Cultural aspects affecting Promotional strategies in International Markets


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Cultural aspects affecting Promotional strategies in International Markets

  2. 2. 2 INDEX Sr. No. Particulars Page Number 1. Globalization 3 2. Cultural Aspects Affecting Product 8 3. Cultural aspects affecting packaging 9 4. Grey Markets 10 5. Survey 12 6. Managing Cultural Diversity Case study: IKEA AXE DEODORANT TROPICANA 17 21 23
  3. 3. 3 Globalization Globalization (or Globalization) refers to the increasingly global relationships of culture, people, and economic activity. It is generally used to refer to economic globalization: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import quotas. Globalization contributes to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage. The term can also refer to the transnational circulation of ideas, languages, and popular culture. Critics of globalization allege that globalization's benefits have been overstated and its costs underestimated. Critics argue that it has decreased inter-cultural contact while increasing the possibility of international and intra-national conflict. Effects Economic International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) between 1955 and 2007. China's trade with Africa rose sevenfold during 2000–07 alone. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. Survival in the new global business market required companies to upgrade their products and use technology skill fully in order to survive increased competition. According to Jagdish Bhagwati, a former adviser to the U.N. on globalization, although there are obvious problems with overly rapid development, globalization is a very positive force that lifts countries out of poverty. According to him, it causes a virtuous economic cycle associated with faster economic growth. The costs and benefits of globalization have not been equally distributed across regions and nations. For example, manufacturing employment in the Midwestern section of the United States declined while growing exponentially in developing countries. Brain drain Opportunities in rich countries attract skilled workers from poor countries, leading to brain drains. For example, nurses from poorer countries come to the US to work. This phenomenon cost Africa over $4.1 billion for the employment of 150,000 expatriate professionals annually The Associated Chambers of Commerce and Industry estimates costs to India of $10 billion per year.
  4. 4. 4 Working conditions In some developing countries labor policies provide less protection than in developed countries. One example is the use of sweatshops by manufacturers. Clothing makers such as The Gap and Nike were accused of contracting with factories that used child labor in violation of local and US law. In the USA, the National Labor Committee proposed the Decent Working Conditions and Fair Competition Act, which would legally require companies to respect human and worker rights by prohibiting the import, sale, or export of sweatshop goods. Specifically, these core standards include no child labor, no forced labor, freedom of association, right to organize and bargain collectively, as well as the right to safe working conditions. Business process outsourcing In rich countries, business process outsourcing has been a double-edged sword; it enabled cheaper services but displaced some service-sector jobs. However, in lower-cost locations such as India, the outsourcing industry is the "primary engine of the country’s development over the next few decades, contributing broadly to GDP growth, employment growth, and poverty alleviation". Income equality World Bank figures indicate that the number of people living on less than $1 per day-the international standard for extreme poverty-dropped from 1.25 billion (29%) in 1990 to 986 million in 2004 (18% of the larger total population). Critics allege globalization increased income inequality, both between and within nations. On 7 out of 8 metrics, income inequality increased in the twenty years ending 2001. Also, "incomes in the lower deciles of world income distribution have probably fallen absolutely since the 1980s". The article was skeptical of the World Bank's claim that the number of people living on less than $1 a day had held steady at 1.2 billion from 1987 to 1998, because of biased methodology. A chart that gave the inequality a very visible and comprehensible form, the so-called 'champagne glass' effect, was contained in the 1992 United Nations Development Program Report, which showed the distribution of global income to be very uneven, with the richest 20% of the world's population controlling 82.7% of the world's income.
  5. 5. 5 Distribution of world GDP, 1989 Quintile of Population Income Richest 20% 82.7% Second 20% 11.7% Third 20% 2.3% Fourth 20% 2.4% Poorest 20% 0.2 In December 2007, World Bank economist Branko Milanovic questioned previous empirical research on global poverty and inequality because improved estimates of purchasing power parity indicated that developing countries were worse off than previously believed. Milanovic remarked, "literally hundreds of scholarly papers on convergence or divergence of countries’ incomes have been published in the last decade based on what we know now were faulty numbers." The new data held considerable implications estimates of global inequality and poverty levels. Earlier inequality was estimated at around 65 Gini points, versus 70 using the new numbers. The globalization of the job market had positive and negative consequences in developed countries. White-collar workers (engineers, attorneys, scientists, professors, executives, journalists, consultants) were able to compete successfully in the world market and command high wages. For example, Boeing Corp. is the US' largest exporter. In late 2011 the company closed orders worth more than $50 Billion for US aircraft, justifying the 11,000 additional workers it hired that year. Conversely, production workers and service workers were unable to compete directly with much lower-cost workers in developing countries. Low-wage countries gained the low-value-added element of work formerly done in rich countries, while higher-value work remained; for instance, the total number of people employed in manufacturing in the US declined, but value added per worker increased. This resulted in growing income inequality in rich countries. This trend seems to be greater in the United States, where it started to rise in the late 1970s, accelerating in the 21st century; it has now reached a level comparable with that found in many developing countries.
  6. 6. 6 Consumption Consumer goods exports such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan fueled the economic expansion of Asian tiger economies.] China exports were worth 157.5 Billion USD in October 2011. In that year exports of goods and services constituted 39.7% of China's GDP. The increasing U.S. trade deficit with China cost 2.4 million American jobs between 2001 and 2008, according to a study by the Economic Policy Institute (EPI). From 2000 to 2007, the United States lost a total of 3.2 million manufacturing jobs. Chinese success cost jobs in developing countries as well as well as the West. As of 26 April 2005 "In regional giant South Africa, some 300,000 textile workers have lost their jobs in the past two years due to the influx of Chinese goods". A 2007 report by PricewaterhouseCoopers LLP predicted that by 2050 the economies of the E7 emerging economies (the BRIC countries: China, India, Brazil, and Russia, plus Mexico, Indonesia and Turkey) would be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada). The report forecast that China would overtake the US as the largest economy around 2025, followed by India in 2050. A 2010 report issued by Goldman Sachs predicted that China was about to overtake Japan and could become the world's largest economy by 2020. Financial interdependency The collapse of the subprime mortgage market in the U.S. led to a global financial crisis and recession on a scale not seen since the Great Depression. According to critics, government deregulation and failed regulation of Wall Street's investment banks were important contributors to the subprime mortgage crisis. Drug and illicit goods trade In 2010 the United Nations Office on Drugs and Crime (UNODC) reported that the global drug trade generated more than $320 billion a year in revenues. Worldwide, the UN estimates there are more than 50 million regular users of heroin, cocaine and synthetic drugs. The international trade of endangered species was second only to drug trafficking among smuggling "industries". medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) resulted in a black market of poachers who hunt restricted animals. Political Globalization seeks to reduce the importance of nation states. Sub-state and supra-state institutions such as the European Union, the WTO, the G8 or the International Criminal Court, replace national functions with international agreement. Some observers attribute the relative decline in US power to globalization, particularly due to the country's high trade deficit. This led to a global power shift towards Asian states, particularly China that unleashed market forces and achieved tremendous growth rates. As of 2011, China was on track to overtake the United States by 2025.
  7. 7. 7 Cultural Mandarin is the first language of 845 million speakers, followed by Spanish (329 million speakers) and English (328 million speakers). However the most popular second language is undoubtedly English, the "lingua franca" of globalization:  About 35% of the world's mail, telexes, and cables are in English.  Approximately 40% of the world's radio programs are in English.  Some 3.5 billion people have some acquaintance of the language.  English is the dominant language on the Internet. Cultural globalisation has increased cross-cultural contacts but may be accompanied by a decrease in the uniqueness of once-isolated communities: sushi is available in Germany as well as Japan, but Euro-Disney outdraws the city of Paris, potentially reducing demand for "authentic" French pastry. Globalisation's contribution to the alienation of individuals from their traditions may be modest compared to the impact of modernity itself, as alleged by existentialists such as Jean-Paul Sartre and Albert Camus. Globalization expanded recreational opportunities by spreading pop culture, particularly via the Internet and satellite television. WHO estimates that up to 500,000 people are in flight at any one time. In 2010, international tourism reached $919B, growing 6.5% over 2009. The IOM found more than 200 million migrants around the world in 2008 including illegal immigration. Remittance flows to developing countries reached $328 billion in 2008. Non-governmental organizations influence public policy across national boundaries, including humanitarian aid and developmental efforts. Religious movements were among the earliest cultural forces to globalize, spread by force, migration, evangelists, imperialists and traders. Christianity, Islam, Buddhism and more recently sects such as Mormonism have taken root and influenced endemic cultures in places far from their origins. Conversi claimed in 2010 that globalization was predominantly driven by the outward flow of culture and economic activity from the United States and was better understood as Americanization. For example, the two most successful global food/beverage outlets are American companies, McDonald's and Starbucks, are often cited as examples of globalization, with over 32,000 and 18,000 locations operating worldwide, respectively as of 2008. Hence these are some of the effects of globalization.
  8. 8. 8 Cultural Aspects Affecting Product McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. On a seasonal basis, McDonald's offers the McRib sandwich. Some speculate the seasonality of the McRib adds to its appeal.[57] Various countries, especially in Asia, are currently serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia). McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The Economist newspaper uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Norway has the most expensive Big Mac in the world as of July 2011, while the country with the least expensive Big Mac is India. Thomas Friedman once said that no country with a McDonald's had gone to war with another. However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Exceptions are the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia war. Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East .looked at the impact McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. McDonald's have recently taken to partnering up with Sinopec, the second largest oil company in the People's Republic of China, as it begins to take advantage of the country's growing use of personal vehicles by opening numerous drive-thru restaurants.McDonald's has opened a McDonald's restaurant and McCafé on the underground premises of the French fine arts museum, the Louvre. McDonald's has started to offer free wireless Internet access in many countries.
  9. 9. 9 CULTURAL ASPECTS AFFECTING PACKAGING Recycling The U.S. Food and Drug Administration granted the first-ever approval to use recycled content in food packaging for Starbucks coffee cups. In 2005 Starbucks received the National Recycling Coalition Recycling Works Award. Starbucks bought 2.5 billion cups for stores in North America in 2007. The 10% recycled paper cups used by Starbucks are not recyclable, because the plastic coating that prevents the cup from leaking also prevents it from being recycled. The plastic cups used for cold drinks are also non- recyclable in most regions. Starbucks cups were originally made using plastic No.1 (polyethylene terephthalate, PETE) but were changed to plastic No.5 (polypropylene, PP). The former type of plastic can be recycled in most regions of the U.S. whereas the latter cannot. Starbucks is considering using biodegradable material instead of plastic to line the cups, and is testing composting of the existing cups. The exception to this is stores in Winnipeg, Manitoba, Canada, where paper cups are recycled to a local company called "Wriggler's Wranch", where they are composted. The majority of Starbucks stores do not have recycling bins; only 1/3 of company-owned stores recycled any materials in 2007,however improvements have since been made and recycling bins are popping up in more stores (the only thing hindering Starbucks' ability to have bins in every store is the lack of facilities for storage and collection of recycling in certain areas.) of the Natural Resources Defense Council says that Starbucks claimed they were using only 10% recycled material partly because the recycled material costs more. Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fiber.
  10. 10. 10 Grey Markets A business can expect problems with grey markets where it trades across national boundaries. So if Company Y is English it will trade in Stirling or Pound notes. If it trades in the United States during the 2010s, to be competitive it will need to sell at a reduced price in the US. However, there is little to stop an entrepreneur from traveling to the US, filling up a transport container with products, which have been exported from Company Y in England, then returning them back to England and marketing the same product at a lower price than Company Y is willing to trade. This is an example of parallel trade, which is legal - just. Therefore it is known as grey marketing. The parties most concerned with the grey market are usually the authorized agents or importers, or the retailers of the item in the target market. Often this is the national subsidiary of the manufacturer, or a related company. In response to the resultant damage to their profits and reputation, manufacturers and their official distribution chain will often seek to restrict the grey market. Such responses can breach competition law, particularly in the European Union. Manufacturers or their licensees often seek to enforce trademark or other intellectual-property rights against the grey market. Such rights may be exercised against the import, sale and/or advertisement of grey imports. In 2002, Levi Strauss, after a 4-year legal fight, prevented UK supermarket Tesco from selling grey market jeans. However, such rights can be limited. Examples of such limitations include the first-sale doctrine in the United States and the doctrine of the exhaustion of rights in the European Union. When grey-market products are advertised on Google, eBay or other legitimate web sites, it is possible to petition for removal of any advertisements that violate trademark or copyright laws. This can be done directly, without the involvement of legal professionals. eBay, for example, will remove listings of such products even in countries where their purchase and use is not against the law. Manufacturers may refuse to supply distributors and retailers (and with commercial products, customers) that trade in grey-market goods. They may also more broadly limit supplies in markets where prices are low. Manufacturers may refuse to honor the warranty of an item purchased from grey-market sources, on the grounds that the higher price on the non- grey market reflects a higher level of service even though the manufacturer does of course control their own prices to distributors. Alternatively, they may provide the warranty service only from the manufacturer's subsidiary in the intended country of import, not the diverted third country where the grey goods are ultimately sold by the distributor or retailer. This response to the grey market is especially evident in electronics goods. Local laws (or customer demand) concerning distribution and packaging (for example, the language on labels, units of measurement, and nutritional disclosure on foodstuffs) can be brought into play, as can national standards certifications for certain goods. Manufacturers may give the same item different model numbers in different countries, even though the functions of the item are identical, so that they can identify grey imports. Manufacturers can also use batch codes to enable similar tracing of grey imports. Parallel market importers often de-code the product in order to avoid the identification of the supplier. In the United States, courts have decided that decoding which blemishes the product is a material alteration, rendering the product infringed. Parallel market importers have worked around this limitation by developing new removal techniques.
  11. 11. 11 The development of DVD region codes, and equivalent regional-lockout techniques in other media, are examples of technological features designed to limit the flow of goods between national markets, effectively fighting the grey market that would otherwise develop. This enables movie studios and other content creators to charge more for the same product in one market than in another or alternatively withhold the product from some markets for a particular time. Consumer advocacy groups argue that this discrimination against consumers—the charging of higher prices on the same object simply because of where they happen to live—is unjust and anti-competitive. Since it requires governments to legislate to prevent their citizens from purchasing goods at cheaper prices from other markets, and since this is clearly not in their citizens' interests, many governments in democratic countries have chosen not to protect anti- competitive technologies such as DVD region-coding. Another example is Smokers might just find the grey market prices more attractive as the Budget announcement will lead the organised players to hike their prices. Considering the latest budget has announced some changes in the excise duty on cigarettes and cigars with hike in excise rates for all non-smoking tobacco products (estimated between 11 and 18 per cent), the move has further crippled the cigarette industry leaving the players no option but to pass it on to their consumers. “Piracy levels, depending on country, range between 40 per cent and 80 per cent,” Reinhard Blaukovitsch from Sony DADC, the company responsible for SecuROM, told Eurogamer as part of an investigation into the true impact of PC game piracy. That means that between 40 and 80 per cent of total copies of a game being played are pirated. “The commercial value of global software piracy is growing by 14 per cent annually.” Svensson goes on to estimate that at the low end of the scale, piracyexists at a 1:1 ratio with retail sales, meaning for every purchased copy, one is downloaded. At the high end he estimates figures as high as 90% piracy vs. legit users.
  12. 12. 12 Survey To have a better understanding of the impacts of Cultural Aspects on Promotions by international companies, we undertook a survey of 50 people so as have an idea of –  Consumer preferences  Influence of promotional strategies on sale  Role of culture in purchasing decision  Cultural influence on market promotional strategies The following were the questions asked: 1) What do you consider while purchasing a product?  Product features  Brand Image  Promotional strategies  Other factors 2) What are your expectations from a company’s promotional efforts?  Stress on Product features  Stress on local cultural values 3) If a company intends to change local cultural practices in a productive way, would you encourage it?  Yes  No 4) Which of these advertisements do you connect with, which can or will affect your purchases?  Hero Moto Corp  Honda Motor Company 5) If a product in the market is packed and offered for sale in a traditional way, will you buy that product?  Yes  No
  13. 13. 13 The answers given by the respondents are summarized and graphically represented below: 1) What do you consider while purchasing a product? The following responses show that major criteria while purchasing a product are the Product features along with influence from promotions of the company as well as brand image. 2) What are your expectations from a company’s promotional efforts? Majority of respondents prefer that an international company promotes their product in a manner which is consistent with the local cultural values rather than the company which gives emphasis only on the product features. 20 10 15 5 Product features Brand Image Promotional strategies Other factors 13 37 Stress on Product features Stress on local cultural values
  14. 14. 14 3) If a company intends to change local cultural practices in a productive way, would you encourage it? Most people prefer such company because of major reason that it can lead to development of local community. This preference can give the multinational companies an advantage that its sales might increase. This exhibits that adaptation to local culture and social work can be effectively used as promotional tool. For example, Lifebuoy’s initiative- “In Safe Hands” in countries like Brazil, Australia, Indonesia, is a marketing support package for the public sector to bring sustainable hand washing practices within the community to life. In Safe Hands assists public sector organizations in:  Bringing about behavioral change  Developing effective integrated communication campaigns  Leveraging the programme's partnership with The World Bank through its Water & Sanitation programme 47 3 Yes No
  15. 15. 15 4) Which of these advertisements do you connect with, which can or will affect your purchase? Most people prefer “Hero Moto Corp” because of long time brand heritage and their tagline “Desh ki Dhadkan” and “Hum Main Hain Hero”. Through this promotion every Indian connects easily with company and believes that he is courageous and powerful just like its product. This exhibits that a promotion that is related to local cultural values is beneficial for the company. Rest of the people prefers Honda because of excellence of the product. 42 8 Hero Moto Corp Honda Motor Company
  16. 16. 16 5) If a product in the market is packed and offered for sale in a traditional way, will you buy that product? Majority of respondents said yes, they prefer that product shall be packed in a traditional way. This can be explained with the example of Cadbury. People in India prefer Cadbury for all the occasions and festivals mainly because the chocolates are packed according to the festival that is going on. In conclusion, what we inferred from the survey is that Cultural aspects affects promotion to a great extent. Also promotion to an extent can influence the culture of a community. 29 21 Yes No
  17. 17. 17 Managing Cultural Diversity IKEA: Case study About IKEA IKEA is a privately held, international home products company that designs and sells ready-to- assemble furniture such as beds and desks, appliances and home accessories. The company is the world's largest furniture retailer. Founded in 1943 by 17-year-old Ingvar Kamprad in Sweden, the company is named as an acronym comprising the initials of the founder's name (Ingvar Kamprad), the farm where he grew up (Elmtaryd), and his home parish (Agunnaryd, in Småland, South Sweden). The firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an average of two to three per cent over the decade to 2010, while continuing its global expansion. The groups of companies that form IKEA are all controlled by INGKA Holding B.V., a Dutch corporation, which in turn is controlled by a tax-exempt, not-for-profit Dutch foundation. The IKEA trademark and concept is controlled by a series of corporations that can be traced to the Netherlands Antilles and to the Interogo Foundation in Liechtenstein. Rather than being sold pre-assembled, much of IKEA's furniture is designed to be self- assembled. The company claims that this helps reduce costs and use of packaging by not shipping air; the volume of a bookcase, for example, is considerably less if it is shipped unassembled rather than assembled. This is also practical for many of the chain's European customers, where public transport is commonly used, with the flat-pack methods allowing for easier transport via public transportation. IKEA contends that it has been a pioneering force in sustainable approaches to mass consumer culture. Kamprad refers to the concept as "democratic design," meaning that the company applies an integrated approach to manufacturing and design (see also environmental design). In response to the explosion of human population and material expectations in the 20th and 21st century, the company implements economies of scale, capturing material streams and creating manufacturing processes that hold costs and resource use down, such as the extensive use of MDF (medium- density fiberboard). MDF, mistakenly called "particle board", is engineered wood fiber glued under heat and pressure to create a building material of superior strength which is resistant to warp. IKEA uses cabinet-grade and furniture-grade MDF in all of its MDF products, such as PAX wardrobes and kitchen cupboards. IKEA also uses wood, plastic, and other materials for furniture and other products. The intended result is flexible, adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses.
  18. 18. 18 IKEA’s entry in U.S.A The furniture industry has long been localized with most players from the industry concentrating on the domestic market only. Swedish furniture industry boasted of the best player in the market, like IKEA, who for the first time decided to go global. They entered the U.S.A. market in 1985, but achieved limited success. They decided to go in for an ethnocentric view of global marketing with their products being shipped after un- assembling the parts to bring down shipping costs. Another innovative move by IKEA was the move to involve the customer in its value chain to bring down costs drastically. With IKEA’s products the customer did the assembling himself at home. IKEA also had a very successful culture that facilitated its expansion into various countries. However, this ethnocentric view did not turn out to be successful in the USA where in they ran into a few problems like different tastes in furniture and cultural change. In addition, more competition and changes in Swedish laws on furniture made expansion into the USA very difficult. Longer shipping periods added to the expansion woes and IKEA had to adopt a more adapted culture to enhance sales in the USA. IKEA’s most important company specific advantage was its value for money. IKEA used this advantage for its expansion plans all over the world. When they failed in the USA, they had to highlight this specific advantage to bail themselves out of the financial crux they had gotten into. Convenient to use and rigid in structure was another company specific advantage that IKEA could have looked at as IKEA focuses on involving customers in the assembling process. This advantage could be a big hit in markets like the USA where each person has the basic expertise in home working such as plumbing and fixing furniture. One more company specific advantage that IKEA has is its legacy of quality in different countries. IKEA has always maintained the best quality in all the countries that it has opened outlets in. Country specific cultural slogans like “low price but not at any price” which highlighted quality were welcomed by the US citizens.
  19. 19. 19 Cultural adaptations made by IKEA IKEA’s streamlined and contemporary "Scandinavian" style was still achieved. What is really the core of the IKEA approach was still maintained through predominantly (4/5) universally accepted product range with local minor adaptations. Many of the locally introduced adaptations were later introduced into other countries' IKEA outlets worldwide - therefore it can be concluded that they were "pilot-tested" in the USA but subsequently widely accepted. Economies of scale were still being achieved. The main characteristics of the IKEA concept were therefore preserved. Furthermore, for the "typical IKEA customer" it seems that their perceptions can be matched world-wide, throughout IKEA outlets, and in their eyes be seen equal to their expectations (i.e. wide variety, streamlined and contemporary "good" design, for "young people of all ages"). Although the original formula is now a bit more flexible, the core of it is preserved and appears to be working for all IKEA outlets internationally. It can be argued that minor adaptations do not amount to a defeat to their original approach. IKEA realized the causes of its reducing profits in U.S.A. and decided to make necessary adaptations in order to survive and grow in the market. High costs of importing: IKEA did not locally manufacture its products in the USA for a very long time. The goods and products were being imported from IKEA’s manufacturing base in Sweden. T he transportation costs from Europe to the American Markets on a frequent basis were eating up IKEA’s markets. Thus, the company decided to start local production and in a matter of few years, IKEA started manufacturing products for its American markets upto the extent of 80%. This led to reduced production costs, leading to increasing profits for the company. One cultural factor that IKEA did not take into consideration while diversifying into USA was the difference in European and American physique! Americans, as opposed to their European counterparts, were a little bulky and preferred furniture of larger sizes. In fact, in the initial stages, the flower vases being sold by IKEA were being used as water glasses by their American customers! In order to experiment this problem, IKEA first decided to increase the sizes of their chest drawers, as the American customers were complaining of the drawers to be too small to store warm clothes. When IKEA started producing chest drawers of larger sizes, they recorded increase in the sales of chest drawers upto 40%. Thus, IKEA decided to expand the size of furniture for the Americans, leading to IKEA’s success in USA. Another rare observation into the American culture revealed to the company that American’s don’t like standing in lines, a problem the company never faced in Sweden. Americans seemed to get restless and irritated when they were made to stand in lines at cash registers of the shop. In order to overcome this problem, IKEA installed cash registers at convenient locations in the
  20. 20. 20 store, in order to reduce the line. This made the American customer happy, leading to IKEA’s growth. Also, IKEA observed that Americans preferred next-day delivery of their products. This service was made available by IKEA. The company also inculcated a returns policy for its American customers, a policy it never introduced in the European Market. In conclusion, IKEA made certain adaptations for the US market, but did not completely change its methodologies. In the words of Anders Moberg, IKEA chief executive, “IKEA adapted but did not destroy its original formula for the American culture.
  21. 21. 21 Axe Deodorant: Case study Axe deodorant was first launched in the year 1983. It has been there in the market for the last 26years and is currently the beat selling brand of Unilever. It has earned an iconic status in most of the markets it has entered. The story is no different for India. Axe deodorant was launched in India during 1999. It was launched as a high price product and initially the promotion was kept low. Axe at that time was the leading men’s deodorant brand in Europe and was popular in India in the Grey market. HLL had the brands denim and Rexona and was ruling the market. Axe was priced at premium above the Denim brand which was positioned as male deodorant brand. At the beginning the product promotion was not fine tuned according to the Indian market and the same advertisement that ran in Europe were used for Indian markets. The brand is targeted at male aged 16-25. All its campaign revolve round this central theme of seduction where girls makes the first move. This has a lot of subliminal implications. The brand assumes that men like to be seduced. The feeling of being seduced gives a big boost of self confidence to a man. Although many brands take this proposition. Axe just made it perfect. Along with these, the brand also engaged with new fragrance and campaigns. In 2005, Axe Axe had a high profile launch of its new fragrance CLICK and before thet there was axe land campaign and followed by axe academy then axe voodoo and phenomenon. In the recent years , it has launched call me campaign.axe is one of the rare brands that have embraced new media to the maximum extent. The brand has started its internet based marketing initiative in India with axe land which involved a virtual trip to the axe world. Also to promote its chocolate variant, it declared November as the month of chocolate. Yahoo web page was used extensively it promote this campaign. Ads for Hindustan Unilever’s male deodorant brand Axe may get taken off Indian Television in the near future. The Information and Broadcast Ministry is considering taking action against what they consider are ‘obscene’ or overtly sexual deodorant commercials, and Axe, Zatak, and Wildstone advertisements are in their immediate crosshairs. And they seem to be quite serious about it. Axe has always used the basic insight – in fact, the very basic animal instinct – of the male species’ attraction towards the opposite sex to position and sell the brand. And quite successfully. They have never been shy of stating their “get laid” message in most explicit insinuation in their advertising campaigns. India is an important emerging market for male deodorants, and a number of new players are trying to copy Axe’s positioning by jumping on the “get the girls” bandwagon. But this is now crossing limits of what is considered acceptable in India. Some say that messages can be considered as “obscene” much faster in India than in other markets and cultures, and a number of MNCs operating in India claim that their communication for India is often mellowed down.
  22. 22. 22 Axe continues its approach of showing (attractive) females being attracted to the guy wearing Axe, be it the “chocolate boy” (see below) or whatever. It is the ad in which a normal guy turns into chocolate after using the Axe chocolate flavour deodorants. And needless to say, girls are immediately attracted to him, all over him to “devour” him! The Wildstone advertisement shows a married woman getting attracted to a guy who wears the deo during the Durga Puja. The Zatak ad shows a sister-in-law getting attracted to her younger brother-in-law. She drops her mangalsutra (sacred black thread /necklace denoting marriage). Copying an insight / idea to sell has always been rampant in the market, but this also needs to be seen is the Indian context. Playing with concepts – and associated values – like mangalsutra and Durga puja is definitely objectable, in cultural and ethical value terms in India. Various obscene advertisements have been banned before here. The Amul Macho Advertisement for “yeah toh bada toing hai” (“this is a toing thing” – ‘toing’ does not have a meaning but has been portrayed sexily in this advertisement) was banned for the same reason. It used the slogan “Crafted for Fantasies,” and was taken off the air, as it portrayed a woman swept away by pleasant fantasies while washing her husband’s underwear at the local washing spot, much to the embarrassment of other women nearby. I wonder how Axe (and competitive brands) may modify its message – or the framing thereof – to a more subtle approach while keeping its core positioning of (sexually) attracting females. Another emotional space? A re-framing of the same message in culturally more acceptable ways? Injecting more humour and slapstick into it? Can’t wait to see what will happen, because the market is growing rapidly and none of the established and emerging players will want to miss this opportunity.
  23. 23. 23 Tropicana: Case Study Tropicana Products is an American based company, and was founded in 1947 by Anthony T. Rossi in Bradenton, Florida, U.S.A. Since 1998 it has been owned by PepsiCo, Inc. Tropicana's headquarters are in Chicago, Illinois. Anthony T. Rossi (1900–1993) was born in Italy on the island of Sicily. He had the equivalent of a high school education, and immigrated to the United States when he was 21 years old. He drove a taxicab, was a grocer in New York, farmed in Virginia and then moved to Florida in 1940 where he farmed and was a restaurateur. His first involvement with the Florida citrus industry was fresh fruit gift boxes sold by Macy's and Gimbel's department stores in New York City, New York. In 1947, Rossi settled in Palmetto, Florida and began packing fruit gift boxes and jars of sectioned fruit for salads under the name Manatee River Packing Company. As the fruit segment business grew, the company moved to a larger location in east Bradenton, Florida and changed its name to Fruit Industries. The ingredients for the fresh fruit salads on the menu of New York’s famed Waldorf-Astoria Hotel were supplied by Fruit Industries. At the east Bradenton location, Rossi began producing frozen concentrate orange juice as a natural extension of the fruit section business. In 1952, with growth of the orange juice business in mind, Rossi purchased the Grapefruit Canning Company in Bradenton. The fresh fruit segments and orange juice business were so successful that he discontinued production of fruit boxes. He developed flash pasteurization in 1954, a process that rapidly raised the temperature of juice for a short time to preserve its fresh taste. For the first time, consumers could have the fresh taste of pure not-from-concentrate juice in a ready to serve chilled package. The juice, Tropicana Pure Premium, became the company’s flagship product. In 1957, the company’s name was changed to Tropicana Products, Inc. to reflect the growing appeal of the Tropicana brand. Brand History: It is now enjoyed almost everywhere in the world. Carefully nurtured for over 50 years, Tropicana has matured into one of the most respected beverage brands. Widely regarded as the world's no. 1 juice brand, it is today available in 63 countries.
  24. 24. 24 Brand Advantage: Tropicana continues to select the best fruit to manufacture high-quality juices and original products, pioneer innovative processes and explore new markets for its products. It is committed to fostering healthy lifestyles by ensuring that its products are naturally nutritious and provide the daily benefits that one needs. In India, Tropicana was launched in 2004 and it comes in two categories: 100% Juices (sold as Tropicana 100%) and Juice Beverages & Nectars (sold as Tropicana). Did You Know? 20 oranges=1L Tropicana 100% Orange juice 8 apples=1L Tropicana 100% Apple juice 1.3 Kg Mixed fruits=1L Tropicana 100% Mixed fruit juice
  25. 25. 25 “Eat breakfast like a king, lunch like a prince, and dinner like a pauper” - A quote by Adelle Davis (American Nutritionist & Writer) The above quote describes the importance of breakfast in one’s life. It is necessary to have a healthy and nutritious breakfast so as to be ready for the whole days work. A good breakfast gives you the required energy to kick start your day. Breakfast is important as there is a gap of 10 – 12 hrs without food as your last meal would have been dinner. Our body is similar to a car in the fact that it needs fuel to run, and like a car, the better you look after your body, the longer and better our body will run. Our bodies must be fuelled several times each day so that we function efficiently and carry out our daily tasks as best we can. In the morning, after many hours without food, it is essential to refuel in order to provide the necessary nutrients and energy to get us through the first part of the day. It is from our brain that messages are sent to other parts of the body to get them moving and working well. If our brain is not fed, it will act in a slow and sluggish manner, which will impact greatly on the rest of our body. The brain requires glucose or blood sugar to provide it with energy to function, whilst the muscles of our body need glucose to activate them and get the body working physically. To work and feel well, our blood sugar levels must be maintained at a certain level. After long periods without food, our blood sugar levels fall, causing tiredness and irritability amongst other symptoms that occur when you need food.
  26. 26. 26 As Indians are getting busier with their schedules more and more people are skipping breakfast. The average Indian is fixed for time in the morning. This is well depicted in the new Tropicana advertisements on television. The successfully running TVCs capture breakfast disruptions like important calls from the office, few more winks of sleep leading to incomplete breakfast. The TVC showcase morning breakfast battles including egg vs mobile phone and dosa vs pillow, to highlight this gap. The pillow standing for extra sleep overpowers the dosa, and a call from the boss takes priority over the egg. A normal Indian breakfast consists of milk, poha, upma, fafda, idli, dosa, paratha, tea, coffee, jalebi, samosa, batata vada, cornflakes, sandwiches, bread, eggs etc. An Indian breakfast normally never contained juice in the morning. To change this culture Tropicana came up with this new advertising campaign of drinking juice in the morning instead of breakfast or with breakfast. This advertisement seems to be affective and it helping its market share in India. The fruit based juice industry is growing at a healthy rate since the last couple of years. Real juice of has the biggest market share with about 50-55% while Tropicana is second with about 35-40%. After this advertisement Tropicana has been growing at rate greater than Real juice and its eating into the market share of Real juice to increase its market share. The marketing of Tropicana as 100% juice which contains 9 fruit nutrients is changing the culture of Indians to start drinking juice in the mornings as it is a healthy option.
  27. 27. 27 Presented by: Rishabh Ganeriwala-13 Sri Ganpathy-21 Rupali Patil-42 Karan Salla-44 Abhinav Shah-45 Taibah Shiliwala-49 Pratik Vishwakarma-56