International marketing management lesson 09

141 Promotional Strategy9.0 AIMS AND OBJECTIVES After studying this lesson, you will be able to: Understand promotion mix in the international marketing Identify promotion appeals foll

9.10.1 Sales Promotion Objectives

9.10.2 Nature of Sales Promotion

9.10.3 Restrictions

9.10.4 Premium and Gifts

9.10.5 Price Reductions, Discounts and Sales

9.11.3 Unified vs Diversified Advertising Strategy

9.11.4 Points in Favour of Unified Advertising Strategy

9.11.5 Points against Unified Approach or Supporting Diversified Approach9.11.6 Right Approach – Pattern Standardisation

141 Promotional Strategy

9.0 AIMS AND OBJECTIVES

After studying this lesson, you will be able to:

 Understand promotion mix in the international marketing

 Identify promotion appeals followed by media selection

 Analyse market research before going in for promotion management in the

international market

 Describe the role of advertising in the international marketing

 Analyse international media decision-making

9.1 INTRODUCTION

The purpose of promotion is to communicate with buyers and also to influence them

Effective promotion requires an understanding of the process of persuasion and how this

process is affected by environmental factors The potential buyer must not only receive

the desired information but should also be able to comprehend that information and the

information must be sufficiently potent to motivate this buyer to react positively To

communicate effectively with someone means that certain facts and information are

shared in common with that person Communication is basically a five-stage process

consisting of source, coding, information, decoding and destination

9.2 FEEDBACK

Encoding is a step that transforms the idea or information into a form that can be transmitted

(written or spoken words) For a receiver, to understand the coded information, that

person must be able to decode these words The source can encode and the receiver

can decode only through experience The two large circles represent the field of

experience of each party If the two circles have common area, communication is relatively

easy because both individuals have similar psychological and social attributes

Source's Environmental Factors Receivers Environmental Factors

Source's Field of Experience

Encoding

Noise Receiver’s Field of Experience

Feedback

Figure 9.1: Process of Communication

Communication is more difficult if the overlapping area is smaller Such is often the case

with international communication If the circles do not meet, the communication is likely

impossible, i.e., the sender and the receiver have nothing in common and they, therefore,

have an extremely difficult time understanding each other Moreover, “noise” can easily

effect any one of the following stages, making the effect on the communication difficult

9.3 PRINCIPLES

First principle is that the message must reach a person’s sense organs This may soundsimplistic yet frequently the message sent is not received by the intended audience Toensure reception, the message must gain the attention of the receiver If the right media

is not available or if the wrong message channel is used the message may never get tothe receiver The second principle requires that the message does not contradict a person’scultural norms It is possible though not probable that a message that is not consistentwith the receiver’s beliefs may sometimes be coded enough to make the buyer re-evaluate traditional beliefs In most cases such a message is likely to be rejected, discarded

or distorted The effective promotion message is thus one that is accepted as part ofreceiver’s attitude and belief structure Understanding the principle is one reason thatAmerican Family Life Assurance Company was so successful in Japan with its “BankSet Sales” A premium was used in conjunction with Bank’s promotion because theJapanese have a favourable attitude towards savings The third principle requires thatthe sender creates a message that arouses the receiver’s need and that suggests aparticular action that will enable the receiver to achieve a desired goal If the suggestedaction results in several goals being realised simultaneously the potency of the messagecorrespondingly increases An advertiser thus, should identify relevant needs and motives.Motives can differ greatly among countries when even the same product is involved Incase of automobiles, the American car buyers usually replace their automobiles everyfew years and styling is important to them On the other hand, a British car ownerusually views the purchase as a lifetime commitment Similarly, buyers in developingcountries also consider the same except those who have abundant money to replacetheir cars every year

Finland Japan

United States Canada

United Kingdom Netherlands

France

Argentina Colombia Italy

NATIONAL INCOME PER CAPITA (U.S DOLLARS)

Source: Intensity of Advertising Effort, Derived from Data on Advertising Expenditures for the International

Advertising Association and Published in The International Advertiser, August 1963.

Figure 9.2: Status of Advertising in Various Markets

143 Promotional Strategy

9.4 PROMOTION MIX

Success in persuading customers to buy hinges on an understanding of the workings of

the human mind and the types of communications that stimulate thoughts and emotions

Thus, promotion is a field in which the effects of the basic systems of a society are

strongly felt Education, religious codes, social values and all the other forces that mould

the minds and feelings of people are the backdrop against which advertising and other

forms of promotion must fit

9.4.1 Status of Promotion

Figure 9.2 gives a picture of the status of advertising in various markets The dominant

pattern is the pronounced rise in level of expenditures from the low income countries to

the high income ones In the former, advertising generally runs about 1 per cent of

national income, while at the upper end it approaches 3 per cent Furthermore, many of

the expenditure ratios fall on a rough curve, suggesting that there is some systematic

relation between economic development and advertising There are also clear deviations

from the curve — like France and Germany—which indicate that, if there is a systematic

relation, it is subject to variation in individual national societies

What is behind these patterns? First, there is a progression in the structural aspects of

marketing that causes the differences in the overall level of expenditure In primitive

societies, goods are produced to meet a limited group of known needs, producers and

consumers are close, and the quality of products is easily seen and judged As we move

up the economic scale, these conditions change, creating needs for advertising Buyers

have enough money to become selective in their purchasing, so promotion is employed to

persuade them to buy the output of a particular maker The producer is separated from

the consumer by widening levels of middlemen Rather than relying on their often

inadequate selling efforts, he turns to advertising to stimulate demand The complexity of

products increases, so the buyer needs more and more knowledge to make his decisions

Sellers find that advertising methods permit them to present facts and arguments to the

consumer

These problems accelerate as incomes increase That is, they increase faster than the

rate of rise of incomes This in itself would justify acceleration in the rise of advertising

But because of the increase, advertisers are confronted by a problem in the limited

attention and absorption capacities of the buyer He has just two eyes and two ears and

only twenty-four hours per day So more producers try to get more complex messages

into a limited “receiver”, with a result somewhat similar to the noise level as a cocktail

party grows The total advertising effort intensifies as each advertiser tries to make

himself noticed in competition with the increasing efforts of others Finally, a saturation

plateau is reached beyond which further increments of effort to claim the consumer’s

attention produce little return According to one estimate, the average US consumer is

exposed to some 1600 ads each day Since the advertising expenditures in the United

States have held close to 2.8 per cent of national income since 1955, despite further rises

in per capita income, we may assume that this is the saturation level In most countries,

however, the percentages are well below that, and as their incomes rise, creating more

competition for buyer attention, progress along the general trend of the curve is likely

Second, we have the question of notable deviations from the general pattern such as

those for France and Germany These would appear to be due to national attitudes

toward advertising, attributable to various causes The aversion to promotion that exists

to a degree in the United States is quite strong in many countries In Europe, the feelings

In the background also is the economic waste argument of some government economists.They cannot usually place actual limitations on advertising, but in countries wheregovernment planning and controls are strong, their attitude can hold down the level Inthe late 1960s, the British Labor Party government was taking a very critical positiontoward high advertising expenditures and had implemented some restrictive moves againstproducers of detergents The Indian government is heavily staffed with socialisticallyinclined economists who lean to this view They have, from time to time exerted enoughpressure, so that they have probably deterred the development of advertising When anIndian government team made a study of tire prices in 1954, one of its sharpest criticismswas on the high level of promotion costs Although it could not specifically direct thecompanies (Firestone, Goodyear, and others) to reduce their selling effort, the government’sgeneral power to control other aspects of the foreign companies’ activities meant thatthe managements had to give weight to its views Finally, in those countries whereeconomic growth is slow, sellers become resigned to a static market and see little purpose

in advertising These various deterrents are common in many countries, but it wouldappear from the French and German examples that they are stronger in some thanothers

The status of promotion in a society sets broad limits for promotion programmes Clearly,

it is appropriate to think in terms of less intensity of effort in countries at a lower level ofeconomic development and to act with restraint where promotion has a lower level ofpublic acceptance However, within these broad limits, management has wide range ofdiscretion Some companies, like Colgate and Pepsi-Cola, have advertised very heavily

in low income countries It is true that because of inadequate marketing data, the results

of their advertising are not specifically definable However, their overall success attests

to the soundness of their practices Thus promotion programmes must be designed onthe basis of specific analysis of objectives and practicalities, not just by conforming tonational patterns

Check Your Progress 1

1 What is encoding?

2 What is the purpose of promotion?

9.5 PROMOTION APPEALS

In creating promotion appeals for foreign markets, the marketing manager needs to bear

in mind the full range of consumer characteristics like buying abilities, motivations andpurchasing practices

145 Promotional Strategy

The widespread of buying abilities abroad has considerable bearing on the pitch of

promotion appeals We have noted that in low income countries the market for some

products is largely limited to a small wealthy class, for others the market extends down

into the middle class, and for only a few is there demand among the impoverished masses

Advertising approaches have to be grated to the characteristics of the income groups

that can buy the products The wealthy elite of the lowest income countries, for example,

can only purchase automobiles, so their luxury qualities may well be emphasised Somewhat

higher in the scale of economic development, a demand appears among the new middle

classes For these consumers emphasis on economy of operation is in order, because

they are often hard pressed financially Beyond such specifics of advertising appeals, it

is important to keep the income level of buyers in mind because it underlies much of the

discussion that follows — both of other aspects of appeals and of media selection

Customer motivations are, of course, the heart of the promotion man’s planning The

varied influences of social, educational and other systems provide a wide range for

imaginative design of appeals The critical decisions lie in determining which of them will

be significant in a given situation For example, consider the experience of a US company

that decided to introduce dishwashers in Switzerland, one of the more affluent European

societies The time saving aspects of the dishwasher seemed to fit the new pattern of

life evolving for the upper middle class housewives They were less and less able to

afford servants, and their time economy was moving in the direction of US women The

success of instant coffee, cake mixes, and the like seemed to indicate that they were

receptive to time saving products Thus the company initially planned to emphasise the

convenience aspects of the product as it does in the United States However, a

pre-introduction study showed that this was not appropriate Despite the limits on their time,

Swiss housewives still feel under strong pressure from social codes that call for hard

work and devotion to domestic duties So the company switched its approach to one of

sanitation and emphasised the greater sterilisation possible with high temperatures in a

dishwasher, an idea that appealed to the spic and span Swiss housewife

Another set of motivations is involved in the use of US television commercials to sell

home products in some Latin American countries At first glance it seems a dubious

practice to show, for example, an American housewife busily doing her dishes with XYZ

detergent on a Mexican television screen Most Mexican owners of television sets are in

the middle or upper classes, where servants are still almost universally employed A

woman from these classes rarely deigns to wash the dishes It is a mark of social status

that she can afford to have others do such mantel work So one’s first reaction is that the

advertiser is curring his own throat by running counter to the values of the society

However, there are two and possibly three other motivations at work in the situation that

make this sort of commercial highly effective First, there is the high quality reputation of

products made by US companies Nationalistic pride may be offended if a company

blatantly says it is a US firm in its ads, but the use of commercial’s made in the United

States makes the point quite effectively Second, to many of the Latin American

housewives, especially those in the rising, ambitious middle class, the material

accoutrements of the US way of life are an ideal Thus a favourable association is built

up between the idea of buying XYZ detergent and having a kitchen equipped like that of

a US housewife

The third possibility, while difficult to prove, may be a very strong point At the same

time that middle-class Mexicans are admiring US material goods, there is strong vein of

envy and sense of inferiority in their emotions They are all too conscious of their lower

standard of living, a feeling aggravated by political sensitivities toward the giant to the

north The picture of the US housewife washing her own dishes is slave to these feelings

in Australia with no apparent adverse effect But Australia is unusual both in its distancefrom the United States and its lack of friction generating relations Canadians, whileethnically and economically similar to the Australians, harbour strong antagonism towardthe United States because they fear its size and resent the influence of American ways,which they feel are destructive of their own culture Most of the less developed countriesenvy and fear US economic wealth and political power Europeans have assorted negativefeelings, ranging from the anti-Anglo-Saxon attitudes of the French to the Colonel Blimpsuperiority complex persisting in some Britons On the other hand, there are feelings ofadmiration for the American way of life and respect for US made products, especially indeveloping nations One key to successful advertising abroad is fitting appeals amongthese mixed feelings.

On the other hand, studies in Europe show that US products are considered superior byonly a limited portion of buyers (with substantial variation by country and product).Experience indicates that a clear identification as a US company may have a negativeeffect, so it is better just to build the company and its brands in advertising withoutreference to their US origins

So far as purchasing practices are concerned, the important points for creating promotionappeals are the differences in who makes the buying decisions and the problem ofcomplexity of decisions In foreign markets, the wife and children generally play a smallerrole in purchases than the husband, and that in industrial buying much more decisionmaking is concentrated at the top levels of management, especially in the family-ownedcompany All of these factors clearly bear on the character of promotion employed Forexample, the massive efforts of food companies to court the younger generation in theUnited States may not be so appropriate abroad, where the mother generally still decideswhat the children should eat But change is occurring here too For example, one companyintroduced a new detergent in Holland by advertising solely in one managzine read bychildren under ten and offering a miniature sports car as a premium The success of theintroduction indicated that at least in this case the children had a very strong influence onbuying decisions

The complexity of decision making is most important in the area of brand image andinstitutional advertising We have already observed the value to the buyer of confidence

in the quality standards of a manufacturer US manufacturers, as a group, have afavourable reputation in this respect But, although the general reputation is a good start,each firm must make its own name in each market Finding the best way to achieve thisobjective may require some ingenuity, as the XYZ detergent story indicates Most UScompanies, especially in the less-developed highly nationalistic countries, are not eager

to emphasise their foreign ownership but they know that they profit from keeping thepublic conscious of it because their ties with US research and manufacturing know-howare recognised marketing strengths Beyond that, a company benefits from types ofadvertising material that build its image as a responsible, reliable firm whose products, incontrast to those of many local manufacturers, the consumer may purchase with assurance

of consistent quality

These, then, are the fundamental lines of analysis upon which promotion appeals should

be developed for foreign markets In addition, there are, in all markets, some legal

147 Promotional Strategy

boundaries restraining advertising Some of these are simply concerned with morals and

good taste Others, such as food and drug labelling, are designed to aid and protect the

buyer A few are restrictions on the basic approach to promotion The most notable

instance is the German prohibition of comparative references in ads A company cannot

says its product is the “best” or even that it is “better” than others in any respect This

prohibition has a logical basis in the concept that such comments amount to slander

against other firms But, noting that this same logic would apply in any country, we must

conclude that its continuation is more related to the status of promotion in Europe

Hong Kong (84%) Recall 45 Israel (13%)

Mexico (13%) Yugoslavia (17%)

Germany (67%) Australia (65%)

Great Britain (14%)

Australia (42%) USA (39%) Israel (38%) Profitability 21 Israel (6%)

Hong Kong (7%) Argentina (8%)

Finland (53%) Yugoslavia (39%)

Coupon return 15 Argentina (0%)

Brazil (0%)

Denmark (27%) Hong Kong (25%) Sweden (25%) Other 18 Yugoslavia (4%)

Denmark (5%) Israel (6%)

Finland (50%) Mexico (34%)

Source: Synodinos, Keown and Jacobs “Transnational Advertising Practices,” 1999.

The figures in Table 9.1 give a broad picture of the variations in media that advertisers in

several countries use to present their stories to the public At the back of these figures

are a number of differences in the availability of media and their effectiveness in reaching

buyers

In most markets, the same variety of communications media found in the United States

exist In addition, the showing of short commercials in movie theatres, a practice that

used to be common in rural United States, is widely utilised abroad and here and there

imaginative managements have created quite novel media For example, one company

supplies taped music interspersed with commercials to be played on long distance buses

in Rhodesia The chief gaps in media availability are due to government restrictions,

especially in the broadcast media There is a feeling in many countries, especially in

Europe and several British-oriented nations like Australia and Canada, that radio and

television programming should be under public rather than private control This feeling

arises in part from a fear of the potential political strength of the media Europeans have

of countries, the government has retained ownership of the broadcast media and nocommercials are allowed.

The chief breaks in this pattern have been forced by economics — radio is relativelyinexpensive, and it serves as a useful outlet for government messages Television is farmore costly both in initial equipment and in programming Therefore, governments havebeen more willing to allow private business to share the cost by accepting commercials.The British, for example, have stoutly resisted commercial radio, but after holding theline on television for several years, they gave in and permitted the formation of acommercial network

The selection of media generally turns on the question of which means is most effective

in reaching a particular audience with a particular message On the whole, the capabilities

of the media abroad are similar to those in the United States: outdoor ads can conveybrief visual messages; newspapers are a good means to promote the current sale ofmany specific products But the coverage and economic aspects of foreign media aredifferent from their US counterparts

Although there are many selective aspects of media in the United States, the generalpattern is one of universal coverage paralleling the fairly homogeneous middle-classmarket Virtually all people read newspapers, listen to the radio, watch television, etc.There is, by contrast a high degree of selectivity in the coverage of most media in low-income countries Illiteracy and low educational levels eliminate much of the lower class,especially in rural areas, from the coverage of press media Low buying power restrictsmost ownership of television sets to the middle and upper classes On the other hand,radio ownership goes fairly low on the income scale, and the practice of bars and otherestablishments of allowing radios to blare loudly into the streets further broaden itscoverage in many low-income areas

In addition to these broad coverage patterns, finer distinctions of coverage are important.Cinema advertising, for example, can be used to reach virtually the whole urban population

of most countries because movie attendance is high even in the poorer ones But because

of the social stratification common abroad, it is also possible to pinpoint a particularincome level by showing commercials only in theatres that cater to the upper classes or

by using them only in the slum theatres Likewise, geographic objectives often leadnaturally to selection of certain media In some countries, a few leading newspapersprovide the best national press coverage, at least among more educated people This istrue in Turkey, for example, and to some degree in England, where the London Times,the Manchester Guardian, and a few other papers have a wide national readership Onthe other hand, there are countries like Germany where newspapers are basically localand magazines provide the only broad national press coverage Probably as a result ofthis condition, German magazine advertising rose about 250 per cent from 1957 to 1966,while newspaper ads increased by 135 per cent

This selectivity of coverage of media is, of course, related in most cases to the sameconditions that create the segmentation of markets — buying ability, education and soforth And the result is that the problem created by market segmentation—that ofpinpointing advertising on the groups that offer real potential is solved quite naturally, atleast in broad terms, by the selectivity of media coverage In each market, it is generallypossible to find at least one medium that fits any company’s needs Pepsi-Cola and

149 Promotional Strategy

Coca-Cola have invested heavily in radio time wherever it is available, because it

penetrates to the lowest levels among which they have developed good sales Automobile

companies, on the other hand, find that television and quality magazines reach the foreign

buyer who can afford their products

The economics of various selling methods provide the second level of selection Advertising

is in part a product of the inefficiency of personal selling It does have other capacities

that personal selling lacks, but, on balance, taking a message personally to every prospective

buyer is more effective than reaching him indirectly through advertising media The

limitation on personal selling is largely economic, and as we move from high wage to low

wage countries, the feasibility of utilising personal selling in preference to advertising

rises The effects of this shift can be seen in the practices of US companies Colgate, for

example, has virtually no direct contact with customers in the United States; except for

distributing samples in supermarkets, it relies almost entirely on advertising In

low-income countries, however, the company has employees who visit virtually all urban

homes once or twice a year with a basketful of company products Ostensibly, they are

salesmen and they may in fact sell enough to pay for a good part of their cost But their

main function is to make the merits of Colgate products known to the public Because

their wages are very low, the method is economical, whereas it would be prohibitively

expensive in the United States

Economic differences are also found among the main advertising media Outdoor displays,

for example, require a large amount of labour-paining individual signs, pasting up sheets,

etc In the United States, high labour costs are a prime factor behind the stagnation of

outdoor advertising; expenditures in the medium dropped from an already small 2 per

cent of the total in 1958 to 1 per cent in 1966 In low-income countries, on the other hand,

low labour costs make it relatively inexpensive to slap up signs and paint slogans on

buildings Thus, some companies appear literally to have plastered the countryside with

their names—it is hard to walk a block in a Mexican city, for example, without seeing a

“Tome Pepsi-Cola” sign

9.7 MARKET RESEARCH

The numerous questions that have arisen in our discussion of product policy, distribution

methods and promotion in foreign markets bring us naturally to the subject of market

research Extensive and thorough market investigations seem the obvious way to obtain

information with which to answer these questions And, indeed, market research does

have much to contribute to foreign marketing management But it too is influenced by

varied characteristics in different societies that limit its scope and effectiveness

The organised, scientific determination of market data has developed quite recently as a

response to the information needs of large scale marketers in the higher income countries

The separation of producers from buyers (along with the rapid change of product and

buyer characteristics) has created a serious problem for the marketer who must know

his customers well Market research has bridged this gap, and bridged it well enough so

that the American marketing manager instinctively looks to it to help with information

problems throughout the world But the degree to which research facilities are available

or can be effectively utilised varies greatly in other countries

To understand the nature of market research abroad, we had best consider how the

nvironmental conditions in different societies affect its main elements: systematic analysis,

customer information, statistical data and operational economy

At the heart of market research is the concept that the answers to questions should be

sought by systematic analysis However obvious this approach may seem to the

to thinking through what they should do or they may act immediately, guided by intuition,

by emotional reactions, or by tradition and habit Although it is difficult to generalize onsuch a matter, it appears that the natural patterns for most people fall somewhere in thislatter category

At the most basic levels are characteristics that seem to be deeply embedded in thepersonalities of large groups of people In his thoughtful study of some European peoples,Salvador de Madriaga describes the Englishman as a man of action, the Spaniard as aman of emotion, and the Frenchman as a man of reason By implication, the characteristics

of the English extend throughout the Anglo-Saxon countries and those of the Spaniardsthroughout Latin America The Anglo-Saxon is inclined to plunge directly into a taskwith little patience for preliminary analysis; the warm blooded Spaniard will respond toany situation with feelings upon which he is want to act without pause or reflection; onlythe French are prone to devote much time to analysis and planning This type of deterrent

to the analytical approach is certainly confirmed by the experience of US business Each

of the important aspects of scientific management—including job planning, budgetarycontrols, and other aspects as well as market research—has progressed only as itsadvocates have fought hard for recognition by the mass of US operating businessmen.The instinct of the typical manager has clearly been to act quickly on the basis of hisaccumulated habits, experience and intuition He has accepted the contributions of variousaspects of business analysis only as they have been pressed upon him by arguments, bythe successes of others who have accepted them sooner, and by his own difficulties.But the Anglo-Saxon pattern has seen less obstacles than others The emotional response

of the Latin type is so antithetical to thoughtful approaches to action that scientificmanagement makes very slow progress against it One finds, in Latin America, muchverbal acceptance of market research, methods analysis, and the like, and assortedconsultants engaged in its application But research is still below US standards becausethere tends to be a lack of thoroughness in the work Market studies are too superficial,

or data are not analysed thoroughly, or in some other way a complete job is not done.The problem lies in the people available A few competent people do some excellentwork, but many of the technicians or interviewers turn out to be still basically guided bythe natural instincts of their peoples

A second level of deterrent lies in the pattern of thought attributable largely to theeducational systems of societies The major distinction here is between regions thatwere strongly affected by the Renaissance and the scientific revolution — north-westernEurope and its colonies—and the rest of the world, which for three centuries was scarcelytouched by those influences Prior to the sixteenth century, European civilization hadbeen largely built upon the authority of the Roman Catholic Church, not only in religiousand—to large degree—political affairs but also in many other aspects of life—doctrineabout the natural world, the conduct of business affairs and so forth Then in anextraordinary period of social and intellectual revolution in the sixteenth century, a wave

of liberal thinking spread through religion, politics, science and education Although manybackwaters persisted and some of the liberals turned out to be as doctrinaire and rigid asthose they displaced, the broad impact of the resolution was lasting Henceforth thepractice of questioning and examining became established as fundamental to life and toeducational systems preparing people for life This approach to training men’s minds hasbeen carried to its most extreme form in the “progressive” educational systems in theUnited States In Europe the teaching has not gone so far in that direction, but there isstill substantial training for independent thought

151 Promotional Strategy

This fundamental characteristic of education in north-western Europe and the

Anglo-Saxon countries is in notable contrast to that in areas that were insulated from the scientific

revolution, like Spain and Latin America There, until very recently, education has consisted

largely of disciplined acquisition of knowledge Learning is something that is passed

down from the teacher to be absorbed by the student without question or hesitation This

type of education, especially in the early formative years of a child’s life, puts a heavy

stamp on his approach to life and work He tends to look for guiding rules upon which to

act – to past practice, to tradition, to the instructions of a superior He does not actually

think in terms of independently arriving at a solution by his own analytical work, and that,

of course, is an attitude at the heart of market analysis or any other aspect of scientific

management

The second basic element of market research, customer information — rests in large

part upon the willingness and ability of people to report accurately to researchers facts

about their lives and personal opinions and attitudes Marketing managers know all too

well that Americans are far from perfect as sources of information in these respects

However, as we move into other societies, we find that the problems multiply First,

there is in many cultures a much greater suspicion of strangers, and an inclination to

keep one’s life to oneself This is another facet of the contrast between the

group-oriented and individualistic attitudes Where the individualistic personality is prevalent, as

in Latin America, an interviewer is more likely to be rebuffed or to receive partial or

misleading information Second, there are structural conditions in societies that interfere

with data collection For example, in Italy, France, Latin America and some other countries,

tax collection is a haphazard process, and the prevailing moral codes tolerate a large

amount of tax evasion Under such circumstances, an interviewer is not likely to be

given accurate information about income or even facts like ownership of major appliances

that might be used as indicators of income level Indeed, interviewers are frequently

suspected of being tax collectors in disguise and treated quite brusquely

The third element, statistical data, is affected by forces similar to those bearing on the

first two elements as well as by economic factors In general, as one goes from higher

income countries toward the less developed regions, one finds progressively less statistical

data available from government and other sources It costs money to collect data on

production, consumption, incomes and the like so the poorer countries have inevitably

been less able to gather it However, the lack of people with research capacities and the

difficulties of obtaining information from individuals and even from companies are just as

important Thus, despite the fact that India is at a lower level of economic development

than most Latin American countries, its government statistics are quite good The training

of statistical people initiated under the British is better, and the citizenry are more

cooperative in providing information

Finally, there is the question of operational economy Market research must pay for itself

in improved marketing decisions There is always a point at which expenditures for

research exceed the potential gain from better decisions A company concerned about

finding a good advertising appeal may, for example, usefully spend x amount to determine

how people respond to certain pictorial formats and even x+y to determine their reactions

to certain colour combinations But there is some amount x+y+z that it could spend to

explore these questions still more thoroughly but that will not pay because sales would

not be increased enough to recover the extra z of costs The exact cut off point beyond

which further expenditure is no longer profitable is of course hard to determine; but we

need here only accept the basic proposition

The significant aspect of the proposition, so far as foreign marketing is concerned, is that

the size of the market having common buyer characteristics is a major factor in determining

9.8 PERSONAL SELLING

Personal selling is one of the four tools of the marketing communication These fourtools are (i) personal selling (ii) public relation and publicity (iii) sales promotion and (iv)advertising Selling is two ways, personal communication between a companyrepresentative and a potential customer as well as back to the company The salesperson’sjob is to correctly understand the buyer’s needs, match those needs to the company’sproduct(s), and then persuade the customer to buy Effective personal selling in asalesperson’s home country requires building a relationship with the customer; internationalmarketing presents additional challenges because the buyer and seller may come fromdifferent national or cultural backgrounds It is difficult to overstate the importance of aface-to-face personal selling effort for industrial products in global markets In 1993, aMalaysian developer, YTL Corp., sought bids on a $700 million contract for powergeneration turbines Siemens AG of Germany and General Electric (GE) were amongthe bidders Datuk Francis Yeoh, managing director of YTL, requested meetings withtop executives from both companies, “I wanted to look them in the eye to see if we can

do business,” Yeoh said Siemens complied with the request; GE did not send an executive.Siemens was awarded the contract

The selling process is typically divided into several stages: prospecting, pre-approach,approaching, presenting, problem solving, handling objections, closing the sale, andfollowing up The relative importance of each stage can vary by country or region.Experienced American sales reps know that persistence is one tactic often required towin an order in the United States; however, persistence often means endurance, awillingness to patiently invest months or years before the effort results in an actual sale.For example, a company wishing to enter the Japanese market must be prepared fornegotiations to take from 3 to 10 years

Prospecting is the process of identifying potential purchasers and assessing their probability

of purchase If Ford wanted to sell vans in another country where they would be used asdelivery vehicles, which businesses would need delivery vehicles? Which businesseshave the financial resources to purchase such a van? Those businesses that match thesetwo needs are better prospects than those who do not Successful prospecting requiresproblem solving techniques, which involve understanding and matching the customer’sneeds and the company’s products in developing a sales presentation

The next two steps, the approach and the presentation, involve one or more meetingsbetween seller and buyer In international selling, it is absolutely essential for the salesperson to understand cultural norms and proper protocol In some countries, the approach

is drawn out as the buyer gets to know or takes the measure of the salesperson on apersonal level with no mention of the pending deal In such instances, the presentationcomes only after rapport has been firmly established

153 Promotional Strategy

During the presentation, the salesperson must deal with objections Objections may be

of a business or personal nature A common theme in sales training is the notion of active

listening; naturally, in international sales, verbal and non-verbal communication barriers

present special challenges for the salesperson When objections are successfully

overcome, the salesperson moves on to the close and asks for the order A successful

sale does not end there, however; the final step of the selling process involves following

up with the customer to ensure his or her ongoing satisfaction with the purchase

9.9 PUBLIC RELATIONS AND PUBLICITY

A company’s public relations effort should foster goodwill and understanding among

constituents both inside and outside the company PR practitioners attempt to generate

favourable publicity, which, by definition, is a non paid form of communication PR

personnel also play a key role in responding to unflattering media reports or controversies

that arise because of company activities in different parts of the world In such instances,

PR’s job is to make sure that the company responds promptly and gets its side of the

story told The basic tools of PR include news releases, newsletters, press conferences,

tours of plants and other company facilities, articles in trade or professional journals,

company publications and brochures, TV and radio talk show appearances by company

personnel, special events and home pages on the Internet As noted earlier, a company

exerts complete control over the content of its advertising and pays for message placement

in the media However, the media typically receive far more press releases and other

PR materials that they can use Speaking generally, a company has little control over

when, or if, the news story runs The company cannot control the “spin,” slant, or tone of

the story In addition to the examples discussed below, Table 9.2 summarises several

recent instances of international publicity involving well-known firms

Indeed, even in the field of PR itself, there are often great differences between theory

and practice One specific area of discourse is the notion of PR as a “two-way symmetrical

model” of communication that should occur between equal entities This model holds

that public relations efforts should be oriented toward social responsibility and problem

solving, and be characterised by dialogue and harmonisation of interests As such, the

symmetrical model takes PR beyond an advocacy role that benefits the organisation A

similar model developed in Austria known as “consensus-oriented public relations” supports

the view that two way symmetrical communication is more desirable and successful

than asymmetrical PR The two-way and consensus models are presumed to be especially

effective in situations with a potential for conflict between differing parites The issues

pertaining to planning hazardous models are presumed to be especially effective in

situations with a potential for conflict between differing parties The issues pertaining to

planning a hazardous waste landfill would be one example However, as one expert has

noted, implementation of these models remains problematic

PepsiCola made good use of integrated marketing communications when it undertook an

ambitious international programme to revamp the packaging of its flagship cola

To raise awareness of its new blue can, Pepsi leased a Concorde jet and painted it in the

new blue colour Pepsi also garnered some “free ink” by spending $5 million to film an ad

with two Russian cosmonauts holding a giant replica of the new can while orbiting the

earth in the Mir space station As Massimo d’Amore, PepsiCo’s head of international

marketing, told reporters, “Space is the ultimate frontier of international marketing The

cola wars have been fought all over the place, and it’s time to take them to space.” It

remains to be seen whether this effort will pay off in terms of increased brand loyalty

IBM spent about $5 milion to stage a rematch of a 1996 chess game between Gary

Kasparov and a computer called Deep Blue The match, which took place in New York