1. 1 Tom Gillpatrick, Ph.D. Juan Young Professor of Marketing & Executive Director, FILC Master International Management Program School of Business Administration Portland State University Global Marketing 3 December 2003

2. 2 Selected Issues of Global Marketing Strategies IV. Global Communication Issues - Global advertising & culture - Global budgeting - Creative strategy - Global media - Global regulations - Agency selection & coordination - Global IMC and other promotion - Marketing and the internet

3. 3 Week Seven Objectives 12-3-03 P1: Global Marketing Communications P1: Global Marketing Communications Promotion Goals/Objectives Promotion Goals/Objectives Promotion Flows Promotion Flows Promotion Mix Promotion Mix P2: Global Communications Issues P2: Global Communications Issues P3: Guest Speaker: Jim Thayer, President OSS P3: Guest Speaker: Jim Thayer, President OSS (Overseas Strategic Services) (Overseas Strategic Services) Case Discussion: Motorola China Experience Case Discussion: Motorola China Experience

4. 4 Basic Promotional Goal Shift the Demand function Price Quantity D1 D2

5. 5 Marketing Communications & Managing Customer Response Promotion Objectives Promotion Objectives Build Awareness Build Awareness Reinforcement or Change Attitudes or Behavior Reinforcement or Change Attitudes or Behavior Action Action Increasing Customer response Increasing Customer response Develop measures to evaluate effectiveness Develop measures to evaluate effectiveness Market Based: Promotion Strategies

6. 6 The Dual Role of Marketing Communications Investing in the Enablers of Growth Product Price/ Cost Place Promotion Processes People/ Climate “Sales over night”“Brand over time”... Keeping the engine running... Tactical... Share of the market... While changing the fan belt... Putting the pitch before the product (Strategic)... Share of mind... Making the latent blatant Positioning

7. 7 Hierarchy of Effects Model Awareness Knowledge Liking Preference Conviction Purchase Implications for promotion mix Media Advertising Publicity Sales Promotion Personal Selling

8. 8 Promotion Flows Manufacturers Distributors Retailers Consumer response

9. 9 Communication Tasks Market- ID target market, PLC Market- ID target market, PLC Message- content, structure,format, source Message- content, structure,format, source Media/channels Media/channels Mix- promotion mix- IMC, push/pull Mix- promotion mix- IMC, push/pull Money- budget Money- budget Measures Measures

10. 10 Customer Response Strategies Pull Customer-Push Communications Customer-Pull Communications Push Customer Preference Awareness Attraction Distributor Push Merchandising Mktg.-Effort Communications Mix Advertising Sales Promotion Catalogs Direct Marketing Telemarketing Electronic Marketing Public Relations Customer Loyalty Commitment Search Eff. Market Coverage Availability Stock-outs

11. 11 Customer Response Index Aware (63%) Unaware (37%) Don’t Comprehend (46%) Comprehend (54%) Interested (23%) Intentions (32%) Action (10%) CRI.3% 2% 5% 26% 29% 37% 100% No Action (90%) No Intentions (68%) Not Interested (77%)

12. 12 Poor Response Marketing Problem Underlying Cause Low Awareness Poor Comprehension Low Interest Low Intentions Low Purchase Level Marketing Communications Marketing Communications Product Positioning Product Positioning Distribution and In-Store Poor Media Selection Insufficient Frequency Poor Ad Copy Insufficient Frequency Poor Ad Copy Insufficient Benefits High Price Poor Ad Copy Weak Value Proposition Need for Low-cost Trial Not Readily Available Not Available Hard to Find In-store Insufficient In-store Services Causes of Poor Customer Response

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14. 14 The International Communications Process Message translated into appropriate meaning Marketer with a product Information source Competitive acti- vities, other sales- people, confusion and so on Evaluation of communications process and measure of action by receiver Advertising Media and or personal sales force Action by consumer responding to decoded message Encoded message interpreted into meaning Noise Feedback Message channel Decoding Receiver Encoding Cultural Context A Cultural Context B

15. 15 A Model of the International Mass Communications Process Producer/ marketer/ advertiser Sets objectives and advertising budget Mass Media Carries the message Advertising agency Develops message (encoding) and selects media Opinion leaders, individuals Receive the message and interpret (decoding) Individuals Think, feel and act (hierarchy of effects) Coordination and control Generate feedback on effects Sender’s cultural settingReceiver’s cultural setting

16. 16 The Four Components of Global Advertising 1. Message and Creative 2. Media 3. Strategy 4. Organization

17. 17 Global Advertising is Most Powerful When: Global Advertising is Most Powerful When: the image communicated can be identical across countries the symbols used carry the same meaning across countries the product features desired are the same the usage conditions are similar across markets

18. 18 Advertising Intensity in Selected Nations

19. 19 Text Overview 1. Global Advertising and Culture 2. Setting the Global Advertising Budget 3. Creative Strategy 4. Global Media Decisions 5. Advertising Regulations 6. Choosing an Advertising Agency 7. Coordinating International Advertising 8. Other Forms of Communication 9. Globally Integrated Marketing Communications (GIMC)

20. 20 Introduction There are many cultural challenges that advertisers face in global marketing. There are many cultural challenges that advertisers face in global marketing. Global advertising encompasses areas such as advertising planning, budgeting, resource allocation issues, message strategy, and media decisions. Other areas include: local regulations, advertising agency selection, coordination of multi-country communication efforts and regional and global campaigns. Global advertising encompasses areas such as advertising planning, budgeting, resource allocation issues, message strategy, and media decisions. Other areas include: local regulations, advertising agency selection, coordination of multi-country communication efforts and regional and global campaigns.

21. 21 1. Global Advertising and Culture Language Barriers Language Barriers Language is one of the most formidable barriers in global marketing. Language is one of the most formidable barriers in global marketing. Three types of translation errors can occur in international marketing: Three types of translation errors can occur in international marketing: Simple carelessness Simple carelessness Multiple-meaning words Multiple-meaning words Idioms Idioms Other Cultural Barriers Other Cultural Barriers Religion Religion

22. 22 1. Global Advertising and Culture (contd.) Cultural traps/cultural dimensions Cultural traps/cultural dimensions Geert Hofstede’s cultural grid can be used to assess the appropriateness of comparative advertising campaigns (see Exhibit 14-2). The five cultural dimensions include: Geert Hofstede’s cultural grid can be used to assess the appropriateness of comparative advertising campaigns (see Exhibit 14-2). The five cultural dimensions include: Power distance Power distance Uncertainty avoidance Uncertainty avoidance Individualism Individualism Masculinity Masculinity Long-termism Long-termism

23. 23 2. Setting the Global Advertising Budget Companies rely on different kind of advertising budgeting methods which include: See Exhibit 14-3 Companies rely on different kind of advertising budgeting methods which include: See Exhibit 14-3 Percentage of Sales Percentage of Sales Competitive Parity Competitive Parity Objective-and-Task Method Objective-and-Task Method Resource Allocation Resource Allocation

24. 24 Creative Challenges of Global Advertising Legal and Tax Considerations Language Limitations Cultural Diversity Media Limitations Production and Cost Limitations

25. 25 Media Usage in Various Countries * * 1995

26. 26 3. Creative Strategy The “Standardization” versus “Adaptation Debate” The “Standardization” versus “Adaptation Debate” Merits of Standardization: Merits of Standardization: Scale Economies Scale Economies Consistent Image Consistent Image Global Consumer Segments Global Consumer Segments Creative Talent Creative Talent Cross-Fertilization Cross-Fertilization Barriers to Standardization: Barriers to Standardization: Cultural Differences Cultural Differences

27. 27 3. Creative Strategy (contd.) Advertising Regulations Advertising Regulations Market Maturity Market Maturity “Not-Invented-Here” (NIH) Syndrome “Not-Invented-Here” (NIH) Syndrome Approaches to Creating Advertising Copy: Approaches to Creating Advertising Copy: “Laissez Faire” “Laissez Faire” Export Advertising Export Advertising Global Prototype Advertising Global Prototype Advertising Prototype Standardization Prototype Standardization

28. 28 3. Creative Strategy (contd.) Regional Approach Regional Approach Pattern Standardization Pattern Standardization Modular Approach Modular Approach

29. 29 4. Global Media Decisions Media Infrastructure Media Infrastructure Media infrastructure differs from country to country Media infrastructure differs from country to country Media Limitations Media Limitations The major limitation in many markets is media availability. The major limitation in many markets is media availability. Recent Developments in the Global Media Landscape: Recent Developments in the Global Media Landscape: Growing commercialization and deregulation of mass media Growing commercialization and deregulation of mass media

31. 31 4. Global Media Decisions (contd.) Shift from radio and print to TV advertising Shift from radio and print to TV advertising Rise of global and regional media Rise of global and regional media Growing spread of interactive marketing Growing spread of interactive marketing Growing popularity of text messaging Growing popularity of text messaging Improved monitoring Improved monitoring Improved TV-viewership measurement Improved TV-viewership measurement

33. 33 Global Marketing Communications In the U.K., all advertising is allowed if not specifically forbidden. In the U.K., all advertising is allowed if not specifically forbidden. In Germany, everything is forbidden if not specifically allowed. In Germany, everything is forbidden if not specifically allowed. In Italy, everything is allowed, even if forbidden, and In Italy, everything is allowed, even if forbidden, and In Belgium, nobody knows what’s forbidden. In Belgium, nobody knows what’s forbidden. Angela Mills

34. 34 5. Advertising Regulations The major types of advertising regulations include: The major types of advertising regulations include: Advertising of “Vice Products” and Pharmaceuticals Advertising of “Vice Products” and Pharmaceuticals Comparative Advertising Comparative Advertising Content of Advertising Messages Content of Advertising Messages Advertising Targeting Children Advertising Targeting Children Other Advertising Regulations: Issues of local languages, tax issues, and advertising rates. Other Advertising Regulations: Issues of local languages, tax issues, and advertising rates.

35. 35 5.Advertising Regulations (contd.) Strategies to deal with advertising regulations: Strategies to deal with advertising regulations: Keep track of regulations and pending legislation Keep track of regulations and pending legislation Screen the campaign early on Screen the campaign early on Lobbying activities Lobbying activities Challenge regulations in court Challenge regulations in court Adapt marketing mix strategy Adapt marketing mix strategy

36. 36 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries

37. 37 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries

38. 38 Regulations Regarding Premiums, Gifts and Competitions in Selected Countries Source: Jean J. Boddewyn, Premiums, Gifts, and Competitions, New York: (International Advertising Association, 1988. © 1988 International Advertising Association

39. 39 6. Choosing an Advertising Agency In selecting an ad agency, the international marketer has several options: In selecting an ad agency, the international marketer has several options: 1. Work with the agency that handles the advertising in the firm’s home market. 2. Pick a purely local agency in the foreign market. 3. Choose the local office of a large international agency. 4. Select an international network of ad agencies that spans the globe.

40. 40 6. Choosing an Advertising Agency (contd.) When screening ad agencies, the following set of criteria can be used: When screening ad agencies, the following set of criteria can be used: Market coverage Market coverage Quality of coverage Quality of coverage Expertise with developing a central international campaign Expertise with developing a central international campaign Creative reputation Creative reputation Scope and quality of support services Scope and quality of support services

41. 41 6. Choosing an Advertising Agency (contd.) Desirable image (“global” versus “local”) Desirable image (“global” versus “local”) Size of the agency Size of the agency Conflicting accounts Conflicting accounts

42. 42 7. Coordinating International Advertising Global or pan-regional advertising approaches require a great deal of coordination. The following mechanisms can help: Global or pan-regional advertising approaches require a great deal of coordination. The following mechanisms can help: Monetary Incentives (cooperative advertising) Monetary Incentives (cooperative advertising) Advertising Manuals (brand book) Advertising Manuals (brand book) Lead-Country Concept Lead-Country Concept Global or Pan-Regional Meetings: Six guidelines to implement a global or pan- regional advertising approach include: Global or Pan-Regional Meetings: Six guidelines to implement a global or pan- regional advertising approach include:

43. 43 7. Coordinating International Advertising (contd.) (1). Top management must be dedicated to going global. (1). Top management must be dedicated to going global. (2). Use a third party (e.g., the ad agency) to help sell key managers the benefits of a global advertising approach. (2). Use a third party (e.g., the ad agency) to help sell key managers the benefits of a global advertising approach. (3). A global brief based on cross-border consumer research can help persuade managers to think in terms of global consumers. (3). A global brief based on cross-border consumer research can help persuade managers to think in terms of global consumers.

44. 44 7. Coordinating International Advertising (contd.) (4). Find product champions and give them a charter for the success of the global marketing program. (4). Find product champions and give them a charter for the success of the global marketing program. (5). Convince local staff that they have an opportunity in developing a global campaign. (5). Convince local staff that they have an opportunity in developing a global campaign. (6). Get local managers on the global marketing team -- have them do the job themselves. (6). Get local managers on the global marketing team -- have them do the job themselves.

45. 45 8. Other Forms of Communication Sales Promotions: Sales promotion refers to a collection of short-term incentive tools that lead to quicker and/or larger sales of a particular product by consumers or the trade. Sales Promotions: Sales promotion refers to a collection of short-term incentive tools that lead to quicker and/or larger sales of a particular product by consumers or the trade. Rationales explaining the local character of promotions: Rationales explaining the local character of promotions: Economic development Economic development Market maturity Market maturity Cultural perceptions Cultural perceptions Trade structure (pull vs. push promotions) Trade structure (pull vs. push promotions)

46. 46 8. Other Forms of Communication (contd.) Government regulations Government regulations Direct Marketing Direct Marketing Event Sponsorships Event Sponsorships Trade Shows: When attending an international trade show, the following guidelines might prove useful: Trade Shows: When attending an international trade show, the following guidelines might prove useful: Decide on what trade shows to attend at least a year in advance. Decide on what trade shows to attend at least a year in advance. Prepare translation of product materials, price lists, selling aids. Prepare translation of product materials, price lists, selling aids.

47. 47 8. Other Forms of Communication (contd.) Bring plenty of literature. Bring someone who knows the language or have a translator. Bring plenty of literature. Bring someone who knows the language or have a translator. Send out, ahead of time, direct-mail pieces to potential attendees. Send out, ahead of time, direct-mail pieces to potential attendees. Find out the best possible space, for instance, in terms of traffic. Find out the best possible space, for instance, in terms of traffic. Plan the best way to display your products and to tell your story. Plan the best way to display your products and to tell your story. Do your homework on potential buyers from other countries. Do your homework on potential buyers from other countries.

48. 48 8. Other Forms of Communication (contd.) Assess the impact of trade show participation on the company’s bottom line. Performance benchmarks may need to be adjusted when evaluating trade show effectiveness in different countries since attendees might behave differently. Assess the impact of trade show participation on the company’s bottom line. Performance benchmarks may need to be adjusted when evaluating trade show effectiveness in different countries since attendees might behave differently.

49. 49 Market Facilitators The Company The Competition The Customer Government Institutions Interest Groups Advertising Agencies Securities Analysts Market Research Firms Business Journalists PR Firms Trade Journalists Distributors suppliers of Complementary Products & Services Consultants Trade Associations OEM’s VAR’s

50. 50 Brand Management Wheel Adapted from P. Temporal “Advanced Brand Management: from Vision to Valuation” Promotions Word of Mouth Scholarships and Endorsements Advertising Product Performance and Development HR, Employee Morale, Brand Culture Service Standards and Behavior Public Relations Channel management, CRM, Internet Packaging Physical Premises Corporate Events BRAND STRATEGY

51. 51 9. Globally Integrated Marketing Communications (GIMC) Integrated Marketing Communications (IMC): Integrated Marketing Communications (IMC): IMC coordinates different communication vehicles – mass advertising, sponsorships, sales promotion, packaging, point-of-purchase displays, so forth. IMC coordinates different communication vehicles – mass advertising, sponsorships, sales promotion, packaging, point-of-purchase displays, so forth. Globally Integrated Marketing Communications (GIMC): Globally Integrated Marketing Communications (GIMC): GIMC is a system of active promotional management that strategically coordinates global communications in all of its component GIMC is a system of active promotional management that strategically coordinates global communications in all of its component

52. 52 9. Globally Integrated Marketing Communications (GIMC) parts. Both horizontally (country-level) and vertically (promotion tools) are used in GIMC. Both horizontally (country-level) and vertically (promotion tools) are used in GIMC.

53. 53 Relative Performance Relative Importance WEAKAVERAGESTRONG HIGH Threats(Remedy) Competitive (Enhance) Core Strengths (Maintain) MEDIUM Weaknesses(Enhance)LowerPriorityOpportunities (Increase salience) LOW LowerPriorityLowPriority Potential Opportunities (Increase salience) Strategic Matrix Interpretation Source: Asia Market Intelligence Areas w/ no clear image position Areas/Priorities for image correction Reasons for current franchise – must be maintained Increased salience of such existing strengths can significantly enhance positioning

54. 54 PERFORMANCE IMPORTANCE WEAKAVERAGESTRONG HIGH MEDIUM LOW AMI’s Pinpoint™ Analysis Beverage Market Example Source: Asia Market Intelligence Attractive Packaging Growing BrandAlways Fresh Buy Best High Quality Good Tasting Easy in Pubs Modern Promoted in Bars Good Advertising Trendy Easy to drink International standards Hear a lot about brandYoungerStrong Special Occasion Locally madeExpensive Good value Easy shop

55. 55 Emotional Brand Relationship Process Adapted from P. Temporal “Advanced Brand Management: from Vision to Valuation” Togetherness/partnership Awareness Information Respect Friendship Trust Loyalty

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59. 59 Marketing to the New Asia “Typical” Japanese: “Typical” Japanese: What is the extent of staff understanding? What is the extent of staff understanding? Does it affect decision-making? Does it affect decision-making? Are the insights still valid? Are the insights still valid? More sophisticated marketing research: More sophisticated marketing research: How to understand markets better? How to understand markets better? Does research account for: Does research account for: Reticent focus groups? Reticent focus groups? Middle-of-the-road responses to surveys? Middle-of-the-road responses to surveys? Should marketing research resources be increased given: Should marketing research resources be increased given: Growing heterogeneity of the Japanese market? Growing heterogeneity of the Japanese market? Competition for segments? Competition for segments?

60. 60 Distribution of Consumer Advertising and Sales Promotion Expenditures in Asia (by percentage) Media1986198719881989199019911992 Total Advertising and Promotion Advertising in the Four Mass Media NewspapersMagazinesRadioTV Sales Promotions Expenditures DMInsertsOutdoorsTransportationPOP Telephone Directory Exhibitions, visuals, etc. New Media Advertising Expenditures 100.066.025.16.54.529.933.93.96.26.54.43.22.17.60.1100.065.725.06.54.429.834.13.96.17.04.33.02.17.70.2100.066.325.56.74.329.833.53.85.87.04.32.72.17.80.2100.064.625.16.64.128.835.23.65.96.94.42.82.09.60.2100.064.224.46.74.228.935.63.55.96.94.52.72.29.90.2100.063.823.86.84.229.336.03.55.96.94.62.82.59.70.2100.063.622.36.74.330.336.24.15.96.94.92.72.98.80.2

61. 61 New Rules of Communications Current advertising: Current advertising: What is the extent of Mood over Message? What is the extent of Mood over Message? Importance of cognitive messages – does balance need to be shifted? Importance of cognitive messages – does balance need to be shifted? Advertising by a non-Japanese firm: Advertising by a non-Japanese firm: How can Mood be utilized? How can Mood be utilized? Other distinctively Japanese features to address? Other distinctively Japanese features to address? Who are best advertising partners? Who are best advertising partners? Given changes in industry Given changes in industry Given new marketing challenges Given new marketing challenges

62. 62 Shifting Realities of Marketing Strategies Old Model New Model Relationship with Customers Passive Consumer Co-producer Customer Needs ArticulatedUnarticulated Segmentation Mass Market Customized segments of one Product and Service Offerings Line extensions and modifications; R&D drives new products Customer-driven: Customization of products and services Customization of products and services Marketing interactions drive new product development Marketing interactions drive new product development

63. 63 Shifting Realities of Marketing Strategies Old Model New Model Pricing Fixed prices and discounting Value-based pricing – models and emergence of consumer-determined pricing Communication Advertising and PR Integrated, interactive customized marketing communication, education and entertainment

64. 64 Shifting Realities of Marketing Strategies Old Model New Model Distribution Traditional retailing and direct marketing to segments Direct (electronic) distribution and rise of third-party logistics services Strategic Intent Market Participation Leadership and innovation in target segment Supply chain Inventory Integrated global supply chain including global delivery; just- in-time

65. 65 Shifting Realities of Marketing Strategies Old Model New Model Geographic scope Domestic and international Global Competitive advantage Marketing power Marketing finesse