Reading: Applying Marketing Principles in the Global Environment
The Marketing Mix in Global Marketing
The same marketing principles that lead to marketing success in domestic marketing can also apply to global marketing. With the rapidly growing force of globalization, the distinction between marketing within an organization’s home country and marketing within external markets is disappearing very quickly. With this in mind, organizations are modifying their marketing strategies to meet the challenges of the global marketplace while trying to sustain their competitiveness within home markets. These changes have also prompted brands to customize their global marketing mix for different markets, based on local languages, needs, wants, and values.
The four Ps of marketing—product, price, placement, and promotion—are all affected as a company moves through the different phases to become and maintain dominance as a global company.
Global Marketing Mix: Product Plus Promotion
For multinational corporations (MNCs), the interplay between product and promotion is important because it can enable a company to make minor adjustments to a single product and its promotion strategy rather than totally revamping the product and promotion for different markets. Coca-Cola is a strong example of this principle. The beverage brand uses two formulas (one with sugar and one with corn syrup) for all markets. The product packaging in every country incorporates Coca-Cola’s contour bottle design and signature ribbon in some shape or form. However, the bottle can also include the country’s native language and appear in identical sizes as other beverage bottles or cans in that country’s market.
Before launching promotional programs, global companies must first define their target markets and determine the products that will resonate most with those consumers and businesses. This research can help inform marketing leaders about what course to take—localization versus standardization strategy—as they learn more about the target market’s receptivity to their goods and services. In addition to pinpointing which price point and distribution channels would best serve a country’s markets, global marketers must decide whether and how to customize their products. Product introductions are also important. Promotional tactics for global audiences can range from television commercials to social-media marketing on Facebook or YouTube. It is the job of global marketers to create and place promotional efforts in settings where local consumers will be most receptive to receiving and acting on those messages. Consumers in each target market have different media habits and preferences, and understanding these behaviours is important for selecting the right promotional mix.
After product research, development, and creation, promotion is generally the largest line item in a global company’s marketing budget. Using integrated marketing communications can significantly increase efficiency and reduce promotional costs, as messages across multiple channels reinforce and amplify one another. For organizations that pursue a standardized approach to promoting products and building brands, promotion is the crucial component of the mix that enables a global company to send the same message worldwide using relevant, engaging, and cost-effective techniques.
While a standardized global promotion strategy enables global brands to engage in uniform marketing practices and promote a consistent brand and image, marketers must also be prepared for the challenge of responding to differences in consumer response to marketing mix elements. Marketers must also fend off the full spectrum of local and global competitors, using promotional strategies, branding, and product development to full competitive effect.
Global Marketing Mix: Promotion
Before a company decides to become global, it must consider social, cultural, economic, political, competitive, and other factors relative to the global expansion it is considering. Creating a worldwide marketing plan is no simple task. It is virtually impossible for a company to communicate one identical message in a unified voice to global markets unless a company holds the same position against its competition in all markets (e.g., market leader, low cost, etc.). This is rarely the case, so most global companies must be open to some level of localization and be nimble enough to adapt to changing local market trends, tastes, and needs.
Global marketers must balance four potentially competing business objectives when developing worldwide advertising:
1) building a brand while speaking with one voice
2) developing economies of scale in the creative process
3) maximizing local effectiveness of advertisements
4) increasing the company’s speed of implementation
Global marketers can use several approaches when executing global promotional programs: exporting executions, producing local executions, and importing ideas that travel.
To successfully implement these approaches, marketers must ensure that their promotional campaigns take into account how consumer behaviour is shaped by internal conditions (e.g., demographics, knowledge, attitude, beliefs) and external influences (e.g., culture, ethnicity, family, lifestyle) in local markets. Areas for attention include:
- Language: Language differences are crucial in global marketing. There are nearly 3,000 languages in the world. Language differences have caused many problems for marketers in designing advertising campaigns and product labels. As discussed in this course’s discussion on naming, language can be problematic in the global naming process, with numerous examples of brand names that work well in some languages but have offensive or unfortunate meanings in other languages. Even countries that use the same language have words with different meanings. Consider the British terms “flat” (apartment in U.S. English), “pants” (underwear in U.S. English), and “lift” (elevator in U.S. English). Canadian English primarily follows language follows the British spelling. Canada has two official languages, French and English and within them many dialects. As Canada becomes more diverse our top five languages have changed. Marketing messaging and materials could easily go wrong if they are not adjusted to fit in-country dialect and usage. Language becomes even more significant if a country’s population speaks several languages. An additional language consideration for marketers is literacy rates. Depending on the target audience and market, literacy may be a significant issue. Some countries, primarily less-developed countries, still have low literacy rates, such as Afghanistan with just 38 percent adult literacy in 2015, and Haiti with 61 percent. India, with its burgeoning economy, reported a literacy rate of 72 percent in 2015. In many countries, literacy rates can differ widely between men and women in many countries, too.
- Colours: Colours may have different meanings in different cultures. This highlights the importance of careful testing of packaging and other visual elements intended for global audiences. For example, green is a sacred colour in the Muslim faith, and it is not considered appropriate for packaging and branding purposes in Middle Eastern countries. In Japan, black and white are colours of mourning and should be avoided on product packaging. Purple is associated with death in some Hispanic nations.
- Values: An individual’s values arise from his or her education, moral or religious beliefs and are learned through experiences. For example, as a consumer market, Americans place a very high value on material well-being and are much more likely to purchase status symbols than people in India. Chinese consumers highly value the sense of honor, dignity, and pride, and in some situations they will pay price premiums to “save face” by spending what is perceived to be an appropriate amount to preserve their honour. In Canada, our values, based on the UWaterloo’s Well-Being Index include:
- This translates into consumer behaviours where about 40% of consumers consider themselves non-loyal with their brands and half of consumers are willing to buy an unfamiliar brand if the price is right. Only 19% buy the same brand for each purchase. About 80% of consumers like to try new products, especially if it is a product from a familiar brand. Canadians are increasingly concerned about sustainable consumption, and the purchases of local, ethical or organic products are on the rise, especially for food and clothing. (Source: StatsCan 2017)
- Business norms: The norms of conducting business also vary from one country to the next. In France, for example, wholesalers do not like to promote products. They are mainly interested in supplying retailers with the products they need.
- Religious beliefs and holidays: In addition to affecting their values, a person’s religious beliefs can affect shopping patterns and products purchased. In the United States and other Christian nations, the Christmas holiday season is a major sales period. In China, the Chinese New Year brings out the shoppers. In India, a string of Hindu festivals including Dussehra and Diwali mark a holiday season that extends over multiple months.
Many other factors, including a country’s political or legal environment, economic status, and technological environment, can impact a brand’s promotional mix. Companies should monitor dynamics in their target markets and be ready to quickly respond and adapt to consumer needs and preferences.
Recommendations for Adjusting the Promotional Mix
When launching global advertising, public relations, or sales campaigns, global companies test promotional ideas using marketing research systems that provide results comparable across countries. These systems help marketers achieve economies of scale in marketing communications, since they reveal which messaging or creative elements contribute to a product’s market success. Marketing-research measures of nonverbal factors such as flow of attention, flow of emotion, and branding moments can provide insight into what is working in an advertisement or other marketing communication piece across multiple countries and languages.
The same recommendations about how to research and understand a target market in domestic settings apply to global settings. Marketing research is essential for marketers to build their understanding of which promotional tactics will be successful in any country or region. Informed experimentation and trial and error are also good teachers. Once marketers and brand managers discover what works (and what doesn’t) in the promotional mix, they can import this knowledge to infuse creative ideas into other markets. Likewise, companies can use this intelligence to modify various elements in their promotional mix that are receiving minimal or unfavorable response from global audiences.