Transcript DIRECT MARKETING and e-COMMERCE

The Structure of the Advertising
and Promotions Industry:
Advertisers, Agencies, Media, and
Support Organizations
2
1
©2012
©2012
Cengage
Cengage
Learning.
Learning.
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All Rights
Reserved.
Reserved.
MayMay
not not
be scanned,
be scanned,
copied
copied
or duplicated,
or duplicated,
or posted
or posted
to atopublicly
a publicly
accessible
accessible
website,
website,
in whole
in whole
or inorpart.
in part.
Scope of the
Advertising Industry
• U.S. Advertising Spending
>$300 Billion
Worldwide Advertising Spending
>$600 Billion
2
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The Promotion Industry in Transition
ALTERED BY SIX
TRENDS
• Information in
Marketplace is an
Interactive System
between Marketers and
Consumers
• Proliferation of Cable
TV, Direct-Marketing &
Alternative New Media
Causes Media
Fragmentation
• Growing Investment in
Advertising Causes
Media Clutter
The Promotion Industry in Transition
ALTERED BY SIX TRENDS
• New Communications/Distributions
Channels
are Growing in Influence
• Fragmentation of Marketing Budgets
Resulting in Greater Portions of Budgets
going to Trade & Consumer Promotions
• Improved Information Systems Allow
Retailers & Distributors more Control over
Marketing & Promotional Decisions
Constant Transition: Trends
Affecting the Advertising and
Promotion Industry
• Consumer control: Social media, Blogs,
DVRs
• Media Proliferation, Consolidation, and
“Multiplatform” Media Organizations
• Media Clutter and Fragmentation
– Greater emphasis on IBP tools
• Crowdsourcing
• Mobile marketing/Mobile media
2
5
Growing Investment in Advertising Causes
Media Clutter
Structure of the Advertising
and
Promotion Industry (Exhibit 2.7)
Advertisers
Advertising and
Promotion Agencies
External Facilitators
Media Organizations
Target Audiences
2
7
Advertisers
Manufacturers and Service Firms
Procter & Gamble, Verizon
Trade Resellers
Sears, McDonald’s
Government
Federal, State, Local
Social/Not-for-profit Organizations
United Way, Nature Conservancy
2
8
Structure of Promotion Industry
MARKETERS
• Manufacturing and Service Firms
• Trade Resellers
• Federal, State and Local Governments
• Social Organizations
– March of Dimes
– Nature Conservancy
– MAKNA
Producer of
Consumer
products and
services, etc…
Organizations
that that buy
products to
sell to
consumers
2.5
2.5
The U.S. Government is a
Marketer that Relies on
Advertising
2.5
2
17
Used with permission of The American Red Cross
Social and
notfor-profit
organizatio
ns
also use
advertising
and
promotion
effectively
©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Role of the Advertiser in IBP:
Before the agencies get involved
• Describe the value that the firm’s brand provides
• Describe the brand’s position in the market
• Describe the firm’s objectives for the brand
in the near-term and long-term
• Identify the target market(s) that are most likely to
respond favorable to the brand
• Identify and manage the supply chain/distribution
system that will most effectively reach the targets
• Be committed to using advertising and other
promotional tools to grow the brand
2
18
Agencies
Advertising
Agencies:
• Full-Service
• Creative Boutique
• Digital/Interactive
• In-House
• Media Specialists
2
19
Promotion
Agencies:
• Direct Marketing/
Database
• Sales Promotion
• Event Planning
• Design Firms
• Public Relations
Firms
Some of the Agency Professionals
who Help Advertisers Prepare
Advertising/IBP
• Account planners
• Marketing
specialists
• Media buyers
• Art directors
• Graphic designers
• PR Specialists
• Creative directors
2
20
• Copywriters
• Direct marketing
specialists
• Sales Promotion
• Event Planners
• Web developers
• Social media
experts
Agencies
Advertising
Agencies:
• Full-Service
• Creative Boutique
• Digital/Interactive
• In-House
• Media Specialists
2
Promotion
Agencies:
• Direct Marketing/
Database
• Sales Promotion
• Event Planning
• Design Firms
• Public Relations
Firms
21
Structure of Promotion Industry (con’t)
AGENCIES
– Advertising Agencies
• Full Service Agency
• Creative Boutique
• Interactive Agency
• In-House Agency
• Media-Buying Agency
Grey Global Group,
Omnicom Group
Idea
factories
Visit http://www.ad4ever.com
Gap, Calvin
Klein, Revlon do
their own inhouse work
A German advertising agency with the
colorful name "indigo:"
Full Service Agency Services
• Account Services
• Marketing Research Services
– Account planner
• Creative and Production Services
• Media Planning and Buying
Services
• Administrative Services
2
24
Agency Compensation
Commissions:
• Around 15% of airtime fees—in flux
• 16 2/3 percent for outdoor media
• Web media is all negotiated
Markup Charges:
• Production cost + fixed %
Fee Systems:
• Hourly rates, or by project
Pay-for-Results:
• Tightly-specified objectives
2
• But, who is responsible for “results”
25
External Facilitators
• Marketing and Advertising Research
Firms
• Consultants
o
Database, Web, CRM, Traditional
Management
• Production Facilitators
o
Facilities, technicians, in-store displays
• Software Firms
o
Web tracking, fulfillment
2
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•
•
•
•
•
EXTERNAL FACILITATORS
Marketing and Advertising
Research Firms
Consultants
Production Facilitators
Information Intermediator
Trade Partners
Media Organizations
• Broadcast
o
TV, radio, satellite
• Print
o
Magazines, direct mail, newspapers, specialty
• Digital/Interactive Media
o
Internet, interactive broadcast
o
iPad, Smartphone
• Support Media
o
Outdoor, directories, event sponsorship, premiums,
point-of-purchase, branded entertainment
• Media Conglomerates
o
Time Warner, Disney, Liberty Media
2
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Media Organizations
and Trade Partners
Available to Marketers
 Broadcast Media
 Interactive Media
 Print Media
 Support Media
 Media Conglomerates
 Wholesalers, Retailers,
B2B Communities, Portals
Media Organizations and Trade Partners Available
to Marketers
Target Audiences
• Household Consumers
• Businesses
• Professionals
• Government Organizations
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AUDIENCES
•
•
•
•
Household Consumers
Trade Resellers
Business and Professional Buyers
Government and Social
Organizations
Design Firms Help
Marketers Develop Logo
Designs that Last,
Like this Pillsbury Logo
2.9
PROMOTION
and
IMC PLANNING
and
STRATEGY
The Promotion Plan
A PROMOTION PLAN IS:
• Direct Extension of Firm’s Marketing Plan
• A Specification of the Analysis, Strategy, and Tasks of the Promotional
Effort
• Needed to Conceive and Implement an Effective Promotional Effort
SIX MAJOR ELEMENTS OF A PROMOTIONAL PLAN ARE:
•
•
•
•
•
•
Executive Summary and Overview
Situation Analysis
Objectives
Budgeting
Strategy
Evaluation
3.2
The Promotion Plan
A promotion plan outlines the promotional tools or tactics
you plan to use to accomplish your marketing objectives.
To the new or inexperienced marketer, the promotion
plan might be mistaken as the entire marketing plan
because it outlines where the majority of the marketing
budget will be spent. It is, however, just one component
of the marketing plan - there are additional strategy and
planning components described in a marketing plan.
•Introduction
•Situation Analysis
•Objectives
Stages in the
Promotional Plan
•Budgeting
•Strategy
•Execution
•Evaluation
The Promotion Plan
EXECUTIVE SUMMARY & OVERVIEW
• Executive Summary-States Most Important Aspects of the Plan
• Overview-What is to be Covered in the Plan in General Terms
SITUATION ANAYLSIS
• Marketers and Agencies Lay Out Most Important Factors Defining the
Situations Facing the Firm, and Include:
– Demographic Trends
– Historical Context
– Industry Analysis
– Market Characteristics
• Type of Consumer
• Geographic Considerations
• Competition
3.4
SITUATION ANAYLSIS
• Product Characteristics
– Category
• Convenience Goods
• Shopping Goods
• Specialty Goods
– Stages in Product Life Cycle
• Characteristics of the Firm
–Push vs. Pull Strategy
–Funds Available
–Size of Sales Staff
–Extent of Firm’s Product Line
SITUATION ANALYSIS
• Characteristics of the Distribution
– Intensity of Distribution
• Intensive Distribution
• Selective Distribution
• Exclusive
– Length of Trade Channel
– Types of Trade Partners
Intensive distribution
Intensive distribution aims to provide saturation coverage
of the market by using all available outlets. For many
products, total sales are directly linked to the number of
outlets used (e.g. cigarettes, beer). Intensive distribution
is usually required where customers have a range of
acceptable brands to chose from. In other words, if one
brand is not available, a customer will simply choose
another.
Selective distribution
Selective distribution involves a producer using a limited
number of outlets in a geographical area to sell products.
An advantage of this approach is that the producer can
choose the most appropriate or best-performing outlets
and focus effort (e.g. training) on them. Selective
distribution works best when consumers are prepared to
"shop around" - in other words - they have a preference
for a particular brand or price and will search out the
outlets that supply.
Exclusive distribution
Exclusive distribution is an extreme form
of selective distribution in which only one
wholesaler, retailer or distributor is used in
a specific geographical area.
A Situation Analysis Needs to
Consider the Type of Trade
Partners that Will be Promoting
The Marketer’s Brand
3.7
The Promotion Plan
OBJECTIVES

Lays the Framework for Executions in Promotional Campaign and
Identifies Goals of a Marketer in Concrete, Measurable Terms
 Create & Maintain Image for Brand
 Increase Customer Awareness & Curiosity about a Brand
 Change Consumers’ Beliefs & Attitudes about a Brand
 Belief – Knowledge & Feelings Accumulated about a Brand
 Attitude is Overall Evaluation of Brand Based on
Knowledge/Emotions
 Influence Purchase Intentions
 Stimulate Trial Use
 Convert One-Time Users to Repeat Customers
 Switch Consumers from Competing Brands
 Encourage Brand Loyalty
 Stimulate More Frequent Use
 Increase Sales
Creating Awareness and Curiosity is a
Common Promotional Objective
The Promotion Plan
OBJECTIVES – KEY TERMINOLOGY
Brand Image
 Brand Awareness
 Top-of-the-Mind Awareness
 Beliefs
 Attitude
 Purchase Intent
 Trial Usage
 Repeat Purchase
 Brand Switching
 Brand Loyalty
 Increasing the Frequency of Use

The Promotion Plan
COMMUNICATIONS vs. SALES OBJECTIVES
– Increase Awareness of Brand Name to 40% of All Consumers in
Western US
– Create Trial Use by 15% of all Teenagers 13-15
– Communicate Superior Brand Performance Features to Target
Audience with Series of Advertisements over Next Six Months
CHARACTERISITICS OF WORKABLE PROMOTIONAL
OBJECTIVES
– Establish Quantitative Benchmark
– Specify Measurement Methods & Criteria or Success
– Specify a Time Frame
The Promotion Plan
BUDGETING - METHODS
• Percentage-of-Sales Approach
• Unit-of-Sales Approach
• Share of Market/Share of Voice
• Funds Available
• Objective & Task
The Promotion Plan (con’t)
BUDGETING FOR ADVERTISING
 Marketing Research
 Message Research
 Production Costs: Production Companies, Talent,
Site Costs
 Media Costs
 Agency Commissions/Fees
 Account Personnel Travel Expenses
The Promotion Plan (con’t)
BUDGETING FOR SALES PROMOTION
 Coupon Value and Dealer Handling Charges
 Contest and Sweepstakes Material and Charges
 Brochures and Collateral Material
 Trade Shows & Exhibits
 Trade Channel Partner Meeting & Entertainment
 Premiums
 Point-of-Purchase Materials
 Trade Allowances
 Trade Incentives
 Trade Training Programs
 Refunds/Rebates
3.57
Premiums—Like This One
Offered by Jell-O—Must be
Factored into Budget Planning
for Promotion
3.15
The Promotion Plan (con’t)
BUDGETING FOR DIRECT
MARKETING
• Uses a Simple Cost-Based Method
• Exact Bids Obtained - Printing, Sorting,
Bundling & Mailing for Print Campaigns
• Bids Obtained for Telemarketing,
Infomercial or Catalog Selling from
External Facilitators
Budgeting for Direct Marketing
Needs to Consider the Cost of
Printing and Mailing Materials
3.17
The Promotion Plan (con’t)
BUDGETING FOR WEBSITES & BANNER
ADS
• Costs for Web Sites - $30K to $100K
• Costs for Banner Ads - $10 CPM to $30 CPM
The Promotion Plan (con’t)
BUDGETING FOR PUBLIC RELATIONS
• Most Difficult of All Budgets to Set - Most
Expensive Public Relation Occurs During Crises
• Most PR Firms Work on Retainers - Set on an
Annual Basis
The Promotion Plan (con’t)
BUDGETING FOR PERSONAL SELLING
• Recruiting Costs
• Training Costs
• Travel Expenses
• Promotional Material - Samples, Catalogs, Product
Brochures
• Salaries & Benefits
• Incentive Programs - Bonuses & Rewards
The Promotion Plan (con’t)
STRATEGY
• Mechanism by which Something is Done
• Account Planner Assists in Strategy
– Works in Advertising Agency & Synthesizes all
Relevant Audience Research to Formulate
Promotional Strategy
3.21
The Promotional Plan (con’t)
EVALUATION
• Marketer Determines How
Promotional Program has Performed
- Factor by Factor
• Main Basis for Evaluation Communications and Sales
Objectives Set for the Program
Evaluation of the IMC Program Will Include the Effect
on Sales of Various Promotional Tools
IMC Management & Planning
STRATEGIC PLANNING OF IMC IS DIFFERENT FROM
TRADITIONAL USE OF MULTIPLE PROMOTIONAL TOOLS
• Outside-in Approach
• IMC Management Planning Requires Comprehensive
& Detailed Knowledge
– Customers
– Prospects
• Knowledge about Customer & Prospects
• IMC Management Plan - Built Around Brand Communications
• Control of IMC Management & Planning - Centralized
– Firms Appointing IMC or Marcom Managers
IMC Management & Planning (con’t)
MODEL OF IMC MANAGEMENT & PLANNING
• IMC Model Considers Complete Process
– Uses Promotion to Communicate to Target Markets
– Effectively Deploys Promotional Tools
– Corporate & Marketing Plans - Understood and Adopted as
Part of IMC Plan
– Databases - Help Identify & Profile Target Markets
– Promotional Objective - Dictate Mix of Promotional Tools
to Pursue for each Target
3.25
UNDERSTANDING
the
BUYER BEHAVIOR
70
Consumer Behavior
Consumer Behavior: a wide
spectrum of things that affect, derive
from, or form the context of human
consumption.
71
Perspectives:
1. Consumers are Systematic Decision
Makers
- Maximizing the benefits from
purchases defines the purchase –
consumers are deliberate.
2. Consumers are Active Interpreters
- Cultural/social membership defines
purchases.
72
Consumer Decision- Making:The
System Decision Maker
I think,
therefore
I buy
73
74
Household Consumer Behavior
Complex Process through which Individuals
Acquire, Use and Dispose of Products or Services
to Satisfy Their Needs and Desires
THE CONSUMER AS A DECISION MAKER - 4
STAGES
• Need Recognition: Functional or Emotional
Benefits
• Information Search & Alternative Evaluation
– Internal Information Search
– External Information Search
– Consideration Set
– Evaluation Criteria
75
Problem Recognition
• More cerebral
– Hierarchy of needs (personal fulfillment)
• Just the way life is
– Out of Stock (out of toothpaste)
– Dissatisfaction (Tired of same old clothes)
– New needs/new wants (New baby, buy a house,
buy a crib)
– Related Products/related purchases (Buy
computer, need printer)
– Peer pressure (Everyone has a cell phone,
so…)
– New products (Wow, with an iPod, I can run for
hours)
76
The Consumer Decision-Making Process
1. Need recognition
Functional or Emotional benefits
2. Information Search and Evaluation
Internal and External
Consideration Set
Evaluative Criteria
3. Purchase
4. Post-purchase use and
evaluation
Customer satisfaction
Cognitive dissonance
77
THE CONSUMER AS A DECISION MAKER 4 STAGES (con’t)
• Purchase -Consumer Commits to a
Brand with Purchase Decision
• Post Purchase Use & Evaluation
– Consumer Satisfaction
– Cognitive Dissonance
78
Post-Purchase Evaluation
• Dissatisfaction = performance is below
expectations
vs.
• Cognitive dissonance = buyer’s remorse
– Reassurance and opinions from others to
reaffirm decision
– Attentive to advertising after the fact
– If dissatisfaction and dissonance = negative
word of mouth
79
Four modes of consumer decision making
Emerging from:
• Sources of Involvement & Prior
Experience Create:
– Extended Problem Solving - inexperienced consumer
– Limited Problem Solving – new problem to solve
– Habit or Variety Seeking
– Brand Loyalty
80
The Consumer Decision-Making Process
1. Need recognition
Functional or Emotional benefits
2. Information Search and Evaluation
Internal and External
Consideration Set
Evaluative Criteria
3. Purchase
4. Post-purchase use and
evaluation
Customer satisfaction
Cognitive dissonance
81
Is this a Functional or
Emotional Appeal for
Foster Grant Sunglasses?
82
How Does This Ad Comply
with the Conditions of
Extended Problem Solving?
83
5.6
THE CONSUMER AS A DECISION MAKER: Key
Psychological Processes
• Attitudes and Beliefs
– Brand Attitudes
– Beliefs
– Salient Beliefs
• Multiattribute Attitude Models
– Evaluative Criteria
– Importance Weight
– The Consideration
– Beliefs
84
85
THE CONSUMER AS A DECISION MAKER
:Key Psychological Processes (con’t)
• Perception
– We Use it to Create a Reality
– Creates an Orientation to the World
– Has Specific Implications for Each
Consumer
• Experimental-Hedonic Influences
– Emphasis on Pleasure & Personal
Enhancement
– Consumers Buy & Consume to Feel Good
– In Contrast to Rigorous Cognitive
Evaluation
86
of Other Factors
The Consumer in a Sociocultural
Consumption Context
CULTURE
• Total Life Ways of a People
• The Way People Eat, Groom, Celebrate & Mark Their
Space/Position
• Cultures are Small
VALUES
• Express in Words & Deeds
• Examples - Individual Freedom, Propriety & Restrained,
Behavior, etc.
RITUALS
• Cultures Affirm, Express & Maintain Values
• Ritual-laden Holidays Perpetuate American Culture
87
Culture is the “Total Life
Ways of People.” How is
Life in Singapore Different
From the U.S.?
5.11
88
The Consumer in a Sociocultural
Consumption Context
SOCIETY
• Social Class
• Family
• Reference Groups
• Race & Ethnicity
• Gender
• Community
89
Is this Ad Using a
Reference Group Appeal?
90
5.13
91
Business Buyer Behavior
STAGES IN BUYING PROCESS
• Need Recognition
• Product & Scheduling
Specifications
• Evaluation of Products
• Product & Supplier Choice
• Product & Supplier Evaluation
92
Business Buyer Behavior
NATURE OF DECISION MAKING IN
BUSINESS MARKET
• Styles
– Rational
– Conservative
• Type of Decision
– Straight Rebuy
– Modified Rebuy
– New Task Buying
93
NATURE OF DECISION MAKING IN BUSINESS
MARKET (con’t)
• Buying Center
– Several Different People Involved in a Single
Decision
– May Require Different Promotional Tools
• Business Buyer Behavior on the Internet
– Internet Buying is Efficient
– Sites Offer Product & Pricing Information from Many
Sources Simultaneously
94
Evaluation Criteria Used in
Business Decision Making
•
•
•
•
•
•
Efficiency of Product Supplied
Certainty of Supply
Dependability in Meeting Schedules
Technical Assistance From the Seller
Product Features
Supplier Loyalty/Patronage
95
Issues in Communication
and Information Processing
INFORMATION PROCESSING &
PERPETUAL DEFENSES
• Two Major Obstacles to Overcome for a Message
to Have an Effect: Cognitive Consistency Impetus
and
Information Overload
– Cognitive Consistency Impetus
• Mental State
• New Information
• Cognitive Consistency
96
• Information Overload
–Consumers Employ Perceptual
Defenses to Simplify & Control
Information Processing
• Selective Exposure
• Selective Attention
• Selective Comprehension
• Selective Retention
97
–Shaping Attitudes via Perceptual
Route
• Low-Involvement Products
• Attitude Formation
• Peripheral Cues
–Any Feature of a Promotion that
Prompts a Pleasant Emotional
Response
98
Consuming in the Real World
Family
Values
Object
meaning
Gender
Social
Class
Reference
Groups
Culture
Race/
Ethnicity
99
UNDERSTANDING
the
MARKET ENVIRONMENT:
SEGMENTING, TARGETING
and
POSITIONING
100
China is an attractive target market for many
companies because of its huge population --- Kotler et
al.2006
101
Segmentation : breaking
down of a diverse,
heterogeneous markets
STP
Positioning:
Act of
assigning &
representing
a brand
Target Segment:
Focus to sub
group
102
1.Break the market into smaller,
more homogeneous segments
2.Specifically target the discrete
market segments
3.Position the product or service to
appeal to the targeted segments.
103
The Value of STP Marketing. WHY??
• Precise Specification of Marketing Objectives
• Better Understanding of Needs and Motives of
Target Market
• Better Understanding of Customers and Non
customers
• More Efficient Allocation of Resources
• Ability to Assess Strengths and Weaknesses
• Ability to Identify Messages to be Used Across
All Promotional Tools
• Better IMC Management of Promotional Effort
• Ability to Respond More Quickly to Changes in
the Environment
104
Beyond STP Marketing.
AFTER??
• STP Decisions are Continuously
Evolving Due to the Dynamic Nature
of Markets
• To Maintain the Profitability of
Brands, Segmentation Decisions
Must be Reassessed Regularly
• Product Differentiation Infuses STP
Decisions with Vitality
105
106
Demographic Segmentation
• Segmentation Based on Physical
Descriptors of Individuals
–Age
Are you a DINK?
–Gender
–Ethnic Background
What are
you?
–Education
–Marital Status
–Occupation
107
Brands in Common
Product Categories Can Be
Targeted to Audiences Based
on Ethnic Background
108
4.6
What is the Basis for
Segmentation in this
Message?
4.7
109
Identifying Target Segments
• Geographic Segmentation
–Climate & Topographical
Features
–Food Preferences & Preparation
Habits
–Entertainment Preferences
–Recreational Activities
110
Identifying Target Segments (con’t)
WHO you are?
WHAT you buy?
Do you need to spend > $ RM?
HOW you use?
• Usage Patterns & Commitment Levels
– Heavy Users
– Nonusers
e.g. nonsmokers
– Brand Loyal Users
Difficult to convert
– Switchers or Variety Seekers
First time buyer
– Emergent Customers
• Psychographic & Lifestyle Segmentation
– AIO’s
Target segment identified
• Benefit Segmentation
by various benefit packages
111
Psychographics and
Lifestyle segmentation
AOI
Lifestyles segmentation
provides insight into
consumer’s motivations.
e.g. Honda --Prestige?,
Passenger Safety?
Fuel Economy?
Club Med, Bintan,
Banyan Tree, etc
Benefit Segmentation
Divide market based on
different benefits that
consumer seeks.
112
A Classic Example of
Benefit Segmentation
4.10
113
Segmenting Business-to-Business Markets
Types of organization segmentation
Standard industrial classification (sic) segmentation
Size of organization segmentation
Geographic location segmentation
End use of segmentation
Horizontal & Vertical market segmentation
114
Prioritizing Target Segments
Capabilities of the organization
Size and growth potential of the
segment
Competitive Field
115
Formulating a Positioning Strategy
for a Brand
ESSENTIALS OF EFFECTIVE BRAND POSITIONING
STRATEGIES
• Substantive Value
• Consistency
• Simplicity & Distinctiveness
FUNDAMENTAL BRAND POSITIONING THEMES
• Benefit Positioning
• User Positioning
• Competitive Positioning
REPOSITIONING BRANDS
116
THE INTERNATIONAL
ENVIRONMENT FOR
PROMOTION
and
IMC
Cultural Communications
• Culture - Total Way of a People, the
Social Legacy the Individual Acquires from
His or Her Group
• Culture is Typically Invisible to Those Who
are Immersed In It, Making
Communication Across Cultures Difficult
Importance of International
Communication
• Complex Social, Political & Economic Changes
Affect International Communications
Environment.
• International Developments Relevant to the Rise
in International Commercial Communications:
– Development of Trading Blocs - May be
Prelude to a Rise in Nationalism
– Loosening of Political and Economic
Constraints
Importance and Rise of International Communication
(con’t)
– Liberalization of the Flow of Labor and Increase in
movements of Peoples Across Borders
– Growing Size of Ethnic Groups From Elevated Birth Rates
– Rise of Cultural Borders and Barriers even as Economic
Barriers Begin to Fall
Overcoming Cultural Barriers in
International Promotion
• Barriers to Creating Successful
International Promotions The tendency to view
– Ethnocentrism
– Self-Reference Criterion
and value things from
the perspective of
one’s own culture.
The unconscious reference to one’s own
cultural values, experiences and
knowledge as a basis for decisions.
How Might This
American Ad Be Viewed
as Ethnocentric
7.6
Overcoming Cultural Barriers in
International Promotion (con’t)
• Cross-Cultural Research Helps Overcome Barriers
– Secondary Data - Data Gathered by Someone
Else
for Some Other Purpose
– Primary Data - Specific Data Collection Unique to
a Promotional Situation
• Economic Conditions
• Demographics Characteristics
• Values
• Custom & Ritual
• Product Use & Preference
Challenges in International
Advertising
• Creative Challenge
• Media Challenge
–Media Availability & Coverage
–Media Costs & Pricing
• Regulatory Challenge
International Markets
Prefer Different Creative
Executions
7.9
Challenges in International Sales
Promotion, Direct Marketing and
e-Commerce
CHARACTERISTICES OF THE PRODUCT
•
Product Prevalence & Use
• As Competitive Environment Becomes More
Complex, Advertising Designed to Differentiate
Brands will Become More Predominant
• Products Moving into Growth Stage will Need to
be
Differentiated
Challenges in International Sales
Promotion, Direct Marketing and eCommerce (con’t)
LEVEL OF ECONOMIC DEVELOPMENT
• All Forms of Production & Direct Marketing are
Applicable in Highly Industrialized Markets
• In Less Developed Countries - Lack of Wide Range
of Consumer Goods & Low Income Make Promotion a
Non Issue
– Few Competitors Serve these Markets
– Low Literacy Make Communication Difficult
w/Print Media
– Without TV, Radio & Newspaper, Direct marketing
is Undermined
– Unsophisticated Mail Systems
Challenges in International Sales Promotion, Direct
Marketing and e-Commerce (con’t)
LEVEL OF ECONOMIC DEVELOPMENT (con’t)
• Newly Industrialized Markets – Better
Environment for Promotional Tools – Must
be Managed Carefully
– Consumer Income Rises – More Consumer
Goods are Introduced and Succeed
– As Media Proliferate, Sales Promotions and
Direct Marketing can be Introduced Based on
Market-by-Market Assessment
Challenges in International Sales Promotion,
Direct Marketing and e-Commerce (con’t)
STRUCTURE OF TRADE CHANNELS
• Highly Developed Distribution & Retailing Systems – Trade
Channel Members Demand Support or Carry Marketers Brand
– Trade Allowances, Incentives, Point-of-Purchase Displays &
Sampling
– Must Have the Means to Handle Coupon Redemption or
Premium Distributions
• Less Developed Trade Channels – May Not be Able to Use
Traditional Promotional Techniques
– Fragmentation of Trade Channels
• Retailers - No Way of Handling Coupons
• Some Countries So Small May Not be able to Handle
Point-of-Purchase
– Trade Show
Challenges in International Sales Promotion,
Direct Marketing and e-Commerce (con’t)
REGULATIONS
– Regulation of Promotion, Direct Marketing,
and
e-Commerce Varies Widely Market-to-Market
• Most Sales Promotion Tools are Legal Across
Europe
• Sweepstakes are Either Heavily Banned or
Regulated in All European Markets
• In Japan – Value of Premium Offered with a
Product is Limited to 10% of the Value of the
Original Price
Promotions in
International Markets
Must be Researched for
Regulation and Legality
7.15
Challenges in International Public
Relations
Companies have less control over global
publicity relative to domestic situations, and no
corporations are powerful enough to control a
host country’s media
Promotion Agencies Around the World
GLOBAL AGENCY
• Will Know Marketer’s Products & Current Promotion
Program
• Agency may then Either Adapt Domestic Campaigns or
Launch New Ones
• Disadvantage is their Distance from Local Culture.
Exporting Meaning is Never Easy
INTERNATIONAL AFFILIATE
• Set Up as a joint Venture w/Local Agencies
• Join Networks or Take Minority Ownership
• Benefits in this Arrangement
LOCAL AGENCY
• Knowledgeable about Culture/Local Market
• Have Well-Established Contacts
• One Problem-Less Standardization of Creative Effort
Standardized vs. Promotional Customized Campaigns
standardized campaigns use same appeal & creative
execution across all international markets
customized campaigns involve preparing creative executions
for each market a firm has created
a brand is well suited for a standardized campaign when:
• communication primarily uses visual appeal
• communication is “culture-less”
• brands that are standardized
• products have global reputation
Certain Product Lend
Themselves to
Standardized Campaigns
7.19
Standardized vs. Promotional Customized Campaigns
(con’t)
environment for standardized promotion is more
favorable due to:
• expansion of global communications media
• emergence of global teenager
• trend towards universal demographic & lifestyle
trends
• americanization of consumption values
Challenges in Developing &
Managing
A Global Sales Force
developing a global sales force can be
achieved with:
• expatriate personnel
• local nationals
• third country nationals
Challenges in Developing & Managing
A Global Sales Force
managing the global sales force
• training
– expatriate
– foreign national personnel
– training for foreign personnel
• motivation & compensation
– companies must consider culture
– guidelines include examining the way firms are
compensating people
• high tax-rate countries – sales personnel push for packages
instead of direct taxable income
• e.g., cost of living allowances, private school tuition, etc.