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Lovemarks or SafeBets - What drives consumers in emerging versus mature markets - Ozyegin University

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  • 1. Lovemarks or SafeBets? What drives consumersin emerging versus mature markets Professor Koen Pauwels Ozyegin University, Istanbul 1
  • 2. My background: merging academics with business•  From Belgium to UCLA to Tuck @ Dartmouth to Istanbul•  Most publications & Awards in my academic cohort•  Editorial board IJRM, JM, JMR, Marketing Science•  Founded the Marketing Productivity Group•  AIMark: Advisory Board & Coordinator Digital Marketing•  #1 expert on Research/Metrics @marketingprofs.com•  EU reintegration project: Return on Marketing Investment in Mature vs. Emerging Markets
  • 3. across countries and industries•  Fast moving consumer goods : e.g. Unilever•  Durable goods : e.g. Nissan, Sony Eurasia•  Retailing : e.g. Old Navy, Marks & Spencer Russia•  Online services : e.g. Groupon, Kayak•  Business-to-business: Inofec Dutch Furniture•  Pharmaceuticals: eg. cholesterol reducers•  Banking: North-Eastern US banks, Credit Europe
  • 4. Marketing Performance: Measuring & Improving ROI Search Engine Opt. Click throughs? Paid online ads Awareness ? ? New Products Sales leads ? Satisfaction? Price Promotions Loyalty? New Channels Social media Brand advertising • • • • Sales? ROI? Profits? ? Stock Price?
  • 5. Problem: smarter marketing in emerging markets Developed Markets Emerging Markets Emerging markets needed for growthBut: institutional, Imply ≠ responsecultural & economic • What your researchdifferences between words meancountries (ICE) • How much they trust and react to ads • How they respond to marketing
  • 6. Overview•  What do your market research words mean ?•  How do consumers trust and share advertising?•  How do consumers’ hearts, minds, wallets react?•  Case study: Personal care in Brazil vs the U.K.•  Conclusion 6
  • 7. What do your market research words mean ?•  Even the best translation leaves true meaning ambiguousCase: what does ‘environment’ mean in Germany & Turkey?Leading multinational of cleaning products was surprised to find out that Turkish consumers had similar enthusiasm and willingness to pay for environment-friendly productWhen probed what they meant by ‘environment’, many Turkish respondents said: “My home, my family”To the follow-up question “What about streets, rivers, lakes?” they responded: “That is the government’s task, not mine” 7
  • 8. How much do consumers trust and share advertising? 2,75 •  “Consumers in emerging Brazil vs. mature markets are 2,7 Trust in general advertising India more likely to talk about 2,65 China any kind of online 2,6 advert” Mindshare 2011 2,55 US •  Studies show higher 2,5 UK trust in offline and 2,45 Netherlands online advertising in 2,4 emerging markets 2,35 0 50 100 Individualism 8
  • 9. How do my (e)MBA students decide on electives ?•  USA: Construct individual utility function based on information search and then each ‘bid’ on electives•  Turkey: Get together and decide on which elective they should all take and then let administration knowIf this differs for students with >6 years of business experience, it may reflect cultural differences 9
  • 10. Which Route should your ads focus on?Experiential Route Functional Route•  Evoke Sensations, •  Focus on product features Feelings, Imaginations and benefitsHas higher impact on ad Drives ad affect + cognition, affect, which lifts purchase which both lift intent in intent in mature markets Emerging MarketsGermany, France, U.K, Italy, BRIC, MIST, Argentina, Mexico, Chile, the Netherlands Poland, Morocco, Saudi Arabia, Pakistan, Thailand, Vietnam, Indonesia, Philippines 10
  • 11. Romance & Reliability•  Roberts (2005) identifies 3 key elements of a Lovemark: mystery, sensuality and intimacy: "We have passed through the age of information and knowledge and we now live in the age of ideas. Successful brands tell stories. They are romantic and mysterious.“•  Mr Zhou (CEIBS, 2008) “In the end, it’s really the basic work, whether you have reliable quality, good service, that are the fundamental attributes of a brand.” 11
  • 12. Customer Attitude Dynamics (Srinivasan et al. 2010) What marketers do •  AdvertisingMarketing •  Price •  Distributionbuilds What customers think & feelAttitudes Awareness Consideration Likingwhich convertto brand sales What customers do Brand purchases
  • 13. How does this differ in emerging markets ?•  Pauwels, Erguncu and Yildirim, just published in IJRM•  Explain marketing impact by 2 criteria of attitude dynamics –  Responsiveness to Marketing –  Conversion to Sales•  We show that attitude dynamics (and thus marketing effects) differ for emerging vs. mature markets 13
  • 14. 1) Responsiveness: can marketers move the attitude? 14
  • 15. 2) Conversion: does it translate into sales/profits ? 15
  • 16. Cultural Differences -  ndividualism I Marketing Response- Uncertainty av Attitude Dynamics: of each attitude to:-  ower Distance P Stickiness, Conversion - Ad Awareness -  dvertising A -  onsideration C - Distribution Economic - Liking -  rice P Differences -  ncome I-  egal Protection L -  ompetition C Marketing Effectiveness -Sales
  • 17. Case study: FMCG in Brazil vs U.K.•  Recent Data for 3 brands x 2 personal care FMCGs•  Econometric model of marketing, attitude, sales Controls for other potential differences:1)  Brands: same brands in emerging/mature market2)  Market (share) position: similar positioning, share3) Similar potential: for attitude metrics 17
  • 18. Advertising Response in Emerging vs Mature Market category 1 category 2 TOTAL 0,020 0,015AD AWARE 0,010Emg > Mature 0,005 0,000 0,008 0,006CONSIDER 0,004Emg << Mature 0,002 0,000 0,012 0,010LIKING 0,008 0,006Emg << Mature 0,004 0,002 0,000 18
  • 19. Sales Conversion in Emerging vs Mature Market category 1 category 2 TOTAL 0,05 0,04 0,03AD AWARE 0,02Similar 0,01 0,00 0,20 0,15CONSIDER 0,10Emg > Mature 0,05 0,00 0,25 0,20LIKING 0,15Emg << Mature 0,10 0,05 0,00 19
  • 20. ‘Cost More’ Sales Conversion: + Emg, - Mature Market category 1 category 2 TOTAL0,040,020,00-0,02-0,04-0,06-0,08-0,10-0,12 20
  • 21. Love Marks or Safe Bets ? Low sales High sales conversion conversionLow response to Liking Emerging Consideration Emgmarketing Awareness Mature Cost More Mat (-)High response to Consideration Mat Liking Maturemarketing Awareness Emg Cost More Emerging 21
  • 22. As illustrated in US-China debates on what a brand is•  “Qualitative research reveals that the Chinese consumers feel the need to wear at least three branded items to feel comfortable at work. Yet, when probed further, they were at a loss, unable to define the features of a brand. However, they had no difficulty describing the product. It seems that for them, the product is the brand. The emotional connection is simply absent” (Lindstrom 2011)•  Advani (2006) : "We are trying everyday to make Lenovo a global brand. Our goal is, not only people here but also people around the world know us. They will have an emotional connection with Lenovo. Becoming a name is one thing but having a deep emotional connection with the company is quite another. That is what our aspirations are: to become a brand that people around the world love.” 22
  • 23. KEY TAKE AWAYS•  You should probe for what words mean exactly•  You should use higher trust in marketing & research•  You should check which attitudes (cognition, affect) translate most into behavior in emerging markets•  You should probe for the attitude response to advertising (higher-lower), price (good-bad),…•  You should verify how consideration is driven by (online or offline) word-of-mouth•  Quant needs to be validated by Qualitative Research 23
  • 24. Want to learn more ?•  It’s not the size of your data, it is how you use it: how to market smarter with analytic dashboards•  Your free copy at: koen.pauwels@ozyegin.edu.tr•  Website: www.marketdashboards.com•  LinkedIn/Twitter: koenhpauwels•  Facebook: http://www.facebook.com/pages/ marketdashboardscom/207532115957700
  • 25. The rise of the middle class•  Even in countries with high income inequality (e.g. Brazil, Turkey), we see a strong rise of the middle class since 2001•  Buying in food, cleaning, personal care much more equal•  Narrow focus on top quarter of consumers would leave more than half of the market to competition!•  From ‘high ground’ expensive products in mature markets to ‘good enough’ less expensive in emerging markets•  But for travel, recreation, culture: top covers 60% of market 25