CH-14 Global Marketing Communications Decisions II: Sales Promotion, Personal Selling, Special Forms of Marketing Communication – Global Marketing : Book Guide

Chapter 14 Global Marketing Communications Decisions II: Sales Promotion, Personal Selling, Special Forms of Marketing Communication SUMMARY A. Sales promotion is any paid, short-term communication program that adds tangible value to a product or brand. Consumer sales promotions are targeted at ultimate consumers; trade sales promotions are used in business-to-business marketing. Sampling gives prospective customers a chance to try a product or service at no cost. A coupon is a certificate that entitles the bearer to a price reduction or other value-enhancing consideration when purchasing a product or service. B. Personal selling is face-to-face communication between a prospective buyer and a company representative. The strategic/consultative selling model that is widely used in the United States is also being utilized worldwide. The model's five strategic steps call for developing a personal selling philosophy, a relationship strategy, a product strategy, a customer strategy, and a presentation strategy. The six steps in the presentation plan are: approach, presentation, demonstration, negotiation, close, and servicing the sale. Successful global selling may require adaptation of one or more steps in the presentation plan. An additional consideration in global selling is the composition of the sales force, which may include expatriates, host country natives, or sales agents. C. Several others forms of communication can be used in global marketing. These include direct marketing, a measurable system that uses one or more media to start or complete a sale. One-to-one marketing is an updated approach to direct marketing that calls for treating each customer in a distinct way based on his or her previous purchase history or past interactions with the company. Direct mail, catalogs, infomercials, teleshopping, and interactive television are some of the direct marketing tools that have been successfully used on a global basis. Global marketers frequently try to place their products in blockbuster movies that will reach global audiences. Sponsorships and product placement are also becoming vital communication tools that can be used on a global basis. LEARNING OBJECTIVES 1 Define sales promotion and identify the most important promotion tactics and tools used by global marketers 2 List the steps in the strategic/consultative selling model 3 Explain the contingency factors that must be considered when making decisions about sales force nationality 4 Explain direct marketing’s advantages and identify the most common types of direct marketing channels 5 Identify special forms of marketing communication and explain how global marketers integrate them into the overall promotion mix DISCUSSION QUESTIONS 14-4. Briefly review how the main tools of sales promotion (e.g., sampling and couponing) can be used in global markets. What issues and problems can arise in different country markets? Answer: Sampling is likely to result in actual trial of the product in global markets. For example, in China, shoppers are reluctant to buy untried, imported products at higher prices, so Procter & Gamble distributes free samples of shampoo and detergents. In the EU, couponing is widely used in the UK and Belgium. However, different countries have different regulations concerning coupon promotions as outlined in Table 14-2. Coupons face a cultural issue in Asia. Couponing is not as widely used in Asia where saving face is important; some Asians are reluctant to use coupons because doing so might bring shame upon them or their families. 14-5. What potential environmental challenges must be taken into account by a company that uses personal selling as a promotional tool outside the home country? Answer: Environmental issues and challenges surface in implementing a personal selling strategy: • Political risks. Unstable or corrupt governments can change the rules for the sales team. • Regulatory hurdles. Many countries set up quotas, tariffs, and capricious rules that affect a foreign sales force. • Currency fluctuations. A sales effort can be derailed by fluctuating currency values. • Market Unknowns. A lack of knowledge of market conditions, the accepted way of doing business, or the positioning of its in-country competitors affect a selling strategy. 14-6. How does management's orientation (e.g., ethnocentric, polycentric, or regio centric) correlate with decisions about sales force nationality? What other factors affect sales force composition? Answer: A company with an ethnocentric orientation prefers expatriates and adopts a standardized approach. Polycentric companies selling in developed countries use expatriates for hi-tech products; a host-country sales force is used for low-tech products. Wide diversity of sales force nationality is found in regio centric companies. Factors that affect sales force composition include the development level of the country and the type of products sold. In less developed countries, host-country nationals should be used for hi-tech products and local agents for low-tech products. 14-7. As mentioned earlier in this chapter, Procter & Gamble (P&G) has a “golden store” program in Mexico and other emerging markets. P&G’s representatives visit participating stores to tidy display areas and arrange promotional material in prominent places. At first, P&G used its own manufacturer’s sales force; now it relies on independent agents who buy inventory (paying in advance) and then resell the items to shopkeepers. Is this approach in line with the chapter discussion? Answer: Using host country sales people have key advantages and several disadvantages as noted in Table 14-4. The advantages are: economical, superior market knowledge, language skills, superior cultural knowledge, and can implement actions sooner. In Mexico, and other emerging markets, Proctor and Gamble products are packaged in single-use quantities at a relatively high per-unit cost. Mexicans tend to shop in tiny independent “mom-and-pop” stores called by P&G “high-frequency stores” so using this method of sales coverage is advantageous. Disadvantages include: Need for extensive product training, low esteem by host country, language skills not important, difficult to ensure loyalty. 14-8. What role does direct marketing have in a global company's promotion mix? Name three companies that have successfully used direct mail or other forms of direct-response advertising. Answer: Direct marketing is designed to generate an order, a request for further information, and/or a visit to a store or other place of business. Direct mail is the primary marketing tool for retail specialists such as LL. Bean and Lands' End. In 2000, Nestlé launched a successful direct mail campaign in Malaysia that offered cat owners free samples of Friskies brand cat food, coupons for discounts on purchases of Friskies, and the opportunity to join the Friskies Cat Club. 14-9. Why are infomercials, sponsorship, and product placement growing in importance for global marketers? Answer: Infomercials and home shopping television are important marketing communications channels for global marketers. Advertisers use infomercials and home shopping television to identify prospective buyers, support ad campaigns, and educate consumers by offering a demonstration. In Asia, infomercials generate several hundred million dollars in annual sales. Infomercials are playing a role in China. A number of local and regional teleshopping channels have sprung up in Europe. An Olympic sponsorship can help a company reach a global audience (e.g., Sony recently became an official U.S. sponsor of the National Basketball Association for $10 million per year). Sponsorship can be used in countries where regulations limit advertising or other forms of marketing communication. In China, where tobacco advertising is prohibited, Philip Morris sponsors the Hong Kong-Beijing car rally. Student answers will vary. Infomercials, sponsorship, and product placement are growing in importance for global marketers due to their effectiveness in reaching targeted audiences, enhancing brand visibility, and building consumer trust. These strategies allow for more engaging and contextual brand interactions, often bypassing traditional ad fatigue and leveraging popular media channels and events for greater impact. OVERVIEW Sponsorships and event marketing are critical marketing tools for global companies such as Red Bull. When developing IMC solutions and strategies, global companies and advertising agencies are giving these and other special forms of promotion an increasingly prominent role in the communication mix; in the first decades of the twenty-first century, worldwide expenditures on sales promotion have been growing at double-digit rates. Sales promotion, direct marketing, and specialized forms of marketing communication such as infomercials and the Internet are also growing in importance. Personal selling remains an important promotional tool as well. Taken together, the marketing mix elements discussed in this chapter and Chapter 13 can be used to create highly effective, integrated promotional campaigns that support global brands. ANNOTATED LECTURE/OUTLINE SALES PROMOTION • (Learning Objective #1) Sales promotion refers to any paid consumer or trade communication program of limited duration that adds tangible value to a product or brand. In a price promotion, tangible value may take the form of a price reduction, coupon, or mail-in refund. Non-price promotions may take the form of free samples, premiums, "buy one, get one free" offers, sweepstakes, and contests. Consumer sales promotions may be designed to make consumers aware of a new product, to stimulate nonusers to sample an existing product, or to increase overall consumer demand. Trade sales promotions are designed to increase product availability in distribution channels. At many companies, expenditures for sales promotion activities have surpassed expenditures for media advertising. At any level of expenditure, sales promotion is only one of several marketing communication tools. Sales promotion plans and programs should be integrated and coordinated with those for advertising, PR, and personal selling. Worldwide, there are several explanations for the increasing popularity of sales promotion as a marketing communication tool. In addition to providing a tangible incentive to buyers, sales promotions also reduce the perceived risk buyers may associate with purchasing the product. From the point of view of the marketer, sales promotion provides accountability; the manager in charge of the promotion can immediately track the results of the promotion. A global company can sometimes leverage experience gained in one country market and us it in another market. As with other aspects of marketing communication, a key issue is whether promotion efforts should be directed by headquarters or left to local country managers. Four factors have been identified that contribute to more headquarters’ involvement in the sales promotion effort: cost, complexity, global branding, and transnational trade. 1. As sales promotions command ever-larger budget allocations, headquarters naturally takes a greater interest. 2. The formulation, implementation, and follow-up of a promotion program may require skills that local managers lack. 3. The increasing importance of global brands justifies headquarters involvement to maintain consistency from country to country and ensure that successful local promotion programs are leveraged in other markets. 4. As mergers and acquisitions lead to increased concentration in the retail industry and as the industry globalizes, retailers will seek coordinated promotional programs from their suppliers. Local managers in the market know the specific local situation. A number of factors must be taken into account when determining the extent to which the promotion must be localized: • In countries with low levels of economic development, low incomes limit the range of promotional tools available. • Market maturity can be different from country to country; consumer sampling and coupons are appropriate in growing markets, but mature markets might require trade allowances or loyalty programs. • Local perceptions of a particular promotional tool or program can vary. • Local regulations may rule out use of a particular promotion in certain countries. • Trade structure in the retailing industry can affect the use of sales promotions. Sampling Sampling is a sales promotion technique that provides potential customers with the opportunity to try a product or service at no cost. Disadvantages associated with sampling: cost of sampling and difficulties in assessing the contribution a sampling program makes. Many companies utilize event marketing and sponsorships to distribute samples at concerts, sports events, and other special events. Compared with other forms of marketing communication, sampling is more likely to result in actual trial of the product. Couponing A coupon is a printed certificate that entitles the bearer to a price reduction or some other special consideration for purchasing a particular product or service. Nearly 90 percent of all coupons are distributed in a printed ride-along vehicle known as a free-standing insert (FSI). Sunday papers carry the vast majority of FSIs. On-pack coupons are attached to, or part of, the product package; they can frequently be redeemed immediately at check out. In-pack coupons are placed inside the package. Cross coupons are distributed with one product but redeemable for a different product. For example, a toothpaste coupon might be distributed with a toothbrush. Coupons are a favorite promotion tool of consumer packaged goods companies. Social couponing is one of the hottest online sales promotion trends today. Groupon had more than 40 million users in 48 countries by the end of 2012. Sales Promotion: Issues and Problems As noted earlier, many companies are being more strategic in targeting their sampling programs. In the case of coupons, retailers must bundle the redeemed coupons together and ship them to a processing point. Many times, coupons are not validated at the point of purchase; fraudulent redemption costs marketers hundreds of millions of dollars each year. Companies must take extreme care when formulating and executing sales promotions. In some emerging markets, sales promotion efforts can raise eyebrows if companies appear to be exploiting regulatory loopholes and lack of consumer resistance to intrusion. One implication for marketing in developing countries is that, despite cultural differences, increased availability of promotions will result in higher levels of consumer utilization. PERSONAL SELLING Personal selling is person-to-person communication between a company representative and a prospective buyer. The seller's communication effort is focused on informing and persuading the prospect, with the short-term goal of making a sale and with a longer-term goal of building a relationship with that buyer. Effective personal selling in a salesperson’s home country requires building a relationship with the customer; global marketing presents additional challenges because the buyer and seller may come from different national or cultural backgrounds. Personal selling is a popular marketing communication tool in countries with various restrictions on advertising. Personal selling is used frequently in countries where low wage rates allow large local sales forces to be hired. The cost effectiveness of personal selling in certain parts of the world has been a key driver behind the decision at many U.S. based firms to begin marketing products and services overseas. The challenge to companies that wish to pursue low-cost personal selling overseas is to establish and maintain acceptable quality among members of the sales team. The old saying, "You get what you pay for" has come to haunt more than one company that has undertaken global expansion. The risks inherent in establishing a personal selling structure overseas remain today. The crucial issue is not whether in-country sales and marketing people can provide more benefit than a remote force. The issue is whether the country team should consist of in-country nationals or expatriates (also known as expats); that is, employees who are sent from their home countries to work abroad. Environmental issues and challenges that may have an impact include: • Political risks. Unstable or corrupt governments can completely change the rules for the sales team. • Regulatory hurdles. Governments sometimes set up quota systems or impose tariffs that affect entering foreign sales forces. • Currency fluctuations. There have been many instances where a company's sales effort has been derailed not by ineffectiveness or lack of market opportunity, but by fluctuating currency values. • Market unknowns. When a company enters a new region of the world, its selling strategy may unravel because of a lack of knowledge of market conditions, the accepted way of doing business, or the positioning of its in-country competitors. The Strategic/Consultative Selling Model • (Learning Objective #2) Figure 14-1 shows the Strategic/Consultative Selling Model, which has gained wide acceptance in the United States. The model consists of five independent steps, each with three prescriptions that can serve as a checklist for sales personnel. First, a sales representative must develop a personal selling philosophy. This requires a commitment to the marketing concept and a willingness to adopt the role of problem solver or partner in helping customers. The second step is to develop a relationship strategy, which is a game plan for establishing and maintaining high-quality relationships with prospects and customers. This step connects sales personnel directly to the concept of relationship marketing, an approach that stresses the importance of developing long-term partnerships with customers. In developing personal and relationship strategies on an international level, the representative is wise to take a step back and understand how these strategies will likely fit in the foreign environment. In many countries, people have only a rudimentary understanding of sales techniques; acceptance of those techniques may be low as well. Sales representatives must understand that patience and a willingness to assimilate host-country norms and customers are important attributes in developing relationships built on respect. The third step is the development of a product strategy. This results in a plan that can assist the sales representative in selecting and positioning products that will satisfy customer needs. This step must include comprehension of the target market’s characteristics and the fact that prevailing needs and wants may mandate products that are different than those offered in the home country. Next is the customer strategy, a plan that ensures that the sales professional will be maximally responsive to customer needs. The customer strategy step also includes building a prospect base, consisting of current customers as well as potential customers (or leads). A qualified lead is someone whose probability of wanting to buy the product is high. The final step, the actual face-to-face selling situation, requires a presentation strategy. This consists of setting objectives for each sales call and establishing a presentation plan to meet those objectives. The presentation plan that is at the heart of the presentation strategy is divided into six stages: approach, presentation, demonstration, negotiation, closing, and servicing the sale (Figure 14-3). The relative importance of each stage can vary from country or region. In the six-step presentation plan, the first step, approach, is the sales representative's initial contact with the customer or prospect. The most crucial element of the step is to completely understand the decision-making process and the roles of each participant, such as the decision maker, influencer, ally, or blocker. In the presentation step, the prospect's needs are assessed and matched to the company's products. To communicate effectively with a foreign audience, the style and message of the presentation must be carefully thought out. In the United States, the presentation is typically designed to sell and persuade, whereas the intent of the international version should be to educate and inform High-pressure tactics rarely succeed in global selling. Next is the sales demonstration, during which the salesperson has the opportunity to tailor the communication effort to the customer and alternately tell and show how the product can meet the customer's needs. During the presentation, the prospect may express concerns or objections about the product itself, the price, or some other aspect of the sale. Dealing effectively with objections in an international setting is a learned art. A common theme in sales training is the concept of active listening; in global sales, verbal and nonverbal communication barriers of the type discussed in Chapter 4 present special challenges. Negotiation is required to ensure that both the customer and the salesperson come away from the presentation as winners. Some foreign customers consider American-style persistence (implying tenacity) or arm-twisting can be considered rude and offensive. Having completed the negotiation step, the sales representative is able to move on to the close and thus asks for the order. The final step is the servicing the sale. A sale does not end when the order is written. To ensure customer satisfaction with the purchase, an implementation process must be outlined and a customer service program established. (Exhibit 14-4) Sales Force Nationality • (Learning Objective #3) As noted previously, a basic issue for companies that sell globally is the composition of the sales force in terms of nationality. It is possible to utilize expatriate salespersons, hire host-country nationals, or third-country sales personnel (Exhibit 14-5). The staffing decision is contingent on several factors, including management's orientation, the technological sophistication of the product, and the stage of economic development exhibited by the target country. A company with an ethnocentric orientation is likely to prefer expatriates and adopt a standardized approach. Polycentric companies selling in developed countries should opt for expatriates to sell technologically sophisticated products; a host-country sales force can used when technological sophistication is lower. In less developed countries, host-country nationals should be used for products in which technology is a factor and local agents for low-tech products. The widest diversity of sales force nationality is found in a company in which a regio centric orientation prevails. Except for high-tech products in developed countries, third-country nationals are likely to be used in all situations. In addition to the factors just cited management must also weigh the advantage and disadvantages of each option. There are advantages and disadvantages of each nationality type: • Advantages: Expatriates possess a high level of product knowledge, a demonstrated commitment to service standards, training for promotion, and greater headquarters control. • Disadvantages: Expatriates are very expensive, turnover is high, language and cross-cultural training are costly. An alternative is to build a sales force with host-country personnel: • Advantages: economical, superior market knowledge, language skills, and superior knowledge of local culture, and implementation is quicker. • Disadvantages: needs product training, may be held in low esteem, language skills may not be important, and it is difficult to ensure loyalty. A third option is to hire persons who are not natives or either the headquarters country or the host country; such persons are known as third country nationals. • Advantages: cultural sensitivity, language skills, economical, allows regional sales coverage. • Disadvantages: identity problems, blocked for promotions, income gaps, needs product and/or company training, loyalty not assured. After much trial and error in creating sales forces, most companies today attempt to establish a hybrid sales force comprised of a balanced mix of expatriates and in-country nationals. The operative word is balanced, as there remains the potential for conflict between the two groups. This is the most expensive proposition since relocation of expats and extensive training of in-country nationals is required. But short term costs are deemed necessary to do business and conduct personal selling overseas. A fourth option is to utilize the services of sales agents. Agents work under contract rather than as full-time employees. It makes sense to set up one or more agents to gain entry to a selected country or region. In a remote area where there is a lack of revenue, agents are retained on a fairly permanent level. Agents are much less expensive than full-time employees and understand the market and culture. If success is achieved, agents can be replaced by employee-based teams; if the market is not financially viable, it is less costly to withdraw from an agent-oriented territory. Other international personal selling approaches: • Exclusive license arrangements: a firm pays commissions to an in-country company’s sales force to conduct personal selling. • Contract manufacturing or production with a degree of personal selling made available through warehouses or showrooms that are open to potential customers. • Management-only agreements: a corporation manages a foreign sales force in a mode similar to franchising. • Joint ventures: Since many countries place restrictions on foreign ownership, partnerships allow a company to obtain a personal sales capability and a customer base. SPECIAL FORMS OF MARKETING COMMUNICATIONS: DIRECT MARKETING, SUPPORT MEDIA, EVENT SPONSORSHIP, AND PRODUCT PLACEMENT • (Learning Objective #4) The Direct Marketing Association defines direct marketing as any communication with a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business. Companies use direct mail, telemarketing, television, print, and other media to generate responses and build databases filled with purchase histories and other information about customers. By contrast, mass marketing communications are typically aimed at broad segments of consumers (see Table 14-2). Don Peppers and Martha Rogers advocate an approach known as one-to-one marketing. One-to-one marketing calls for treating different customers differently based on their previous purchase history or past interactions with the company. Peppers and Rogers describe the four steps in one-to-one marketing as follows: 1. Identify customers and accumulate detailed information about them. 2. Differentiate customers and rank them in terms of their value to the company. 3. Interact with customers to develop more cost efficient and cost-effective forms of interaction 4. Customize the product or service offered to the customer. Worldwide, the popularity of direct marketing has been steadily increasing in recent years. One reason is the availability of credit cards. Another reason is societal: dual-income families have money to spend but less time to shop; technological advances have made it easier for companies to reach customers directly. Direct marketing programs can be readily made to conform to the “think global, act local” philosophy. Rainer Hengst of Deutsche Post offers the following guidelines for U.S.-based direct marketers that wish to go global: • The world is full of people who are not Americans. Be sure not to treat them like they are. • Like politics, all marketing is local. • Although there is an EU, there is no such thing as a "European." • Pick your target, focus on one country, and do your homework. • Customers need to be able to return products locally. Direct Mail Direct mail uses the postal service as a vehicle for delivering a personally addressed offer to a prospect targeted by the marketer. Direct mail is popular with banks, insurance companies, and other financial services providers. The United States is home to a well-developed mailing list industry. The availability of good lists and the sheer size of the market are important factors in explaining why Americans receive more direct mail than anyone else. Compared with the United States, list availability in Europe and Japan is much more limited. Catalogs A catalog is a magazine-style publication that features photographs, illustrations, and extensive information about a company’s products. Catalogs have a long and illustrious history as a direct marketing tool in both Europe and the United States. U.S.-based catalog marketers include JC Penney, Lands' End, L.L. Bean, and Victoria's Secret. Historically, catalogers in the United States benefited from the ability to ship goods from one coast to the other, crossing multiple state boundaries with relatively few regulatory hurdles. Prior to the advent of the single market, catalog sales in Europe were hindered by the fact that mail order products passing through customs at national borders were subject to value-added taxes (VAT). Today, the single market means that mail order goods can move freely throughout the EU without incurring VAT charges. In Japan, the domestic catalog industry is well developed. Even as they continue to develop the Japanese market, Western catalogers are now turning their attention to other Asian countries. In Hong Kong and Singapore, efficient postal services, highly educated populations, wide use of credit cards, and high per capita income are attracting the attention of catalog marketers. Infomercials, Teleshopping, and Interactive Television An infomercial is a form of paid television programming in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number shown on the screen. In Asia, infomercials generate several hundred million dollars in annual sales. Infomercials are also playing a part in the development of China’s market sector. With teleshopping, home-shopping channels such as QVC and the Home Shopping Network (HSN) take the infomercial concept one step further; the round-the-clock programming is exclusively dedicated to product demonstration and selling. (Exhibit 14-7) Industry observers expect the popularity of home shopping will increase during the next few years as interactive television (ITV or t-commerce) technology is introduced into more households. ITV allows television viewers to interact with the programming content that they are viewing. Support Media Traditional support media include transit and billboard advertising (see Table 14-3). Outdoor advertising is growing at a faster rate than the overall advertising market. As countries add mass transportation systems and build and improve their highway infrastructures, advertisers are utilizing more indoor and outdoor posters and billboards to reach the buying public. Worldwide spending on outdoor advertising amounts to about 6 percent of total ad spending in Europe, 6.4 percent is allocated to outdoor, compared with 4 percent in the United States EMERGING MARKETS BRIEFING BOOK Billboards Banned in Brazil! Score one for environmental activists: On January 1, 2007, Lei Cidade Limpa (“Clean City Law”) went into effect in São Paulo, Brazil. The main effect of the law, which was championed by Mayor Gilberto Kassab, is to ban various forms of outdoor advertising in the city of 11 million people. What’s left is a mish-mash of skeleton frames devoid of posters (see Exhibit 14-9). In addition, transit ads on buses and taxis are no longer allowed. Store signs are still permitted, but the maximum size of a given sign is determined by a formula based on the dimensions of the store’s facade. Some advertisers even acknowledge that, in Brazil, traditional outdoor advertising may not be the best communication channel. Denied access to traditional outdoor advertising for now, companies have devised a number of alternative ways to communicate with prospective customers. Innovative indoor approaches such as placing ads in elevators and bathrooms are also being adopted. Brazilians have embraced social media, so online channels are a natural fit. Sponsorship Sponsorship is an increasingly popular form of marketing communications whereby a company pays a fee to have its name associated with a particular event, team or athletic association, or sports facility. • Sponsorship combines elements of public relations and sales promotion. • Sponsorship can be used in countries where regulations limit the extent to which a company can use advertising or other forms of marketing communication. EMERGING MARKETS BRIEFING BOOK Expo 2010 Shanghai China At one time Shanghai was known as the “Paris of the Orient.” After the Cultural Revolution, however, glamour and individuality gave way to uniforms and conformity. Things have come full circle now, with Shanghai once again celebrating its status as China’s financial center and an up-and-coming cosmopolitan city. China as a whole now represents the world’s second largest market for luxury goods. It is no surprise, therefore, that numerous global fashion companies and brands were present at Expo 2010. The theme of Expo 2010 was “Better City, Better Life,” and many exhibits by corporate and national sponsors were designed to show how technology can improve quality of life. Exhibits in the Urban Best Practices Area embodied this overarching theme. For example, the German city of Hamburg chose the theme “Balancity”—a city in balance—and showcased a “passive house” designed to maintain year-round comfortable interior temperatures without conventional heating or air conditioning systems, a house made from bamboo. The queues and visitor tallies at the various exhibits were indicative of the interest. People would sometimes wait 8 hours to see Saudi Arabia’s IMAX theatre attraction, which offered an immersive flight over the Kingdom’s treasures. Chinese companies were also very much in evidence at the Expo. The exterior of their pavilion, dubbed the Dream Cube, changed its exterior colors in response to movement of the people inside. Product Placement: Motion Pictures, Television Shows, and Public Figures • (Learning Objective #5) Companies can achieve a unique kind of exposure by using product placement: arranging for a company’s products and brand names to appear in popular television programs, movies, and other types of performances. Marketers can also lend or donate products to celebrities or other public figures; the products get publicity when the celebrity appears in public using the product. (Exhibit 14-2) This tactic is especially popular with auto manufacturers and fashion designers and is often used in conjunction with the Academy Awards and Grammys. Worldwide audience figures for a blockbuster movie hit can equal tens of millions of people. In many instances, product placements generate considerable media interest and result in additional publicity. Placements can be arranged in several different ways. Sometimes companies pay a fee for the placement; alternatively, a show’s producers will write the product into the script in exchange for marketing and promotion support of the new production. A brand’s owner can also strike a barter agreement. In the case of television placement, the blurring of advertising and programming content comes as companies increasingly question the effectiveness of traditional advertising. In fact, some evidence suggests that a prominent product placement in a television program leads to better recall than a traditional advertisement. Sometimes called branded entertainment, the effective integration of products and brands with entertainment can be seen on the monster TV hit “American Idol.” As the cost of marketing major films increase, studios are increasingly looking for partnerships to share the cost and attract the broadest possible viewing audience. Product placement raises an interesting issue for global marketers: once footage of a scene is shot and incorporated into a movie or television, the image of the product is “frozen” and will be seen without adaptation everywhere in the world. When advertising appears in conventional forms most consumers are aware of the fact that they are being expose to an ad This is not necessarily the case with product placement; in effect, viewers are being marketed to subliminally without their consent. THE CULTURAL CONTEXT Products Star in Bond Films The James Bond films are known for integrating well-known brand names into the action. The 22 films featuring the suave British agent have grossed nearly $5 billion in worldwide ticket sales. The series’ popularity, plus the high cost of making the films, makes Bond a perfect vehicle for showcasing products and brands. Many companies are eager to be associated with a high-profile project like a Bond film. Tomorrow Never Dies, the follow-up to Golden Eye, featured global brand promotional tie-ins worth an estimated $100 million. Ericsson, Heineken, Omega, Brioni, and Visa International all placed products in the film. Bond star Pierce Brosnan also appeared as Agent 007 in specially filmed television commercials. When Die Another Day, the 20th installment in the series, was released at the end of 2002, BMW took a backseat to Ford. The U.S. automaker persuaded the producers to bring back the Aston Martin (the nameplate was owned by Ford at the time); Jaguars and the new Thunderbird were also prominent in the film. The 21st Bond film, Casino Royale, featured actor Daniel Craig in the role of 007. To avoid a backlash from fans and marketing executives, the film’s producers deliberately limited the number of official global partners in the film to six: Sony Electronics, Sony Ericsson, Omega, Heineken, Ford, and Smirnoff. As Myles Romero, Ford’s global brand entertainment director, noted. For the next installment, 2008’s Quantum of Solace, several companies hitched their brands to Bond for the first time. These included Coke Zero and Avon. Speaking of Coke Zero, Derk Hendriksen explained, “We’re in more than 100 markets. We thought the tie-in would be very appropriate for two irreverent and global personalities.” For its part, Avon coordinated the launch of Bond Girl 007 Fragrance with the film’s release. Tracy Haffner, global vice president for marketing, called the film “a great platform to develop a beautiful fragrance and connect with women worldwide.” CASES Case 14-1: Red Bull Overview: It’s a safe bet that most people reading this textbook are familiar with Red Bull. The $6.4 billion company that virtually created the market for energy drinks revels in its association with cultural events such as concerts and extreme sports including snowboarding and surfing. The company uses a variety of communication channels in addition to advertising and public relations to promote the brand. Red Bull’s Facebook page has 38 million “likes,” and 1 million people follow its Twitter feed. The brand’s slogan, “Red Bull Gives You Wings,” made Red Bull the perfect corporate partner for one of the biggest public relations coups in recent years. In fall 2012, Red Bull sponsored Felix Baumgartner’s death-defying skydive from the edge of space (see Exhibit 14-1). Red Bull utilizes a communication tool known as marketer-produced media. The Red Bulletin is a monthly magazine produced by Red Bull Media House. Red Bull distributes more than 3 million copies of each issue through newsstand sales, subscriptions, and as a free iPad app. The magazine is available in Austria, Germany, Great Britain, Kuwait, New Zealand, Poland, and South Africa. In 2011, The Red Bulletin was launched in the United States; 1.2 million free copies were distributed in major newspapers. The first U.S. issue featured San Francisco Giants pitcher Tim Lincecum, one of hundreds of athletes who are sponsored by Red Bull. As publisher Raymond Roker put it, “We are entering a new age of media in terms of what consumers of content want and expect.” Since 1998, Red Bull has been involved in another high-profile initiative. The Red Bull Music Academy is a series of concerts, workshops, art installations, and other cultural events that rotate from year to year among different international cities. Red Bull Music Academy also sponsors stages at international music festivals such as Montreaux Jazz; RBMA Radio is a Web resource where listeners can access new music, live concerts, interviews, and other content. Despite the name, Red Bull plays down its participation in the Academy; according to the Web site, “The Red Bull Music Academy is not a sponsored event, but a long-term music initiative, committed to fostering creative exchange amongst those who have made and continue to make a difference in the world of sound.” Needless to say, the Red Bull logo is visible everywhere, and coolers filled with the drink are placed in strategic locations. Nirmalya Kumar, a marketing professor at the London Business School, has written a case study on Red Bull titled “The Anti-Brand Brand.” Kumar gives Red Bull high marks for its nontraditional marketing communication strategy. As Kumar explains, “Part of being a great brand is conveying what you stand for in an authentic manner so consumers find it believable. The music academy and the [Baumgartner] air show have given Red Bull a lot of that.” Discussion Questions: 14-10. What is the critical thinking issue raised by the case? Answer: Red Bull discovered a market segment with needs that weren’t being met by any existing product. Red Bull’s IMC incorporates both traditional and non-traditional marketing. The critical thinking issue raised by the case is evaluating the effectiveness and ethical implications of using infomercials, sponsorships, and product placements in global marketing strategies. It involves assessing whether these methods genuinely enhance brand value and consumer engagement or merely serve as manipulative tactics. 14-11. Summarize the different types of marketing communications that Red Bull uses. Are these “traditional” or “nontraditional”? Answer: Red Bull uses traditional event sponsorship, however their Red Bull Music Academy and RBMA Radio are non-traditional. Red Bull primarily uses nontraditional marketing communications, including extreme sports sponsorships, viral content, and event marketing. Their approach focuses on creating unique experiences and engaging content rather than relying on traditional advertising methods. 14-12. What communication goal does each of Red Bull’s marketing communication tools accomplish? Are you familiar with any additional brand touch points that aren’t mentioned in the case? Answer: Red Bull has reached a myriad of communication goals. From event sponsorship, to their news bulletins, their radio station, etc., they have successfully reached their target market. Student’s answers will vary when responding to the touch points. Red Bull’s marketing tools aim to enhance brand image and connect with target audiences through exciting, adrenaline-fueled experiences. Sponsorships and events reinforce its association with extreme sports, while viral content and social media engagement boost brand visibility and consumer interaction. Additional brand touchpoints include Red Bull’s magazine, content partnerships, and branded merchandise, all contributing to its dynamic and immersive marketing strategy. 14-13. What is the risk of sponsoring a special event such as Felix Baumgartner’s historic skydive? Answer: If Felix Baumgartner’s skydive had ended tragically, it would have been a bad marketing event for Red Bull. The risk of sponsoring an event like Felix Baumgartner’s historic skydive includes potential negative outcomes if the event encounters issues or fails to meet expectations, which could harm the brand’s image. Additionally, high-profile events can be costly and may not always deliver the anticipated return on investment. 14-14. Red Bull and other energy drinks have generated negative publicity regarding possible health hazards. Discuss. Answer: Red Bull and other energy drinks have faced negative publicity due to concerns over potential health risks, such as increased heart rate, high caffeine levels, and adverse effects on young consumers. Critics argue that excessive consumption can lead to serious health issues, including cardiovascular problems and sleep disturbances. This scrutiny has led to calls for better regulation and clearer labeling to inform consumers about potential risks. 14-15. What makes Red Bull, in Professor Kumar’s words, an “anti-brand brand”? Answer: As Kumar explains, “Part of being a great brand is conveying what you stand for in an authentic manner so consumers find it believable. The music academy and the air show have given Red Bull a lot of that.” Kumar continues “Red Bull needs to determine whether it was outgrowing its anti-establishment status. As a mature brand, it needs to assess whether the time had come to transition to a more traditional marketing approach. But this raises a critical question: would this move toward a more mainstream approach fundamentally destroy Red Bull's anti-brand mystique?” Case 14-2: Marketing an Industrial Product in Latin America Overview: Business in every country has its own peculiarities. Culture and traditions influence such aspects as international trade relationship. In order to establish good relationships between both parties, the culture of each involved society must be learned. In the given case, the American sales manager didn’t want to adjust to Latin American way of business behavior and consequently lost a contract. 14-23. What impression do you think the sales manager made on the purchasing manger? Answer: One of the rules that the attaché told the sales manager was to respect the culture and history of Latin America. By showing the ignorance concerning the history and heritage of the country, the sales manager showed his disrespect to the purchasing manager and lost the respect accordingly. Respect is important in Latin America for both sides to trust each other and to do business. This case proved that one of the most important Latin American business rules is “No respect—no business.” 14-24. How would you critique the quality of the communication among all parties in this case? Answer: Talking about the sales manager, he was too ethnocentric and didn’t want to accept cultural differences. However, I would not judge only the sales manager. The purchasing manager could also learn a little bit about the American way of doing business and find a compromise. Of course, the sales manager was in the asking position and could not set the rules, but to learn about the opposite side is the matter of respect. 14-25. Is a high-context culture or a low-context culture at work in this case? Explain your answer. Answer: It’s a clash of a low-context and a high-context cultures that played a negative role in this case. The United States is a low-context culture where words mean everything and problems are solved when they appear without any delay. Latin American countries are high-context cultures where nonverbal communication and the respect to the opposing side mean a lot in making business decisions. The clash of cultures in this case couldn’t be resolved because none of the sides wanted to accept the difference of the other one and find a compromise. TEACHING TOOLS AND EXERCISES Additional Cases: "Doosan Infra core International: Portable Power Brand Transformation (B)" by Marting roth and Dominique Turpin, HBS, IMD, Sept. 2010, IMD430-PDF-ENG. "Haier: Taking a Chinese Company Global in 2011" by Tarum Khanna, Krishna G. Plaepu, and Phillip Andrews, HBS, Aug. 2011, 23p. 713408-PDF-ENG. " Herborist" A Chinese Personal Care Brand Goes Abroad", by Kevin Zhow and Grace Loo, HBS, University of Hong Kong, June 2011, 24 p. HKU927-PDF-ENG “We Marketing Group: Building a Global Marketing and Communications Company in China “. Ali Farhoomand; Kineta Hung; Grace Loo. HBS HKU734. 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: Taylor, Charles R., George R. Franke, and Michael L. Maynard. "Attitudes toward Direct Marketing and Its Regulation: A Comparison of the United States and Japan." Journal of Public Policy & Marketing 19, no. 2 (Fall 2000), pp. 228-37. Internet Exercise: Ethics and the Internet. Do you want regulation of the Internet? Explain your answer? If you favor regulation, what type of regulation of the Internet do you favor? What do you think is the most unethical practice currently on the Internet (if any)? Go to a business ethics resource website to explore issues in business ethics and marketing ethics (http://www.business-ethics.com/). Guest Speaker: Invite a manager from a local department, specialty, or discount store to speak to the class about the use of sampling, coupons, special events, and other sales promotion tools. SUGGESTED READINGS Books DeMooij, M. K. and Warren Keegan. Advertising Worldwide. London: Prentice Hall International, 1991. Grey, Anne-Marie and Kim Skildum-Reid. The Sponsorship Seeker’s Toolkit. New York: McGraw-Hill, 2002. Articles Blandauf, Artur, David W. Cravens, and Nigel F. Piercy. “Examining the Consequences of Sales Management Control Strategies in European Field Sales Organizations.” International Marketing Review 18, no. 5 (2001), pp. 474-508. Chen, Chien-Wei. Integrated Marketing Communications and New Product Performance in International Markets. Journal of Global Marketing (Volume 24, Issue 5) 2011 Link: http://www.tandfonline.com/doi/abs/10.1080/08911762.2011.634325 Chun-Chin, Sheen, Gwo-Ji, Tai, Cheng-Ting, Lee, Kuo-Liang. “Using Six Sigma to Improve Replenishment Process in a Direct Selling Company”. Supply Chain Management: An International Journal. 2010. v. 15, issue 1. Gupta, Pola B. and Kenneth R. Lord. “Product Placement in Movies: The Effect of Prominence and Mode of Audience Recall.” Journal of Current Issues and Research in Advertising 20 (Spring 1998), pp. 47-60. Gould, Stephen J., Pola B. Gupta, and Sonja Grabner-Krauter. "Product Placements in Movies: A Cross-Cultural Analysis of Austrian, French and American Consumers' Attitudes Toward this Emerging, International Promotional Medium." Journal of Advertising 29 no. 4 (Winter 2000) pp. 41-58. Hill, John S., Richard R. Still, and Unal O. Boya. “Managing the Multinational Sales Force.” International Marketing Review 8 (1991), pp. 19-31. Honeycutt, Earl D. Jr., and John B. Ford. "Guidelines for Managing an International Sales Force." Industrial Marketing Management 24 (March 1995), pp. 135-144. Kashani, Kamran, and John A. Quelch, "Can Sales Promotion Go Global?" Business Horizons (May-June 1990), pp. 37-43. McGuinness, Dalton, Mike Brennan, and Philip Gendall. "The Effect of Product Sampling and Couponing on Purchase Behavior: Some Empirical Evidence," International Journal of Advertising 14, no. 3 (1995), pp. 219-230. Njissen, Edwin J., Douglas, Susan P. Consumer World-Mindedness and Attitudes Toward Product Positioning in Advertising: An Examination of Global Versus Foreign Versus Local Positioning. Journal of International Marketing (Volume 19, Number 3, p. 113-133) 2011. Link: http://www.journals.marketingpower.com/doi/abs/10.1509/jimk.19.3.113 Okazaki, Shintaro, Mueller, Barbara & Taylor, Charles R. "Global Consumer Culture Positioning: Testing Perceptions of Soft-Sell and Hard-Sell Advertising Appeals Between U.S. and Japanese Consumers". Journal of International Marketing (Volume 18, Number 2, p. 20-34) 2010 Samli, A. Coskun, Gregory P. Wirth, and James R. Wills, Jr. "High-Tech Firms Must Get More Out of Their International Sales Efforts." Industrial Marketing Management 23 (October 1994), pp. 333-342. Tong, DYK and Lai, KP, "Ladies' purchase intention during retail shoes sales promotions" International Journal of Retail & Distribution …, 2012. Wilken, Rowan & Sinclair, John. Global Marketing Communications and Strategic Regionalism. Globalizations (Volume 8, Number 1, p.1-15) 2011 Link: http://dx.doi.org/10.1080/14747731.2011.544189 Solution Manual for Global Marketing Warren J. Keegan, Mark C. Green 9780133545005, 9781292017389