets. Generally, standardization is a more attractive strategy if markets are viewed as relatively homogeneous, while adaptation becomes necessary if markets arc viewed as heterogeneous (Peebles, Ryan and Vernon 1977, 197K). Given advances in technology. Communication and travel which provide more global influences on consumers and organ izations around the world, it has been argued that a global strategic orientation is now necessary, and that standardization of the basic marketing elements is fundamental to such a global strategy (Levitt l93). Others have argued that across-the-board standardization is infeasible (Killough 1978), and that the underlying basis of a global strategy is to make local adjustments to global strategies, depending upon a variety of internal and external forces (Simmonds 1985; Wind and Douglas 1986). Perhaps, unintentionally, the standardization versus adaptation debate may have been miscast as a dichotomous decision (Quelch and Hoff 1986). The practice of global marketing standardization may be more realistically placed on a continuum indicating the relative extent to which the degree of standardization is desirable (Hue and Fraser 1988; Link 1988; Sorenson and Weichmann 1975). However, total standardization of marketing strategy is not feasible (Killough 1978) because there are a plethora of factors that influence ii. Product and industry characteristics, exchange rates and a host of other market differences influence the extent of standardization (Wind and Douglas 1986). But, according to Peebles, Ryans and Vernon (1978), standardization, in general. Is feasible in global markets especially where the host country’s marketing infrastructure is well developed and economically similar to the home market (Jam 1989). Two aspects of standardization which have been widely recognized in the international marketing literature are process and program standardization (e.g.. Miracle 3968: Sorenson and Weichmann 1975). Process standardization refers to
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the development of uniform marketing management practices, including the sequencing of tasks, problem solving processes, decision making processes, and performance evaluation procedures (Shruptine and Toync 1981; Jam 1989; Kreutzer 1988). In particular Rafec and Krcutzer (1989) posit that by building a common company language, creating a corporate culture in the parent company and global subsidiaries through job rotation, and standardized training and education (which arc different representations of process standardization) the firm can contribute to the successful development of a global marketing strategy. The general theme of most studies in this area is that it is often more important and possible to standardize global marketing planning and decision making than it is to standardize the content of the entire marketing mix (c.g, Miracle 1968; Sorenson and Weichmann 1975; Dunn 1976; Peebles, Ryan and Vernon 1978). Additionally, the proponents of process standardization are, in general, skeptical of the viability of complete pro- grain standardization. Program standardization which refers to the development of a uniform marketing mix for global markets has been the focus of most standardization literature, especially the earlier studies (Walters 1986). In its purest form, program standardization can be defined as the offering of identical products at identical prices using identical means of promotion through the use of identical distribution systems for each country being targeted (Huzzell 1968; Krcutzcr 1988). Different aspects of the marketing pro- grain that need to be considered for standardization would include product design, product branding, packaging, pricing, advertising, sales promotion campaigns, media budget allocation, types and number of intermediaries, and logistics, among others (Qucich and Hoff 1986; Wind and Douglas l986. The extent to which the marketing program can be standardized depends on factors such as market composition, nature of the product, nature of the target market and the host country market environment (Jam 1989). The implementation of marketing program standardization may further be influenced by an organization’s international philosophical orientation (Cateora 1995). Not all of these elements of the marketing mix have received equal attention from researchers. The vast majority of research has focused on the standardization of promotion (primarily advertising). According to Jam (1989), almost half of all major standardization studies over the past quarter of a century have been concerned with promotion. The standardization of product design has also been considered much more other than the other two elements of the marketing mix. When channels of distribution are discussed in the standardization literature it is usually to acknowledge that the availability and
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quality of marketing channels may be heavily influenced by culture and tradition, so standardization of distribution channels may be particularly difficult to achieve (lluszagh, Fox and Day 1986; Douglas and Wind 1987; Jam 1993; Stern and El-Ansary 1992). Thus, the generally accepted approach for developing global marketing channels is to adapt channels to the host country environment. As previously mentioned, academicians and practitioners generally concur that a strategy of standardizing marketing channels in global markets is usually not feasible. Even Levitt (1983) did not advocate the systematic disregard of local differences in the formulation of distribution strategy Other authors have made a distinction between prototype and pattern standardization especially in context to global advertising strategy (Peebles, Ryans. And Vernon 1977; Walters and Toyne 1989). Prototype standardization of global advertising allows the same advertisement or campaign to be employed in multiple markets while still allowing thc advertising copy to he adapted for translation. Pattern standardization of global advertising, however, refers to a standardized basic advertising concept or theme, with adaptations to the execution elements made when necessary. For example, Levi Strauss uses the concepts of quality and American heritage around the world. Broad outlines of campaigns arc developed, but specific details of a campaign are allowed to be decided upon locally (“For Levi’s,... 1990).
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STA NDA RDIZ I TION Ut’ GLOBAL MARKETING CHANNEL STRATEGY Marketing strategy in a channels context refers to a firm’s broad prin iples for the achievement of its distribution objectives for its given target market(s) (Rosenbloom 1990), Six strategic distribution decisions need to he addressed by the firm to achieve its distribution objectives. Channel strategies therefore need to be formulated for all six decision areas. These decisions are: (I) determining the role of distribution in overall objectives and strategies, (2) determining the role of distribution in the marketing mix, (3) designing marketing channels, (4) selecting channel members, (5) managing the channel, and (6) evaluating channel member performance (see Figure I). The process of marketing channel strategy parallels the process for the development implementation, and control of other types of marketing strategies. As stated earlier, the general theme of most of the literature on marketing process standardization is that it is often more important and possible to use standardized practices for global marketing planning and decision making than it is to standardize the content of the marketing mix. This view was endorsed by Sorenson and Wcichmann (1975) who asserted that the method used for approaching and analyzing a marketing problem. And for synthesizing the information in order to arrive at a decision can be ‘absolutely’ standardized on a global basis. They found that executives in many of the companies surveyed emphasized that it was their skills in developing and implementing systems for international market planning that culminated in their competitive edge. That is, standardization of the processes used in devising marketing strategies was perceived as the key to success. This view has received considerable support (Dunn 1976; Peebles, Ryans. And Vernon 1978; Shruptine and Toyne l981). The process of developing global distribution channels strategies can be viewed similarly. Regardless of the target market, the six basic distribution decisions identified in Figure 1 have to be made in the domestic market as well as in all foreign environments, and they should be made in the order presented. So, despite the many claims that the standardization of marketing channels is not feasible, at the process standardization level, the standardization of marketing channel strategy is a viable and feasible alternative.
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STANDA RDIZING GLOBAL MARKETING CHANNELS The marketing channel consists of the external organization which the firm uses to achieve its distribution objectives (Rosenbloom 1995). It includes the route, path or conduit through which goods, products or things of value flow as they move from the manufacturer to the ultimate user of’ the product. Distribution in global markets, as in domestic markets, involves all activities related to providing place, and possession utilities for industrial users and final consumers.
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Design of the Marketing Channel Marketing channel design refers to the development of new channels or the modification of existing channel structures Rosenbloom 1995). Key channel design decisions consist of the following three dimensions: 1. The number of levels in the channel. This refers to the number of intermediary levels between the manufacturer and ultimate users. As the number of intermediary levels increases, the channel increases in length. The number of levels may range from two (e.g., manufacturer-direct users or direct channel) to five levels or more (e.g., manufacturer agent ‘wholesaler ‘retailer -‘consumer). 2. The intensive at the various levels. This refers to the number of intermediaries at each level which could be intensive (many), selective (few) or exclusive (one). 3. The npes of intermediaries. This refers to the particular type of intermediary to be used at the different levels of the channel (e.g., agents, distributors, dealers, wholesalers and retailers). This would lead to the development of a number of possible channel structure alternatives, which the manufacturer must evaluate in light of variables such as markets served, product types, the environment, and behavioral factors that affect its channel structure. The manufacturer would then implement the channel structure from the set of alternatives which would be most efficient in performing the distribution tasks. Thus, the goal of the channel decision maker is to develop a design mix, consisting of these three channel structure dimensions, which optimizes returns for all channel members. Researchers who conclude that marketing channels cannot be standardized globally are basically referring to the difficulty of standardizing these three channel structure dimensions across all markets due to differing government regulations, marketing infrastructure, the character of mark ets, industry conditions, and other factors. For a company to develop identical channel structures for each of its international markets is indeed an unrealistic undertaking, but, as noted earlier, standardization may take different forms, such as prototype and pattern standardization discussed earlier. It may, for example, be feasible for a company to develop a core standardized channel structure across some of its international markets. This standardized structure may then be altered as deemed necessary. This would be analogous to pattern standardization of advertising in selected foreign target markets. The task then is to determine what would lead a firm toward pattern standardization of global marketing channels rather than adaptation.
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Managing the Marketing Channel
Once the marketing channel has been designed, it has to be managed. Channel management involves the administration of marketing channels to secure the cooperation of channel members to achieve the firm’s distribution objectives. Fundamental in the administration of channels is the motivation of channel members (Rosenbloom 1978; 1990). Motivation refers to actions taken by the manufacturer to foster channel member Cooperation in implementing the firm’s distribution objectives. Moreover, the product, price, promotion and logistical elements of the marketing mix also have to he managed and used as resources in fostering channel member cooperation. Due to cultural differences, management attitudes and behavior dither from country to country in terms of contact level, tempo, formality, ethical standards and negotiation emphasis (Cateora 1993). Furthermore, motivation is shaped by culture (Terpslra and David 1985). Preferred leadership styles differ, and the way that these leadership styles are interpreted and responded to are influenced by culture (Hofstede 1980, 1984). Because management’s effectiveness in motivating and securing cooperation may vary across different cultures, the task for the global marketer is to determine when various channel management styles and strategies used in motivating channel members can be standardized rather than adapted. To attain a fuller understanding of how global marketing channels can be standardized, the design and management of marketing channels is addressed by adapting Keegan’s classic Multinational Product Planning Framework (Keegan 1969).
KEEGAN’S INTERNATIONAL PRODUCT
PLANNING FRAME WORK
Keegan originally offered five alternatives for product and communication strategy for firms entering foreign markets, as shown in Table 1. These strategic alternatives were addition of three factors: (I) the product’s function (2) conditions of product use and (3) consumers’ ability to buy the product. When both product function and conditions of use are the same, the recommended strategy is to standardize both product and promotion strategy. When the product’s function is different and the conditions of product use are the same, the product itself may remain standardized, but the communications regarding how the product meets the target market’s needs should be adapted. Alternatively,
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when the function across markets is the same and the conditions of use differ, the communications relating the function of the product may be standardized while the product itself should be adapted to adjust to the different environmental conditions. These four alternatives assume an ability to buy the product. The fifth and final alternative considers entry into developing markets where consumers do not have the ability to buy products, for which the recommended strategy is to innovate backwards (i.e., develop a new but simpler, less costly product), and develop new communications. The framework is particularly useful for practitioners in global markets because it addresses timeless, key issues in a direct, parsimonious fashion. It forces companies to identify the basic needs of the target market and suggests strategies for implementation to best satisfy those needs in terms of product design, promotion, and pricing. The original framework was extended to include pricing strategic alter- natives (Keegan 1993). Currently, the only primary marketing mix element not addressed in Keegan’s framework is distribution channels.
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ADAPTING KEEGAN’S FRAMEWORK
TO GLOBAL CHANNELS STRATEGY
Keegan’s framework for Multinational Product Planning is adapted to address the two key decision areas of global distribution strategy development discussed earlier: (1) the design of the marketing channel and (2) the management of the marketing channel. Towards this end, the two criteria for decision making will be adapted. Rather than considering product function and conditions of product use, marketing channel functions to be performed in a given target market and the target market business culture arc used as the key factors for determining the marketing channel strategic alternatives. In a marketing channels context, these factors are analogous to the original factors of product function and conditions of product use. Moreover, even though Keagan advocated adaptation or standardization as a dichotomous proposition, in this paper it is treated as existing on a continuum. This follows because there may be various forms of standardization, such as prototype and pattern standardization, discussed earlier, in this paper, standardization refers to pattern standardization, which allows for specific details of the channel strategy to be altered locally, rather than requiring complete programmatic standardization. In Keegan’s original framework (1969) the first criterion, product function, focused on the basic product function for the final customer. While marketing channels arc also designed to ultimately meet a customer’s needs, there are a variety of channel functions that may be performed to meet those needs. These may be different from target market to target market. Thus, in a marketing channel design context, the focus is on the array of channel functions that may be performed within the channel in a given target market. The functional app roach to marketing channel design has a long history in the marketing literature (Maynard et a). 1932; Converse and Huegy 1946; Duddy and Revzan 1947; Alderson 1949; Alderson 1957). The marketing channel structure uscd is a reflection of the functions the channel needs to perform to enter and operate in chosen markets. That is, the manufacturer identifies the required set of marketing channel functions to be performed and then proceeds to develop the appropriate channel structure (Rosenbloom 1987). The functional approach is comprehensive because it can deal with the full range of possible marketing channel structure choices.
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Consider the case of variations in intermediaries across different distribution cultures. In some cultures, intermediaries are accustomed to providing extensive levels of functional performance for the manufacturers whom they represent. They are prepared and accustomed to implementing virtually all of the channel functions necessary to consummate transactions across distant international boundaries. Thus, the foreign manufacturer can confidently rely upon intermediaries to find a way to make its products conveniently available to the target market regardless of the difficulties or complexities involved. The Fisher-Price toy company prov ides a good illustration of a manufacturer that has relied heavily on a standardized pattern of channel strategy to enter diverse foreign markets across Western Europe. This strategy consists of developing a channel structure that relies heavily on intermediaries during the initial stages of market development before moving to less reliance as the level of sales volume moves above a critical mass (Buzzell et al. 199$). Such a channel strategy could only be possible in distribution cultures such as those in Western Europe where intermediaries are capable and willing to provide this level of functional performance. On the other hand, in some cultures intermediaries are much less capable or inclined to provide such extensive performance of channel functions for suppliers. They sec their role as essentially that of limited function facilitators whose primary role is simply to break-bulk from large quantities of imported products and provide for transportation of products to final customers. Any level of functional performance beyond this very basic logistical function (such as promotion, order-taking, market information, or technical advice) is viewed as outside of the scope of their normal business practices. Such culturally based limitations of intermediaries have, for example, caused Proctor & Gamble, a company often thought of as the consummate mass-marketer, to significantly alter its standard channel strategy. While usually relying heavily on wholesalers and retailers to communicate with and service final customers, in developing countries, Proctor & Gamble has at times eschewed its traditional marketing channel structure and implemented a direct channel system of selling its products door-to-door because intermediaries simply could not, or would not, provide the range of marketing functions necessary to achieve P & G’s strategic distribution objectives (Czinkota and Ronkainen 1988). The second criterion for product and communication strategy design used in Keegan’s original framework, conditions of product use, focused on the
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environmental conditions which affect the consumption of the product. In a marketing channel management context the foreign environment also has an impact, but its impact is on the management of the distribution structure. Rather than focus on the conditions in which the Customer consumes the product, the focus is on the conditions in which the product moves through the marketing channel structure. This process may be viewed as a series of flows. These flows include the product flow, the negotiation flow, the ownership flow, the information flow and the promotion flow (Vaile, (irether and Cox 1952). Global marketing channel management must effectively manage and coordinate these flows to achieve the firm’s distribution objectives. 01 all of these flows, communication is perhaps the most fundamental to the management of global marketing channels. The formulation and implementation of channel strategies, and the motivation as well as the evaluation of channel members are totally dependent on the information flow. The information flow in global marketing channels is dependent upon verbal and nonverbal communication; consequently the effectiveness of communication is heavily affected by the cultural environment. For instance, cultures differ in the extent to which the message contained in a communication is explicit or implicit (Hall 1959; 1976). According to hall, countries may be divided into high-context and low-context countries. Information flows in low-context cultures depend more on explicit messages, directly contained in the words of a communication. Information flows in high-context countries, however, depend much more heavily on the nonverbal, contextual aspects of the communication message. These differences make effective communication between high- and low-context cultures more difficult than between two low-context or two high-context cultures; For example, consider a situation in which a marketing channel member inquires of a manufacturer if a particular shipment will arrive in two weeks. A manager from a low context country’s “yes” answer would essentially be a commitment that the shipment will indeed arrive within that time frame. A manager from a high context country’s “yes” answer may mean that the shipment will arrive within two weeks. However, it may also mean that there is only a possibility, or that there is no way, that the shipment will arrive within two weeks. In the latter case, the context in which the question is asked and answered is very important. The high context manager may be answering “yes” to save face for himself and his organization, for the channel member, or for both. Thus, communication across high and low context cultures may be greatly complicated.
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The adapted version of Keegan’s framework for Multinational Product Planning, incorporating the above, is presented in Table 2. Essentially, when the functions of the marketing channel to be performed by channel members arc the same across target markets, the elements of channel design may be considered for pattern standardization. The basic design of the channel may be standardized, with adaptations as deemed appropriate to comply with local government rules and regulations. When the market business culture “matches” or is the same across two target markets ((hat is, there are two low-context or two high-context countries) the management of the marketing channel may he standardized (akin to pattern standardization). This would result in four alternative strategies: (1) dual standardization. (2) Design standardization and management adaptation, (3) design adaptation and management standardization, and (4) dual adaptation. SUMMARY and CONCLUSION Standardization has long been discussed in the international marketing literature and has often been advanced as a desirable global marketing strategy. However, the vast majority of research in the area has focused on product and promotion standardization and has neglected the area of marketing channels standardization. This article addresses the question of standardization as it applies to global marketing channel
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Existing literature on (he standardization of global marketing channels generally avers that marketing channels cannot be standardized. However, as discussed in the paper, the process of marketing channel strategic decision making can he standardized. While complete standardization of the marketing channels program is not feasible due to deterrent government regulations, marketing infrastructure, the character of marketing, industry conditions, and other factors across international markets, the general channel design and management may be standardized across diverse foreign markets, while still allowing moth’si modification. Keegan’s Multinational Product Planning Framework was adapted to a marketing channels context. Four alternative strategies were developed based on the channel functions (0 are performed in a market and the compatibility of communication flows across cultures. Firms are presented with four alternatives for foreign marketing channels strategy. Thus, rather than simply pointing out the many differences in distribution that exist across markets and lamenting the difficulty of standardizing channels across those different markets, the framework provides firms operating in global markets with a basic starting point for developing and managing their global distribution channels.
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Distribution - introduction
Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are Product, Price and Promotion.
The Nature of Distribution Channels
Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as
"all the organisations through which a product must pass between its point of production and consumption"
Why does a business give the job of selling its products to intermediaries? After all, using intermediary’s means giving up some control over how products are sold and who they are sold to.
The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself.
Functions of a Distribution Channel
The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions:
Information Gathering and distributing market research and intelligence - important for marketing planning
Promotion Developing and spreading communications about offers
Contact Finding and communicating with prospective buyers
Matching Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging
Negotiation Reaching agreement on price and other terms of the offer
Physical distribution
Transporting and storing goods
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Financing Acquiring and using funds to cover the costs of the distribution channel
Risk taking Assuming some commercial risks by operating the channel (e.g. holding stock)
All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective.
Numbers of Distribution Channel Levels
Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure below shows some examples of channel levels for consumer marketing channels:
In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent.
The remaining channels are "indirect-marketing channels".
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Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to large retailers such as Comet, Dixons and Currys which then sell the goods to the final consumers.
Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented - i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. A good example of this channel arrangement in the UK is the distribution of drugs.
Distribution - channel strategy
The following table describes the factors that influence the choice of distribution channel by a
business:
Influence Comments
Market
factors
An important market factor is "buyer behaviour"; how do buyer's want to
purchase the product? Do they prefer to buy from retailers, locally, via mail order
or perhaps over the Internet? Another important factor is buyer needs for product
information, installation and servicing. Which channels are best served to provide
the customer with the information they need before buying? Does the product need
specific technical assistance either to install or service a product? Intermediaries
are often best placed to provide servicing rather than the original producer - for
example in the case of motor cars.
The willingness of channel intermediaries to market product is also a factor.
Retailers in particular invest heavily in properties, shop fitting etc. They may
decide not to support a particular product if it requires too much investment (e.g.
training, display equipment, warehousing).
Another important factor is intermediary cost. Intermediaries typically charge a
"mark-up" or "commission" for participating in the channel. This might be
deemed unacceptably high for the ultimate producer business.
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Producer
factors
A key question is whether the producer have the resources to perform the functions
of the channel? For example a producer may not have the resources to recruit, train
and equip a sales team. If so, the only option may be to use agents and/or other
distributors.
Producers may also feel that they do not possess the customer-based skills to
distribute their products. Many channel intermediaries focus heavily on the
customer interface as a way of creating competitive advantage and cementing the
relationship with their supplying producers.
Another factor is the extent to which producers want to maintain control over how,
to whom and at what price a product is sold. If a manufacturer sells via a retailer,
they effective lose control over the final consumer price, since the retailer sets the
price and any relevant discounts or promotional offers. Similarly, there is no
guarantee for a producer that their product/(s) are actually been stocked by the
retailer. Direct distribution gives a producer much more control over these issues.
Product
factors
Large complex products are often supplied direct to customers (e.g. complex
medical equipment sold to hospitals). By contrast perishable products (such as
frozen food, meat, bread) require relatively short distribution channels - ideally
suited to using intermediaries such as retailers.
Distribution Intensity
There are three broad options - intensive, selective and exclusive distribution:
Intensive distribution aims to provide saturation coverage of the market by using all available
outlets. For many products, total sales are directly linked to the number of outlets used (e.g.
cigarettes, beer). Intensive distribution is usually required where customers have a range of
acceptable brands to chose from. In other words, if one brand is not available, a customer will
simply choose another.
Selective distribution involves a producer using a limited number of outlets in a geographical
area to sell products. An advantage of this approach is that the producer can choose the most
appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective
distribution works best when consumers are prepared to "shop around" - in other words - they
have a preference for a particular brand or price and will search out the outlets that supply.
Exclusive distribution is an extreme form of selective distribution in which only one wholesaler,
retailer or distributor is used in a specific geographical area.
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Types of distribution intermediary
Introduction
There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below:
Retailers
Retailers operate outlets that trade directly with household customers. Retailers can be classified in several ways:
• Type of goods being sold( e.g. clothes, grocery, furniture) • Type of service (e.g. self-service, counter-service) • Size (e.g. corner shop; superstore) • Ownership (e.g. privately-owned independent; public-quoted retail group • Location (e.g. rural, city-centre, out-of-town) • Brand (e.g. nationwide retail brands; local one-shop name)
Wholesalers
Wholesalers stock a range of products from several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialise in particular products.
Distributors and dealers
Distributors or dealers have a similar role to wholesalers – that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service.
Franchises
Franchises are independent businesses that operate a branded product (usually a service) in exchange for a licence fee and a share of sales.
Agents
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Agents sell the products and services of producers in return for a commission (a percentage of the sales revenues)
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Module V
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Global Marketing Information Systems
"To survive in this new globally competitive world, we had to modernize. Information technology is the glue for everything we do. "
JAMES WOGSLAND
Vice Chairman,
Caterpiller
"Nothing changes more constantly than the past; for the past that influences our lives does not consist of
what happened, but of what men believe happened.
GERALD W.
JOHNSONSTON
The objective of the chapter is to make the student understand the importance of market research in
international marketing. After the lesson the student would be able to appreciate the following:
1. Overview of Global Marketing Information Systems 2. Sources of Market Information 3. Formal Marketing Research
4. Current Issues in Global Marketing Research 5. An Integrated Approach to Information Collection
Information, or useful data, is the material of executive action the global marketer is faced with a dual problem in acquiring the information needed for decision-making. In high-income countries, the an10unt of information available far exceeds the absorptive capacity of an individual or an organization. The in formation problem is superabundance, not scarcity. Although advanced countries all over the world are in the middle of an information explosion, there is a lack of information available on the market characteristics of less developed countries.
Thus, the global marketer is faced with the problem of information abundance an
information scarcity. The global marketer must know where to go to obtain
information the subject areas that should be covered and the different ways that
information can bi acquired acquired information must be processed in an
efficient and useful way. The technical term for the process of information
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acquisition is scanning. This chapter presents an information acquisition model for
global marketing as well as an outline 0 the global n1arketing research process.
Once acquired, information must be processed in an efficient and effective way.
The chapter concludes with a discussion of how to manage the marketing
information collection system and the marketing research effort.
For example, K.M.S. "Titoo" Ahuwalia is the president of ORG-MARG, the largest
marketing research company in India. His client list reads like a "Who's Who" of
global companies: Avon Products, Gillette, Coca-Cola, and Unilever. And, as Titoo
is fond of telling’ them, they are finding that "India is different." India is the
second most populous
nation on earth, with a middle class comprised of more than 200 million people.
Despite increasing affluence, however, centuries-old cultural traditions and
customs still prevail. As a result, consumer behavior sometimes confounds
Western expectations. Despite the fact that summer temperatures frequently
reach triple digits; only 2 percent of urban dwellers use deodorant. Instead,
Indians bathe twice daily. Only l' percent of households have air conditioners, and
a recent Gallup survey revealed that only 1 percent intended to buy an air
conditioner in the near future. The virtues of frugality once preached by Gandhi
remain uppermost in the minds of many; smokers refill disposable lighters, and
women recycle old sheets instead of spending money on sanitary napkins.
Likewise, in a country where food is believed to shape personality and mood and
hot breakfasts are thought to be a source of energy, Kellogg has had little luck-
winning converts to cold cereal.
For marketers hoping to achieve success in India and other emerging n1arkets,
information about buyer behavior and the overall business environment is vital to
ef1ective managerial decision-making. When researching any market, marketers
n1ust know where to go to obtain information, what subject areas to investigate
and information to look for, the different ways information can be acquired, and
the various analytical approaches that will yield important insights and
understanding. Obviously, India's 16 languages, 200 dialects, and low level of
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urbanization create special research challenges. However, similar challenges are
likely to present themselves wherever the marketer goes.
It is the marketer's good fortune that, since the n1id-1990s, a veritable
cornucopia of market information has become available on the Internet. A few
keystrokes can yield literally hundreds of articles, research findings, and Web sites
that offer a wealth of information about particular country markets. Even so,
marketers need to study several important topics in order to make the most of
modern information technology. First they need to understand the importance of
information technology and marketing information systems as strategic assets.
Second, they need a framework for information scanning and opportunity
identification. Third, they should have a general understanding of the formal
market research process. Finally, they should know how to manage the marketing
information collection system and the marketing research effort. Overview of Global
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Marketing Information Systems (GMIS)
The purpose of a marketing information system (MIS) is to provide managers and others decision makers with a continuous flow of information about markets, customers, competitors, and company operations.
A MIS provide a means for gathering, analyzing, classifying, storing, retrieving, and reporting relevant data about customers, markets, channels, sales and competitors. A companies MIS should also cover important aspects of a companies external environment. For eg: companies in any industry need to pay close attention to government, regulation, mergers, acquisition, and alliances.The internet has also dramatically expanded our ability to access up to date information. Poor operating results can often be traced to insufficient data and information about events both inside and outside the company. For eg: when a new management team was installed at the American unit of Adidas AG, the German headquartered athletics shoe marketer, data were not even available on normal inventory turnover rates. A new reporting system revealed that revolves Reebok and Nike turned inventories five times per year, compared with twice a year at Adidas. This information was used to tighten the marketing focus on the best selling Adidas products.
It is no easy task to organize, implement, and monitor global marketing information and research strategies and programs. Increased global economic integration between countries, the demise of communism, volatile currency exchange rates, and other factors of driving the demand for access to credible worldwide business and political information. Today’s economic and political environments require worldwide news information on a daily basis. Geocentric global companies generally have intelligence systems that meet the challenges.
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Information subject agenda
Starting point for a global MIS is a list of subjects about which information is
desired. The resulting subject agenda should be tailored to the specific needs and
objectives of the company. The general framework is suggested in table,
consisting of six broad information areas.
CATEGORY COVERAGE
1. Markets Demand estimates, consumers behavior,
products, channels, communication media
availability and cost, and market responsiveness.
2. Competition Corporate, business and functional strategies
and plans.
3. Foreign exchange Balance of payment , interest rates,
attractiveness of country currency, expectation
of analysts.
4. Prescriptive
information
Laws, regulations, ruling concerning taxes,
earnings, dividend in both host and home
country.
5. Resource information Availability of human, financial, information and
physical resources.
6. General conditions Overview of socio cultural, political,
technological environments.
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Elements of the information system
The following constitute the elements of the global information system. Data may
be specific or general or both and used for decisions on whether to enter markets
or not, in what degree and what emphasis in terms of the marketing mix. General
information includes data on the following:
· Economic - rate of growth of GNP, level of inflation, incomes
· Social - people, demographics, culture, subculture
· Political - risk, instability, attitudes to "foreigners"
· Technology - current, rate of change, infrastructure
· Resources - money, manpower, materials, acquisitions, joint ventures
· Fiscal - taxes, exchange rates
· Institutions - money markets
· Managerial - funds
Table 5.2 Categories for a global intelligence system
1. Market information
Market statistics and potential Consumer attitudes and behaviour,
spending power, per capita income
Physical features - infrastructure,
communications, money markets, banks
etc.
Channels of distribution - type,
availability, effectiveness
Media - availability, effectiveness and cost Information sources - quality,
availability and cost
Resources - money, human, materials
(availability, cost, quality, development)
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2. Environmental factors
Economic factors
Economic - rate of growth, structure,
conduct, capital, economic blocs, (SADC),
GNP, GDP, Nl
Social - customs, culture, attitudes,
preferences
Political/Legal - laws, regulations,
investment, "climate", government
ideology, stability.
Technology - state, trends
development
Competition - type, structure, operations,
strategy plans, programmes, acquisitions,
mergers
Trading partner(s)
Management capability Foreign embassies, NGOs and other
developmental thrust
3. Financial/Exchange
Balance of payments
Terms of access - quotas, tariffs, duties etc Inflation rates
Monetary and fiscal policy Expectations - economists, bankers,
business people
Commodity exchanges Currency alterations and
movements, controls and regulations
International competitors Taxes - inflation, incentives,
dividends tax rules, earnings,
repatriation of profits
Spot, forward market Intervention by outside bodies e.g.
IMF or World Bank and their effect
on policy
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Scanning modes: Surveillance and Search
Once the subject agenda has been determined, the next step is the actual
collection of information. This can be accomplished using surveillance and search.
In the surveillance mode, the marketer engages in informal information gathering.
- Globally oriented marketers are constantly on the look out for information
about potential opportunities and threats in various parts of the world. They
want to know everything about the industry, the business, the market place,
and consumers. This passion shows up in the way they keep there ear’s and
eye’s tuned for clues, rumors, nuggets of information and insights from other
people’s experiences. Browsing through newspapers and magazines and
surfing the internet are ways to ensure exposure to information on a regular
basis.
-Global marketers may also develop a habit of watching news programs and
commercials from around the world by a satellite. This type of general
exposure to information is known as viewing. If a particular news story has
special relevance for a company, for eg; entry of a new player into a global
industry ,say, Samsung into automobiles- marketers in the automobile and
related industries and all competitors of Samsung will pay special attention,
tracking the story as it develops, this is known as monitoring.
The search mode is characterized by more formal activity. -Search is characterized by deliberate seeking out of specific information.
-Search often involves investigation, a relatively limited and informal type of
search.
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Investigation often involves seeking out books or articles in trade publications
or searching the internet on a particular topic or issue. Search may also consist
of research, a formally organized effort to acquire specific information for a
specific purpose.
One study found that nearly 75% of the information acquired by headquarters
executives at U.S. global companies from surveillance as apposed to search.
However the viewing more generated only 13% of important external
information, where as monitoring generated 60%. Person can absorb only a
minute fraction of the data available to him or her. Exposure to and retention of
information stimuli must be selective. Nevertheless, it is vital that the
organization as a whole be receptive to information not explicitly recognized as
important. Some organizations suffer from a variation of the NIH (not invented
here) syndrome. If the information they are viewing has not been generated by
the company, it is summarily missed. Over all, the global organization is faced
with the following needs:
An efficient, effective system that will scan and digest published source and technical journals in the headquarters country as well as all countries in which the company has operations or customers.
Daily scanning, translating, digesting, abstracting, and electronic input of information into a market intelligence system. Despite the advances in global information, its translation and electronic input are mostly manual. This will continue for the next few years, particularly in developing countries.
Expanding information coverage to other regions of the world.
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Sources of market information
Human source- Although scanning is a vital source of information, research
has shown that headquarters executives of global companies obtain as much
as 2/3 of the information they need from personal sources.
-A great deal of external information comes from executives based abroad in
company subsidiaries, affiliates and braches. These executives are likely to
have established communication with distributors, consumers, customers,
suppliers, and government officials. Other important sources are friends
acquaintances, professional colleagues , consultants and prospective new
employees. The latter are particularly important if they have worked for
competitors.
- The most secure way of transmitting information is face to face rather than
in writing. People are reluctant to commit themselves in writing to highly
“iffy” things. They are not cowards or overly cautious; they simply know that
you are bound to be wrong in trying to predict the future and they prefer to
not have there names associated with documents that will someday look
foolish.
These include executives based abroad, specific "look see" missions which are
very important, and sales people, customers, suppliers, distributors, and
government officials. This information is "internal" to the firm as opposed to
documentary sources which are generally external. Most of the information is
gathered on a face to face basis.
Documentary sources- One of the most important developments in global
marketing research is the extraordinary expansion in the quantity and quality
of documentary sources of information. The information explosion is an
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explosion in the availability of documentary information not only in print but
increasingly on-line and on the internet and the intranet for company-
restricted information. The two broad categories of documentary information
are published public information and unpublished private documents. The
former is available on the internet, and the latter is available on the intranet
or company password- restricted – access networks created by organizations
for there own employees.
Internet sources- The range and depth of information available on the
internet are vast and growing every day. Companies, governments, non-
governmental organizations, market research companies, data assemblers
and packagers, security analysts, news gathering organizations, universities
and university faculty to mentioned just a few are all sources that can be
accessed on–line. The internet is a unique information source: it combines the
three basic information source types: human documentary (published and
private) and direct perception. A number of electronic resources have been
developed in recent years. These include the national trade data base, which
is available on CD-ROM, from the department of commerce. The Gate ways
company in Manchester, Massachusetts, has developed pc software called
“the world trader” to help small firms find opportunities in export markets.
Similarly the port authority of New York developed a program called “export
to win” to help small business owners learn about exporting, in addition, the
internet and other interactive information services feature bulletin boards
where a great deal of information about various worlds markets is exchanged.
Another online source is the EIU “ economist intelligence unit” , which is
maintained by the economists.
Direct perception- direct sensory perception provides a vital background for
the information that comes from human and documentary sources. Direct
perception gets all the sense involved. Seeing, feeling, hearing, smelling, or
tasting for oneself to find out what is going on?, in a particular country rather
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than getting second hand information by hearing or reading about a particular
issue. Some information is easily available from the other sources but requires
sensory experience to sink in. These are "sensory" sources of information, for
example, if one heard of the construction of a new cold store at an airport, it
could mean that the industry which produces products for airport store is
planning to export in quantity. This could give rise to a market opportunity for
another potential exporter of the same produce. Direct perception could be
achieved by in country visits, where it would be possible to exercise all the
sensory receptors sight, taste, touch, intuition, hearing and smell. Often there
is no substitute to "feeling out" a situation. Participation in exhibitions,
discussions with importing organisations and participation in Government
working parties can all be useful sources of data.
Documented sources
In recent years there has been an information explosion, especially in the documented, or "secondary" source area. (Primary data collection will be dealt with later). Various sources of documented data are available including:
i) Governments
· Central office of information (UK)
· Central Statistical Office (Zimbabwe)
· EU documentation centres
· Boards of trade, or Ministry of Commerce
ii) International bodies
· the UN Statistical Yearbook
· World Bank - general statistics
· OECD - general statistics
· ITC - Geneva (information service)
iii) Business, trade, professional
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· Chambers of Commerce
· Institute of Marketing
· American Management Association
· The Market Research Society
iv) Foreign embassies, trade missions
· Commercial newspapers
· Financial agencies - Price Waterhouse
· Kompass Register of companies
· Economist Intelligence Unit (UK)
v) Other
· Libraries, universities, colleges.
There are excellent sources of overseas data, in the horticultural industry, giving information on markets, prices and produce required for those wishing to sell into Europe. An example of these are given below:
· International Trade Centre (ITC) Geneva
· COLEACP, Paris
· Natural Resource Institute (NRI) UK
· GTZ, Germany
· CBI, Netherlands
· IMPOD, Sweden
· Chambers of commerce
· Food and Agriculture Organization of the United Nations
Secondary data from such sources are relatively cheap to obtain and readily available. However the disadvantages are legion.
· The data may have been collected and manipulated for a specific use, therefore
it may be incomplete, ambiguous or out of context.
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· Data may be compiled in different ways in different countries making comparability difficult., For example, in Germany consumer expenditures are estimated largely on the basis of turnover tax receipts, in the UK they are measured on tax receipts plus household surveys and production sources. Similarly with GNP measures, it only reflects average health per head of population and not how it is dispersed. As seen earlier, bimodalities are normal, thus introducing bias. GNP may be understated for political reasons and may not reflect education (i.e. wealth based on minerals). Also infrastructure may reflect channelled funds, say for tourism, rather than society as a whole - typical of many African countries.
· Data may be corrupted by methodological and interpretive problems, for example, definitional error, sampling error, section error, non response error, language, social organisations, trained workers, etc.
· Data may be nonexistent, unreliable or incomplete thus making inter country comparisons very difficult
· Data may be inflated or deflated for political purposes
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FORMAL MARKETING RESEARCH
Marketing research is the project specific, systematic gathering of the data in
search scanning mode.
There are two ways to conduct marketing research
1. One to design and implement a study with in house staff. 2. Other is to use an outside firm specializing in marketing research.
The process of collecting data and converting it into useful information can be
divided into five basic steps:
STEP:1 IDENTIFYING THE RESEARCH PROBLEM
Research is often undertaken after a problem or opportunity has presented itself. It is a truism of market research that “a problem well defined is a problem half solved”. Thus, regardless of what institution sets the research effort in motion, the first two questions a marketer should ask are ,”What information do I need”? and “Why do I need this information”?
The research problem often involves assessing the nature of the market opportunity, a phase that is also known as presearch. This , in turn depends in part on whether the market that is the focus of the research effort can be classified as existing or potential.
Existing markets are those in which client needs for secondary information are already being served. In many countries , data about size of existing market –in terms of dollar volume and unit sales – are readily available.
Potential markets can be further sub-divided into latent and incipient market.
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A latent market is in essence an undiscovered segment. It is a market in which
demand would materialize if an appropriate product were made available. In a
latent market, demand is zero before the product is offered.
Incipient demand is demand that will emerge if a particular economy,
technological, political, or sociocultural trend continues. If a company offers a
product to meet incipient demand before the trends have taken root, it will have
little market response.
STEP:2 DEVELOPING A RESEARCH PLAN
After defining the problem to be studied or the question to be answered, the
marketer must address a new set of questions.
-What is the information worth to me in dollars(or yen etc.)?
-What will we gain by collecting this data?
-What would be the cost of not getting the data that could be converted into
useful information?
Research requires the investment of both money and managerial time, and it is
necessary to perform a cost-benefit analysis before proceeding further.
STEP:3 COLLECTING DATA
Are data available in company files, a library, industry or state journals or on-line?
When is the information needed? Marketers must address these issues as they
proceed to the data collection step of the research.
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Secondary Data
A low cost approach to marketing research and data collection begins with desk
research. Personal files, company or public libraries, on-line databases,
government records, and trade associations are just a few of the data sources
that can be tapped with minimal effort and often at no cost. Data from these
sources already exist. Such data are known as secondary data because they were
not gathered for the specific project at hand. Syndicated studies published by
research companies are another source of secondary data and information.
Primary Data Survey Research
When data are not available through published statistics or studies, direct
collection is necessary. Survey research, interviews, and focus groups are some of
the tools used to collect primary market data.
Personal interview-with individuals or groups-allow researchers to ask ”why” and
then explore answers.
A focus group is a group interview led by a trained moderator who facilitates
discussion of a product concept, advertisement, social trend or other topic.
Survey research often involves obtaining data from customers or some other
designated group by means of a questionnaire. Survey can be designed to
generate quantitative data(“How often would you buy?”), qualitative data(“Why
would you buy?”), or both. Survey research generally involves administering a
questionnaire by mail, by telephone , or in person. A good questionnaire has
three main characteristics:
1. It is simple. 2. It is easy for respondents to answer and for the interviewer to record. 3. It keeps the interview to the point and obtains desired information.
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STEP:4 ANALYZING RESEARCH DATA
Demand Pattern Analysis
Industrial growth patterns provide an insight into market demand. Because they generally reveal consumption patterns, production patterns are helpful in assessing market opportunities.
Additionally, trends in manufacturing production indicate potential market for companies that supply manufacturing inputs .
Income Elasticity Measurements
Income elasticity describes the relationship between demand for a good and changes in income.
According to the Engel’s law’ which states that as income rises, smaller proportion of income are spent on food. Demand for durable consumer goods such as furniture and appliances tends to be income elastic, increasing relatively faster than the increases in income.
Market Estimation by Analogy
Estimating market size with available data presents challenging analytic tasks. When data are unavailable, as in frequently the case in both less developed
countries and industrialized countries, resourceful techniques are required. One resourceful technique is estimation by analogy. There are two ways to use this technique:
1) Cross-sectional comparisons: amounts simply to positing the assumption that there is an analogy between the relationship of a factor and demand for particular product or commodity in two countries.
2) Displace a time series in time: it is based on the assumption that an analogy between market exists in different time periods or in other words markets in question are going through the same stages of market development. This method is useful when data are available for two markets at different level of development.
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Cluster Analysis
The objective of cluster analysis is to group variables into clusters that maximize
within group similarities and between group differences.
STEP:5 PRESENTING THE FINDINGS
The report based on the marketing research must be useful to managers as input to the decision making process.
The report should clearly relate to the problem or opportunity identified and it should be clearly stated and provide basis for the managerial action.
As the data is available on a worldwide basis it becomes possible to analyze marketing expenditure effectiveness across national boundaries. Therefore, manager can decide where they are achieving the greatest marginal effectiveness for their marketing expenditure and can adjust expenditure accordingly.
Attention has to be paid to:
The research design: The design can be descriptive, experimental, observational or simulation. international research is of a descriptive nature or observational. The ability to conduct simulations or experiments depends on the sophistication of the market and the research facilities available.
Questionnaire design: Whilst in domestic research, questionnaires can be "closed" or "open ended". Unless trained staff can be found, and the nuances of translation can be mastered, "closed" questionnaires are mainly the norm in international research. The form of data gathered by "closed" questionnaire is mainly of a behavioural or quantitative nature. The form of data gatherered by "open ended" research is qualitative.
Attention has to be paid to length, translation, ease of response and method of questionnaire return. The rate of return in international research is often as low as 6% as it is very difficult to give incentives to the respondent. Covering letters should be succinct and written in the language and idiom of the country of
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destination. Marketers can often use clever devices to increase the response rates, for example in France, a red dot on the envelope denotes an "official" letter.
Questionnaires may contain ranking and rating questions (scaled questionnaires) and these can only be used if the respondent is fully aware of what is being asked. Often, in translation, the nuances and differences of interpretation may make scaling techniques difficult to utilise.
Data collection method: Data collection can be done in a variety of ways including personal interview, mail, telephone and observation (either mechanical or human.) Each method has its own merits and demerits. Personal interview allows the building of a relationship between interviewer and interviewee, and allows the "explanation" and "showing".
This is particularly important when conducting group discussions or carrying out in depth-research rather than one to one personal interviews. The gathering of "motivational" or "qualitative" data by group discussions will depend to a large extent on the availability of trained interviewees in the researched country.
Mail methods allow a longer questionnaire with considered response, but suffers from non response and interpretive problems. The telephone is quick but expensive and in many countries getting to the respondent may be difficult due to lack of a telephone infrastructure. Observation may not be always possible due to cultural blockages. In the end, time and cost elements often dictate the method, but generally mail and personal methods are the most widely used.
Sample size and selection: Samples can either be probabilistic or non probabilistic (random and non-random). Random samples can either be simple non-random or multi-random (stratified). Non random samples include quotas, selective or judgemental methods. With probabilistic samples it is possible to be more sophisticated in the analysis by using parametric methods of analysis or project results with greater statistical reliability. With non random sampling techniques, descriptive statistics are more appropriate. In agricultural marketing, rapid rural surveys are a well used method, which are basically a mix of the two sampling techniques. In international research random sampling can be very expensive.
Another important decision is the size of sample. Again, the larger the sample size and more difficult it is to obtain (if randomly chosen) the higher the cost will be.
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Whilst quota sampling may be cheaper there is the possibility that bias may exist in the sample because of inaccurate prior assumptions concerning population or because the field workers select the respondents, unwittingly, in a biased way.
Location of research facility
It is always a burning question as to where to locate the research, in-country or
"at home". In general the more "distant" the country, the better it is to locate the
research in-country. Surveillance techniques could, on the other hand, be mainly
conducted at home. The following case shows what happened to the Tanzanian
sisal industry due, in part, to the lack of a global intelligence facility.
Case 5.1 Tanzanian Sisal
The once world leading Tanzanian Sisal Industry is a classic example of
failure due to its inability to monitor market trends, through lack of an
adequate intelligence system, as well as many, in-country problems.
Basically, it failed to take account of the shrink in demand for sisal fibre in
Western Europe. Many sisal mills were being dosed because of the fact that
they were old and labour intensive (hence uneconomic), and the:
disintegration of markets for sisal fibre in Eastern Europe due to that
region's political crises. Sisal was brought into Tanzania by a German
Agronomist, Dr. Richard Hingdorf in 1892 and the first estates were
established in Tanga and Morogoro regions. After World War I, most
estates were sold to Greeks, Swiss, Dutch. British and Asians, although a
number of Germans re-acquired their estates from 1926 onwards. From
that time, up to and after World War I, Tanzania remained the world's
leader in both production and exports.
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In the early 60's sisal was Tanzania's largest export, accounting for over a
quarter of foreign exchange. Production was around 200 000 - 230 000
tonnes per annum. However, during the 70's and 8Q's production dropped
dramatically. In 1970's production was at 202 000 tonnes, in 1979 it was
81000 tonnes, by 1985 production was at 32 000 tonnes, a drop of 87%
from the peak of 230 000 tonnes in 1964. Since then production has
stagnated at around 30 000 - 33 000 tonnes per annum. Needless to say
Tanzania has long since ceased to be the number one world producer and
its export earnings fallen well behind that of coffee, cotton tea, tobacco
and cashewnuts. Since 1985 Tanzania has been producing 7 - 9% of the
world's sisal fibre exports and is in fourth place behind Brazil, Morocco and
Kenya.
The decline in sisal production came in two stages, an initial stage up to
1987 and then 1990 onwards. Both internal and external factors account
for the decline. In the initial stage, the internal factors included the
nationalisation of some of the sisal estates in the late 1960's, an overvalued
exchange rate, high export taxes and a controlled single channel marketing
system. In the second stage liquidity problems affected production.
However, the external factors in the two periods had the most significant
effect and show clearly the consequences of an ill prepared intelligence
system. In the initial stage up to 1987 Tanzania experienced declining world
prices of sisal fibre and the introduction of a substitute, cheap synthetic
fibre -polypropylene twines. These factors led to low investment in
replanting, leaf transport facilities and factory machines at the estate level.
In the second stage of the 1990's onwards, the collapse of the former USSR,
one of the major markets for Tanzania sisal fibre and changing world
demand were the major factors. An inability to pick up these changes in
demand by the intelligence system was a major player in the industry
collapse. However, there is a ray of hope with a new swing worldwide to
more "greener" and more environmentally friendly products. Tanzania sisal
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could make a comeback.
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Module VI
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Cigarettes are one of the most widely distributed and profitable global consumer products. However, as the number of smokers in high-income countries declines due to heightened antismoking sentiment and health concerns, tobacco industry giants such as Britain's B.A.T. Industries PLC and America's Philip Morris Company have set their sights on new market opportunities. In particular, tobacco companies are targeting smokers in developing countries such as China; Thailand, India, and Russia. These are nations in which a combination of forces-rising incomes in some countries and challenging economic conditions in others, smoking is fashionableness, and the status assigned to Western cigarette brands-interacts to expand the smoking market and brand share of the leading global brands. Moreover, because many women in these countries view smoking as a symbol of their improving status in society, the tobacco companies are aggressively targeting women.
The actions taken by managers at Philip Morris, B.A.T., and other tobacco companies are examples of market segmentation and targeting. Market segmentation represents an effort to identify and categorize groups of customers and countries according to various characteristics. Targeting is the process of evaluating the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond. Such targeting reflects the reality that a company should identify those consumers it can reach most effectively and efficiently. Segmentation, targeting, and positioning are all examined in this chapter.
MARKET SEGMENTATION is the process of subdividing a market into distinct
subsets of customers that behave in the same way or have similar needs. Each
subset may conceivably be chosen as a market target to be reached with a
distinctive marketing strategy. The process begins with the basis of segmentation-
a product specific factor that reflects differences in customers’ requirements or
responsiveness to marketing variables.
Global market segmentation is a process of dividing the world market into
distinct subsets of customers that behave in the same way or have similar needs,
or, as one author put it, it is “the process of identifying specific segments-
whether they be country groups or individual consumer groups- of potential
customers with homogeneous attributes who are likely to exhibit similar buying
behaviour”.
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GEOGRAPHIC SEGMENTATION
Geographic segmentation is dividing the world into geographic subsets.
The advantage of geography is proximity: markets in geographic segments are
closer to each other and easier to visit on same trip or to call on during the same
time window.
LIMITATIONS
The mere fact that markets are in the same world geographic does not meant that
they are similar. Japan and Vietnam are both in East Asia, but one is high income,
post industrial society and the other is an emerging less developed, pre industrial
society.
DEMOGRAPHIC SEGMENTATION
Demographic segmentation is based on measureable characteristics of
population such as age, gender, income, education and occupation.
A number of demographic trends-aging population, fewer children, more
women working outside the home and higher income and living standards-
suggest the emergence of global segment.
For most consumer and industrial products, national income is the single
most important segmentation variable and indicator of market potential.
Annual per capita income varies widely in world markets, from a low of $81
in the Congo to the high of $38,587 in Luxembourg.
The U.S. market, with per capita income of $29,953, more than $8.3 trillion
in 2000 national income and a population of more than 275 million people
is enormous. Thus, Americans are the favourite target market.
Many global companies also realize that for products with a low enough
price-e.g. cigarettes, soft drinks and some packaged goods-population is a
more important segmentation variable than income. Thus, China and India
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with respective population of about 1.3billion and 1.0 billion might
represent attractive target markets.
To know the standard of living of people in a country, it is necessary to
determine the purchasing power of the local currency. In low income
countries the actual purchasing power of the local currency is much higher
than the implied by exchange values.
Age is another useful demographic variable. One global segment based on
demographics is global teenagers-young people between the ages of 12
and 19. Teens, by virtue of their interest in fashion, music and a youthful
life style, exhibit consumption behaviour that is remarkably consistent
across borders.
Another global segment is so called elite: older, more affluent consumers
who are well travelled and have the money to spend on prestigious
products with an image of exclusivity. This segment’s needs and wants are
spread over various product categories:
Durable goods e.g. luxury automobiles
Non durables e.g. upscale beverages such as rare wines and
champagne
Financial services e.g. American express gold and platinum
cards
PSYCHOGRAPHIC SEGMENTATION
Psychographic segmentation involves grouping people in terms of their attitudes,
values and lifestyles. Data are obtained from questionnaires that requires
respondents to indicate the extent to which they agree or disagree with series of
statements.
Backer’s Spielvogel & Bates’s Global Scan
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Global scan is a study that encompasses 18 countries, mostly located in the Triad.
To identity attitudes that could help explain and predict purchase behaviour for
different product categories, the researchers studied consumer. Combining all the
country data yielded a segmentation study known as Target Scan, a description of
five global psychographic segments that BSB claims represent 95% of the adult
populations in the 18 countries surveyed. BSB has labelled the segments as
follows:
Strivers(26%). This segment consists of young people with a median age of 31
who live hectic, on the go lives. Driven to achieve success, they are materialistic
pleasure seekers for whom time and money are in short supply.
Achievers (22%). Older than Strivers, the affluent, assertive Achievers are
upwardly mobile and already have attained a good measure of success. Achievers
are status conscious consumers for whom quality is important.
Pressured(13%). The Pressured segment, largely comprised of women, cut across
age groups and is characterized by constant financial and family pressures. Life’s
problems overwhelm the members of this segment.
Adapters(18%). This segment is composed of older people who are content with
their lives and who manage to maintain their values while keeping open minds
when faced to change.
Traditional(16%). This segment is “rooted to the past” and clings to the country’s
heritage and cultural values.
Global scan is helpful tool for identifying consumer similarities across national
boundaries as well as highlighting differences between segments in different
countries. E.g. in United States, the 75 million baby boomers help swell the ranks
of Strivers and Achievers to nearly half the population.
Global scan also revealed the marked differences between the circumstances in
which Strivers find themselves in different countries. In the United States, Strivers
are chronically short of both time and money, whereas Japanese Strivers have
ample monetary resources.
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D’arcy Massius Benton & Bowler’s Euroconsumer Study
DMBB’s research team focused on Europe and produced a 15-country study titled
“The Euroconsumer: Marketing Myth or Cultural Certainty?” The researches
identified four lifestyle groups:
Successful Idealists. Comprising from 5 to 20 % of the population, this segment
consists of persons who have achieved professional and material success while
maintaining commitment to abstract or socially responsible ideals.
Affluent Materials. These status conscious “up-and-comers” many of whom are
business professionals, use conspicuous consumption to communicate their
success to others.
Comfortable Belongers. Comprising one quarter to one half of a country’s
population, this group, like Global Scan’s Adapters and Traditionals, is
conservative and most comfortable with the familiar. Belongers are content with
the comfort of home, family, friends and community.
Disaffected Survivors. Lacking power and affluence, this segment harbours little
hope for upward mobility and tends to be either resentful or resigned. This
segment is concentrated in high-crime, urban inner city neighborhoods. Despite
Disaffected Survivors’ lack of societal status, their attitudes nevertheless tend to
affect the rest of society.
The first two groups represent the elite, the latter two, mainstream European
consumers.
Young & Rubicam’s Cross Cultural Consumer Characterizations (4Cs)
Young & Rubicam’s 4Cs is a 20-country psychographic segmentation study
focusing on goals, motivations, and values that help to determine consumer
choice. The research is based on the assumption that “there are underlying
psychological processes involved in human behaviour that are culture free and so
basic that they can be found all over the globe”.
There are three groups which are further subdivided into seven segments:
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Constrained (Resigned Poor and Struggling Poor)
Middle Majority(Mainstreamers, Aspirers and Succeeders)
Innovators (Transitional and Reformers)
ATTITUDES WORK LIFESTYLE PURCHASE
BEHAVIOUR
Resigned Poor
Unhappy
Distrustful
Labor
Unskilled
Shut-in
Television
Staples
Price
Struggling Poor
Unhappy
Dissatisfied
Labor
Craftsmen
Sports
Television
Price
Discount stores
Mainstreamers
Happy
Belong
Craftsmen
Teaching
Family
Gardening
Habit
Brand loyal
Aspirers
Unhappy
Ambitious
Sales
White collar
Trendy Sports
Fashion
magazines
Conspicuous
consumption
Credit
Succeeders
Happy
Industrious
Managerial
Professional
Travel
Dining out
Luxury
Quality
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Transitional
Rebellious
Liberal
Student
Health field
Arts/crafts
Special interest
magazines
Impulse
Unique products
Reformers
Inner growth
Improve world
Professional
Entrepreneur
Reading
Cultural events
Ecology
Homemade/grown
BEHAVIOUR SEGMENTATION
Behaviour segmentation focuses on whether people buy and use a product,
as well as how often and how much they use it.
Consumers can be categorized in terms of usage rates e.g. heavy, medium,
light and nonuser.
Consumers can also be segmented according to user status: potential
users, non users, ex users, regulars, first-timers and users of competitors,
products. Nestle is marketing bottled water in Pakistan where there is a
huge market of nonusers who, despite their low income, are willing to pay
18 rupees a bottle for clean water because of the widespread presence of
arsenic poisoning in well water and the pollution of surface water. Tobacco
companies are targeting China because the Chinese are heavy smokers.
BENEFIT SEGMENTATION
Global benefit segmentation focuses on the numerator of the value equation-the
B in V=B/P. This approach can achieve excellent results by virtue of markerters’
superior understanding of the problem a product solves or the benefit it offers,
regardless of geography. e.g. nestle discovers that cat owners attitude toward
feeding heir are same everywhere.
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VERTICAL VERSUS HORIZONTAL SEGMENTATION
Vertical segmentation is based on product category or modality and price points.
E.g. ,in medical imaging there is X-ray, computed axial tomography(CAT) scan,
magnetic resonance imaging(MRI) and so on. Each modality has its own price
points.
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GLOBAL TARGETING
Targeting is the act of evaluating and comparing the identified groups and then
selecting one or more of them as the prospect(s) with the highest potential.
CRITERIA FOR TARGETING
The three basic criteria for assessing opportunity in global target markets are the
same as in single country targeting:
Current Segment Size and Growth Potential
Is the market segment currently large enough that it presents a company
with the opportunity to make a profit?
If it is not large enough or profitable enough today does it have high growth
potential so that it is attractive in terms of a company’s long term strategy?
Indeed, one of the advantages of targeting a market segment globally is
that, whereas a segment in a single country market might be too small,
even a narrow segment can be served profitably with a standardized
product if the segment exists in several countries. The billion plus members
of the global “MTV Generation” constitute a huge market that, by virtue of
its size, is extremely attractive to many companies.
Potential Competition
A market or market segment characterized by strong competition may be
segment to avoid or one in which to utilize a different strategy.
Often a local brand may present competition to the entering multinational.
In Peru, Inca Kola is as popular as Coca-Cola. In India, Thumbs Cola is a
major brand. In the Siberian city of Krasnoyarsk, Crazy Cola has a 48% share
of the market. The multinational might try more or different promotions or
may acquire the local company or form an alliance with it.
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Compatibility and Feasibility
If a global target market is judged to be large enough, and if strong
competition are either absent or not deemed to represent insurmountable
obstacles, then the final consideration is whether a company can and
should target that market. In many cases, reaching global market segments
requires considerable resources such as expenditures for distribution and
travel by company personnel.
Another question is whether the pursuit of a particular segment is
compatible with the company’s overall goals and established sources of
competitive advantage. Although Pepsi was firmly entrenched in the
Russian market having entered in 1972, Coke waited 15 years to make its
first move in Russia and 20 years before it decided to make major
investments. At the time of Coke’s entry, Pepsi had 100% of the Russian
market.
SELECTING A GLOBAL TARGET MARKET STRATEGY
There are three basic categories of target marketing strategies:
Standardized Global Marketing
Standardized global marketing is analogous to mass marketing in a single
country. It involves creating the same marketing mix for a broad market of
potential buyers.
This strategy calls for existence distribution in the maximum number of
retail outlets.
The appeal of standardized global marketing is clear: greater sales volume,
lower production costs and greater profitability. The same is true of
standardized global communications: lower production costs and if done
well, higher quality and greater effectiveness of marketing communication.
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Coca-Cola, one of the world’s most global brands, uses the appeal of
youthful fun in its global advertising.
Concentrated Global Marketing
The second global targeting strategy involves devising a marketing mix to
reach a single segment of the global market.
In cosmetics, this approach has been used successfully by the House of
Lauder, Chanel and other cosmetics houses that target the upscale, prestige
segment of the market.
This is the strategy employed by the hidden champions of global marketing:
companies that most people have never heard of that have adopted
strategies of concentrated marketing on a global scale. These companies
define their markets narrowly. They go for global depth rather than
national breadth.
Differentiated Global Marketing
The third target marketing strategy is a variation of concentrated global
marketing.
It entails targeting two or more distinct market segments with different
marketing mixes. This strategy allows a company to achieve wider marker
coverage.
E.g. in the segment of sports utility vehicle(SUV), Rover has a $50,000+
Range Rover at the high end of the market; a scaled down version, the Land
Rover Discoverer, is priced under $35,000, which competes directly with
the Jeep Grand Cherokee. These are to different segments, and Rover has a
concentrated strategy for each.
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GLOBAL PRODUCT POSITIONING
Positioning is the location of your product in the mend of your customer.
Thus, one of the most powerful tools of marketing is not something that a
marketer can do to the product or to any elememnt of the marketing mix:
Postioninig is hat happens in the mind of the customer.
The position that a product occupies in the mind of a customer depends on
the host of variables, many of which are controlled by the marketer.
After the global market has been segmented and one or more segments
have been targeted, it is essential to plan a way to reach the target(s). To
achieve this task, marketers use positioning. In today,s global market
environment , many companies find it increasingly important to have a
unified global positioning strategy.
Can global positioning can work for all products? One study suggest that
global positioning is most effective for the product cateogries that
approach eithrt end of a “high-touch or high-tech ” continuum. Both ends
of the continuum are characterized by high levels of customer involvement
and by a shared “language” among consumers.
High-Tech Positioning
Personal computers, video and stereo equipment and automobiles are examples
of product cateogries in which high tech positioning has proven effective. Such
products are frequently purchased on the basis of concrete product features,
although image may also be important.
High –tech products can be divided into following three cateogries:
1. Technical Products
Computers, chemicals, tires and financial services are just a sample of product
cateogries whose buyers have specialized needs, require a great deal of
product information and share a common “language”
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2. Special Interest Products
Although less technical and more leisure or recreation oriented, special
interest product are also characterized by a shared experience and high
involvement among users. Again, the common language and symbols
associated with such products can transcend language and cultural barriers.
High-Touch Positioning
Marketing of high touch products requires less emphasis on specialized
information and more emphasis on image. High touch products highly involve
customers. Buyers of high touch products also share a common language and set
of symbols relating to themes of wealth, materialism and romance.
There are three categories of high touch products. These are:
1. Products that Solve Common Problems
At the other end of the price spectrum from high tech products in this
category provide benefit links to “life’s little moments”. Ads that show
friends talking over a cup of coffee in a cafe or quenching thirst with a soft
drink during a day at the beach put the product at the centre of everyday
life and communicate the benefit offered in a way that is understood
worldwide.
2. Global Village Products
Chanel fragrances, designer fashions, mineral water and pizza are all
examples of products whose positioning is strongly cosmopolitan in nature.
Fragrances and fashions have travelled as a result of growing worldwide
interest in high quality, highly visible, high priced products that often
enhance social status. However, the lower priced food products just
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mentioned show that the global village category encompasses a broad price
spectrum.
3. Products that Use Universal Theme
There are some advertising themes and products appeals are thought to be
basic enough that they are truly transnational. Additional themes are
materialism( keyed to images of well being or status), heroism(themes
include rugged individuals or self-sacrifice), play(leisure/recreation) and
procreation(images of courtship and romance)
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Brand Launching and Sustainingin a developing
country : The case study of Honda on Vietnam
Motorcycle Market
Authors Thi Bich Ngoc Nguyen
Thi Xuan Thu Nguyen
Purpose
The project is to investigate the Brand Launching and Sustaining in a The Case Study of Honda on Vietnam Motorcycle Market
developing country through the study on how Honda has successfully
launched and sustained its Brand on the Motorcycle Market of Vietnam.
Problems
Honda's Brand Launching campaign and the company's strategies and initiatives to Sustain its Brand on the Motorcycle Market of Vietnam.
Methodology
The realistic approach and case study method are to be applied. The information should be gathered through numerous sources: primary data
from the email qualitative interviews with the managers of Honda
Motorcycle Vietnam, and the email quantitative surveys among Vietnam's
Honda Motorcycle users; secondary data from the articles in a variety of
newspapers and magazines as well as websites.
Conceptual Model
The contents covered in the project are Brand Launching and Sustaining. In particular, theories related to Brand Launching in terms of Brand
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Identity and Brand Positioning, as well as Brand Sustaining with respects
to Brand Growth and Brand Maturity should be investigated and analysed.
In addition, what is of significance importance is the base of the
company's Branding Strategies -the business environment of the
destination country. Therefore, the disseration should thoroughly
investigate the Grasp of the Market including Market Assessment
(Government Policies, Demand Conditions and Market Opportunities) and
Communications (Marketing and PR Activities and Social Corporate
Responsibility) which serve as the foundation for the firm's market-based
or fully tailored Branding Strategies to the specific conditions or
characteristics of the destination nation.
Findings
Honda has adopted appropriate Branding Strategies (Brand Identity, Positioning, Growing and Sustaining) on Vietnam Motorcycle Market.
The firm has identified its Brand as true Made-in-Japan products of high
quality and reasonable price. It serves as 'the power of dreams' created in
an ideal corporate culture and environment friendly working condition
which is committed to advanced technology and society orientation.
Honda Brand has been positioned to satisfy the needs for a transportation
means of reliability, long duration, safety, hi-tech, fuel saving and
environment protection of the middle and high class customer groups in
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Vietnam. To compete with such rivals as Yamaha, Suzuki, SYM and
Piaggio, Honda has adopted proper Growing Strategies with Cub and
Scooter categories including a range of product lines. In addition, the
company has implemented appropriate Sustaining Strategies focusing on
Communication Efforts and Influencer Proximity with a variety of
Marketing and PR activities, Safety Driving Plan and Social Activities
ranging from Environmental Preservation, Educational Development,
Safety Driving Support Activities to Donation and Charity Activities.
Actually, Honda's Branding strategies have been fully tailored to the
specific market conditions of Vietnam.
Conclusion
Honda has gained the leading position on Vietnam Motorcycle Market since 1996 when the company penetrated into the country. Honda Brand
has received great love from Vietnamese customers and become more than
a Brand, but a citizen of Vietnam who 'strives to become a company that
the society wants to exist'.
Recommendation
Honda Brand success should only be maintained when the firm is managed to constantly strengthen Honda Brand itself as well as identify
and fix the shortcomings: keep serving as a good Vietnamese citizen, be
consistent with the company's reasonable pricing strategy, improve the
firm's customer relationships and pay more attention to the counterfeit
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brand defense.
Lessons
Honda's great achievements in Vietnam offer valuable lessons for the firms who desire to successfully brand in Vietnam in particular and
developing countries in general: Concerning Brand Launching (Brand
Identity and Positioning), the company should invest in Marketing and PR
activities, adopt Reasonable Price and Localization strategies, pay
attention to Customer Relationship, Influencer Proximity and Corporate
Social Responsibility to become a good citizen of the market country.
Regarding Brand Sustaining (Brand Growth and Maturity), the firm
should take advantages of brand extension and line extension, maintain the
Launching Strategies and simultaneously Bring Added Values and
Recreate a Perceived Difference for its brands, Actively and dynamically
involving itself in the Competition and also adopting Dual Management.
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Emerging Markets : a Case Study on Foreign
Market Entry in Laos; MBA-thesis in marketing
University essay from Högskolan i Gävle/Institutionen för ekonomi AUTHOR: Petter Lindh; [2009]
Background
This thesis is conducted for Husqvarna AB with the aim to map the Laotian market for them in terms of market potential for forestry power equipment. In order to
provide decision material for further action I was asked to give a description of the Laotian forestry sector; research potential harvesting volumes; analyze the
competitive situation; describe the general business conditions in Laos; and provide some insight as to how Husqvarna can enter the Laotian market.
Method
The method I have used for collection of information is two-fold. The empirical data has mostly been derived via interviews with forestry officials and companies
involved in forestry. The theoretical review and collection of secondary data has been performed by research of books, journals, reports, newspapers and online sources. The research methodology can accordingly be labelled "the actor
approach" which methodology is based on understanding social entireties. An important element in this approach is a process referred to as the hermeneutic
circle - a process in which new knowledge is continuously incorporated into the understanding and used as base for further research. An important part of the method is my personal experience of Laos, from which I consider myself being able
to base some conclusions.
Theoretical Review
Foreign market entry can generally be made in four modes: Exporting, licensing, joint ventures, or sole ventures. Foreign market entry strategies may involve
adapting the marketing strategy. It may also necessitate product adaption.
Market entry in developing countries will most likely mean being exposed to
unfamiliar environments. The general business conditions might be very different from the home market and constitute higher levels of trade barriers and
sociocultural distance may be difficult to deal with.
Case Study, Conclusions and Reflections
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The highlights from these two chapters include:
1. Laos offers foreign investors to use any of the four market entry modes.
2. Doing business in Laos receives a low international rating, especially in terms of labor restrictions. It also has rather high trade barriers.
3. Laos is developing its commercial tree plantation sector and estimates suggest that the harvesting volumes will be increasing rapidly in the coming 10-15 years.
4. Importing and selling forestry power equipment is restricted. Laos does not yet have any authorized dealer for chainsaws. This provides for interesting
opportunities.
5. The market is flooded with cheap, illegally imported, Chinese chainsaws, but it is questionable whether this actually constitutes any competition to
Husqvarna, being a high quality brand. The Chinese chainsaws might however soon increase in terms of quality and be more competitive.
6. Obtaining an import and sales license for outdoor power products may be a rather lengthy procedure but once in place would mean being the first authorized dealer - which might be advantageous.
Recommendation
Due to Laos making efforts to increase the commercial tree plantation area, the harvesting volumes will increase rapidly the coming years. The sales potential for
forestry equipment will hence increase in the years to come.
My recommendation to Husqvarna, if they have resources, is therefore to locate a
dealer and enter the Laotian market. Plantations are however still mostly in the development phase. It is therefore doubtful that early entry is profitable enough to
be motivated if there are other markets with higher potential that Husqvarna wants to enter.
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Module VII
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Global eMarketing
In the past few years there has been an explosion of online commercial activity enabled by the lnternet or world wide web. This is generally referred to as electronic marketing (c-marketing), with a maior component of c-marketing being electronic transactions taking place on Internet-based markets (electronic markets or e-markets).
The development of the Internet as a 'new' distribution channel will result in a
shift of power from the manufacturers and the traditional retail channels to the
consumers. This increasing consumer power can be explained in the following
ways:
• The search for convenience. The Internet gives people a new tool together
information and purchase more easily than do traditional channels.
• The incorporation of the net into the purchase process. Pre-purchase and post-
sale use of the Internet is exploding, regardless of where the product is bought.
• A shift in loyalties. Consumers reward online merchants with higher repeat-
purchase behavior.
• Future buying plans. Survey results indicate an increasing consumer disposition
to buy online (Boston Consulting Group, 2000; IDC, 2000).
Today's technology only scratches the surface of efficient comparison shopping
and product search. The development of automated buying profiles networked
buying clubs and online auctions will bring greater price competition to the
Internet. Merchants must be prepared to live up to we will match any price'
marketing guarantees.
Competing on the Internet is different from the traditional industrial world.
Competition no longer takes place in the physical marketplace, but in the market
space. This computer-mediated environment has profound implications for how
business is transacted between buyer and seller. The nature of transaction is
different in that is based on information about the product or services rather than
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on its physical appearance or attributes. The context of the transaction is
different; instead of taking place in a physical world it occurs in a computer-
mediated environment with the buyer conducting the transaction from a personal
computer screen. Consequently, to be a player in many industries does not
require a physical infrastructure such as buildings and machinery; a computer and
communications platform are sufficient.
Like so many 'buzz words’ in use today, c-marketing tends to mean different
things to different people.
The enablement of a business vision supported by advanced information technology to increase the effectiveness of the business relationships between trading partners. Examples of e-marketing transactions are: • An individual purchases a book on the Internet. • A government employee reserves a hotel room over the Internet. • A manufacturing plant orders electronic components from another plant within the company using the company's intranet.
At internet Marketing
Search Engine Optimization Organic Marketing Web Design PPC strategy & maintenance Website Branding Traffic Analysis & Statistics Email Marketing Web 2.0 Marketing Niche Identification Viral Marketing
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Internet Marketing Solutions
Internet media marketing campaign is believed to be the best suitable solution for
the problems faced by the present highly competitive world of marketing.
Popularly known as online media marketing and digital media marketing, the
discipline of internet media marketing provides a cost-effective target-oriented
alternative for the promotion of products or services. Online media marketing
campaigns are pursued with the help of several technology based tools like
website banners, social networks, email newsletters, etc. There are several ways
in which the internet media marketing can be done providing meticulous
marketing solutions to the media marketers.
One of the finest and most appropriate internet marketing solutions is Search
Engine Optimization, popularly known as SEO. Search Engine Optimization means
using the right keywords in the media marketing campaign so that the campaign
finds place in any popular search engine like Google, MSN or Yahoo. The idea
behind attaining the search engine optimization is to attract the maximum
number of prospective leads. Every single person who enters that particular
keyword can be attracted to the campaign by search engine optimization, which
automatically means a very wide base of prospective leads.
Apart from this, the media marketer can engage himself directly with the
customers through social networks. There is a virtual world of social networks
which have most of the internet users attached to them in one way or the other.
By creating an id on any of the popular social networking sites, the internet media
marketer can establish a direct contact with a large customer base.
Apart from these very popular internet media marketing tools, the media
marketer can also resort to email newsletters and online distribution of press
releases. There are many online wire services which distribute the press releases
around the world free of cost or at a very meager price. This makes the internet
media marketer connect to the media houses around the world and publicize his
product or services to the customer base across the globe. Therefore, an
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appropriate mix of internet media marketing tools provides an apt internet
marketing solution for the promotion of any kind of business around the world.
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What is an Effective Internet Marketing Strategy?
Before you even start creating internet marketing strategy for your website(s), you need to do a research. That’s where it all begins actually. Just like in any business, you have to understand where you are and what can you do.
#1 Phase - Online Research
In this phase, you must research your market. Who are your main competitors? What are they doing online? PPC, SEO, press releases, develop their own products, do affiliate marketing or Adsense? What are their weaknesses? Do they
offer a guarantee? Is their product really good? Do they build links constantly or not?
Who is your favourite customer? Where do they hangout: MySpace or YouTube? Are they freebie seekers or desperate buyers? What forces them to buy one or another product? Read reviews, forums, testimonials to find out as much as you can about your target market.
#2 Phase – Data Analysis
If you’ve performed a thorough online market research, it’s time to systematize the data you have. Write down what are the main strengths and weaknesses of your competitors. Maybe you have more time than your competitors? Or maybe you know some targeted traffic source that others don’t. How might this affect your business?
Which are the places your target market usually visits? What are their main concerns? Maybe they’re not satisfied with the products in the market. Can offer
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something better, maybe in a form of a bonus? After that, you come to the next step, which is developing your internet marketing strategy.
#3 Phase – Strategy Development
When you already know your target market and your competitors, you are able to start creating your internet marketing strategy (or strategies). Just sit down and think about: who you are and what you can offer to the target market.
It involves a little bit of planning. What marketing methods you’ll use and which ones you can afford? PPC, SEO, email, blogging, podcasting, video blogging, webinars, viral traffic generation, link building, banner exchange or others…? You must prioritize your web marketing tactics. Find out what’s going to bring you positive ROI in the shortest time possible.
Do you have enough time to perform search engine optimization? If so, then sit and do everything you can, day in day out, to rank at the top in search engines. Don’t have time? Then buy PPC traffic and start testing your landing pages effectively. Or buy resell rights to products and sell them on ClickBank with the help of JV partners.
Don’t have time AND money? Then you better get one or another, otherwise you’re dead.
Seriously, you must find ways to get time or money. You need to think about how you can exploit other people’s time and money to build your own web business. That’s what rich people do and that’s what you must do if you want to survive in this competitive world.
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#4 Phase – Monitoring Performance
When you have an internet marketing plan, you can start implementing it right away. The last step is to start monitoring your internet marketing campaigns. Which keywords people typed into search engines to find your site? Which keywords brought you the most money in PPC marketing? Are you satisfied with your SEO rankings or not? Do majority of your visitors leave your site without even spending 30 seconds? And
so on…
Only with the help of close monitoring you can discover what works and what doesn’t. Testing landing pages, testing Adwords ads against each other (A/B split testing) can show you some amazing results. And remember – you never know for sure until you TEST it!
There is no formula for an effective Internet marketing strategy. It depends on your individual situation. When you realize your strengths and weaknesses, you’ll be able to come up with a great marketing plan. No matter if you’re thinking about Adsense site, affiliate site or your own product. When you find out what you’re able to accomplish with your resources at the moment, you can create a great web marketing strategy for your online business and finally breakthrough on the internet.
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Relationship Marketing
Relationship marketing is critical to any organization that wants to maintain and
grow revenue and profitability from its existing customer base as well as attract
new customers. Effective relationship marketing aligns to various means and
channels that are permission based and provide accurate and relevant
information to each recipient.
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The key benefits of working with and using our capabilities for relationship
marketing include integrated and synchronized communications from one
resource and transparency between customer data and the results of your
marketing initiative. We view relationship marketing as a continuous process that
requires ongoing analysis to mine customer responses, identify trends and create
communications, offers and or upsell opportunities in real time that align to those
efforts.
The success of any customer relationship management program revolves around
customer data. Some clients express a concern that they don’t have the proper
data or mechanisms in place to gather data to execute an effective relationship
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management program. This is where the benefit and utility of our cross media
capabilities provides great benefit and opportunity. We can develop and initiate
programs and campaigns designed to gather, mine and or align data for scaling up
to an ongoing relationship marketing programs. From online surveys, landing
page sequencing and more effective segmentation to simple call center interview
questions and messaging we can make relationship marketing work for you and
your customers.
Effective customer retention programs through relationship marketing help drive
and increase customer profitability that increases over time. In addition customer
acquisition costs are minimized the longer the relationship. That is why we
believe prospects that have been pre-qualified to have a strong interest and
desire to purchase are at the entry point of any relationship marketing program.
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What is Relationship Marketing?
Description
Relationship Marketing is an approach which emphasizes the continuing relationships that should exist between the organization and its customers. It emphasizes the importance of customer service and quality and of developing a series of transactions with consumers. The terminology was first described by Theodore Levitt in 1983. Origin of the Relationship Marketing Approach. History Already in 1980, B. Schneider wrote: What is surprising is that researchers and businessmen have concentrated far more on how to attract customers to products and services than on retaining customers. In 1983 Levitt wrote: In a great and increasing proportion of transactions, the relationship actually intensifies subsequent to the sale. This becomes a central factor in the buyer's choice of the seller the next time. Relationship Marketing is strongly linked to Business Process Reengineering. According to this reengineering theory, organizations should be structured according to complete tasks and processes. Rather than functions. Usage of Relationship Marketing. Applications Relationship marketing and traditional transactional marketing are not mutually exclusive and they are not necessarily in conflict with each other. Relationship Marketing may be more suitable in the following circumstances or situations:
High value products or services. Industrial products. Products are not generic commodities. Switching costs are high. Customers prefer a continuous relation. There is customer involvement in the production phase.
Steps in the Relationship Marketing Process
1. Chart the service delivery system. Set standards for each part of the system, especially the 'encounter points'.
2. Identify critical service issues. 3. Set service standards for all aspects of service delivery. 4. Develop customer communication systems.
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5. Train employees on building and maintaining a good relationship with clients.
6. Monitor service standards, reward staff for exceeding service levels, correct sub-standard service levels.
7. Ensure that each employee fully understands the importance of quality and relationships in the marketing philosophy.
Strengths of Relationship Marketing. Benefits
Focus on providing value to customers. Emphasis on customer retention. The method is an integrated approach to marketing, service and quality.
Therefore it provides a better basis for achieving Competitive Advantage.
Studies in several industries show that the costs to keep an existing customer are just a fraction of the costs to acquire a new customer. So often it makes economic sense to pay more attention to existing customers.
Long-term customers may initiate free word of mouth promotions and referrals.
Long-term customers are less likely to switch to competitors. This makes it more difficult for competitors to enter the market.
Happier customers may lead to happier employees. Limitations of the Relationship Marketing model. Disadvantages Relationship Marketing is less appropriate in the following circumstances:
Relatively low value products or services. Consumer products. Generic commodities. Switching costs are low. Clients prefer a single transaction to relationships. No / low customer involvement in production.
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Case Study: IBM Electronics Value Chain Management The goal
Improved operational effectiveness
Are you looking for ways to deliver maximum value to your
customers for the least possible cost? Could your business
bring products to market faster? Electronics Value Chain
Management from IBM can offer you consulting, applications
and architecture to help you reduce value chain
inefficiencies.
The advantage
Rely on our experience
We can help you win in the marketplace through experience,
technology and innovation tailored to meet your
organisation's needs:
The benefits of Electronics Value Chain Management
have been proven within our demanding electronics
manufacturing operations.
Our consultants are experts in value chain strategy,
organisational change and business design—their
detailed knowledge of the electronics industry enables
them to develop comprehensive value chain solutions
that can address your unique requirements.
Few other companies have the breadth and depth of
our service offerings.
The benefits
Successful business transformation
Electronics Value Chain Management from IBM follows a
proven methodology to build a customised value chain
transformation for your business. We can help:
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Determine the potential return on your investment by
analysing the risk and reward for different
implementation scenarios.
Provide a strategy and road map for your entire supply
chain.
Objectively evaluate and select an enterprise solution
and value chain process based on your unique business
needs.
Implement the applications needed to streamline your specific business operations.
Provide the infrastructure to reliably support value
chain management applications and processes.
With value chain management you can:
Improve your operational effectiveness with the rapid
execution of business processes.
Enable a more accurate view of future demand.
Enable collaborative planning and execution with your
business partners to maximise throughput.
Enhance forecast, capacity and demand information by
collaborating with trading partners.
Achieve business value through effective end-to-end
value chain management.
The ROI
Business benefits
Electronics Value Chain Management can significantly lower
costs and improve operational effectiveness. Many of our
customers have seen:
On-time delivery improved by 10-20%. Production cycles shortened by 10-50%.
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Time to market reduced by 5-25%.
Planning cycle time cut by 25-75%.
Operating costs lowered by 8-12%.
Transportation spending reduced by 8-12%.
Direct material costs cut by 8-12%.
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Further reading
Chaffey, D., Ellis-Chadwick, F., Johnston, K. and Mayer, R. (2006) Internet Marketing: Strategy, Implementation and Practice, (3rd edn), FT/Prentice
Hall, Harlow (UK).
Chakrabarti, R. and Scholnick, B. (2002) 'International expansion of e-
retailers: where the Amazon flows', Thunderbird International Business Review, 44(1), pp. 85-104.
Clarke, I. and Flaherty, T.B. (2003) 'Web-based B2B portals', Industrial
Marketing Management, 32(1), pp. 15-23.
Connelly, M. (2006) 'In Europe, sexy will sell Dodge', Automotive News
Europe, 11(3), pp. 20.
Dobele, A., Toleman, D. and Beverland, M. (2005) 'Controlled infection! Spreading the brand message through viral marketing', Business Horizons,
48, pp. 143-149.
Emiliani, M.L. and Stec, D.J. (2002) 'Realizing savings from online reverse
auctions', Supply Chain Management: An International Journal, 7(1), pp. 12-23.
Gulledge, T. (2002) 'B2B emarketplaces and small- and medium-sized
enterprises', Computers in Industry, 49(1), pp. 47-58.
Jalassi, T. and Leenen, S. (2003) 'An e-commerce sales model for
manufacturing companies: a conceptual framework and a European example', European Management Journal, 21(1), pp. 38-47.
Joergensen, J.L. and Blythe, J. (2003) 'A guide to a more effective World
Wide Web presence', Journal of Marketing Communications, 9, pp. 45-58.
Phelps, J.E., Lewis, R., Mobilio, L., Perry, D. and Raman, N. (2004) 'Viral
marketing or electronic word-of-mouth advertising: examining consumer responses and motivations to pass along email', Journal of Advertising
Research, December, pp. 333-348.
Sashi, C.M. and O'Leary, B. (2002) 'The role of Internet auctions in the
expansion of B2B markets', Industrial Marketing Management, 31, pp. 103-110.
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Sevais, P., Madsen, T.K. and Rasmussen, E.S. (2007) 'Small manufacturing
firms' involvement in international e-business activities', International Marketing Research: Opportunities and Challenges in the 21st
Century, Advances in International Marketing, 17, pp. 301-321.
Sheth, J.N. and Arun Sharma (2005) 'International e-marketing: opportunities and issues', International Marketing Review, 22(6), pp. 611-
622.
Standifer, R.L. (2003) 'Managing conflict in B2B e-commerce', Business
Horizons, March-April, pp. 65-70.
Thiessen, J.H., Wright, R.W. and Turner, I. (2001) 'A model of e-commerce use by international SMEs', Journal of International Management, 7(3), pp.
211-233.
Turban, E. (2002) Electronic Commerce: A Managerial Perspective, Prentice
Hall, International Edition Upper Saddle River, N.J.
Wilson, S.G. and Abel, I. (2002) 'So you want to get involved in e-commerce', Industrial Marketing Management, 31, pp. 85-94.
Global Marketing channels
http://blog.channelmanagement.com/?Tag=Global%20Channel%20Programs
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References
1. Vernon, R. "International Investment and International Trade in the Product Cycle." Quarterly
Journal of Economics, May 1966, pp 190 -207.
2. Perlmutter, H.J. "Social Architectural Problems of the Multinational Firm." Quarterly Journal
of AISEC International. Vol. 3, No. 3, August 1967.
3. Cavusgil, S. T. "Differences among Exporting Firms based on Degree of Internationalisation".
Journal of Business Research, Vol. 12,1984.
4. Firat A. F., Dholakia N., Venkatesh A., "Marketing in a Postmodern World. European"
Journal of Marketing Vol 29 No. 1 1995 pp 40-56
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5. Hakansson, H. (ed), "International Marketing and Purchasing of Industrial Goods." IMP
Project Group, John Wiley and Sons, 1982.
6. Jaffee S. "Exporting high value food commodities." World Bank Discussion Paper No. 198.
The World Bank 1993.
7. Johanson, J and Mattison, L.G. "Internationalisation in Industrial Systems - A Network
Approach." Paper prepared for the Prince Bertil Symposium on Strategies in Global
Competition. Stockholm School of Economies, 1984.
8. Keegan, W. J. "Global Marketing Management" 4th Edition. Prentice Hall International
Edition 1989.
9. Kotler, P." Marketing Management, Analysis, Planning, Implementation and Control", 6th
Edition. Prentice Hall International Edition, 1988.
10. Wensley J.R.C. "PIMS and BCG New Horizons" or False Dawns Strategic Management
Journal No. 3 April/June 1982.
11. Carter, S. "Multinational and International Marketing in Constraint Economies." The
Quarterly Review of Marketing, Summer 1988, pp 13-18.
12. Smith, P. "International Marketing." University of Hull, MBA Notes, 1990.
13. Terpstra, V. "International Marketing", 4th ed. The Dryden Press, 1987.
14. "The Business Herald " (Zimbabwe) January 19, 1995
REFERENCES
International marketing by Rakesh Mohan Joshi
Global Marketing Management by Warren J. Keegan
Case Studies
Emerging Markets : a Case Study on Foreign Market Entry in Laos; MBA-thesis in marketing
http://hig.diva-portal.org/smash/record.jsf?pid=diva2:217060
Brand Launching and Sustainingin a developing country : The case study of Honda on
Vietnam Motorcycle Market
http://www.essays.se/essay/a05b473cd3/
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