European Marketing Professor Dr Marin A Marinov © University of Gloucestershire, United Kingdom May...

European MarketingEuropean Marketing

Professor Dr Marin A Marinov ©Professor Dr Marin A Marinov ©University of Gloucestershire, United University of Gloucestershire, United

KingdomKingdom

May 29 – June 2, 2006May 29 – June 2, 2006 University of WarsawUniversity of Warsaw

Topic One: Topic One: Is Standardized Marketing Is Standardized Marketing

Strategy Applicable in Strategy Applicable in Europe?Europe?

Goals:Goals:

•To address European diversityTo address European diversity

•To present some aspects of culture To present some aspects of culture heterogeneity of Europeheterogeneity of Europe

•To reflect on the applicability of To reflect on the applicability of Standardized Marketing Strategy in Standardized Marketing Strategy in EuropeEurope

What Is EuropeWhat Is Europe

• Which Europe are we talking about:Which Europe are we talking about:

– Western EuropeWestern Europe– European Union (EU15 or EU25)European Union (EU15 or EU25)– Geographically defined EuropeGeographically defined Europe– The above plus the Commonwealth of The above plus the Commonwealth of

Independent StatesIndependent States

Degree of Homogeneity and Degree of Homogeneity and Heterogeneity in EuropeHeterogeneity in Europe

• Depending on what Europe we refer toDepending on what Europe we refer to

• Environmental characteristicsEnvironmental characteristics– Political – convergence versus divergencePolitical – convergence versus divergence– Economic – degree of similarities and dissimilaritiesEconomic – degree of similarities and dissimilarities– Cultural – probably the most diverse featureCultural – probably the most diverse feature

• LanguagesLanguages

• Systems guaranteeing culture development (e.g., Systems guaranteeing culture development (e.g., education and help from the government)education and help from the government)

• ReligionsReligions

• Values and believesValues and believes

– Legal Legal – FinancialFinancial

Culture Homogeneity Culture Homogeneity (Using Hofstede’s Culture (Using Hofstede’s Culture

Dimensions) Dimensions)

• Anglo-Saxon Europe – Ireland and Anglo-Saxon Europe – Ireland and United KingdomUnited Kingdom– Low power distanceLow power distance– Low uncertainty avoidanceLow uncertainty avoidance– Highly individualisticHighly individualistic– Mostly masculineMostly masculine– Short-term orientedShort-term oriented


Dimensions)Dimensions)• Nordic Europe – Sweden, Norway, Nordic Europe – Sweden, Norway,

Denmark, Finland, Northern Germany, Denmark, Finland, Northern Germany, the Netherlandsthe Netherlands– Low power distanceLow power distance– Low uncertainty avoidanceLow uncertainty avoidance– Highly individualisticHighly individualistic– Strongly feminineStrongly feminine – defer from Anglo-Saxon – defer from Anglo-Saxon– Short-term orientedShort-term oriented


Dimensions)Dimensions)• Western Central Europe – most of Western Central Europe – most of

Germany, Luxemburg, Belgium, Germany, Luxemburg, Belgium, Switzerland, Austria, FranceSwitzerland, Austria, France– HighHigh/low power distance - heterogeneous/low power distance - heterogeneous– High uncertainty avoidanceHigh uncertainty avoidance - defer from - defer from

Anglo-SaxonAnglo-Saxon– Highly individualisticHighly individualistic– Masculine/Masculine/femininefeminine – heterogeneous – heterogeneous– Short-term to Short-term to medium-termmedium-term oriented - oriented -

heterogeneousheterogeneous


Dimensions)Dimensions)• Mediterranean Europe – Spain, Portugal, Mediterranean Europe – Spain, Portugal,

Greece, Italy, Southern FranceGreece, Italy, Southern France– High power distanceHigh power distance - defer from Anglo- - defer from Anglo-

SaxonSaxon– High uncertainty avoidanceHigh uncertainty avoidance - defer from - defer from

Anglo-SaxonAnglo-Saxon– CollectivisticCollectivistic/individualistic - heterogeneous/individualistic - heterogeneous– Masculine/Masculine/femininefeminine – heterogeneous – heterogeneous– Short-term to Short-term to medium-termmedium-term oriented - oriented -



Dimensions)Dimensions)• Eastern Central Europe – Czech Republic, Eastern Central Europe – Czech Republic,

Hungary, Poland, Slovakia, SloveniaHungary, Poland, Slovakia, Slovenia– High power distanceHigh power distance – differ from Anglo-Saxon – differ from Anglo-Saxon– High uncertainty avoidanceHigh uncertainty avoidance - defer from Anglo- - defer from Anglo-

SaxonSaxon– Individualistic/Individualistic/collectivisticcollectivistic - heterogeneous - heterogeneous– Masculine/Masculine/femininefeminine – heterogeneous – heterogeneous– Short-term to Short-term to long-termlong-term oriented - oriented -



Dimensions)Dimensions)• South-eastern Europe – Bulgaria, South-eastern Europe – Bulgaria,

Croatia, Romania, TurkeyCroatia, Romania, Turkey– High power distanceHigh power distance – differ from Anglo- – differ from Anglo-

SaxonSaxon– High uncertainty avoidanceHigh uncertainty avoidance - defer from - defer from

Anglo-SaxonAnglo-Saxon– CollectivisticCollectivistic - defer from Anglo-Saxon - defer from Anglo-Saxon– Mainly Mainly feminine feminine – defer from Anglo-Saxon– defer from Anglo-Saxon– Mostly Mostly long-termlong-term oriented - defer from oriented - defer from

Anglo-SaxonAnglo-Saxon

Is Standardized Marketing Is Standardized Marketing Strategy Applicable to Europe?Strategy Applicable to Europe?

• ‘…‘…it is clear that Europe stands apart from it is clear that Europe stands apart from all other regions that are characterized by all other regions that are characterized by either high population density and either high population density and homogeneous population (e.g., Japan and homogeneous population (e.g., Japan and China) or low density and heterogeneous China) or low density and heterogeneous population (e.g., North America). Europe population (e.g., North America). Europe represents one of the most potentially represents one of the most potentially lucrative markets in the world.’lucrative markets in the world.’

Kaynak and Jallat, 2005Kaynak and Jallat, 2005


• Europe is very diverse in:Europe is very diverse in:– CultureCulture– Geo-political characteristicsGeo-political characteristics– Level of economic, legal and financial Level of economic, legal and financial

developmentdevelopment– Buying behaviour (market features)Buying behaviour (market features)– Level of disposable income (Buyer Level of disposable income (Buyer

characteristics) characteristics)


• Competing economies with significant Competing economies with significant power – German, British, French, Italian power – German, British, French, Italian and to some extent Dutch and Swedishand to some extent Dutch and Swedish

• Dominating role of Anglo-Saxon Dominating role of Anglo-Saxon economic and business model applied economic and business model applied in continental Europe within the model in continental Europe within the model of social security which seems to erodeof social security which seems to erode


• Europe is undergoing constant change of Europe is undergoing constant change of significant nature that affectssignificant nature that affects– Geo-politicalGeo-political– EconomicEconomic– Cultural, etc. boundaries of regionsCultural, etc. boundaries of regions

• However diversity stays and is expected However diversity stays and is expected to stay in the foreseeable future, thus it to stay in the foreseeable future, thus it is very difficult to implement is very difficult to implement Standardized Marketing Strategy in Standardized Marketing Strategy in Europe even to apply Pan-European Europe even to apply Pan-European Marketing Strategy. Marketing Strategy.

Topic Two: Topic Two: European Customers and European Customers and

Market DefinitionMarket Definition

Goals:Goals:

•The European marketThe European market

•European market segmentationEuropean market segmentation

•Special issuesSpecial issues

European MarketEuropean Market• Composition – variety of integration blocs:Composition – variety of integration blocs:

– European Union (EU) – 25 member states European Union (EU) – 25 member states (intended homogeneity in economic, monetary (intended homogeneity in economic, monetary and political terms) – about 430 million peopleand political terms) – about 430 million people

– European Free Trade Agreement (EFTA) – 4 European Free Trade Agreement (EFTA) – 4 member states – small to tiny – very member states – small to tiny – very homogeneous economically – Iceland, homogeneous economically – Iceland, Liechtenstein, Norway and Switzerland – less Liechtenstein, Norway and Switzerland – less than 10 million peoplethan 10 million people

– Central European Free Trade Agreement Central European Free Trade Agreement (CEFTA) – 4 states prospective EU members (CEFTA) – 4 states prospective EU members Bulgaria (2007), Croatia, FYR of Macedonia and Bulgaria (2007), Croatia, FYR of Macedonia and Romania (2007) – about 40 million peopleRomania (2007) – about 40 million people

– Commonwealth of Independent States (CIS) – Commonwealth of Independent States (CIS) – all former USSR republics apart from the Baltic all former USSR republics apart from the Baltic countries - Azerbaijan, Armenia, Belarus, countries - Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine – almost 300 million peopleand Ukraine – almost 300 million people

European MarketEuropean Market

European MarketEuropean Market• High income European countries – High income European countries – LuxemburgLuxemburg, ,

Norway, Norway, IrelandIreland, Liechtenstein and Switzerland, Liechtenstein and Switzerland• High middle income countries – Andorra, High middle income countries – Andorra,

AustriaAustria, , DenmarkDenmark, , the Netherlandsthe Netherlands, Iceland, , Iceland, BelgiumBelgium, , SwedenSweden, , United KingdomUnited Kingdom, , FinlandFinland, , GermanyGermany, Monaco, San Marino, , Monaco, San Marino, FranceFrance and and ItalyItaly

• Low middle income countries – Low middle income countries – SpainSpain, , CyprusCyprus, , PortugalPortugal, , GreeceGreece, , SloveniaSlovenia, , MaltaMalta, , Czech Czech RepublicRepublic and and HungaryHungary

• Low income countries – Low income countries – SlovakiaSlovakia, , EstoniaEstonia, , Croatia, Croatia, PolandPoland, , LithuaniaLithuania, , LatviaLatvia, , BulgariaBulgaria, , Russian Federation, Russian Federation, RomaniaRomania, Turkey and FYR , Turkey and FYR of Macedoniaof Macedonia

• Very low income countries – All other countries Very low income countries – All other countries in Europein Europe


• Factors drawing European market apart:Factors drawing European market apart:– The enlargement of the EU extends and The enlargement of the EU extends and

enhances the diversity of consumers within the enhances the diversity of consumers within the UnionUnion

– Most multinationals have regional European HQs Most multinationals have regional European HQs – Matsushita, Kellogg’s, Ford, etc.– Matsushita, Kellogg’s, Ford, etc.

• Factors drawing European market together:Factors drawing European market together:– Industrial market is targeted on Pan-European Industrial market is targeted on Pan-European

basis -about 45 per cent of market transactions basis -about 45 per cent of market transactions in Europe are of industrial goodsin Europe are of industrial goods

– Companies selling consumer durables are Companies selling consumer durables are mostly using unified components of marketing mostly using unified components of marketing strategy – still promotion, distribution and strategy – still promotion, distribution and sometimes pricing policies differ across Europe.sometimes pricing policies differ across Europe.


• Industrial MarketsIndustrial Markets– The Airbus consortium (Germany, France, The Airbus consortium (Germany, France,

UK and Italy) sells a huge range of short- UK and Italy) sells a huge range of short- and long-haul aircraftand long-haul aircraft

– Automakers producing commercial Automakers producing commercial vehicles (Daimler-Benz, GM, Fiat, Renault, vehicles (Daimler-Benz, GM, Fiat, Renault, etc.) offer a huge rage of vehicles for the etc.) offer a huge rage of vehicles for the segments by engine size, performance segments by engine size, performance and exploitation conditions marketand exploitation conditions market


• Consumer markets - SegmentationConsumer markets - Segmentation– Formation of Formation of large urban clusterslarge urban clusters of mass of mass

European consumers are recommended by European consumers are recommended by many researchers – e.g., Paris, London, Milan, many researchers – e.g., Paris, London, Milan, Madrid, Vienna)Madrid, Vienna)

– Medium-sized regional niche clustersMedium-sized regional niche clusters are are recommended in cross-border regions (e.g., recommended in cross-border regions (e.g., high income consumers in Brussels-Paris region)high income consumers in Brussels-Paris region)

– Small local niche clustersSmall local niche clusters can be formed on the can be formed on the basis of lifestyle (e.g., suburban markets of basis of lifestyle (e.g., suburban markets of large urban areaslarge urban areas

Special IssuesSpecial Issues

• Consumers from low and very low Consumers from low and very low income countries may need targeting income countries may need targeting with different marketing strategies:with different marketing strategies:– Concerning the marketing mixConcerning the marketing mix– The degree of localization The degree of localization – The strategic priority formationThe strategic priority formation– The relocation of production facilities for:The relocation of production facilities for:

•Obtaining cost leadershipObtaining cost leadership

•To be closer to the marketTo be closer to the market

Topic Three: Topic Three: European Market IntelligenceEuropean Market Intelligence

Goals:Goals:

•To identify existing market To identify existing market opportunitiesopportunities

•To provide understanding of the To provide understanding of the varieties of marketing process applied varieties of marketing process applied in Europein Europe

•To provide data base for future To provide data base for future marketing activitiesmarketing activities

European Market IntelligenceEuropean Market Intelligence

• What are the feasible motives for What are the feasible motives for serving the European market?serving the European market?

• What is the level of commitment to What is the level of commitment to the European market and various the European market and various parts of it?parts of it?

• What resources and agencies are What resources and agencies are available for conducting European available for conducting European market research?market research?

European Market IntelligenceEuropean Market Intelligence

• Using existing publications for Using existing publications for preliminary information:preliminary information:– ESOMAR (European Society for Opinion and ESOMAR (European Society for Opinion and

Marketing Research) – organizes Marketing Research) – organizes conferences and publishes research findingsconferences and publishes research findings

– Official publications of various government Official publications of various government institutionsinstitutions

• Hiring research companies foreign/local Hiring research companies foreign/local to conduct market researchto conduct market research

Specific Issues in European Market Specific Issues in European Market IntelligenceIntelligence

• Demographic data – mostly reliable, depending Demographic data – mostly reliable, depending on source (government or other) on source (government or other)

• Educational stratification – different educational Educational stratification – different educational systems – process of unification – long-term systems – process of unification – long-term effecteffect

• Marital status or partner co-existence (hetero- Marital status or partner co-existence (hetero- and homo-sexual couples/families)and homo-sexual couples/families)

• Social stratification – can differ significantly Social stratification – can differ significantly across Europe – low, medium and high end of the across Europe – low, medium and high end of the marketmarket

• Promotional issues:Promotional issues:– Approaches to promotionApproaches to promotion– Promotional budgetsPromotional budgets

Topic Four: Topic Four: Market Entry and Country Market Entry and Country

SelectionSelection

Goals:Goals:

• To evaluate market entry strategies for To evaluate market entry strategies for EuropeEurope

• To make decision associated with country To make decision associated with country selectionselection

• To understand existing competition To understand existing competition challengeschallenges

Market Entry Strategies for Market Entry Strategies for EuropeEurope• What are theoretically available What are theoretically available

choices:choices:– Exporting – indirect, directExporting – indirect, direct– Contracting intellectual property – Contracting intellectual property –

licensing, franchisinglicensing, franchising– Investment Investment

•Forms: Greenfield or acquisitionForms: Greenfield or acquisition

•Outcomes: Strategic alliances, joint ventures, Outcomes: Strategic alliances, joint ventures, partially or wholly owned subsidiariespartially or wholly owned subsidiaries

•Management dilemmas: which party manages Management dilemmas: which party manages the venturethe venture

Market Entry Strategies for Market Entry Strategies for EuropeEurope• Benefits and risks from the application of Benefits and risks from the application of

various modes of market entry:various modes of market entry:– Benefits increase from indirect exporting to Benefits increase from indirect exporting to

wholly owned subsidiarywholly owned subsidiary– Risks also augment when we move along that Risks also augment when we move along that

line – Country risk evaluationline – Country risk evaluation

• Business/marketing strategy and market Business/marketing strategy and market entry strategy:entry strategy:– Cost leadership strategy requires investmentCost leadership strategy requires investment– Differentiation and focus strategies may be Differentiation and focus strategies may be

associated with any market entry strategyassociated with any market entry strategy

Market Entry Strategies for Market Entry Strategies for EuropeEurope• Current foreign involvement in European markets Current foreign involvement in European markets

(Percentages in value terms):(Percentages in value terms):– Importing – about 20 per centImporting – about 20 per cent– Contractual arrangements – about 10 per centContractual arrangements – about 10 per cent– Investment – more than 70 per centInvestment – more than 70 per cent

• Research based preferred modes of market entry Research based preferred modes of market entry by some European countries:by some European countries:– Strategic alliances (Austria, France, Germany, Italy, Strategic alliances (Austria, France, Germany, Italy,

Spain, United Kingdom) – most preferred and applied in Spain, United Kingdom) – most preferred and applied in France, last preferred and applied in GermanyFrance, last preferred and applied in Germany

– Franchising – Applied on a massive scale for fast food Franchising – Applied on a massive scale for fast food restaurants, trade and other services across Europerestaurants, trade and other services across Europe

– Investment – Joint ventures mostly applied in riskier Investment – Joint ventures mostly applied in riskier countries and counties with limited market intelligences, countries and counties with limited market intelligences, elsewhere preference for the formation of wholly owned elsewhere preference for the formation of wholly owned subsidiariessubsidiaries

Market Entry Strategies for Market Entry Strategies for EuropeEurope

Country SelectionCountry Selection• Regional or European market targeting:Regional or European market targeting:

– Pan-European or country specific approach Pan-European or country specific approach – remember similarities and differences – remember similarities and differences across Europeacross Europe

– Is testing of the market necessary – choice Is testing of the market necessary – choice of a lead country of a lead country

– How much commitment should be devoted How much commitment should be devoted to various countries – entering the markets to various countries – entering the markets of various countries with different modes of of various countries with different modes of market entry market entry

Market Entry Strategies for Market Entry Strategies for EuropeEurope• Regionalization of the European Regionalization of the European

market – sets of criteria to usemarket – sets of criteria to use– Geo-politicalGeo-political– DemographicDemographic– CulturalCultural– Membership in various integrations – Membership in various integrations –

Implications of various policies (quotas, Implications of various policies (quotas, tariffs, CAP, etc.)tariffs, CAP, etc.)

– Industry specific criteriaIndustry specific criteria

Market Entry Strategies for Market Entry Strategies for EuropeEurope• How to select countries:How to select countries:

– Market size, market specifics, purchasing power Market size, market specifics, purchasing power distribution and growth potential (Market and distribution and growth potential (Market and economic constraints)economic constraints)

– Competition Competition • Type and intensityType and intensity• Domestic or foreignDomestic or foreign• Positioning of competitorsPositioning of competitors

– Risks associated with market entry and operationsRisks associated with market entry and operations– Government and consumer attitudes – Government and consumer attitudes –

government policy; ethnocentrism and animositygovernment policy; ethnocentrism and animosity– Cost of market entry and transaction cost issuesCost of market entry and transaction cost issues– Infrastructure and business support structure Infrastructure and business support structure – Negotiation practices and lobbying opportunities – Negotiation practices and lobbying opportunities –

significance of domestic partner significance of domestic partner


CompetitionCompetition• Competition related issues (Michael Competition related issues (Michael Porter questions associated with Porter questions associated with competition:competition:– Will the competition retaliate to the entry?Will the competition retaliate to the entry?– When the retaliation take place?When the retaliation take place?– What impact will the retaliation have?What impact will the retaliation have?– How strong the retaliation will be?How strong the retaliation will be?– Can retaliation be controlled, managed or Can retaliation be controlled, managed or

influenced?influenced?– What strategy will work best in any What strategy will work best in any

particular contextsparticular contexts


CompetitionCompetition• Government factors influencing Government factors influencing competition:competition:– Protectionist policy towards local businesses: Protectionist policy towards local businesses:

Subsidies, credits with low or no interestSubsidies, credits with low or no interest– Favourable policy towards foreign business – Favourable policy towards foreign business –

Encouraging imports, helping local businesses Encouraging imports, helping local businesses enter in partnerships, low taxation, tax enter in partnerships, low taxation, tax holidaysholidays

– Financial regulations – centralized in the Euro Financial regulations – centralized in the Euro zone, but not in all other European countries zone, but not in all other European countries including the EU member states outside the including the EU member states outside the Euro zoneEuro zone

Market Entry Strategies for EuropeMarket Entry Strategies for EuropeCompetitionCompetition

• Entering European markets with a Entering European markets with a cost cost leadership leadership strategy:strategy:– In more affluent countries – target the most In more affluent countries – target the most

profitable segments – profitable segments – profit maximizationprofit maximization approachapproach

– In less affluent counties – target the mass market In less affluent counties – target the mass market consisting of highly price-sensitive customers with consisting of highly price-sensitive customers with price-oriented promotional campaigns – price-oriented promotional campaigns – building building market sharemarket share approach approach

– In highly competitive markets avoid attacking In highly competitive markets avoid attacking directly existing major competitors – reposition, directly existing major competitors – reposition, search for niche marketssearch for niche markets

– In less affluent countries patience is needed for In less affluent countries patience is needed for profit generation – such is rather limited or none profit generation – such is rather limited or none existent in the first years of operationexistent in the first years of operation

– Example: Dell Computers market entry in Europe Example: Dell Computers market entry in Europe in 1990s highly profitable since early 2000sin 1990s highly profitable since early 2000s


CompetitionCompetition• Entering European markets with Entering European markets with differentiationdifferentiation or or focus focus strategies:strategies:– In all country markets targeting of specific segments In all country markets targeting of specific segments

or niche markets would be beneficial – or niche markets would be beneficial – non-price non-price segmentsegment formation and targeting approach formation and targeting approach

– In high end markets in all countries it is advisable to In high end markets in all countries it is advisable to put an emphasis on augmented products (high value put an emphasis on augmented products (high value added products and provision of special or superior added products and provision of special or superior customer services)customer services)

– In all country markets attempt to lock in customers In all country markets attempt to lock in customers (create customer loyalty) with specialist product (create customer loyalty) with specialist product attributes mostly intangible (brand building and brand attributes mostly intangible (brand building and brand recognition)recognition)

Topic Five: Topic Five: Marketing Mix PolicesMarketing Mix Polices

Goals:Goals:

•Product policy decisionsProduct policy decisions•Price policy decisionsPrice policy decisions•Promotion policy decisionsPromotion policy decisions•Distribution policy decisionsDistribution policy decisions

Product Policy DecisionsProduct Policy Decisions

• Barriers to Trade:Barriers to Trade:– Compliance with EU or national standards and Compliance with EU or national standards and

legislationlegislation– Adherence the international (ISO) or national Adherence the international (ISO) or national

technical and product related standardization technical and product related standardization systemssystems

• Customization versus Standardization of Customization versus Standardization of products – most serious issues with products – most serious issues with FMCGs (French versus British FMCGs (French versus British approaches).approaches).

Product Policy DecisionsProduct Policy Decisions• Branding Decisions – Brand Positioning:Branding Decisions – Brand Positioning:

– Euro-mass brands: high volume, basic quality, low margins. Euro-mass brands: high volume, basic quality, low margins. Example: Example: Natrel Natrel deodorant launched by Gillette in 12 deodorant launched by Gillette in 12 European countries with same brand name, formula, European countries with same brand name, formula, packaging and promotion. More success in some countries, packaging and promotion. More success in some countries, less success in other.less success in other.

– Euro-niche brands: low to medium volume, high value Euro-niche brands: low to medium volume, high value added, high to very high margins. Example: added, high to very high margins. Example: American American Express Card Express Card introduced in Europe appeals to a small target introduced in Europe appeals to a small target group in most European countries – the business community group in most European countries – the business community engaged in international operations.engaged in international operations.

– Local national or regional brands in Europe: tailored to Local national or regional brands in Europe: tailored to specific national or regional tastes. Example: Regional beer specific national or regional tastes. Example: Regional beer brands in Germany (more than 150), one of the best selling brands in Germany (more than 150), one of the best selling British tabloid newspapers British tabloid newspapers The Sun The Sun targets a very specific targets a very specific readership, which is quite distinctive to the UK.readership, which is quite distinctive to the UK.

– In summary there is a small number of Euro brands because In summary there is a small number of Euro brands because of the huge variation of consumer tastes, legislation, media of the huge variation of consumer tastes, legislation, media preferences, etc. Thus targeting Europe with a branding preferences, etc. Thus targeting Europe with a branding strategy should be done very carefully. strategy should be done very carefully.


• Private Label and Original Equipment Private Label and Original Equipment Opportunities in Europe:Opportunities in Europe:– Importer and local producers use Importer and local producers use retailer’s retailer’s

brand names brand names – For private label goods (mostly – For private label goods (mostly food retailers) food retailers) CarrefourCarrefour, , TescoTesco, etc. In 2004 the , etc. In 2004 the share of such goods was 8 per cent in Italy, 17 share of such goods was 8 per cent in Italy, 17 per cent in France, 39 per cent in the UKper cent in France, 39 per cent in the UK

– Imports of parts and components for B2B Imports of parts and components for B2B markets in which firms serve as OEM (consumer markets in which firms serve as OEM (consumer durables) and industrial goods assembly – about durables) and industrial goods assembly – about 28 per cent of the goods sold in the 35 country 28 per cent of the goods sold in the 35 country EU in 2003 were produced using OEMEU in 2003 were produced using OEM


• Service Quality: Service Quality: – – Expectations for service qualityExpectations for service quality in the in the

developed and affluent European markets are developed and affluent European markets are very highvery high and mostly uniform; expectations and mostly uniform; expectations are are constantly increasingconstantly increasing in other parts of in other parts of EuropeEurope

- Special training programmes required at all Special training programmes required at all management levels to meet these management levels to meet these expectationsexpectations

- Meeting a certain Meeting a certain quality threshold a must quality threshold a must to to be able to serve successfully European marketbe able to serve successfully European market

Pricing Policy DecisionsPricing Policy Decisions• The Role of the EU and EMU (European The Role of the EU and EMU (European

Monetary Union) on Making of Pricing Monetary Union) on Making of Pricing Decisions:Decisions:– Price transparency and comparabilityPrice transparency and comparability– Tax policies – Impact of Tax policies – Impact of directdirect and and indirectindirect

taxes on prices – Price comparison across taxes on prices – Price comparison across EuropeEurope

– None unified VAT taxationNone unified VAT taxation– Subsidies – CAP (Common Agricultural Subsidies – CAP (Common Agricultural

Policy)Policy)

Pricing Policy DecisionsPricing Policy Decisions

• Pricing impact of the Euro (in 12 EU member Pricing impact of the Euro (in 12 EU member countries and 13 national currencies:countries and 13 national currencies:– Hampering unified pricingHampering unified pricing– Necessity of unified currency quotations Necessity of unified currency quotations

• Pricing outside EU and EFTA:Pricing outside EU and EFTA:– Hedging against currency fluctuations – If a Hedging against currency fluctuations – If a

contract price were quoted in Polish zloti contract price were quoted in Polish zloti sufficient amount of this currency may be bought sufficient amount of this currency may be bought on the future market to cover the contract. on the future market to cover the contract. Banks and specialized financial markets like Banks and specialized financial markets like LIFFE (London International Financial Future LIFFE (London International Financial Future Exchange).Exchange).

Promotion Policy DecisionsPromotion Policy Decisions

• Regulation of promotional activities Regulation of promotional activities of EU member countries:of EU member countries:– Centralized EU regulation exercised by Centralized EU regulation exercised by

the European Commission (EC) bodiesthe European Commission (EC) bodies– Country specific restrictions of Country specific restrictions of

promotional activitiespromotional activities– The role of media regulation – satellite The role of media regulation – satellite

television, cross-border print advertising television, cross-border print advertising France-Belgium; Austria-Germany; France-Belgium; Austria-Germany; Scandinavian countries Scandinavian countries

Promotion Policy DecisionsPromotion Policy Decisions

• Promotional expenditure in the EU:Promotional expenditure in the EU:– Advertising – about two-thirds of overall Advertising – about two-thirds of overall

promotional spendingpromotional spending– Sales promotion – approximately 15 per centSales promotion – approximately 15 per cent– Direct mail – circa 8 per centDirect mail – circa 8 per cent

• Advertising expenditure as a percentage of Advertising expenditure as a percentage of GDP (2004):GDP (2004):– Countries with advertising expenditure above Countries with advertising expenditure above

1.00 per cent of their GDP: Spain – 1.71 per cent; 1.00 per cent of their GDP: Spain – 1.71 per cent; UK – 1.68 per cent; Italy – 1.35 per cent; the UK – 1.68 per cent; Italy – 1.35 per cent; the Netherlands – 1.21 per cent; Denmark – 1.11 per Netherlands – 1.21 per cent; Denmark – 1.11 per centcent

– Countries with highest advertising expenditure in Countries with highest advertising expenditure in absolute figures (2004 in billion Euros): UK – 9.7; absolute figures (2004 in billion Euros): UK – 9.7; Germany – 7.1; Italy – 6.9; France – 5.2; Spain – Germany – 7.1; Italy – 6.9; France – 5.2; Spain – 3.8.3.8.

Distribution Policy DecisionsDistribution Policy Decisions

• EU cross-border restrictions:EU cross-border restrictions:– Customs control is mainly exercised when Customs control is mainly exercised when

entering the EU (exception most EU new entering the EU (exception most EU new member states) member states)

– Foreign exchange controls are now applied Foreign exchange controls are now applied when entering the new EU member states and when entering the new EU member states and goods originate from these statesgoods originate from these states

• Retail regulation:Retail regulation:– Closing hoursClosing hours– Restrictions in developments in urban and Restrictions in developments in urban and

suburban areassuburban areas

Distribution Policy DecisionsDistribution Policy Decisions• Retailing development and structure:Retailing development and structure:

– Excessive expansion of food retailing in Excessive expansion of food retailing in recent years – more foreign retail outlets, recent years – more foreign retail outlets, increased competition, concentration of increased competition, concentration of transaction pointstransaction points

– Concentration of grocery buying (Per cent Concentration of grocery buying (Per cent buying from the 10 largest retailers, 2003):buying from the 10 largest retailers, 2003):•Switzerland – 96%, Sweden – 93%, Germany – Switzerland – 96%, Sweden – 93%, Germany –

84%, the Netherlands – 82%, Belgium – 72%, UK – 84%, the Netherlands – 82%, Belgium – 72%, UK – 70%70%

•By contrast – Italy – 33%, Spain – 28%, Romania – By contrast – Italy – 33%, Spain – 28%, Romania – 24%24%

Topic Six: Topic Six: Marketing in the Emerging Markets Marketing in the Emerging Markets

of South-eastern Europeof South-eastern Europe

Goals:Goals:•To identify geo-political environmentTo identify geo-political environment•To analyse main economic featuresTo analyse main economic features•Common marketing features of the Common marketing features of the countries countries

Geo-Political EnvironmentGeo-Political Environment

• Consisting of four countries pre-1991:Consisting of four countries pre-1991:– Albania – small, underdeveloped, strictly Albania – small, underdeveloped, strictly

socialist country;socialist country;– Bulgaria – small to medium, somewhat Bulgaria – small to medium, somewhat

industrialized, the closest ally to the ex-USSRindustrialized, the closest ally to the ex-USSR– Romania – medium-sized, somewhat Romania – medium-sized, somewhat

industrialized, under personal dictatorship industrialized, under personal dictatorship – Socialist Federal Republic of Yugoslavia – Socialist Federal Republic of Yugoslavia –

medium-sized federation of six republics, the medium-sized federation of six republics, the most open to the West socialist countrymost open to the West socialist country

Geo-Political EnvironmentGeo-Political Environment

• Presently comprising nine countries with territory of Presently comprising nine countries with territory of about 640 000 square kilometres and population of about 640 000 square kilometres and population of about 58 million:about 58 million:– Albania – 3.5 million, Muslim countryAlbania – 3.5 million, Muslim country– Bosnia and Herzegovina – 4 million, in political and Bosnia and Herzegovina – 4 million, in political and

economic instability, federation, Muslim and Christian economic instability, federation, Muslim and Christian populationpopulation

– Bulgaria – 8 million, mostly Christian countryBulgaria – 8 million, mostly Christian country– Croatia – 4.5 million, economically stable, mostly Christian Croatia – 4.5 million, economically stable, mostly Christian

populationpopulation– FYR of Macedonia – 2 million, Christian and Muslim FYR of Macedonia – 2 million, Christian and Muslim

populationpopulation– Montenegro – 0.7 million, mostly Christian population, last Montenegro – 0.7 million, mostly Christian population, last

break through republic from former Yugoslavia (May 2006)break through republic from former Yugoslavia (May 2006)– Romania – 23 million, mostly Christian countryRomania – 23 million, mostly Christian country– Serbia – 10 million, mostly Christian countrySerbia – 10 million, mostly Christian country– Slovenia – 2 million, most advanced economically, EU Slovenia – 2 million, most advanced economically, EU

member (2004), mostly Christian countrymember (2004), mostly Christian country

Economic EnvironmentEconomic Environment• GDP per capita in purchasing power parity (PPP) in GDP per capita in purchasing power parity (PPP) in

2003:2003:– Slovenia – US$18 500, highest average puchasing powerSlovenia – US$18 500, highest average puchasing power– Newly expected EU member states:Newly expected EU member states:

• Bulgaria – US$6 800 (January 2007)Bulgaria – US$6 800 (January 2007)• Croatia – US$8 800 (2008)Croatia – US$8 800 (2008)• Romania – US$7 100 (January 2007Romania – US$7 100 (January 2007

– Rest of the countries:Rest of the countries:• Macedonia – US$4 800Macedonia – US$4 800• Serbia and Montenegro – US$4 700Serbia and Montenegro – US$4 700• Albania – US$3 900Albania – US$3 900• Bosnia and Herzegovina – US$3 800Bosnia and Herzegovina – US$3 800

• Comprising about 1 per cent of the world Comprising about 1 per cent of the world population it contributed in 2003 1.12 per cent to population it contributed in 2003 1.12 per cent to the world’s GDP measured in PPP.the world’s GDP measured in PPP.

Common Marketing FeaturesCommon Marketing Features

• Consumer behaviour:Consumer behaviour:– High price sensitivityHigh price sensitivity– Preference for purchasing locally produced Preference for purchasing locally produced

goods (especially food stuff)goods (especially food stuff)– Medium to high ethnocentrism and consumer Medium to high ethnocentrism and consumer

animosityanimosity– Predominantly frequent purchases of fresh Predominantly frequent purchases of fresh

foodfood– Medium to high conservatism in buying habitsMedium to high conservatism in buying habits– Low level of brand recognition and brand Low level of brand recognition and brand

loyaltyloyalty


• Promotion:Promotion:– High reliance on High reliance on television advertisingtelevision advertising by by

foreign companiesforeign companies– High reliance on High reliance on print and radio advertisingprint and radio advertising

by local companiesby local companies– Aggressive advertising by foreign Aggressive advertising by foreign

companies companies – Low degree of regulation of the promotion Low degree of regulation of the promotion

activities - underdeveloped legislation and activities - underdeveloped legislation and problems with law enforcementproblems with law enforcement


• Distribution:Distribution:– Highly fragmented distribution systemsHighly fragmented distribution systems– Quick development of centralized Quick development of centralized

puchasing through penetration of foreign puchasing through penetration of foreign retail chains – super- and hypermarketsretail chains – super- and hypermarkets

– Traditional retail outlets still popular with Traditional retail outlets still popular with low income buyerslow income buyers

– Small specialist retailers establishing Small specialist retailers establishing presence in these markets on franchise presence in these markets on franchise basisbasis

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European Marketing Professor Dr Marin A Marinov © University of Gloucestershire, United Kingdom May...

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