Imm unit-08 (promoting product internationally)

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By :

Prof. Amit Kumar

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International marketing has become a major concern for business schools to develop global strategies to lead and sustain in the much expanded and

competitive arena. Liberalization thus catalyzing market competition, poses challenge for the

managers in handling the rigors of expanding global marketplace.

Syllabus aims at providing contemporary knowledge & skills on issues of global

marketing management.

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Importance of this course

Global Marketing Management

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Course: Global Marketing Management

1. Framework of Global Marketing Management

2. Global Marketing Research

3. Decision Making in International Marketing

4. Foreign Market Entry & Export Marketing

5. Product Planning & Development

6. Global Pricing Strategies

7. Global Distribution System

8. Promoting Product Internationally

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Global Marketing Management

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Global Marketing Management Promoting Product Internationally

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Contents

• International Marketing Communication Mix• Consumer Response Hierarchy Models• Process of International Marketing Communication• Marketing Communication Strategy• Factors influencing International Communication Decision• Major Tools for International marketing communication

Advertising (Standardization Vs Adaptation) Sales Promotion Personal Selling

• Framework for International Product-Promotion Strategies

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Introduction

• Effective communication is crucial to a firm’s success in international markets.

• In marketing terms, it is also referred to as the fourth P (Promotion) of the marketing mix.

Firms convey a set of messages to the target customers through a communication channel with the objective to not only create favorable response for its market offering but also to receive market feedback on a

regular basis.

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International Marketing Communication Mix

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Customer

SalesPromotionAdvertising

PublicRelation

Direct andInteractiveMarketing

PersonalSelling

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• Advertising is a paid form of communication carried out through newspapers, magazines, radio, television and other mass media by an identified sponsor.

• Sales promotion comprises short-term marketing measures which stimulate quick buyer’s action and result in immediate sale of the product.

• As a part of its image building exercise, a firm invests in public relations. It may include sponsorship of sports and cultural events, press release and even lobbying at government level.

• Direct marketing wherein a firm has direct interaction with the customers.

• Personal selling involves direct selling by firm’s sales force and is considered to be a two-way method of marketing communication, which helps in building strong customer relationships.

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Communication mix for international market is influenced bythe following factors:

• Market Size• Cost of promotional activity• Resource availability, especially finance• Media availability• Type of product and its price sensitivity• Mode of entry into international market• Market characteristics

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Consumer Response Hierarchy ModelsAIDA Model

• In this approach the main objective of the firm is to make the customers aware of the product and seek their attention through effective marketing communication, such as effective advertising.

• The awareness would, in turn, generate interest about the product in the consumer followed by the desire to own.

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Attention

Interest

Desire

Action

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Consumer Response Hierarchy ModelsInnovation-Adaptation Model

• Developed by Rogers, especially in reference to a new product.

• An this model, a firm first creates awareness and generates interest before the customer gets a chance to evaluate it first hand.

• The firm gives a final trail to the new product before it is actually adopted by the customers.

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Awareness

Interest

Evaluation

Trail

Adoption

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Marketing Communication StrategiesPush Strategy

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Firm ChannelIntermediary

EndCustomer

MarketingCommunication

ProductPush

MarketingCommunication

ProductPush

• In push strategy, the promotional program is primarily directed at the market intermediaries in the distribution system. It aims to motivate the market intermediaries to stock, promote and sell the products to the ultimate customer.

• The tools used in this strategy include personal selling, sales promotion and trade shows.

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Marketing Communication StrategiesPush Strategy

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Push strategy is usually found to be more effective under the following situations:• Lack of product differentiation• Weak brand identity• Low brand loyalty• Difficulty in appreciating product benefits• Industrial sales• Lack of access to advertising media• Low promotional budget• Short and direct marketing channels• Low wages (cost of employing salespersons is lower than

the advertising cost)

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Marketing Communication StrategiesPull Strategy

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Firm ChannelIntermediary

EndCustomer

• The process of motivating the customers to buy the product from the retailers through promotional programmes.

• A retailer asks for a product from a wholesaler and the wholesaler asks for the product from a distributor who gets the product from the firm.

Marketing Communication

Productrequest

Productrequest

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Marketing Communication StrategiesPull Strategy

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Pull strategy is more effective in the following situations:

• Perceived product differentiation• Strong brand identity• High brand loyalty• High-involvement product category• High promotional budgets

The techniques used full pull strategy include advertising and sales promotion campaigns directed at consumers, such

as discounts, gift vouchers, samples etc.In retail outlets where self-service is predominant, pull

strategy is more effective.

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Factor Influencing International Communication Decisions

1. Culture2. Languages3. Education4. Media Infrastructure5. Government Regulation

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Culture

• Parker Pen Company successfully used the slogan ‘Avoid Embarrassment- Use Quink’ in the US. The product was marketed in Latin America with the Spanish translation ‘Evite Embarazos -Use Quink’ of the above slogan that unintentionally meant ‘Avoid Pregnancy-use Quink’ resulting in an embarrassment for the company.

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Culture

• P & G showed an animated stork delivering Pampers diapers in its ad campaigns in the US. The same ad copy was used in Japan, only the language was changed. However, this ad did not work in Japan. The subsequent market research revealed that, unlike the Western folklore, storks, according to the Japanese folklore, are not expected to deliver babies.

• On the contrary, Japanese people believed that it is the giant peaches that float on the river that bring babies to the deserving parents. Subsequently, P&G changed the theme of the ad campaign to ‘expert mom’, a nurse who is also a mother theme.

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Culture

• Muhammad Ali is immensely popular in the Middle east. One of the car manufacturers used Muhammad Ali in its ad campaign for the region. The ad theme was, ’I am greatest’. The ad backfired and offended the Muslims who regard only the God as great.

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Language

The word ‘yes’ is understood differently in different countries.• In low-context societies, such as the USA and Europe, ‘yes’

means ‘yes’.• But in high-context societies such as Japan, ‘yes’ means ‘I am

listening to what you are saying’ and it does not necessarily mean ‘yes’.

• In Thailand, ‘yes’ means ‘OK’.

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Language

• Pepsi used the German translation of the slogan ‘come alive with Pepsi’ in its ad campaign in west Germany. However, the slogan when translated to German actually meant ‘come out of the grave with Pepsi’ and failed to generate any market response from the customers.

• General Motor translated its slogan ‘Body by Fischer’ to ‘Corps by Fischer’ in Belgium that offended the Belgian customers.

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Education• Literacy plays an important role in deciding what

communication tool and message should be used in international market.

• Market segments with low level of adult literacy need to be addressed by way of more audio-visual content rather than a written message.

• It should be ensured that the visuals convey the desired message rather than the text part of the communication.

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Media Infrastructure• Availability of media, that varies widely, often influences the

advertisers options for using a particular medium.• A cross country comparison of the share of advertising

expenditure on various mediums of communication is given:

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Print TV Radio Others Total

India 53 38 2 8 100

China 40 43 4 13 100

Mexico 28 57 15 0 100

Thailand 32 55 9 4 100

US 46 37 14 4 100

UK 59 29 5 7 100

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Government RegulationThe government regulations in various countries relate to thefollowing issues:• Advertising in foreign language• Use of pornography and sensuality• Comparative advertising referring to the competing products

from rival firms• Advertising related to alcohol and tobacco• Use of children as models• Advertising related to health food and pharmaceuticals

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Government RegulationIn Malaysia, the Ministry of Information’s advertising code

states that women should not be the principal object of an advertisement and should not be used to attract sales unless the advertised product is relevant to women.

Use of foreign words and expressions when French equivalents can be used are prohibited in France.

Most Arab countries prohibit explicit depiction of sensuality.

The Ministry of Saudi Arabia prohibits any advertising depicting unveiled women.

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Advertising (Standardization Vs Adaptation)

An international advertising firm may opt for a standardize advertising strategy or may customize it depending

upon the needs of various markets.

• The arguments in favor of standardized advertising campaign include economy of scale and uniform projection of a firm’s image in global markets.

• The adaptation of advertising may be either due to mandatory reasons such as regulatory framework or due to competitive market response.

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Advertising (Standardization)

Using the same advertising strategy across the country is termed as standardization. However, the extent or

degree of standardization varies.

• Ad with no change• Ad with changes in illustration

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Ad with no change

• Some ad is used with no change in theme, copy or illustration except for translation.

Benetton Group, the Italy-based global clothing retailer, uses global advertising campaign with the same theme, ‘The

United Colors of Benetton’.

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Ad with change in illustration

• When ads use different models, generally local models, for different countries but maintain the same ad copy and theme, also considered as standardized advertising.

Virginia Slims, the worldwide market leader in women’s cigarette, initiated a worldwide campaign in which it is

used local models in different countries.

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Universal appeals in international advertising are used infollowing situations:

• Superior Quality (BMW uses the slogan ‘ultimate driving machine’ worldwide)

• New Product/Service (Microsoft used sprinkler approach)• Country of Origin (Brands which have a strong country

stereotype, emphasize on ‘made in …’)• Celebrities (celebrities with universal appeal are engaged in

global product, Swiss watchmaker SMH promoted its Omega brand with actor Pierce Brosnan after the release of James Bond movie Golden Eye)

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Benefits of Advertising: Study be Nielson

In 2008, Nielson – a consulting firm, conducted a global study covering 25000 consumers spread

over 50 countries across the globe.

The objective of the survey was to provide a better understanding of consumer perceptions of the

benefits of advertising.

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Benefits of Advertising: Study be Nielson

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Benefits Global India

Advertising stimulates competition, which leads to better products and lower prices

AgreeDisagree

68%27%

81%17%

Advertising contributes to the growth of the economy

AgreeDisagree

72%20%

77%18%

Advertising provides useful information on important issues in society, as safety & health

AgreeDisagree

63%30%

80%17%

Advertising often gets one’s attention and is entertaining

AgreeDisagree

66%29%

87%10%

Advertising is important to fund sporting events, art exhibitions and cultural events

AgreeDisagree

81%13%

88%10%

By helping companies succeed, advertising creates jobs in those companies

AgreeDisagree

80%14%

85%10%

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Personal Selling

The cost of personal selling can be very high. One extreme case is the German software maker SAP, the world’s

leader in applications packages for client-server networks.

In the US, SAP America has removed the $140,000 annual limit on sales commission, making it possible for a

salesperson to earn as much as $2 million a year- more than what the company’s top German executive make.

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Sales Promotion

Sales promotion activities are constrained by local laws that may not permit premiums or free gifts to be given. Laws in

some countries control the amount of discount given at retail, others require permits for all sales promotions.

Belgium prohibits sweepstakes and, in Greece coupling is illegal.

Export promotion by Govt. of India, cover several areas such as production, quality control, export credit and finance,

and export incentives and assistance.

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Product-Promotion Strategy for International Markets

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Straightextension

Dualadaptation

Productadaptation

Promotionadaptation

Don’tChange

Promotion

Product

Pro

mo

tio

n

AdaptPromotion

Don’tChangeProduct

AdaptProduct

Develop New

Product

ProductInvention


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Straight Extension:

• In countries where the product performs the same function or satisfies the same needs and the conditions of the product use are same, the straight or dual extension strategy is used.

• The soft drink firm Coke and Levers for its Lux brand of soaps use the straight extension strategy in international markets. The same product is used with minor customization in marketing communication.

• The leading beer firm Heineken uses a standardized product and promotional approach the world over to maintain and communicate the uniform product quality of premium beer.

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Promotion Adaptation:

• In countries where the product performs the different function or satisfies the different needs but the conditions of the product use are same, the promotion adaptation- product extension strategy is used.

• Bicycles are cost-effective and affordable means of transport for the rural population in low-income countries, whereas it is the means for recreation and healthcare in high-income countries.

• In low-income countries sewing machines are generally perceived as a means to economize the household expenditure on stitching, and are widely gifted in rural areas as a utility item, whereas in high-income countries, sewing machines are considered to be a recreational item.

•

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Promotion Adaptation:

• In countries where the product performs the different function or satisfies the different needs but the conditions of the product use are same, the promotion adaptation-product extension strategy is used.

• In India, chewing gum is viewed primarily as children’s product whereas it is considered to be a substitute to smoking in the US. It is supposed to provide dental benefits in Europe while considered beneficial for facial fitness in Far Eastern countries.

• Under such situations, no changes are made in the product whereas the promotional strategy is customized so as to address customers’ needs.

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Product Adaptation:

• In countries where the conditions of the product use are different but product performs the same function or satisfies the same needs, the product adaptation-promotion extension strategy is used.

• The differences in electric voltage require product modifications in electrical appliances marketed in countries like India and the US. Under such situations, the promotional strategy remains the same but the product modification is made depending upon the customers’ need in different markets.

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Product Adaptation:

Around the world detergent is primarily used for washing and clearing cloths. Nevertheless, the washing habits of the

people vary widely in various markets. Indian housewives use lukewarm water whereas the French wash their cloths

in scalding hot water and the Australian use cold water.

Indian and the French generally use top-loading washing machines while most Europeans use front-loading

washing machines.

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Dual Adaptation:

• In countries where the functions of a product and the need satisfied are different and the conditions of the product use are also different, a firm has to customize both the product and the promotional strategies.

Clothing in the low-income countries serves the basic purpose of physical protection whereas in high-income countries or

even in urban centers of medium and low-income countries it symbolizes the personality and status of the user. Therefore,

a firm has to customize both product and its promotion.

•

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Product Invention:

• In case of product adaptation and the consumers do not posses the necessary ability to pay for the product, new product invention and development of new marketing communication is required.

• In the rural areas in Africa, Asia and Latin America, the buying power of the people is limited. Therefore, firms have to develop technologies suitable to the target markets.

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Product Invention:

The conditions in Africa necessitated the firms developing hand-powered washing machines for African markets.

Philips India introduced a hand wound radio in 2003, primarily to address the needs of rural India where the electrical supply is erratic and constant use of

batteries makes the radio expensive. The product has done exceeding well in rural markets.

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Imm unit-08 (promoting product internationally)

Leadership & Management