Rationale for going international Perception of slow growth & increased competition in domestic markets Belief in enhanced overseas growth & profit opportunities Desire to reduce costs from economies of scale Need to diversify risk Recognition of global mobility of customers
ADVANTAGES OF GLOBAL MARKETING PROGRAMS1.Economies of Scale in Production and DistributionFrom a supply-side or cost perspective, the primary advantage of a globalmarketing program is the manufacturing efficiencies and lower costs thatderive from higher volumes in production and distribution2.Lower Marketing CostsAnother set of cost advantages can be realized from uniformity in packaging,advertising, promotion, and other marketing communication activities.In particular, the more uniform the branding strategy adopted across countries,the more potential cost saving should prevaili.e. Exxon Mobil
3.Power and ScopeCommunicate CredibilityDiverse markets indicates expertise and acceptanceThe fact that the brand is widely available may signal that the product ishigh quality and convenient to useA prominent international profile may be especially important for certainservice brands For example, Avis assures their customers that they can receive the same high-quality service renting its cars anywhere in the world, further reinforcing a key benefit promise embodied in its slogan, “We Try Harder.”4.Consistency in Brand ImageMaintaining a common marketing platform all over the world helps tomaintain the consistency of brand and company imageReason: Uniform image, Customer mobility, media exposure acrossnational boundariesFor example, American Express communicates the prestige and utility ofits card and the convenience and ease of replacement of its traveler’schecks worldwide.Gillette Mach3 sells “Functional Superiority” worldwide
5.Ability to Leverage Good Ideas Quickly and EfficientlyGlobalization also can result in increased sustainability and “facilitate continueddevelopment of core competencies with the organization. In manufacturing, inR& D, in marketing and sales, and in less talked about areas such asCompetitive Intelligence… all of which enhance the company ability tocompete”. i.e. Rank Xerox6.Uniformity of Marketing PracticesA standardized global marketing program may simplify coordination andprovide greater control of how the brand is being marketed in differentcountries. By keeping the core of the marketing program constant, greaterattention can be paid to making refinements over markets and over time toimprove its effectiveness.i.e. Colgate Total featuring “Brushing man” in 100 countries
DISADVANTAGES OF GLOBAL MARKETING PROGRAMS1.Difference in Consumer Needs, Wants, and Usage Patterns for ProductsProduct strategies that work in one country may not work in another.For example, marketing research at one time revealed that the French ate 4times more yogurt than the British, the British consumed 8 times morechocolate that the Italians, and Americans drank 11 times more soft drinks thanconsumers abroad2.Differences in Consumer Response to Marketing Mix ElementsVary in attitudes and opinionsResearch has shown that Americans, in general, tend to be fairly cynicaltoward advertising, whereas Japanese view it much more positively.Research has also shown differences in advertising style between the twocountries. Japanese ads tend to be softer and more abstract in tone, whereasAmerican ads tend to be richer in product informationPrice sensitivity ,promotion responsiveness, sponsorship support etc. maydiffer. i.e. Brand purchase intention in US/Korea
3.Differences in Brand and Product Development and theCompetitive EnvironmentProducts at different stages of PLC.Perceptions and positions may also differ.i.e. Coca-cola ( US-7, UK-9, Geramny-4, Brazil-1, Singapore-2,Japan-8,France-3)Europeans tend to have more competitors because shipping productsacross borders is easy.For example, Procter & Gamble competes in France against Italian,Swedish, and Danish companies in many categories. 4.Differences in the Legal Environment For example, at one time, laws in Venezuela, Canada and Australia stipulated that commercials had to be physically produced in the native country. Poland required commercial lyrics to be sung in PolishAustria, France: Ban on use of children in commercialsUK: Ban on using Heroic figures in CigaretteSingapore, Germany: Ban on comparative ads
5.Differences in Marketing InstitutionsFor example, channels of distribution, retail practices, media availability, andmedia costs all may vary significantly. Foreign companies have struggled foryears to break into Japan’s rigid distribution system that locks out manyforeign goods. China’s primitive logistics-poor roads, jammed rivers, andclogged railways-and inexperienced, indifferent, and often corrupt middlemenpresent a different kind of challenge.6.Differences in Administrative ProceduresLocal managers may suffer from the “not invented here’ syndrome and raiseobjections-rightly or wrongly-that the global marketing program misses somekey dimension of the local market. Local manager who feel that their autonomyhas been reduced may lose motivation and feel doomed to failure.
Ten Commandments of Global Branding1.UNDERSTAND SIMILARITIES AND DIFFERENCES IN THE GLOBAL BRANDING LANDSCAPE• international markets can vary in terms of brand development, consumerbehavior, marketing infrastructure, competitive activity, legal restriction• Find commonalities across markets• Find what is unique about each market (and relevant to your brand meaning)• Examine all aspects of the marketing environment• Reconcile similarities and differences in a cost-effective wayKnorr, the top-selling brand of soup in Europe had trouble entering the U.S. market with its line of dry packaged soups. Although the initial advertising tried to educate American consumers about the advantages of dry soups relative to condensed soups such as Campbell’s, the products failed to gain a widespread following. Today, Knorr soups are perceived to be for gourmets, and dehydrated soups represent a small niche in the U.S. soup category.
Developed versus Developing MarketsIn China, for example, Procter & Gamble runs ads promoting its corporateimage because consumers in that country are concerned about the reputationand trustworthiness of the companies behind the products.Changing Landscape for Global BrandsBecause of the growth of global media such as MTV, a teenager in Paris mayhave more in common with a teenager in London, New York, Sydney, or almostany other major city in the world than with his or her own parents.
2. DON’T TAKE SHORTCUTS IN BRAND BUILDING• Build brand awareness first, then craft brand image• Build programs market by market to address strategic goalsFor example, in 1990, Pepsi bought the rights to bottle and sell its soft drink to German retailers. Pepsi attempted to match Coke’s high prices in the market without sufficient pull from brand-building activities and merchandising and without sufficient push from a strong distribution network with the right kind of trucks, coolers and so forth. Pepsi so alienated two major German retailers, Tengelmann & Asko, that is actually lost distribution in those stores for couple of years. The brand languished with a market share under 5% as a result and has only recently started to bounce back
3. ESTABLISH MARKETING INFRASTRUCTURE• Create appropriate manufacturing, distribution and logistics systems from scratch if necessary• Capitalize if possible on existing infrastructure in new marketsFor example, Coca-Cola’s distribution strategy has been one key to its global success. Rather than leaving foreign operations in the control of fragmented local bottlers, Coca-Cola’s anchor bottler model resulted in the company deciding to either use only large bottlers (e.g., Norway’s Ringnes or Australia’s Amatil) or take an equity stake in smaller bottlers in order to gain control of local management. At a more micro level, Coca-Cola’s intensive deployment of vending machines in Japan was a key to success in the market. Overall, Coca-Cola invested over $3 billion internationally from 1981 to 1993 in infrastructure and marketing.
4. EMBRACE INTEGRATED MARKETING COMMUNICATIONS• Even in an international environment, consider non-traditional forms of communication that go beyond advertising• Integrate within market and maintain positioning across marketsi.e. sponsorship, promotions, public relations, merchandising activities,An important considerations is that the nontraditional form of advertising should be consistent with the brand’s overall positioning and heritage. Disney’s theme parks are not only huge profit generators ( Tokyo Disneyland has been an overwhelming success with over 75% repeat visitors), but also serve as advertising vehicles that help solidify Disney’s association with “fun family entertainment”.
AdvertisingFor example, although Dove soap adopted the same basic positioningworldwide for years-based on the fact that it contains one-quarter cleansingcream-the company used testimonials in which pretty, 30ish women praised thebrand’s skin-softening virtues in their own language in countries such asAustralia, France, Germany, and Italy.Different countries can be characterized as being more or less receptive todifferent creative styles.For example, humor is more common in U.S and U.K ads than, say, in Germanads.Promotion and SponsorshipFor example, Nestle has run worldwide promotional tie-ins with Disney moviessuch as Atlantics & Monsters, Inc. Mars has become a worldwide sponsor ofthe World Cup & Olympics.
5. CULTIVATE BRAND PARTNERSHIP3. Form partnerships with global and local entities to address identified deficiencies4. Avoid compromising the brand promise through any partnership or alliancejoint venture partners, licenses or franchisees, distributors ad agencies, and other marketing support personnelLipton increased its sales by 500 percent in the first 4 years of its partnership with PepsiCo to distribute the product. Lipton adds the power of its brand to the ready-to-drink iced tea market, while PepsiCo adds its contacts in global distribution
1. BALANCE STANDARDIZATION S AND CUSTOMIZATION• Retain relevant elements of marketing programs across all markets• Find local adaptations and additions that complement and supplement global elements to add to local appeal a more standardized global marketing program include the following: • Common customer needs • Global customers and channels • Favorable trade politics and common regulations • Compatible technical standards • Transferable marketing skills
Product Strategymarketing mix & culture are fully analyzed, understood, and incorporated intothe marketing program.At one time, Palmolive soap was sold globally although with 22 differentfragrances, 17 different packages, 9 different shapes and with numerousdifferent positioning. After marketing analyses to reap the benefits of globalmarketing, the company now employs just 7 fragrances, 1 core packagingdesign and 3 main shapes, all executed around to related positioning (one fordeveloping markets and one for developed markets).Pricing Strategyconsumer perceptions of the value of the brandtheir willingness to paytheir elasticities with respect to price changesFor example, brands such as Levi’s, Heineken have been able to command amuch higher price outside their domestic market because they have a distinctlydifferent brand image and thus sources of brand equity in other countries thatconsumers place more value on
1. BALANCE GLOBAL AND LOCAL CONTROL• Establish clear managerial guidelines for all global managers• Delineate specific areas for local manager discretion and autonomychoosing the most appropriate organizational structure for managing global brands:• Centralization at home office or headquarters• Decentralization of decision making to local foreign markets• Some combination of centralization and decentralizationCoca-Cola, for example, distinguishes between local marketing activities that would appear to dilute brand equity and those that would not appear to be as efficacious as desired. Headquarters would stop the former from occurring but would not stop the latter, leaving it to the local manager’s judgment of the activities appropriateness but also holding him or her responsible, for its success.
8. ESTABLISH OPERABLE GUIDELINES• Explain brand management guidelines clearly and in writing for local managers in all markets• Establish a system for seamless communication between markets and with headquartersCoca Cola has a strategy document that clearly articulates the company’s strategy & how the brand positioning is manifested in various aspects of the marketing mix elements. This document sets out the parameters for the brand & therefore determines how much is left to chanceMcDonald’s operating manual imposes rigorous worldwide control (e.g., the 19 steps to cook & bag French fries)Nestle ensures that branding decisions at least follow strict corporate guidelines
1. IMPLEMENT A GLOBAL BRAND EQUITY MEASUREMENT SYSTEM• Conduct brand audits in all markets• Devise a brand tracking system for all relevant marketsWhen Dupont set out to implement a global tracking system for its various brands, its efforts were hampered by the fact that the level of sophistication of local marketing research companies varied considerably for the 40 primary countries in which Dupont operated
1. LEVERAGE BRAND ELEMENTS• Check the relevance of brand elements across markets• Establish a visual brand identity that transcends markets McDonald’s association with kids without the need for words Apple logo, and the M & M characters need no translation Nike swoosh connotes sports Coke’s contour bottle connotes refreshment Mercedes star connotes status and prestige worldwide, Marlboro man