MKTG373 Ch. 19: International Advertising and Promotion

Reasons companies are seeking out international markets
(1) Domestic markets offer limited opportunities for expansion because of slow population growth, saturated markets, intense competition, and/or an unfavorable marketing environment
(2) International markets offer opportunities for growth and profits
(3) globalization due to technological and system advances
(4) Imports are taking a larger and larger share of the domestic markets for products

*balance of trade deficit*: the monetary value of our imports exceeds that of our exports

Economic Environment
– A country’s economic conditions indicate its current and future potential for consuming

– Developed countries have the *economic infrastructure* in terms of the communications, transportation, financial, and distribution networks needed to conduct business in these markets effectively

– Developing countries lack purchasing power and have limited communications networks available to firms that want to promote their products or services to these markets

*BRIC Nations* – Brazil, Russia, India, and China

The demographic environment
Marketers must consider income levels and distribution, age and occupations distributions of the population, household size, education, and employment rates

– International advertisers often have difficulties with language (solved by using local expertise)

– Tastes, traditions, and customs must also be considered

*Cultural values*: beliefs and goals shared by members of a society regarding ideal end states of life and modes of conduct
– society shapes consumers basic values, which affect their behavior and determine how they respond to various situations

ethnocentrism
the tendency for individuals to view their own group or society as the center of the universe
Political/Legal Environment
Regulations differ owing to economic and national sovereignty considerations, nationalistic and cultural values, and the goal of protecting consumers not only from false or misleading advertising but, in some cases, from advertising in general
global marketing
When a company uses a common marketing plan for all countries in which it operates, thus selling the product in essentially the same way everywhere in the world

*Global advertising*
– falls under the umbrella of global marketing
– a way to implement the global marketing strategy by using the same basic advertising approach in all markets

Advantages of Global Marketing and Advertising
(1) Economies of scale in production and distribution
(2) Lower marketing and advertising costs as a result of reductions in planning and control
(3) Lower advertising production costs
(4) Ability to exploit good ideas on a worldwide basis and introduce products quickly into various world markets
(5) A consistent national brand and/or company image
(6) Simplification of coordination and control of marketing and promotional programs
Problems with Global Advertising
– very few products lend themselves to global advertising
– differences in culture, market, and economic development; consumer needs and usage patterns; media availabilities; and legal restrictions make it extremely difficult to develop an effective universal approach
When is globalization appropriate?
(1) brands or messages that can be adapted for a visual appeal, avoiding the problems of trying to translate words into dozens of languages

(2) Brands that are promoted with image campaigns that play to universal needs, values, and emotions

(3) High-tech products and new products coming to the world for the first time, not steeped in the cultural heritage of a company

(4) Products with a nationalistic flavor if the country has a reputation in the field

(5) Products that appeal to a market segment with universally similar tastes, interests, needs and values

*Imagery is important*

– Many of the marketers of high-tech products use global campaigns to promote their brands

Country of origin effect
Refers to a consumers general perceptions of quality for products made in a given country
– Ex: Swiss watches, French wine, and German beet or automobiles
Global Products, Local Messages
– Many companies are taking an in-between approach by standardizing their products and basic marketing strategy, but localizing their advertising messages

*pattern advertising* – Marketers ads follow a basic approach, but themes, copy, and sometimes even visual elements are adapted to differences in local markets

– important to adapt the language, models, scenic background, message content, and symbol components to reflect the culture and frame of reference of consumers in various countries

Centralization – organizational style for international advertising
All decisions about agency selection, creative strategy, and campaign development, media strategy, and budgeting are made at the firm’s home office
– likely when:
(1) market and media conditions are similar from one country to another
(2) the company only has one or a few international agencies handling all of its advertising
(3) the company can used standardized advertising; or,
(4) the company desires a consistent image worldwide

– can save money due to less need for staff and administration

Decentralization – organizational style for international advertising
Marketing and advertising managers in each market have the authority to make their own advertising and promotional decisions
– select ad agencies, develop budgets, conduct research, approve creative themes and executions, and select advertising media
Combination – organizational style for international advertising
A combination of the Centralized and Decentralized organizational style for international advertising

Home headquarters:
– has control over the advertising policy, guidelines, and operations in all markets

Advertising managers in regional or local offices submit advertising plans and budgets for their markets, which are reviewed by the international

Selecting an agency
Many companies *consolidate* their global advertising with one agency.
– Reasons include:
(1) Many companies recognize that they must develop a consistent global image for the company and/or its brands and speak with one coordinated marketing voice around the world
(2) increases cost efficiencies and gain leverage on agencies
(3) Agencies now have the ability to communicate and manage globally

Consolidating has some fallbacks:
– if the agency fails to deliver an effective campaign, the client has no backup agency to make a fast rebound and the search for a new agency can be very time consuming
– regional offices aren’t always accepting of working with non-local agencies

Some companies choose a domestic agency that belongs to a network of foreign agencies
– company can use a domestic-based agency, but still have international access

Criteria for agency selection
– ability of agency to cover relevant markets
– quality of agency work
– Market research, PR, and other services offered
– Relative roles of company advertising department and agency
– Level of communication and control desired by company
– Ability of agency to coordinate international campaign
– Size of company’s international business
– Company’s desire for local vs. international image
– Company’s organizational structure
– Company’s level of involvement with international operations
Localized advertising strategy – creative decision
the creative team must determine what type of selling idea, ad appeal, and execution style will work in each market
– Marketers must also figure out what type of advertising appeal or execution style will be most effective in each market
Selecting media
The characteristics of media differ from country to country in terms of coverage, cost, quality of reproduction, restrictions, etc.
– another problem faced is obtaining reliable media information such as circulation figures, audience profiles, and costs
International media
– traditional focus of international media has been magazines and newspapers
Factors to consider when developing international sales promotions
(1) economic development
(2) Market maturity
(3) Consumer perceptions
(4) Trade structure
(5) Regulations