Chapter 7: THE INTERNATIONAL ENVIRONMENT FOR PROMOTIONandIMC 7.1.

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1 Chapter 7: THE INTERNATIONAL ENVIRONMENT FOR PROMOTIONandIMC 7.1

2 Cultural Communications Culture - Total Way of a People, the Social Legacy the Individual Acquires from His or Her Group 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 Culture is Typically Invisible to Those Who are Immersed In It, Making Communication Across Cultures Difficult7.2

3 Importance of International Communication Complex Social, Political & Economic Changes Affect International Communications Environment. Complex Social, Political & Economic Changes Affect International Communications Environment. International Developments Relevant to the Rise in International Commercial Communications: International Developments Relevant to the Rise in International Commercial Communications: Development of Trading Blocs - May be Prelude to a Rise in Nationalism Development of Trading Blocs - May be Prelude to a Rise in Nationalism Loosening of Political and Economic Constraints Loosening of Political and Economic Constraints7.3

4 Importance and Rise of International Communication (con’t) Liberalization of the Flow of Labor and Increase in movements of Peoples Across Borders Liberalization of the Flow of Labor and Increase in movements of Peoples Across Borders Growing Size of Ethnic Groups From Elevated Birth Rates Growing Size of Ethnic Groups From Elevated Birth Rates Rise of Cultural Borders and Barriers even as Economic Barriers Begin to Fall Rise of Cultural Borders and Barriers even as Economic Barriers Begin to Fall7.4

5 Overcoming Cultural Barriers in International Promotion Barriers to Creating Successful International Promotions Barriers to Creating Successful International Promotions Ethnocentrism Ethnocentrism Self-Reference Criterion Self-Reference Criterion7.5

6 How Might This American Ad Be Viewed as Ethnocentric 7.6

7 Overcoming Cultural Barriers in International Promotion (con’t) Cross-Cultural Research Helps Overcome Barriers Cross-Cultural Research Helps Overcome Barriers Secondary Data - Data Gathered by Someone Else Secondary Data - Data Gathered by Someone Else for Some Other Purpose Primary Data - Specific Data Collection Unique to a Promotional Situation Primary Data - Specific Data Collection Unique to a Promotional Situation Economic Conditions Economic Conditions Demographics Characteristics Demographics Characteristics Values Values Custom & Ritual Custom & Ritual Product Use & Preference Product Use & Preference7.7

8 Challenges in International Advertising Creative Challenge Creative Challenge Media Challenge Media Challenge Media Availability & Coverage Media Availability & Coverage Media Costs & Pricing Media Costs & Pricing Regulatory Challenge Regulatory Challenge7.8

9 International Markets Prefer Different Creative Executions 7.9

10 Challenges in International Sales Promotion, Direct Marketing and e-Commerce CHARACTERISTICES OF THE PRODUCT Product Prevalence & Use Product Prevalence & Use As Competitive Environment Becomes More Complex, Advertising Designed to Differentiate Brands will Become More Predominant 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 Products Moving into Growth Stage will Need to be Differentiated7.10

11 Challenges in International Sales Promotion, Direct Marketing and e-Commerce (con’t) LEVEL OF ECONOMIC DEVELOPMENT All Forms of Production & Direct Marketing are Applicable in Highly Industrialized Markets 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 In Less Developed Countries - Lack of Wide Range of Consumer Goods & Low Income Make Promotion a Non Issue Few Competitors Serve these Markets Few Competitors Serve these Markets Low Literacy Make Communication Difficult w/Print Media Low Literacy Make Communication Difficult w/Print Media Without TV, Radio & Newspaper, Direct marketing is Undermined Without TV, Radio & Newspaper, Direct marketing is Undermined Unsophisticated Mail Systems Unsophisticated Mail Systems7.11

12 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 Newly Industrialized Markets – Better Environment for Promotional Tools – Must be Managed Carefully Consumer Income Rises – More Consumer Goods are Introduced and Succeed 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 As Media Proliferate, Sales Promotions and Direct Marketing can be Introduced Based on Market-by- Market Assessment7.12

13 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 Highly Developed Distribution & Retailing Systems – Trade Channel Members Demand Support or Carry Marketers Brand Trade Allowances, Incentives, Point-of-Purchase Displays & Sampling Trade Allowances, Incentives, Point-of-Purchase Displays & Sampling Must Have the Means to Handle Coupon Redemption or Premium Distributions Must Have the Means to Handle Coupon Redemption or Premium Distributions Less Developed Trade Channels – May Not be Able to Use Traditional Promotional Techniques Less Developed Trade Channels – May Not be Able to Use Traditional Promotional Techniques Fragmentation of Trade Channels Fragmentation of Trade Channels Retailers - No Way of Handling Coupons Retailers - No Way of Handling Coupons Some Countries So Small May Not be able to Handle Point-of-Purchase Some Countries So Small May Not be able to Handle Point-of-Purchase Trade Show Trade Show7.13

14 Challenges in International Sales Promotion, Direct Marketing and e-Commerce (con’t) REGULATIONS Regulation of Promotion, Direct Marketing, and Regulation of Promotion, Direct Marketing, and e-Commerce Varies Widely Market-to-Market Most Sales Promotion Tools are Legal Across Europe Most Sales Promotion Tools are Legal Across Europe Sweepstakes are Either Heavily Banned or Regulated in All European Markets 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 In Japan – Value of Premium Offered with a Product is Limited to 10% of the Value of the Original Price7.14

15 Promotions in International Markets Must be Researched for Regulation and Legality 7.15

16 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 7.16

17 Promotion Agencies Around the World GLOBAL AGENCY Will Know Marketer’s Products & Current Promotion Program Will Know Marketer’s Products & Current Promotion Program Agency may then Either Adapt Domestic Campaigns or Launch New Ones Agency may then Either Adapt Domestic Campaigns or Launch New Ones Disadvantage is their Distance from Local Culture. Exporting Meaning is Never Easy Disadvantage is their Distance from Local Culture. Exporting Meaning is Never Easy INTERNATIONAL AFFILIATE Set Up as a joint Venture w/Local Agencies Set Up as a joint Venture w/Local Agencies Join Networks or Take Minority Ownership Join Networks or Take Minority Ownership Benefits in this Arrangement Benefits in this Arrangement LOCAL AGENCY Knowledgeable about Culture/Local Market Knowledgeable about Culture/Local Market Have Well-Established Contacts Have Well-Established Contacts One Problem-Less Standardization of Creative Effort One Problem-Less Standardization of Creative Effort7.17

18 Standardized vs. Promotional Customized Campaigns STANDARDIZED CAMPAIGNS USE SAME APPEAL & CREATIVE EXECUTION ACROSS ALLINTERNATIONAL 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 Primarily Uses Visual Appeal Communication is “Culture-less” Communication is “Culture-less” Brands that are Standardized Brands that are Standardized Products have Global Reputation Products have Global Reputation7.18

19 Certain Product Lend Themselves to Standardized Campaigns 7.19

20 Standardized vs. Promotional Customized Campaigns (con’t) ENVIRONMENT FOR STANDARDIZED PROMOTION IS MORE FAVORABLE DUE TO: Expansion of Global Communications Media Expansion of Global Communications Media Emergence of Global Teenager Emergence of Global Teenager Trend Towards Universal Demographic & Lifestyle Trends Trend Towards Universal Demographic & Lifestyle Trends Americanization of Consumption Values Americanization of Consumption Values7.20

21 Challenges in Developing & Managing A Global Sales Force DEVELOPING A GLOBAL SALES FORCE CAN BE ACHIEVED WITH: Expatriate Personnel Expatriate Personnel Local Nationals Local Nationals Third Country Nationals Third Country Nationals7.22

22 Challenges in Developing & Managing A Global Sales Force MANAGING THE GLOBAL SALES FORCE Training Training Expatriate Expatriate Foreign National Personnel Foreign National Personnel Training for Foreign Personnel Training for Foreign Personnel Motivation & Compensation Motivation & Compensation Companies Must Consider Culture Companies Must Consider Culture Guidelines Include Examining the Way Firms are Compensating People Guidelines Include Examining the Way Firms are Compensating People High Tax-Rate Countries – Sales Personnel Push for Packages instead of Direct Taxable Income High Tax-Rate Countries – Sales Personnel Push for Packages instead of Direct Taxable Income E.g., Cost of Living Allowances, Private School Tuition, etc. E.g., Cost of Living Allowances, Private School Tuition, etc. 7.23 7.23