16 Integrated Marketing Communications and International Advertising McGraw-Hill/Irwin International Marketing, 13/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter

Chapter Learning Objectives Local market characteristics that affect the advertising and promotion of products The strengths and weaknesses of sales promotion and public relations in global marketing When global advertising is most effective; when modified advertising is necessary The effects of a single European market on advertising The effect of limited media, excessive media, paper and equipment shortages, and government regulations on advertising and promotion budgets The communication process and advertising misfires

Global Perspective Barbie Versus Mulan The original Barbie between Japan, Hong Kong and Hollywood Major toy makers increasingly are designing 1 version globally -Cable & satellite TV and internet -International retail giants – Wal- Mart, Toys “R” us, Carrefour Rapunzel Barbie launched in 59 countries at the same time. TV ad campaign in 35 languages around the world broadcasted at the same time+ web site+ games+ videos+ movies Action figures toys make up just 1% of the toy market in Germany, 5% in US AND 6% in UK Disney’s Jasmine in the Islamic world Despite of Mattel IMC plan Barbie sales declined sharply in front of the more ethnically diverse competitors’ products

Las Vegas Loosing Its Exclusivity The gaming heritage Resort industry Dinning& Shopping Competition from other cities Lack of a unifying idea that could break through the clutter People love to come to Las Vegas to cut loose, have fun and do things they wouldn’t do back home R&R Partners “Only in Vegas” ads

Using IMC To Market Las Vegas

Creating a Unique Brand Identity for Las Vegas © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin *Click outside of the video screen to advance to the next slide

Leveraging the popular commercials into IMC Marketing guerilla efforts around the Oscar and Grammy awards Sponsorships, PR& feature stories in CNN& National Public Radio, US Today, NY Times, WS journal and cover story in Time magazine Grand Marketer Award million visitors 89% occupancy rate

Taking The “Only Vegas” Campaign in a New Direction

Creating a Unique Brand Identity for Las Vegas © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin *Click outside of the video screen to advance to the next slide

Point of purchase Publicity Public relations Direct marketing Interactive marketing Special events Packaging Sales promotion Direct response Traditional Approach to Marketing Communications Media Adver- tising

Contemporary IMC Approach Point of purchase Publicity Interactive marketing Public relations Direct marketing Special events Packaging Sales promotion Direct response Media Adver- tising

Defining IMC IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, customers, prospects, employees, associates and other targeted relevant external and internal audiences. Don Schultz IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, customers, prospects, employees, associates and other targeted relevant external and internal audiences. Don Schultz The goal of IMC is to generate short-term financial returns and build long-term brand value.

Demand for accountability Demand for accountability and Measurement of Outcomes Recognized as a business process Importance of relevant audience Ongoing strategic business process Multiple relevant audiences A Contemporary Perspective of IMC IMC Not just another management fashion IMC Not just another management fashion

Traditional compensation Performance-based compensation Traditional compensation Performance-based compensation Media advertising Multiple forms of communication Mass media Specialized media Manufacturer dominance Retailer dominance General focus Data-based marketing Low agency accountability Greater agency accountability Limited Internet availability Widespread Internet availability Media advertising Multiple forms of communication Mass media Specialized media Manufacturer dominance Retailer dominance General focus Data-based marketing Low agency accountability Greater agency accountability Reasons for the Growing Importance of IMC FromToward

IMC and Branding Brand Identity is a combination of factors: Name, logo, symbols, design, packaging, product or service performance, and image or associations in the consumer’s mind Brand Value (Billions of Dollars) 1. Coca-Cola$ Microsoft$ IBM$ GE$ Intel$ Nokia$ Disney$ McDonald’s$ Marlboro$ Mercedes$21.19 IMC plays a major role in the process of developing and sustaining brand identity & equity by increasing the number of encounters between the consumers and the brand

Intel’s Advertising Helps Build Brand Equity The Bunny People *Click outside of the video screen to advance to the next slide © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Advertising Direct Marketing Interactive/ Internet Marketing Interactive/ Internet Marketing Sales Promotion Publicity/Public Relations Publicity/Public Relations Personal Selling Advertising Direct Marketing Interactive/ Internet Marketing Interactive/ Internet Marketing Sales Promotion Publicity/Public Relations Publicity/Public Relations Basic Elements of the Promotional Mix

Sales Promotions in International Markets Sales promotions -Marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation -Short-term efforts directed to the consumer or retailer to achieve specific objectives’ P&G “Arial Road Show” to the rural areas in Egypt In markets with media limitations the percentage of the promotional budget allocated to sales promotions may have to be increased Pepsi an Coke carnival truck in Latin America Product sampling – Nestle rest- stop in France

Consumer-oriented [For end-users] Trade-oriented [For resellers] Sales Promotion Tools Events Loyalty Programs Bonus Packs efunds/Rebates Refunds/Rebates Contests/Sweepstakes Premiums Samples Coupons Coop Advertising Trade Shows Training Programs POP Displays Trade Allowances

Introduce new products Get existing customers to buy more Attract new customers Maintain sales in off season Increase retail inventories Tie in advertising & personal selling Enhance personal selling Combat competition Introduce new products Get existing customers to buy more Attract new customers Maintain sales in off season Increase retail inventories Tie in advertising & personal selling Enhance personal selling Various Uses of Sales Promotion Sales Promotion Sales Promotion

Advertising Versus Publicity Advertising Publicity Tentative Low Low/Unspecified Uncontrollable Great Lower Measurable Schedulable High/Specific High Specifiable Undetermined Higher Little Factor Control Credibility Reach Frequency Cost Flexibility Timing

Interviews Feature Articles Feature Articles Special Events Special Events Press Conferences Press Conferences News Releases News Releases Feature Articles Feature Articles Special Events Special Events News Releases News Releases Publicity Vehicles © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Public Relations When an organization systematically plans and distributes information in an attempt to control and manage its image and the nature of the publicity it receives, it is really engaging in PR. “The management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance”

Corporate Advertising Cause-related Marketing Publicity Vehicles Community Activities Public Affairs Activities Special Publications Special Event Sponsorship Publicity Vehicles Community Activities Public Affairs Activities Special Publications Public Relations Tools

International Public Relations Bridgestone/Firestone Tires safety recall & Throwing the blame Global workplace standards Building an international profile for new companies Corporate sponsorships despite of their connections to advertising -Tobacco companies using sports event sponsorships. -Coca Cola & soccer, Macdonald’s & Sidney Olympics 2000 The role of public relations (PR) is creating good relationships with the popular press and other media to help companies communicate messages to customers, the general public, and governmental regulators.

The Growth of Advertising and Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Top 20 Global Advertisers ($ millions) Insert Exhibit 16.1

International Advertising 1.Perform marketing research. 2.Specify the goals of the communication. 3.Develop the most effective message(s) for the market segments selected. 4.Select effective media. 5.Compose and secure a budget. 6.Execute the campaign. 7.Evaluate the campaign relative to the goals specified.

Advertising Strategy and Goals Marketing problems require careful marketing research and thoughtful and creative advertising campaigns in country, regional, and global markets, respectively. Increased need for more sophisticated advertising strategies. -Increased costs, coordination of adv. programs, global image Balance between standardization of advertising themes and customization. -Foreign or domestic agencies -Centralization or decentralization Gillete, the best a Man can get – umbrella statement but different brand names Consumer cultures as a base for segmentation

Product Attributes and Benefit Segmentation Different cultures usually agree on the benefit of the primary function of a product Other features and psychological attributes of the item can have significant differences -Cameras in US, Japan and Africa - excellent pictures is the primary function - Dannon’s yogurt - health in US and Pleasure in France Blue Diamond’s Almonds – assumes that no two markets will react the same, that each has its own set of differences, and that each will require a different marketing approach and strategy -In US “a can a week is all what we ask”, Canada considered it too silly. In Japan almond tofu and miso soup

Regional Segmentation Pan-European communications media highlighting need for more standardized promotional efforts and harmony in brand names IBM pan-European promotional strategy- CIM Costs savings with a common theme in uniform promotional packaging and design Eveready in Latin America 1 message campaign to 16 countries Legal restrictions slowly being eliminated

The International Communications Process Insert Exhibit 16.4

Global Advertising and the Communications Process If not properly considered, the different cultural contexts can increase the probability of misunderstandings Effective communication demands the existence of a “psychological overlap” between the sender and the receiver It can never be assumed that “if it sells well in one country, it will sell in another” Tooth paste for cavity reducing in US& breath control in Europe Encoding Problems even with the right message – Is the perfume effective against infertility in Africa?!! Decoding problems – Pepsi “come alive”, Chevrolet NOVA “doesn’t go” in Spain

Legal Constraints Laws that control comparative advertising vary from country to country in Europe. Comparative advertising- Germany, Belgium and Luxembourg Advertising of specific products - Pharmaceuticals Control of advertising on television- Time and content Accessibility to broadcast media Limitations on length and number of commercials – In Germany 20 min between commercials and not more than 12 min/hour Internet services Special taxes that apply to advertising

Linguistic Limitations Language is one of the major barriers to effective communication through advertising Translation challenges Low literacy in many countries Multiple languages within a country

Cultural Diversity Knowledge of cultural diversity must encompass the total advertising project General Mills instant cake in UK and Japan Toyota Prado “rule by force” not a nice memory in China Existing perceptions based on tradition and heritages are often hard to overcome P&G and the story of the bird delivering Pampers in Japan Subcultures Changing traditions and Coffee in Japan

Media Limitations and Production and Cost Limitations Media limitations may diminish the role of advertising in the promotional program 10 showings /year with no 2 exposures closer than 10 days in Italy Examples of production limitations: -Poor-quality printing : Kodak in China -Lack of high-grade paper : Colgate - Palmolive in Eastern Europe Low-cost reproduction in small markets poses a problem in many countries – Coca Cola and Nestle using Feluccas Sails in Egypt

Media Planning and Analysis – Tactical Considerations commercial string sandwiches in Brazil National coverage = different media Annual TV scheduling by August 30 in Germany In Vietnam Newspapers ads limited to 10% of space and 5% of time on radio and TV

Media Planning and Analysis – Tactical Considerations Availability Cost Coverage Lack of market data - circulation& segmentation Newspapers -Number, paper shortage, ad space, editorials and advertorials Magazines

Media Planning and Analysis – Tactical Considerations (continued) Radio and television Satellite and cable TV Direct mail The Internet Other media Cinema, Billboards etc.

Campaign Execution and Advertising Agencies Managed by advertising agencies -Local domestic agency -Company-owned agency -Multinational agency with local branches Compensation -Commonly 15 percent throughout the world -Some companies moving to reward-by-results

International Control of Advertising: Broader Issues Consumer criticism Deceptive advertising Decency and blatant use of sex Self-regulation Government regulations

Summary An integrated marketing communications (IMC) program includes coordination among advertising, sales management, public relations, sales promotions, and direct marketing. Currently companies are basing their advertising strategies on national, subcultural, demographic, or other market segments. The major problem facing international advertisers is designing the best messages for each market served. The availability and quality of advertising media vary substantially around the world. Advances in communication technologies are causing dramatic changes in the structure of the international advertising and communications industries.