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Global Marketing Management: One world, one voice? (part 6)

In Management, Marketing on March 24, 2013 at 5:35 pm

External conditions required for standardised advertising

country life

Integration of consumer habits

It seems as though we are far from living in a global village: nations retain individual economic and cultural norms. Computer-mediated and networked communications specialists, Van Alstyne and Brynjolfsson propose ‘Balkanisation’ as an alternative effect of the globalising technologies which have connected 25% of the world to the internet (2005). ‘Cyber-Balkanisation’ describes the groups which form through the internet, based on interest rather than geography. Balkanisation is a useful concept for advertisers seeking an international audience bound by consumer behaviour. Standardised advertising has been successfully used to appeal to wealthy elites and cosmopolitans of all nationalities.

Elites’ interaction with global fashion, food and entertainment can be explained as status positioning (Domzal and Kernan, 1993). The wealthiest members of a geographic community seek membership of a global ‘club’ through ownership of Cartier jewellery, Vuitton luggage and Hermes suits. This segment is being nurtured in developing economies. Efforts to encourage Asian middle classes to embrace LVMH’s European sophistication have taken off in recent years. In 2011, they accounted for 27% of total sales (Economist, 2011).

Additionally, a younger generation is maturing within a relatively globalised world, familiar with the postmodern dissolution of cultural values and indigenous ‘truths’. ‘Digital natives’ can freely explore and be influenced by global trends (BBC, 2009).

lego

Adverts which successfully translated across cultures to appeal to postmodern shoppers are more reliant on fantasy and lifestyle formats than cultural references, used the evocation of emotion rather than precise messages and used concrete representations of the product rather than metaphor (Domzal and Kernan, 1993). John Lyndon’s TV spot for Country Life is constructed from English stereotypes and requires knowledge of his Sex Pistols past. Alternately, the Lego advert requires no translation.

Conclusion

Standardising advertising across cultures reduces costs and has the potential to add value if multinationals are willing to adapt strategically and structurally. However, neither standardised advertising nor neat definitions of local taste can be universally applied.

While regional trade has grouped national economies providing opportunities for ads to ‘travel’, cultural barriers remain. Successful advertising targets audiences capable of appropriately decoding communications: different histories, associations and values interfere with this. However, market segments can be defined by qualities apart from nationally-specific traits. Elite and postmodern audiences engage with global trends.

The world is not a global village. It is divided by stages of economic development, cultural notions, local tastes and consumer behaviours. However, people simultaneously occupy several cultures and though national norms might close one ear, cosmopolitanism may open the other. With careful targeting, advertising may be standardised across cultures.

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Global Marketing Management: One world, one voice? (part 5)

In Management, Marketing on March 24, 2013 at 5:32 pm

External conditions required for standardised advertising

mccafe

Figure 5 French McDonald’s ad

Cultural integration

There are fears that globalisation will cause a homogenous world standard by ‘cultural imperialism’. Yet, we are protective of the ‘imagined communities’ we live in and can be resistant to change (Benedict Anderson, 1991). James Cantalupo, President of MacDonald’s International undermines the concept of cultural influence as a zero-sum game:

You don’t have two thousand stores in Japan by being seen as an American company. Look, McDonald’s serves meat, bread and potatoes. They eat meat, bread and potatoes in most areas of the world. It’s how you package it and the experience you offer that counts. [3]

With this ethos, McDonalds balances standardisation and local adaption. The below advertisement illustrates the brand associating itself with the ‘café culture’ in France.

Differences in moral and religious beliefs and even colour associations can make for wildly divergent interpretations of ads. For instance, the French associate red with danger, passion and revolution, while the Chinese think of good fortune and prosperity. Some transnational companies borrow national associations to increase the cultural capital of their brands (see figure 5). Language is a major barrier to standardised advertising. In a study of 400 agencies, only 11% of brands use the same language in all international markets (Duncan and Ramaprasad, 1995).

cafe rougechinese

Figure 6 Red in corporate websites

A study of more than 70,000 ads across cultures found few ‘travelled well’ and that the cost savings of standardisation were offset by a lack of local resonance (Millward Brown, 2007). Cluster analyses of countries, considering factors including media availability and economic development, support these conclusions leading Siriam and Gopalakrishna to argue:

[Advertisers] should view standardisation not as the transferability of an entire campaign across countries, but as a strategy that makes unified themes, images and even brand names, possible. (1999, p.146)

Standardised ads often draw on ‘universal values’, such as the desire to live long and comfortable lives or nurture the next generation. Johnnie Walker whiskey has capitalised on the theme of personal progress. Diageo’s ‘Keep on Walking’ campaign, which spread this message using local landscapes, increased sales by 48% in eight years (Hollis, 2007).

 jhonny walker

Figure 7 Johnnie Walker: Same theme, different location

As standardisation establishes products as global, multinationals leave themselves vulnerable to ‘out-localisation’. Greater expertise enables local firms to target underrepresented consumer segments. India’s Tata Motors developed its financial services to support rural Indians who had no access to loans and support.

This is not to say that products tied to a local culture cannot move between countries. Americans enjoy a dazzling array of cultural imports including Vietnamese restaurants, Reggae music, Egyptian novels, Chinese films, Indian clothes and Afghan jewellery. Yet, some product categories are easier to export, e.g. technology over local delicacies. Further, even countries with radically different cultures may have similar consumer segments which possess the same needs. Tata has leveraged its expertise in marketing to Africa and ASEAN countries with consumers closely resembling those within the firm’s home nation.

The emergence of consumer segments which can be found in all the principal regions of the world is explored in the penultimate section of this essay.

Global Marketing Management: One world, one voice? (part 4)

In Management, Marketing on March 24, 2013 at 5:25 pm

External conditions required for standardised advertising

currencies

Advertisers can only speak effectively with ‘one voice’ if we live in ‘one world’. Market connections and advanced communication technologies are creating a single marketplace. Yet, in 2012, we are finding that business remains relatively concentrated.[1] The following sections investigate the integration of national economies, cultures and consumer habits across the world to determine whether the age of standardised advertising has come.

Economic integration

Friedman’s ‘Golden Arches Theory of Conflict Prevention’ amusingly demonstrates the interdependence between multinationals and the development of nation-states, observing that no two countries with McDonald’s franchises had fought against one another (1999).[2]

Figure 4, shows international trade increasing into the 21st century, albeit at different regional rates. The most important drivers of the global economy are the triad nations – Japan, the EU15 and the USA. In 2008, they accounted for 73.6% of foreign direct investment (FDI) around the world (Rugman and Collinson, 2012).

In the same year, UNCTAD found upwards of half of the investment in developing countries goes to Brazil, China and India suggesting that investment is global and national economies with the greatest potential are rewarded. With these exceptions, however, recipients of FDI tend to be found in clusters around triad members. The USA invests in Latin America.  The EU15 seek markets in Eastern Europe.  Japan invests in Singapore, China and Thailand. FDI clusters often share financial practices and trading agreements, examples being NAFTA and ASEAN.

world exportsFigure 4 Source: Bureau for Economic Policy Analysis

National economies are grouped through trade with the world’s leading investors and traders. This suggests that businesses based in the triad nations might profitably standardise advertising across a FDI cluster as these markets will already be exposed to the values and consumer habits that pervade the region. HSBC has embraced local practise, positioning itself as ‘the world’s local bank’. The extent of cultural integration between countries is examined in the next section.

Global Marketing Management: One world, one voice? (part 3)

In Management, Marketing on March 24, 2013 at 5:15 pm

office

Internal conditions required for standardised advertising

Corporate structure

When MNEs hire several agencies for their regional knowledge, costs rise rapidly as effort is duplicated. Standardising advertising can reduce costs and simplify campaign management and corporate structure.

Highly centralised MNEs are more likely to produce consistent global advertising programmes. In Hill and James’s (1990) study of 175 promotional messages, both strategy and executives are more likely to be changed where business units were more independent, i.e. affluent, high-sales markets.

Management orientation

The attitudes of business leaders are important in determining the structure, strategy and outlook of an organisation. Highly centralised organisations, eager to extend advertising campaigns across regions are frequently governed according to an ethnocentric orientation – the belief that your practices are superior. However, Keegan and Green (2013) oppose the idea that an ethnocentric company can succeed globally, instead advocating a geocentric viewpoint which takes the best of extension and adaptive advertising strategies.

It is possible to cluster countries by the typical management orientation of their MNEs. Significantly, western corporations standardise more than non-western firms. Head of DMB&B’s Japan office explains that the distance and economic heterogeneity across Asia makes a pan-continental campaign less likely to succeed than in Europe (Duncan and Ramaprasad, 1995, p.59). This leads us to the external factors required before standardisation can be considered a sensible business decision.

Global Marketing Management: One world, one voice? (part 2)

In Management, Marketing on March 24, 2013 at 5:09 pm

coke

Advantages of standardised advertising

Advertising consists of communications aiming to persuade an audience to take or continue an action, ideally entering into a value-laden relationship with an organisation (Kotler and Armstrong, 2012). MNEs are increasingly standardising advertising in strategy, execution or language when marketing products in multiple regions.

Standardised advertsing

Figure 1  Duncan and Ramaprasad (1995)

The value created by marketing can be considered from the buyer, seller and buyer-seller perspective. Standardised advertising is expected to create value for the seller by increasing the willingness of consumers to pay, opportunities for licensing, efficiency of communications and increased demand at reduced costs, by using advertising concepts (which can take years to develop) in several countries. P&G has institutionalised this logic in a ‘search and reapply’ practice.

This would be a false economy if standardisation did not support the brand’s value to the buyer. In fact, studies find that global brands enjoy customer perceptions of superiority even when this is not objectively the case (Steenkamp et al, 2003). Questioning 1800 consumers from 12 countries revealed preference is based in the quality signalled by the brand’s global presence, the power of the ‘global myth’ and brand implications of social responsibility (Holt et al, 2004).

Standardised advertsing

Figure 2 Source: Holt et al, 2004

Quality signal

Establishing a single brand image is the most important advantage of standardised advertising. Globally-recognised brands have consistent visual, verbal, auditory or tactile identity across regions. Consistency contributes to the brand’s utility as a promise of quality. As advertising connects markets across cultures, the desirability of a product is evidenced by its widespread availability.

Additionally, connections with a particular market can increase quality perceptions. Ishal Ismail, owner of Malaysian KFC, reveals that, “Anything Western, especially American, people here love. It makes them feel modern when they eat it.” (Friedman, p.293-4, 1999) The veneration of foreign goods is prevalent among developing consumer segments. The Chinese say “Heaven is abroad.” (Ger, 1999, p.67)

Global myths

Thompson (2004) argued that myths, understood in this context as narratives (often based in binary oppositions and archetypes) which order buyer experience and position social groups within society, could be harnessed.

Mythologies often fixate on globally recognised company figures. Steve Jobs became the basis of creation, satanic, hero and resurrection myths respectively based in the company’s foundation, rivals IBM and Microsoft and Job’s dismissal and subsequent return to Apple (Belk and Tumbat, 2005). Myths give audiences a personification of the company while drawing upon familiar narrative dynamics. Engaging with these shared myths, advertisements and brands allows buyers to create an imagined global identity, shared with communities bound by consumption (Holt et al, 2004).

Social responsibility

Standardised advertising makes the reach of MNEs apparent. This places global brands under consumer pressure to be responsible in their business – interestingly, a criterion which does not affect preferences between local brands (Duncan and Ramaprasad, 1995). However, the cosmopolitanism of global advertising’s target audience means that assisting a community in one region will increase brand prestige worldwide.

pampers

Figure 3 Pampers’ vaccination campaign is widely publicised

Preconditions for standardised advertising

The value standardised advertising adds to the buyer-seller relationships can be significant. However, businesses will not automatically benefit. MNEs can only achieve this scale of advertising with appropriate corporate structure, consumer segments and concessions to local conditions. These preconditions are explored in the next section.

Global Marketing Management: One world, one voice? (part 1)

In Management, Marketing on March 24, 2013 at 3:52 pm

mcdglob

Introduction

Today, individuals, corporations and nation-states are able to reach around the world further, faster, deeper and more cheaply than ever before (Friedman, 1999).  Globalising processes have accelerated since the turn of the millennium, increasing trade, capital and investment movements, migration and knowledge exchange across geographic borders (IMF, 2000). These trends have led some to predict that the world is on the cusp of becoming a ‘global village’, a single cultural and economic community.

Certainly, the integration of national economies and advanced communication technologies have propelled us towards a single marketplace and given multinational enterprises (MNEs) an influence comparable to that of nation-states.[1] Advertising has evolved as businesses expanded their offer to domestic, export, international, multinational and global markets.

Practitioners and theorists disagree over whether advertising should be extended across markets or adapted to local conditions. This series of articles will investigate the advisability of standardising advertising across cultures. We will examine the advantages of this strategy, before investigating the conditions which preclude successful communication.

Definitions

  • Brand: A name, design, symbol, phrase or combination that identifies and differentiates
  • Global advertising: Advertising which meets global objectives by marketing on a worldwide scale
  • Global brand: A brand with appeal which transcends regional differences. Widespread availability and consistency across local and foreign markets
  • Globalisation: The integration of national economies and cultures
  • Global village: An expression of the idea that globalisation will integrate the world’s population to such a degree that interactions will be freed from geographic constraint

[1] In 1990, there were 60 countries with Gross National Product below US $10bn, while there were more than 235 MNEs with revenues in excess of this amount