Chapter 13 Global Marketing Communications Decision I: Advertising and Public Relations SUMMARY A. Marketing communications—the promotion P of the marketing mix— includes advertising, public relations, sales promotion, and personal selling. When a company embraces integrated marketing communications (IMC), it recognizes that the various elements of a company's communication strategy must be carefully coordinated. Advertising is a sponsored, paid message that is communicated through nonpersonal channels. Global advertising consists of the same advertising appeals, messages, artwork, and copy in campaigns around the world. The effort required to create a global campaign forces a company to determine whether or not a global market exists for its product or brand. The trade-off between standardized and adapted advertising is often accomplished by means of pattern advertising, which can be used to create localized global advertising. Many advertising agencies are part of larger advertising organizations. Advertisers may place a single global agency in charge of worldwide advertising; it is also possible to use one or more agencies on a regional or local basis. B. The starting point in ad development is the creative strategy, a statement of what the message will say. The people who create ads often seek a big idea that can serve as the basis for memorable, effective messages. The advertising appeal is the communication approach—rational or emotional—that best relates to buyer motives. Rational appeals speak to the mind: emotional appeals speak to the heart. The selling proposition is the promise that captures the reason for buying the product. The creative execution is the way an appeal or proposition is presented. Art direction and copy must be created with cultural considerations in mind. Perceptions of humor, male-female relationships, and sexual imagery vary in different parts of the world. Media availability varies considerably from country to country. When selecting media, marketers are sometimes as constrained by laws and regulations as by literacy rates. C. A company utilizes public relations (PR) to foster goodwill and understanding among constituents both inside and outside the company. In particular, the PR department attempts to generate favorable publicity about the company and its products and brands. The PR department must also manage corporate communications when responding to negative publicity. Important PR tools are press releases, media kits, interviews, social media, and tours. Many global companies make use of various types of corporate advertising, including image advertising and advocacy advertising. Public relations is also responsible for providing accurate, timely information, especially in the event of a crisis. LEARNING OBJECTIVES 1 Define global advertising and identify the top-ranked companies in terms of worldwide ad spending 2 Explain the structure of the advertising industry and describe the difference between agency holding companies and individual agency brands 3 Identify key ad agency personnel and describe their respective roles in creating global advertising 4 Explain how media availability varies around the world 5 Compare and contrast publicity and public relations and identify global companies that have recently been impacted by negative publicity DISCUSSION QUESTIONS 13-4. In what ways can global brands and global advertising campaigns benefit a company? Answer: The Chapter 11 opening quotation by the Colgate executive applies here; “You get a lot more benefit and you can do a lot more with a global brand than you can with a local brand.” Fundamentally, a strong brand is an intangible asset that adds value to the business. The potential benefits from global brands include economies of scale in potential benefits from global brands include economies of scale in both advertising and production and improved access to distribution channels. As consumer tastes and preferences continue to converge, consumer products companies in particular will have opportunities to build global brands and use global campaigns. Also, as people from around the globe travel more freely, they will be confused if they see a particular product with an unfamiliar name or package. 13-5. How does the "standardized versus localized" debate apply to advertising? Answer: In general, advertising can be used to inform or persuade. If a global market exists for a product, or if a global product is developed from the ground up, opportunities to standardize some, if not all elements, should be explored. “Pattern” advertising represents a middle point on the standardized/localized continuum. In pattern advertising, a standardized basic message is used with modifications tailored to individual markets. At Coca-Cola, for example, a TV ad could include a wide shot of hundreds of children singing together, plus a close-up of a youngster from the local country market. Other localizations can include translating words and lyrics or making adjustments to copy or are direction. For example, when Benetton refrains from running a particular execution of its “United Colors of Benetton” print campaign in a particular country, it is using pattern advertising. 13-6. What is the difference between an advertising appeal and creative execution? Answer: The message appeal relates to an individual’s or organization’s buying motives. Motives may be rational or emotional. Much advertising for consumer packaged goods and popular brands appeals to emotions as opposed to intellect, whereas business-to-business advertising is generally designed to be consistent with the more rational nature of corporate buying situations. Execution refers to how the message is presented. 13-7. Starting with Chapter 1, review the ads that appear in this text. Can you identify ads that use emotional appeals? Rational appeals? What is the communication task of each ad? To inform? To persuade? To remind? To entertain? Answer: The following is one view / one opinion on the appeals and communication tasks for each of the chapter’s ads. It would be an interesting in-class assignment to see if students from countries outside of the United States agree on the appeal and communication tasks. Especially interesting and open for classroom discussions is the slight differences between inform/persuade ad communication tasks. 13-8. How do the media options available to advertisers vary in different parts of the world? What can advertisers do to cope with media limitations in certain countries? Answer: Media availability varies widely in world markets. Even when a particular media vehicle is available, government regulations can limit, or even prohibit, some or all types of advertising. This is especially true where government owns the broadcasting companies. Broadcast advertising is frequently restricted by the government. Even if broadcast media are available, information about listener or viewer audiences may be hard to obtain compared with industrialized countries, where such information forms the basis for advertising rates. One favorable trend in broadcasting is the privatization of industry in some parts of the world which should create a more favorable climate for advertising. Another trend is the rapid diffusion of small satellite dishes around the world – including countries such as China where broadcasting had been limited. The growth of global satellite broadcasting also means improved prospects for both television advertising in general and for development of pan-regional or global ads. 13-9. What are some of the ways PR practices vary in different parts of the world? Answer: Global PR practitioners may be called upon to build consensus, create trust, and anticipate conflicts. The means to achieve these objectives may vary. PR often depends on press releases that result in stories appearing in newspapers and magazines. PR firms may also work with companies to create corporate ads in which the company advocates its position on a certain issue. In countries with high levels of illiteracy, getting publicity in print media is not effective. In some countries, PR practitioners must develop creative alternative communication channels. Dance, songs, storytelling, and the town crier are a few of the possibilities. OVERVIEW Advertising, public relations, and other forms of communication are critical tools in the marketing program. Marketing communications—the promotion P of the marketing mix—refers to all forms of communication used by organizations to inform, remind, explain, persuade, and influence the attitudes and buying behavior of customers and others. The primary purpose of marketing communications is to tell customers about the benefits and values that a company, product, or service offers. The elements of the promotion mix are advertising, public relations, personal selling, and sales promotion. Global marketers can use all of these elements, either alone or in varying combinations. This chapter examines advertising and public relations from the perspective of the global marketer. ANNOTATED LECTURE/OUTLINE GLOBAL ADVERTISING • (Learning Objective #1) The environment in which marketing communications programs and strategies are implemented varies from country to country. The challenge of effectively communicating across borders is one reason that global companies and their advertising agencies are embracing a concept known as integrated marketing communications (IMC). Adherents of an IMC approach explicitly recognize that the various elements of a company’s communication strategy must be carefully coordinated. Advertising is none element of an IMC program. Advertising may be defined as any sponsored, paid message that is communicated in a nonpersonal way. Global advertising may be defined as messages whose art, copy, headlines, photographs, tag lines, and other elements have been developed expressly for their worldwide suitability. A global company possesses a critical marketing advantage with respect to marketing communications: It has the opportunity to successfully transform a domestic advertising campaign into a worldwide one. Alternatively, it can create a new global campaign from the ground up. Global campaigns with unified themes can help to build long-term product and brand identities and offer significant savings by reducing the cost associated with producing ads. The potential for effective global advertising also increases as companies recognize and embrace new concepts such as "product cultures." An example is the globalization of beer culture, which can be seen in the popularity of German-style beer halls in Japan and Irish-style pubs in the United States. Similarly, the globalization of coffee culture has created market opportunities for companies such as Starbucks. Marketing managers also realize that some market segments can be defined on the basis of global demography—youth culture, for example—rather than ethnic or national culture. Global advertising offers companies economies of scale in advertising as well as improved access to distribution channels (Table 13-1). Global Advertising Content: "Standardization" Versus "Adaptation" Communication experts generally agree that the overall requirements of effective communication and persuasion are fixed and do not vary from country to country. The same thing is true of the components of the communication process: The marketer is the source of the message; the message must be encoded, conveyed via the appropriate channel(s), and decoded by a member of the target audience. Communication takes place only when the intended meaning is transferred from the source to the receiver. Four major difficulties can compromise an organization's attempt to communicate with customers in any location: 1. The message may not get through to the intended recipient. 2. The message may not be understood or may even be misunderstood. 3. The message may be understood but still may not compel the recipient to take action. 4. The effectiveness of the message can be impaired by noise. The key question for global marketers is whether the specific advertising message and media strategy must be changed from region to region or country to country because of environmental requirements. Proponents of the “one world, one voice” approach to global advertising believe that the era of the global village has arrived and that tastes and preferences are converging worldwide. According to the standardization argument, people everywhere want the same products for the same reasons. Advertisers who prefer the localized approach are skeptical of the global village argument. They assert that consumers still differ from country to country and must be reached by advertising tailored to their respective countries. Global companies have embraced pattern advertising—the development of a basic pan-regional or global communication concept for which copy, artwork, or other elements can be adapted as required for individual country markets. A global campaign will result in the substantial benefits of cost savings, increased control, and the potential creative leverage of a global appeal. A localized campaign will focus on the most important attributes of a product or brand in each nation or culture. As a practical matter, marketing managers may choose to run both global and local ads rather than adopt an “either/or” stance. The question of when to use each approach depends on the product involved and a company’s objectives in a particular market. The following generalizations can serve as guidelines: Standardized print campaigns can be used for industrial products or for technology oriented consumer products. Example: Apple iPhone. Standardized print campaigns with a strong visual appeal often travel well. Example: Chivas Regal (“This is the Chivas Life”). TV commercials that use voice-overs instead of actors or celebrity endorsers speaking dialogue can use standardized visuals with translated copy for the voice-over. Examples: Gillette (“The best a man can get”); GE (“Imagination at work”). ADVERTISING AGENCIES: ORGANIZATIONS AND BRANDS Advertising is a fast-paced business, and the ad agency world is fluid and dynamic. New agencies are formed, existing agencies are dismantled, and cross-border investment, spin-offs, joint ventures, and mergers and acquisitions are a fact of life. There is also a great deal of mobility in the industry as executives and top talent move from one agency to another. The 20 largest global advertising organizations ranked by 2012 worldwide revenue are shown in Table 13-2. The key to understanding the table is the word organization; most of the firms identified in Table 13-2 are umbrella corporations or holding companies that include one or more “core” advertising agencies, as well as units specializing in direct marketing, marketing services, public relations, or research. Table 13-3 presents the rankings of individual agencies (agency “brands”) by 2012 worldwide revenue. Most of the agency brands identified in Table 13-3 are full-service agencies: In addition to creating advertising, they provide other services such as market research, media buying, and direct marketing. The agencies listed in Table 13-3 are all owned by larger holding companies Selecting an Advertising Agency • (Learning Objective #2) Companies can create ads in-house, use an outside agency, or combine both strategies. When one or more outside agencies are used, they can serve product accounts on a multi-country or even global basis. Today, there is a growing tendency for Western clients to designate global agencies for product accounts to support the integration of the marketing and advertising functions. Japan-based companies are less inclined to use this approach. In selecting an advertising agency, the following issues should be considered: • Company organization. Companies that are decentralized actually allow managers at the local subsidiary to make ad selection decisions. • National responsiveness. Is the global agency familiar with local culture and buying habits in a particular country or should a local selection be made? • Area coverage. Does the candidate agency cover all relevant markets? • Buyer perception. What kind of brand awareness does the company want to project? THE CULTURAL CONTEXT Smokers Fume About Limits on Tobacco Advertising According the World Health Organization (WHO), 5 million people die each year as a direct result of consuming tobacco products. A total of 172 countries are signatories to the Framework Convention on Tobacco Control (WHO FCTC), which aims to reduce global tobacco production as well as the consumption of tobacco products. The treaty entered into force in February 2005. In China, tobacco advertising has been banned from television and radio since 1994; the ban also extends to newspaper, magazine, and cinema ads. With a population of 1.3 billion people, including one-third of the world’s smokers, China is a massive potential market for cigarette manufacturers at a time when Western markets are shrinking. A tobacco ad ban proposal was introduced in mid-1991 with the aim of fulfilling the single-market rules of the Maastricht Treaty. The directive would have prohibited tobacco advertising on billboards as of July 2001; newspaper and magazine advertising was slated to end by 2002, with sports sponsorship banned by 2003 (such “world-level” sports as Formula One racing would be excluded until 2006). Not surprisingly, tobacco companies and advertising associations opposed the proposed ban. The European Commission justified the directive on the grounds that various countries had, or were considering, restrictions on tobacco advertising and that there was a need for common rules on cross-border trade. However, the German government challenged the new directive at the ECJ on the grounds that it would restrict single-country print advertisements for local cigarette brands. The industry spends between $600 million and $1 billion on advertising in the EU annually. An EU ban would have hurt them most in the countries where they compete with entrenched state tobacco monopolies, namely, France, Italy, and Spain. Tobacco companies in Central Europe face the prospect of tougher marketing regulations as countries in the region work to meet requirements for entry into the EU. CREATING GLOBAL ADVERTISING As suggested earlier in the discussion of the adaptation versus standardization debate, the message is at the heart of advertising. The particular message and the way it is presented will depend on the advertiser’s objective. Is the ad designed to inform, entertain, remind, or persuade? Moreover, in a world characterized by information overload, ads must break through the clutter, grab the audience’s attention, and linger in their minds. This requires developing an original and effective creative strategy, which is simply a statement or concept of what a particular message or campaign will say. Advertising agencies can be thought of as “idea factories”; in industry parlance, the Holy Grail in creative strategy development is something known as the big idea. The big idea is that flash of insight that synthesizes the purpose of the strategy, joins the product benefit with consumer desire in a fresh, involving way, brings the subject to life, and makes the reader or audience stop, look, and listen. Some of the world’s most memorable advertising campaigns have achieved success because they originate from an idea that is so “big” that the campaign offers opportunities for a seemingly unlimited number of new executions. Such a campaign is said to have legs because it can be used for long periods of time. The print campaign for Absolut vodka is a perfect example. The advertising appeal is the communications approach that relates to the motives of the target audience. Ads based on a rational appeal depend on logic and speak to the audience’s intellect. Ads using an emotional appeal may tug at the heartstrings or tickle the funny bone of the intended audience. The selling proposition is the promise or claim that captures the reason for buying the product or the benefit that ownership confers. Effective global advertising may also require developing different presentations of the product’s appeal or selling proposition. The way an appeal or proposition is presented is called the creative execution. Art Direction and Art Directors • (Learning Objective #3) The visual presentation of an advertisement—the "body language—is a matter of art direction. The individual with general responsibility for the overall look of an ad is known as the art director. The art director chooses graphics, pictures, type styles, and other visual elements for an ad. For example, Revlon used a French producer to develop commercials in English and Spanish to communicate universal appeals and product benefits. The global advertiser must make sure that visual executions are not inappropriately extended into markets. EMERGING MARKETS BRIEFING BOOK Localizing Ad Executions in China A creative challenge presented to Ogilvy & Mather in China illustrates the relationship between creative strategy, appeal, and execution. The client, Coca-Cola’s Fanta, wanted a national TV ad that would communicate to consumers that Fanta is an antidote to everyday pressures on Chinese youth. This was the overall creative strategy; in other words, what the message should say. What type of appeal would be appropriate? Not surprisingly, soft drinks lend themselves especially well to emotional appeals; that was the appeal Ogilvy & Mather preferred. The next step was to choose a specific execution. Soft drink marketers often utilize slice-of-life and fantasy executions, usually injected with an element of fun or humor. As Jeff Delkin, Ogilvy’s regional business director in Shanghai, notes, for a U.S. ad, the creative strategy could be executed with a teen’s fantasy or images of revenge on a mean teacher. However, in China it is not acceptable to challenge or undermine the position of authority figures. The completed ad shows that drinking Fanta can create a fun experience in a classroom. When a student opens a can of Fanta, oranges begin to rain down. The teacher catches the oranges and juggles them—much to the delight of the students. Another example is a Nike campaign created by Wieden & Kennedy in China. Nike’s “Just Do It” ads typically showcase famous athletes and sports heroes and are legendary for their inspirational appeals. The selling proposition is universal—Nike is a “cool” brand. However, a localized execution of a Nike ad that featured Chinese superstar Wang Zhizhi did not connect with consumers; they prefer to draw inspiration from the world’s best players rather than a national star who has yet to prove himself in the global arena. In 2006, Nike launched a new campaign that featured Chinese youth who had overcome personal obstacles to excel at sports. Young people were encouraged to share their stories at Nike stores or on a Nike Web site. Web site visitors were able to view short, 3- to 4-minute films featuring Chinese youth playing sports in well-known locales. Shortened versions of the clips were used as TV ads. As Jesse Lin, Wieden’s managing director in Shanghai, said, “China’s younger generation is in the midst of forming its own style, mixing together Chinese elements and influences they’ve absorbed from the West, but they don’t think they need to learn from the West. Nike realized this and wants to be a part of this new generation, rather than telling them what to do.” McDonald’s used a localized campaign for the Chinese launch of the Quarter Pounder sandwich; ironically, the campaign came as the fast-food giant removed menu items such as an Asian-style chicken or beef wrap with rice created to appeal to Chinese tastes. Beef is considered a luxury, upscale item in China; beef also is perceived to boost energy and heighten sex appeal. In Chinese, the word beef connotes manliness, strength, and skill. Television commercials for the Quarter Pounder have sex appeal: They include close-ups of a woman’s neck and mouth juxtaposed with images of fireworks and spraying water. The voice-over says, “You can feel it. Thicker. You can taste it. Juicier.” The McDonald’s print ads also conveyed sexual innuendo. One execution featured a “beauty shot” of a Quarter Pounder with an extreme close up of a woman’s mouth in the background. The copy read, “Part of your body will be excited. You will feel 100 percent of the beef.” Copy and Copywriters The words that are the spoken or written communication elements in advertisements are known as copy. Copywriters are language specialists who develop the headlines, subheads, and body copy used in print advertising and the scripts containing the words that are delivered by spokespeople, actors, or hired voice talents in broadcast ads. As a general rule, copy should be relatively short and avoid slang or idioms. Languages vary in terms of the number of words required to convey a given message; thus the increase of pictures and illustrations. It is important to recognize overlap in the use of languages in many areas of the world (e.g., the EU, Latin America, and North America). Capitalizing on this, global advertisers can realize economies of scale by producing advertising copy with the same language and message for these markets. The success of this approach will depend in part on avoiding unintended ambiguity in the ad copy. Advertising executives may elect to prepare new copy for a foreign market in the language of the target country or to translate the original copy into the target language. A third option is to leave some (or all) copy elements in the original (home-country) language. In choosing from these alternatives, the advertiser must consider whether the intended foreign audience can receive and comprehend a translated message. Anyone with knowledge of two or more languages realizes that the ability to think in another language facilitates accurate communication. To be confident that a message will be understood correctly after it is received, one must understand the connotations of words, phrases, and sentence structures, as well as their translated meaning. The same principle applies to advertising—perhaps to an even greater degree. A copywriter who can think in the target language and understands the consumers in the target country will be able to create the most effective appeals, organize the ideas, and craft the specific language, especially if colloquialisms, idioms, or humor are involved. Knowledge of cultural diversity, especially the symbolism associated with cultural traits, is essential for creating advertising. Use of colors and man-woman relationships can often be stumbling blocks. Ads that strike viewers in some countries as humorous or irritating may not necessarily be perceived that way by viewers in other countries. Standards vary widely with regard to the use of sexually explicit or provocative imagery from country to country. Food is the product category most likely to exhibit cultural sensitivity. Thus, marketers of food and food products must be alert to the need to localize their advertising. Global Media Decisions The next issue facing advertisers is which medium or media to use when communicating with target audiences. Media availability can vary from country to country. Some companies use virtually the entire spectrum of available media; Coca-Cola is a good example. Other companies prefer to utilize one or two media categories. The available alternatives can be broadly categorized as print media, electronic media, and other. Print media range from local daily and weekly newspapers to magazines and business publications with national, regional, or international audiences. Electronic media include broadcast television, cable television, radio, and the Internet. Additionally, advertisers may utilize various forms of outdoor, transit, and direct mail advertising. Globally, media decisions must take into account country-specific regulations. Global Advertising Expenditures and Media Vehicles Each year, more money is spent on advertising in the United States than anywhere else in the world. U.S. ad spending in 2012 totaled $160 billion. However, much of the current growth in advertising expenditures—as much as one third—is occurring in the BRICS countries. Worldwide, television is the number one advertising medium; with estimated ad revenues of $163 billion in 2012, television captured slightly more than 40% of global expenditures. Newspapers rank second on a worldwide basis, accounting for about 27 percent of advertising spending. However, media consumption patterns vary from country to country. For example, television is the number one medium in both the United States and Japan. By contrast, newspapers are the leading medium in Germany; television ranks second. Worldwide, radio continues to be a less important advertising medium than print and television. However, in countries where advertising budgets are limited, radio’s enormous reach can provide a cost-effective means of communicating with a large consumer market. Also, radio can be effective in countries where literacy rates are low. A clear trend that is gaining traction throughout the world: Spending on customer relationship management and Internet advertising is gaining ground at the expense of TV and print. Media Decisions • (Learning Objective #4) The availability of television, newspapers, and other forms of broadcast and print media varies around the world. Moreover, patterns of media consumption differ from country to country as well. In many developed countries, for example, newspapers are experiencing circulation and readership declines as consumers devote more time to new media options such as the Internet. Even when media availability is high, its use as an advertising vehicle may be limited. For example, in Europe, television advertising is very limited in Denmark, Norway, and Sweden. Regulations concerning content of commercials vary; Sweden bans advertising to children younger than 12 years of age. As noted earlier, cultural considerations often affect the presentation of the advertising message. One recent study comparing the content of magazine advertisements in the United States with those in the Arab world found the following: • People are depicted less often in Arabic magazine ads. • U.S. ads tend to have more information content; by contrast, brevity is considered a virtue in the Arab world. • U.S. ads contain more price information, and are more likely to include comparative appeals than Arabic ads. PUBLIC RELATIONS AND PUBLICITY • (Learning Objective #5) Public relations (PR) is the department or function responsible for evaluating public opinion about, and attitudes towards, the organization and its products or brands. Public relations personnel are responsible for fostering goodwill, understanding, and acceptance among a company’s various constituents and publics. Like advertising, PR is one of four variables in the promotion mix. By definition, publicity is communication about a company or product for which the company does not pay. (In the PR world, publicity is sometimes referred to as earned media, and advertising and promotions are known as unearned media). PR professionals also play a key role in responding to unflattering media reports or controversies that arise because of company activities in different parts of the globe. In such instances, PR’s job is to make sure that the company responds promptly and provide the public with facts. (Exhibit 13-4) The basic tools of PR include news releases, newsletters, media kits, press conferences, tours of plants and other company facilities, articles in trade or professional journals, company publications and brochures, TV and radio talk show interviews, special events, social media, and corporate websites. 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 many more press releases and other PR materials than they can use. Generally speaking, a company has little control over when, or if, a news story runs; nor can the company directly control the spin, slant, or tone of the story. To compensate for this lack of control, many companies utilize corporate advertising that, despite the name, is generally considered part of the PR function. As with “regular” advertising, a company or organization identified in the ad pays for corporate advertising. However, unlike regular advertising, the objective of corporate advertising is not to generate demand by informing, persuading, entertaining, or reminding customers. In the context of integrated marketing communications, corporate advertising is often used to call attention to the company’s other communications efforts. Image advertising enhances the public's perception of a company, create goodwill, or announce a major change, such as a merger, acquisition, or divestiture. In advocacy advertising, a company presents its point of view on a particular issue. Sometimes a company generates publicity simply by going about the business of global marketing activities. As noted in Table 13-4, Nike and other marketers have received a great deal of negative publicity regarding alleged sweatshop conditions in factories run by subcontractors. Today, Nike’s PR team is doing a better job of counteracting the criticism by effectively communicating the positive economic impact Nike has had on the nations where it manufactures its sneakers. (Exhibit 13-6) Any company that is increasing its activities outside the home country can utilize PR personnel as boundary spanners between the company and employees, unions, stockholders, customers, the media, financial analysts, governments, or suppliers. Many companies have their own in-house PR staff. Companies may also choose to engage the services of an outside PR firm. The Growing Role of Public Relations in Global Marketing Communications Public relations professionals with international responsibility must go beyond media relations and serve as more than a company mouthpiece; they are called upon to simultaneously build consensus and understanding, create trust and harmony, articulate and influence public opinion, anticipate conflicts, and resolve disputes. As companies become more involved in global marketing and the globalization of industries continues, company management must recognize the value of international PR. The number of international PR associations is growing as well. PR professionals must build good personal working relationships with journalists and other media representatives, as well as with leaders of other primary constituencies. Therefore, strong interpersonal skills are needed. One of the most basic concepts of the practice of PR is to know the audience. For the global PR practitioner, this means knowing the audiences in both the home country and the host country or countries. How Public Relations Practices Differ around the World Cultural traditions, social and political contexts, and economic environments in specific countries can affect public relations practices. In developing countries, however, the best way to communicate might be through the gong man, the town crier, the market square, or the chief’s courts. A company that is ethnocentric in its approach to PR will extend home-country PR activities into host countries. The rationale behind this approach is that people everywhere are motivated and persuaded in much the same manner. This approach does not take cultural considerations into account. A company adopting a polycentric approach to PR gives the host-country practitioner more leeway to incorporate local customs and practices into the PR effort. Although such an approach has the advantage of local responsiveness, the lack of global communication and coordination can lead to a PR disaster. The ultimate test of an organization’s understanding of the power and importance of public relations occurs during a time of environmental turbulence, especially a potential or actual crisis. CASES Case 13-1: The BP Oil Spill Overview: The catastrophic explosion on the Deepwater Horizon oil-drilling platform in the Gulf of Mexico in April 2010 killed 11 workers and allowed millions of gallons of oil to spill into the waters off the Louisiana coast. Numerous efforts to stop the leak failed. As an estimated 30,000 barrels of oil leaked from the stricken well each day, Deepwater Horizon became the worst oil spill in U.S. history, surpassing the 1989 Exxon Valdez accident in Alaska. As one newspaper noted in mid-2010, Some industry observers wondered whether the rhetoric directed against BP was motivated in part by the perception that the company is British. Global companies must ensure that they have successfully positioned themselves as diverse entities with representation from the various markets in which they have operations. Crisis management practitioners are in wide agreement that in times of crisis it is imperative for company spokespersons to tell the truth and to take responsibility. Failure to do so can result in lost credibility. Another point of view is that some corporate crises are so monumental that traditional PR approaches will simply not suffice. Hoping to regain some credibility in Washington, BP assembled a team of consultants and lobbyists to help it prepare for congressional testimony and respond to government inquiries. Finally, there is the prospect of shareholder suits from investors who have seen the value of their BP holdings plummet in the wake of the crisis. Discussion Questions 13-10. Some industry observers think that BP should not have spent money on print and TV ads to reassure the American public. Do you agree or disagree? Explain. Answer: As the book states, "public relations professionals with international responsibility must go beyond media relations and serve as more than a company mouthpiece; they are called upon to simultaneously build consensus and understanding, create trust and harmony, articulate and influence public opinion, anticipate conflicts, and resolve disputes Cultural traditions, social and political contexts, and economic environments in specific countries can affect public relations practices. A company adopting a polycentric approach to PR gives the host-country practitioner more leeway to incorporate local customs and practices into the PR effort. Although such an approach has the advantage of local responsiveness, the lack of global communication and coordination can lead to a PR disaster. The ultimate test of an organization’s understanding of the power and importance of public relations occurs during a time of environmental turbulence, especially a potential or actual crisis. When disaster strikes, a company or industry often finds itself thrust into the spotlight. A company’s swift and effective handling of communications during such times can have significant implications. The best response is to be forthright and direct, reassure the public, and provide the media with accurate information." Therefore, student answers will vary but if they quote the material above, they should agree that BP’s spending on TV advertising is and was good business. 13-11. On October 1, 2010, an American, Bob Dudley, replaced Tony Hayward as chief executive of BP. Does this change surprise you? Answer: No, Bob Dudley an American was the right choice given the fact that the U.S. market is BP's largest market and the U.S.'s largest driller of oil. Credibility - that means BP's credibility was at the stake and so BP’s choice was a move in that direction. 13-12. How might the advice from BP’s lawyers differ from the advice BP receives from PR professionals? Answer: PR advocates state that the company "the best response is to be forthright and direct, reassure the public, and provide the media with accurate information." This is just the opposite advice that the lawyers would give the company—not to admit to any wrongdoing and try to litigate the outcomes. 13-13. What factor(s) will affect whether BP’s corporate reputation can be repaired? Answer: First, BP has to avoid any oil disasters in the near term. Another incidence like the Deepwater Horizon would or could break the company. Secondly, the company has to ensure that it continues to maintain a strong presence in front of the American people and continue with their environmental message and clean up campaign. Ultimately, the price of BP's stock will determine if the company will survive / has survived this crisis or whether or not BP will be broken into components or even absorbed by a larger oil company. Case 13-2: Scotch Whiskey in China: A Taste of the Good Life Overview: Scotch whisky is a textbook example of a global product. Wealthy consumers with discerning palates do not hesitate to pay premium prices for top global brands such as Chivas Regal and Johnnie Walker. In China, for example, the self-satisfaction that goes along with achieving a goal may not be enough; acknowledgment of the achievement by peers is also important. Market segmentation is an integral part of Diageo’s approach to the Chinese market. In 2000, France’s Pernod Ricard SA acquired the Chivas Regal brand from Seagram. Between 2000 and 2002, Chivas experienced a 10 percent overall decline in sales volume, while Johnnie Walker posted a 12 percent gain. 13-14. Why are Diageo, Pernod Ricard, and other marketers of global spirits brands localizing advertising campaigns in emerging markets? Answer: Market segmentation is critical for the success of Scotch whisky from country to country because the reasons that people drink Scotch—aspiration goals such as success and achievement differ from country to country. In China, acknowledgement of one’s achievement by one’s peer group is also important. Family’s perceptions about one’s success are also important. 13-15. How do consumption habits for products such as Scotch whisky vary from country to country? Answer: Scotch whisky is a global product. Wealthy consumers with discerning and discriminating palates pay premium prices for top brands—Scotch drinkers around the world associate this product with aspirational goals and success and achievements. But consumption patterns differ from country to country. For example, in China whisky is consumed by a wider variety of settings than in the West. There were 4 segments of consumption patterns and demographic compositions identified for China: guanzi, strong independent women, upwardly mobile, and the “choice generation”. 13-16. Why are some spirits products and brands strictly local - pastis in France, for example, or Moutai - whereas others have global potential? Answer: Cultural differences are the primary reasons behind these differences. Spirits represent aspirational products or products used to / identified with achievements in one’s life. Therefore, these “stages” of achievements are celebrated differently among the different cultures of the world. Food is the product category most likely to exhibit cultural sensitivity. Thus, marketers of food and food products must be alert to the need to localize their advertising. Knowledge of cultural diversity, especially the symbolism associated with cultural traits, is essential for creating advertising. 13-17. What strategies should Diago, Pernod-Ricard, and other Western spirits brands pursue in China? Answer: In China, achieving a goal is not enough if you don't show others that you have accomplished it. So the Western brands of Scotch must practice market segmentation and advertise Scotch as an aspirational product and proof that you've made it! In China, the strength of peer group and family perceptions of an individual's achievement is so important. TEACHING TOOLS AND EXERCISES Additional Cases: "BP Oil International: Brand Image Program (A)" , by Robert J. Kopp and Philip A. Dover, HBS, January 2012. BAB196-PDF-ENG. "Toyota Recalls (C) : Bumpy Road Ahead" by John A. Quelch, Carin-Isabel Knoop, Ryan Johnson. HBS, 511042-PDF-ENG, 4 p. "SKII China: Managing Public Relations" by John JR Roberts, Stanford Graduate School of Business, Nov. 2008, IB81-PDF-ENG, 8 pg. “Red Bull and Auto Racing: Sponsor or Own a Formula One Team?” George Foster; David W. Hoyt. HBS SPM35. “Sony-FIFA Partnership Marketing Program: The Value of Sponsorship”. Mark Jeffery; Saurabh Mishra. HBS KEL195. Activity: Students should be preparing or presenting their Cultural-Economic Analysis and Marketing Plan for their country and product as outlined in Chapter 1. Out-of-Class Reading: Solberg, Carl Arthur. "The Perennial Issue of Adaptation or Standardization of International Marketing Communication: Organizational contingencies and Performance." Journal of International Marketing 10, no. 3 (2002), pp. 1-21. Small Group Exercise: Divide the class into small groups. Each group will design a full-page magazine ad for a new brand of energy drink. Then name of the drink, as well as package design, is at the discretion of the group. On a separate sheet of paper, specify the benefits stressed or appeals made in the advertisement. Market this energy drink in three foreign countries. Internet Exercise: Go to Coca-Cola’s homepage (www.coca-cola.com). Take a tour of the company’s many country specific homepages (located on the left side of the opening screen). Take a look at how Coke is diversely advertised in the many countries they operate. SUGGESTED READINGS Books Anholt, Simon. Another One Bites the Grass: Making Sense of International Advertising. New York: John Wiley & Sons, 2000. Bly, Robert W. Advertising Managers Handbook. New York: Aspen Publishing, 2002. Kochan, Nicholas, ed. The World's Greatest Brands. New York: New York University Press, 1997. Mueller, Barbara. International Advertising: Communicating Across Cultures. Belmont, CA: Wadsworth Publishing Company, 1995. Zenith Media. Advertising Expenditure Forecasts. London: Zenith Media, December 2005. Articles Akaka, Melissa Archpru & Alden, Dana L. Global Brand Positioning and Perceptions: International Advertising and Consumer Culture". International Journal of Advertising: The Quarterly Review of Marketing Communications (Volume 29 Number 1, p.37) 2010 Link: http://warc.com/Pages/Store/PDF/IJASample.pdf#page=37 Banerjee, Anish. "Transnational Advertising Development and Management: An Account Planning Approach and Process Framework." International Journal of Advertising 13, no. 2 (1994), pp. 95-124. Cervellon, Marie-Cecile, and Laurette Dube. "Standardization versus Cultural Adaptation in Food Advertising: Insights from a Two-Culture Market." International Journal of Advertising 19, no. 4 (2000), pp. 429-447. Compaine, Benjamin. “Global Media.” Foreign Policy (November/December 2002), pp. 20-28. De Mooij, Marieke & Hofstede, Geert. The Hofstede Model: Applications to Global Branding and Advertising Strategy and Research” . International Journal of Advertising: The Quarterly Review of Marketing Communications (Volume 29 Number 1, p.85) 2010 De Mooij, Marieke, "Tailoring Your Strategy to Fit the Culture", IESE - Insight Magazine, Stanford Graduate School of Business, November 2007, IIRO26-PDF_ENG, 8 pages. Endicott, R. Craig. “Global Marketing.” Advertising Age (November 14, 2005), pp. 1-3. Harris, Greg. "International Advertising Standardization: What Do the Multinationals Actually Standardize?" Journal of International Marketing 2, no. 4 (1994), pp. 13-30. Hiebert, Ray E. "Advertising and Public Relations in Transition from Communism: The Case of Hungary, 1989-1994." Public Relations Review, 20, no. 4 (Winter 1994), pp. 357-372. House, Robert J., Quigley, Narda R. & Sully de Luque, Mary. Insights From Project GLOBE: Extending Global Advertising Research Through a Contemporary Framework. International Journal of Advertising: The Quarterly Review of Marketing Communications (Volume 29 Number 1, p.111) 2010 Johansson, Johny K. "The Sense of 'Nonsense': Japanese TV Advertising." Journal of Advertising 23, no. 1 (March 1994), pp. 17-26. Josephs, Ray, and Juanita W. Josephs. "Public Relations, the U.K. Way." Public Relations Journal (April 1994), pp. 14-18. Kruckeberg, Dean. "A Global Perspective on Public Relations Ethics: The Middle East." Public Relations Review 22, no. 2 (Summer 1996), pp. 181-189. Leslie, D.A. "Global Scan: The Globalization of Advertising Agencies, Concepts, and Campaigns." Economic Geography 71, no. 4 (October 1995), pp. 402-426. Melevar, T.C., Sarah Turnbull, and George Balabanis. "International Advertising Strategies of Multinational Enterprises in the Middle East." Journal of International Advertising 19, no. 4 (2000), pp. 529-547. Mueller, Barbara. “Multinational Advertising: Factors Influencing the Standardized versus Specialized Approach.” International Marketing Review 8, no. 1 (1991), pp. 7-18. Na, Woonbong, and Roger Marshall. "A Cross-Cultural Assessment of the Advertising Agency Selection Process: An Empirical Test in Korea and New Zealand." International Journal of Advertising 20, no. 1 (2001) pp. 49-66. Nessmann, Karl. "Public Relations in Europe: A Comparison with the United States." Public Relations Journal 21, no. 2 (Summer 1995), pp. 151-160. Newsom, Doug, and Bob Carrell. "Professional Public Relations in India: Need Outstrips Supply." Public Relations Journal 20, no. 2 (Summer 1994), pp. 183-188. Parameswaran, Ravi, and R. Mohan Pisharodi. "Facets of Country of Origin Image: An Empirical Assessment." Journal of Advertising 23, no. 1 (March 1994), pp. 43-56. Plakoyiannaku, Emmanuella, Zotos, Yorgos. “Female Role Stereotypes in Print Advertising: Identifying Associations with Magazine and Product Categories”. European Journal of Marketing. 2009. v. 43, issue 11/12. pp 1411-1434. Sirisagul, Kanya. "Global Advertising Practices: A Comparative Study." Journal of Global Marketing 14, no. 3 (2000), pp. 77-97. Solberg, Carl Arthur. "The Perennial Issue of Adaptation or Standardization of International Marketing Communication: Organizational contingencies and Performance." Journal of International Marketing 10, no. 3 (2002), pp. 1-21. Taylor, Charles R., R. Dale Wilson, and Gordon E. Miracle, "The Effect of Brand Differentiating Messages on the Effectiveness of Korean Advertising." Journal of International Marketing 2, no. 4 (1994), pp. 31-52. Wang, Ying, Sun Shaojing. “Examining the Role of Beliefs and Attitudes in Online Advertising: A Comparison between the U.S. and Romania. International Marketing Review no. 27 (2010). Zandpour, Fred. "Global Reach and Local Touch: Achieving Cultural Fitness in TV Advertising." Journal of Advertising Research 34, no. 5 (September/October 1994), pp. 35-63. _____ and Katrin R. Harich. "Think and Feel Country Clusters: A New Approach to International Advertising Standardization." International Journal of Advertising 15, no. 4 (1996), pp. 325-344. Zavrl, Frani and Dejan Vercic. "Performing Public Relations in Central and Eastern Europe." International Public Relations Journal 18, no. 2 (1995), pp. 21-23. Solution Manual for Global Marketing Warren J. Keegan, Mark C. Green 9780133545005, 9781292017389
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