Philips sense and simplicity

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The presence of physical borders between countries has become meaningless for business organizations to much extent due to globalization of markets. In today’s rapidly changing market environments it …

The presence of physical borders between countries has become meaningless for business organizations to much extent due to globalization of markets. In today’s rapidly changing market environments it has become crucial for organizations in general and marketers and advertisers in particular to recognize the significance of cultural anthropology and local values to effectively communicate brand messages across borders. Despite the fact that many marketers prefer to have standardized marketing mix variables, elements of corporate visual identity (CVI) too are often tailored when firms cross their home-country boundaries to establish a desired image. In this paper, how attractive “Sense and Simplicity” – Philips Electronics’ standardized central message – is in two different cultures is analyzed.

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  • 1. http://brandingtodominate.blogspot.com/ PHILIPS ‘SENSE AND SIMPLICITY’http://brandingtodominate.blogspot.com/
  • 2. http://brandingtodominate.blogspot.com/ 2011 2011 MSC IN MARKETING & STRATEGY MSC IN MARKETING & STRATEGY TABLE OF CONTENTSCONTENT PAGEIntroduction 1Corporate Visual IdentityStandardized brand messages and value proposition across cultures Exhibit 1: The world economic pyramid 1 Exhibit 2: The process of making profits and alleviating poverty 2 Exhibit 3: Exhibit 4: Exhibit 5:ConclusionAppendicesAppendix 1: Share of global poor by country 8Appendix 2: Key purchase influencers and their components 9References 13
  • 3. http://brandingtodominate.blogspot.com/ Abstract: The presence of physical borders between countries has become meaningless for business organizations to much extent due to globalization of markets. In today’s rapidly changing market environments it has become crucial for organizations in general and marketers and advertisers in particular to recognize the significance of cultural anthropology and local values to effectively communicate brand messages across borders. Despite the fact that many marketers prefer to have standardized marketing mix variables, elements of corporate visual identity (CVI) too are often tailored when firms cross their home-country boundaries to establish a desired image. In this paper, how attractive “Sense and Simplicity” – Philips Electronics’ standardized central message – is in two different cultures is analyzed. “Many companies recognize the role of design led innovation. But we at Philips have gone one step further with a special differentiator in this area: we believe in simplicity-led design…which is our springboard to even greater innovation.”1 Gerard Kleisterlee, President and CEO Philips, in January 2006.INTRODUCTIONGlobalization of markets with recent developments in information technology has led manycompanies to expand their operations as well as their customer-base across borders. This expansionof business into international markets constitutes strategic decision-making not only regarding theselection of country to expand into, or the entry mode, but how to segment, position and target thepotential customers as well, to maximize the profits. As a result, global firms develop global productswhich lead to global brands and global marketing (van Raaij 1997). Mueller (2004) suggested thatthe MNCs become truly global via their branding strategies and marketing messages in hostcountries and not just by shifting their headquarters or operations to other countries.As economic globalization intensifies, standardization of marketing mix elements can be the mostfavorable approach to gain economies of scale but to ignore the cultural differences is to invitefailure (Watson et al 2002). Standardization is, however, often not appropriate for varying culturesaround the world (van Raaij 1997). Standardization of mission, proposition, concept and execution –the four levels of standardization as noted by van Raaij (1997) - does not optimally fit with differentcultures. Standardization of ‘proposition’ – part of corporate visual identity – across borders wouldbe the focus of this paper in regards to Philips Electronics’ “Sense and Simplicity”, albeit there is notmuch literature on globalization of CVI apart from few empirical studies on CVI (Melewar andSaunders 1999). Though, literature regarding Brand Management suggests that standardization ofbranding strategy across borders may be in accordance with building a consistent and well-definedbrand meaning (Bengtsson et al 2009), but what is appropriate for one culture might not work inanother. The managers need to have the ‘interpretive knowledge’ (Ghauri and Cateora 2010, p. 83)about the cultures.1 http://dimagemaker.com/2005/09/21/philips-shows-innovations/ 1
  • 4. http://brandingtodominate.blogspot.com/CORPORATE VISUAL IDENTITYOver the past decade corporate identity – the image that a firm desires to project to its targetmarket by means of symbolism, communications and behavior (Pelsmacker et al 2007, p 14;Margulies 1977) – has been brought to limelight and has begun to be associate with the strategicdecisions of organizations (Balmer and Gray 1999). Corporate identity develops the image projectedby an organization and its products (Schmitt 1995) and its affects the perceptions in the long run aswell (Alessandri 2001).Corporate visual identity (CVI) is part of the corporate identity that organizations use to project theirdesired image to its stakeholders. Its components are name, logo, typography, color and slogan. vanRiel and Balmer (1997) suggested graphic design, integrated corporate communication, and amultidisciplinary approach that focuses on organizational behavior as elements of corporateidentity, taking a broader perspective. Melewar and Saunders (1999) in their study ofstandardization versus localization issues for CVI found out that standardization of CVI does notdepend upon the main business of the firms; the standardization of CVI is more influenced by the“nature and attribute of specific products”. In turn, CVI plays an important role in the purchasedecisions by consumers by augmenting or damaging the company’s image and goodwill (Jun and Lee2007).Many companies are faced by the challenge of having a standardized global CVI or localizing theirCVI specifically for various cultures. A true MNE as suggested by Keegan would adapt its CVIconsidering the cultural sensitivities and by adapting itself to the local environment. It does meanthat the management needs to abandon their ways of doing business; rather, they should take intoaccount the differences between the cultures and should accommodate those differences in orderto avoid any misunderstanding (Ghauri and Cateora 2010, p. 103). Many of the firms in consumerelectronics industry follow the model of “produce globally, translate locally” to effectivelycommunicate their brand messages (van Raaij 1997).STANDARDIZED BRAND MESSAGES AND VALUE PROPOSITION ACROSS CULTURESPhilips is a multinational Dutch corporation which has a major presence in consumer electronics,lighting and healthcare and is defined as a diversified health and well-being company. It is one of thelargest electronics companies in the world. In 2009, the company reported consolidated revenues of$32,774 million and operating profits of $868 million (Datamonitor 360). Philips has market presencein various culturally distinct countries but has one standardized CVI in general and brand propositionin particular – to have a consistent brand image across borders – which may have different impacton consumers in different cultures. Brand consistency requires companies to have allcommunication directed towards one, central brand image but when the strategies are executedlocally, the difference between the cultures should be taken into account and there may bevariations in messages across countries and over time (Marks 2009).Culture and communication campaign correlate to each other and there is an interdependentrelationship between the two. As Wang suggested, “culture provides a campaign with its physical 2
  • 5. http://brandingtodominate.blogspot.com/and psychological environment and a campaign helps to bring necessary and/or desired changes to aculture. As world cultures vary, campaign praxes in human societies certainly differ”.There are cultural differences among the regions as well, taking a broad perspective. The keyelement is to define what the brand would stand for in consumers’ minds across borders, forinstance, Asia, i.e. defining the brands value proposition and positioning for Asia. Moreover, its alsoimportant to define what the brand would not stand for. Once defined, every target market wouldclearly depict its pros and cons for the brand and communication can then be specifically developedfor each country to be targeted (Marks 2009).The implications of cultural diversity are enormous for marketing communications and culturaldiversity is not going to vanish immediately (Lewis 1999). Persuasive styles and strategies in the fieldof communication may vary across cultures (Jun and Lee 2007). However, if we base ourcommunication strategies on the assumption that all people living in Europe have exactly the samecultural values and depict a certain peculiar behavior, the strategy would not be very effective.Although a firm can employ a global strategy with standardized communication strategies if thegroups that are to be targeted are similar across borders (horizontal segmentation), but a moreeffective strategy would be to adopt a differentiation strategy for each country taking advantage oflocal differences to be more effective (van Raaij 1997). Van den Bosch, De Jong and Elving (2005)comment that corporate branding and corporate communication are practiced methods to createcorporate reputation.van Raaij (1997) noted that four levels where standardisation may take place are mission,proposition, concept, and execution, and the four different extents are global, adaptation,differentiation and local (Exhibit 1).The perception that the world has or is becoming a global village leading to homogenous culture allaround the world is largely misleading; in marketing communications even today, culturaldifferences remain a critical element (van Raaij 1997). Marketers and researchers would be betterable to understand the variations of communication campaigns worldwide by placing culture in itsproper position (Wang). Therefore there is a real risk that with increased cultural diversity,denationalization and deterritorisation; will come increased difficulties in predicting consumers’behavior towards a brand (Wilson and Liu 2009). 3
  • 6. http://brandingtodominate.blogspot.com/Philips started off with manufacturing light bulbs and electrical equipment and is credited withseveral inventions but even after having technical know-how, the company faced financialchallenges in 1990s due to two reasons. Firstly, the company was operating in too many industrieslosing its focus. Secondly, the company did not focus on marketing. Major changes were carried outinside the company to streamline the processes, and “Let’s make things better” campaign waslaunched in 1995 which replaced the 26 slogans used by Philips in various countries to wither thedamages done in the past; thus standardizing the brand message across borders. Later in 2004, the“Sense and Sensibility” campaign was initiated as the top hierarchical management believed that theprevious campaign was not able to convey the desired image of superiority in design and quality ofPhilip’s products (Govind 2007) (Exhibit 2). Philips when conducted in-depth interviews and focusgroup research, found out that the customers were interested in latest and ‘user-friendly’technology. By ‘sense’, Philips meant “intimately understanding the needs and aspirations ofconsumers and customers in order to develop innovative solutions” while simplicity referred to“easy to experience” (www.philips.com).As per the new brand promise, the company was to develop simple user-friendly products withsimple designs after understanding the unmet needs of the customers. The notion of simplicity wasnot only applied to products but within the organization as well.The execution of this standardized message was carried out across borders following the ‘etic’approach in which “products and communication are derived from culturally universal criteria, andare essentially the same for all cultures” (van Raaij 1997). This might be an attractive proposition insome parts of the world, however it may not be very effective in others. United Kingdom (UK) andThailand are selected on account of vertical segmentation – taking into account the differencesbetween nations and ignoring the differences within a nation – for the analysis of attractiveness ofthis market proposition in two different cultures (van Raaij 1997). 4
  • 7. http://brandingtodominate.blogspot.com/Cultures comprise of and also differ in terms of values, rituals, heroes and symbols. Consumers whobelong to and grow up in a certain culture become habituated to that culture’s values, beliefs andperception processes (Zhang and Neelankavil 1996). In 1952, two well-known anthropologists,Kroeber and Kluckhohn, collected 164 definitions of culture; the oldest definition was given byTaylor. According to Taylor, culture is “a complex whole which includes knowledge, beliefs, art,morals, laws, customs and any other capabilities and habits acquired by individuals as members ofsociety” (First 2009). The results of the study conducted by Daghfous et al (1999) clearly show thatindividual values have a significant impact on consumers behavior.On the account of language solely, this standardized proposition might not be much attractive inThailand in comparison to UK, as English is not the native language of Thais and much of thepopulation does not understand English. Moreover, due to the abstract nature of the proposition, itis difficult for Thais to make sense of “Sense and Simplicity”. Conversely, British can easilyunderstand and make sense of Philips’ proposition. On Philips’ website for Thai consumers, all thecontent had been translated into Thai – on the assumption or evidence that Thais may not be able tocomprehend the content in English effectively – except the brand name and Philips’ central message(Appendix 1). Thais may not be able to grasp the implicit meaning of “Sense and Simplicity” as well.“When communicating value proposition of a brand which is not a strap line but is a central themeto which everything must adhere, even locally” (Marks 2009), the need to recognize the difference inthe languages across borders and the way in which words are perceived is important to developcorporate reputation and hence competitive advantage (van den Bosch et al 2005) (Figure 1). 5
  • 8. http://brandingtodominate.blogspot.com/Hofstede dimensional model of national culture is employed to analyze the attractiveness of “Senseand Simplicity” in the two countries.Thailand being high on power distance might be a more appropriate market for Philips, asconsumers purchase global brands to satisfy their need of communicating their own social statuswhich must be clear in high power distance societies (De Mooij and Hofstede 2010).On the other hand, the contrast of individualism and collectivism in UK and Thailand respectively,makes this proposition more attractive for UK and less for Thailand. The proposition seems to havemore individualistic orientation in nature seeming to satisfy personal and individual needs. “Senseand Simplicity” would be perceived more positively by British in comparison to Thai. Moreover DeMooij and Hofstede (2010) noted that for consumers in collectivist cultures Thailand for instance,brand concept is too conceptual as they are less used to conceptual thinking. So this proposition inThailand may not add any value to Philips. 6
  • 9. http://brandingtodominate.blogspot.com/In cultures where uncertainty avoidance is high (Thailand), and people feel threatened by ambiguityand vagueness, this proposition may not be very effective as for consumers in such cultures it doesnot promise anything concrete. They may not accept this brand promise because of its vague nature.Moreover, people in such cultures are less open for “innovation and change” (De Mooij andHofstede 2010), the aspect which is shown in Philips advertisements in relation to “Sense andSimplicity”. Furthermore, Philips has major presence in healthcare sector and its proposition is moreviable for low uncertainty avoidance cultures where consumers have more active attitude towardshealth. In cultures with low power distance and low uncertainty avoidance (such as UK incomparison to Thailand) people attributed ‘innovative’ and ‘different’ to global brands such asPhilips (De Mooij and Hofstede 2010), which is in accordance with “Sense and Simplicity”.People, in general, demand ‘latest’ user-friendly technology (Govind 2007), and “Sense andSimplicity” does not coincide with the desirable attributes. Moreover, as any technology becomesobsolete over a certain period of time, long-term orientation of Thai culture makes Philips’proposition less viable for Thailand. Consumers with long-term orientation may not be able toassociate ‘Simple’ with latest innovations.Cultures also influence consumer behavior in terms of cognitive style, loyalty, consumerinvolvement, and legal environment (Exhibit 3). Cognitive styles vary in terms of cultural dimensions.This may mean that consumers in individualistic cultures such as UK tend to look more actively forinformation and acquire knowledge about the product via the media or friends. Whereas consumersin collectivist cultures acquire information through implicit communication, base their decisions onpersonal feelings and do not actively seek information. In collectivist cultures, consumers seekinformation from the members of the group that they are part of due to high contact rate amongthem (De Mooij and Hofstede 2010). Hence, Philip’s proposition may not have any effect onconsumers in collectivist cultures and may not do any good to Philips. 7
  • 10. http://brandingtodominate.blogspot.com/The two countries – UK and Thailand – also lie on opposite end of Schwartz seven culturalorientations map of 76 countries (Appendix 2).CONCLUSIONMarketing communications in truly globalized world need to be taken care of when companiestarget customers from different cultures. People living in different cultures grow up in differentenvironment with different surroundings, mindsets, values and beliefs. Though the world isbecoming a ‘global village’ but the differences in culture and language will remain there and mightcontinue to increase. Culture is one of those aspects for marketers which should not be taken gratedfor and should not be ignored. Marketers need to pay attention to every detail of their marketingprogram when going global; brand message communication is of the most important aspects.Differences between cultures are going to stay and marketers and brand managers would have totake into account these differences to effectively market their products. Highly standardized globalcommunication strategy might not be very effective in all the target markets. 8
  • 11. http://brandingtodominate.blogspot.com/References: 1. Alessandri, S.W. (2001). Modelling corporate identity: a concept explication and theoretical explanation. Corporate Communications: An Internal Journal, 6(4), pp. 173-182. 2. Balmer, J.M.T. and Gray, E.R. (1999). Corporate identity and corporate communications: creating a competitive advantage. Corporate Communications: An International Journal, 4(4), pp. 171-176. 3. Bengtsson, A., Bardhi, F. and Venkatraman, M. (2009). How global brands travel with consumers: an examination of the relationship between brand consistency and meaning across national boundaries. International Marketing Review, 27(5), pp. 519-540. 4. Daghfous, N., Petrof, J.V. and Pons, F. (1999). Values and adoption of innovation: a cross- cultural study. Journal of Consumer Marketing, 16(4), pp. 314-331. 5. De Mooij, M. and Hofstede, G. (2010). The Hofstede Model: applications to global branding and advertising strategy and research. International Journal of Advertising, 29(1), pp. 85-110. 6. First, I. (2009). Brand Meaning and Its Creation in a Cross-Cultural Context. Ph.D. thesis. University of St. Gallen. 7. Ghauri, P.N. and Cateora, P. (2010). International Marketing. 2nd ed. McGraw-Hill. 8. Govind, S. (2007). Philips: Making Sense of Simplicity. IBS Center for Management Research. 9. Jun, J.W. and Lee, H.S. (2007). Cultural differences in brand designs and tagline appeals. International Marketing Review, 24(4), pp. 474-491. 10. Lewis, R.D. (1999). When Cultures Collide: managing successfully across cultures. Yarmouth, ME: Nicholas Brealey. 11. Margulies, W.P. (1997). Make the most of your corporate identity. Harvard Business Review, July-August, pp. 66-74. 12. Marks, C. (2009). Ensuring Brand Consistency in Different Cultures. [Online]. (URL: http://www.msi.co.uk/brand-services-article-2). (Accessed 12 March 2011). 13. Melewar, T.C. and Saunders, J. (1999). International Corporate Visual Identity: Standardization or Localization? Journal of International Business Studies, 30(3), pp. 583-598. 14. Mueller, B. (2004). Dynamics of International Advertising. Peter Lang Publishing, New York, NY. 15. Pelsmacker, P.D., Geuens, M. and Bergh, J.V. (2007). Marketing Communications: a European perspective. 3rd ed. Prentice Hall. 16. Philips website. [Online]. (URL: http://www.philips.co.uk/about/company/global/brand/brandpromise/index.page). (Accessed 16 March 2011). 17. Schmitt, B.H. (1995). Issues of corporate identity in East Asia. The Columbia Journal of World Business, Winter, pp. 28-36. 18. Schwartz, S.H. (2006). Value dimensions of culture and national difference. [Online]. (URL: http://www.uib.no/psyfa/isp/diversity/content/reseach/multicultur/Workshop/Schwartz%2 0.pdf). (Accessed 25 March 2011). 19. van den Bosch, A.L.M., De Jong, M.D.T. and Elving, W.J.L. (2005). How corporate visual identity supports reputation. Corporate Communications: An International Journal, 10(2), 108-116. 20. van Raaij, W.F. (1997). Globalisation of marketing communication? Journal of Economic Psychology, 18, pp. 259-270. 9
  • 12. http://brandingtodominate.blogspot.com/21. van Riel, C.B.M. and Balmer, J.M.T. (1997). Corporate identity: its concepts, its measurements and management. European Journal of Marketing, 31(5), pp. 340-355.22. Wang, J. Culture and Campaign Communication: toward a normative theory. [Online]. (URL: http://www.uri.edu/iaics/content/2004v13n1/06%20Jianglong%20Wang.pdf). (Accessed 12 March 2011).23. Watson, J., Lysonski, S., Gillan, T. and Raymore, L. (2002). Cultural values and important possessions: a cross-cultural analysis. Journal of Business Research, 55, pp. 923-931.24. Wilson, J.A.J. and Liu, J. (2009). ‘The Pinocchio Effect’, when managing the brand creation process, across cultures. TMC Academic Journal, 4(1), pp. 45-58.25. Zhang, Y. and Neelankavil, J.P. (1996). The influence of culture on advertising effectiveness in China and the USA: a cross-cultural study. European Journal of Marketing, 31(2), pp. 134- 149. 10
  • 13. http://brandingtodominate.blogspot.com/APPENDIX 1 11
  • 14. http://brandingtodominate.blogspot.com/ APPENDIX 2Source: Dr. Marieke de Mooij – http://courses.mariekedemooij.com/unav Source: Schwartz (2006) 12