Communication decisions Lecture by Ewa Baranowska-Prokop, Ph.D. Communication decisions

De Beers: forward integration What could be De Beers motives for making forward integration into the retail & consumer market? Is it a wise decision? How should De Beers develop its Internet strategy following this forward integration strategy? Would it be possible for De Beers, with its branded diamonts, to standardize the international marketing strategy across borders?

BMW Motorcycles: A case study (1) Should BMW use standardization or adaptation in promoting the motorcycles outside the US and Germany? Requires web access

BMW Motorcycles: A case study (2) Why is BMW using its website as a virtual showroom rather than also selling online directly to consumers? Should BMW develop and promote a new motorcycle brand to differentiate its motorcycles from competing motorcycle brands as well as differentiating them from BMW cars?

Learning objectives Define and classify the different types of communication tools Describe and explain the major steps in advertising decisions Describe the techniques available and appropriate for setting the advertising budget in foreign markets

Learning objectives (2) Discuss the possibilities of marketing via the Internet Explain how important personal selling and sales force management are in the international marketplace Define and explain the concept of ‘viral marketing’ Discuss how standardized international advertising has both benefits and drawbacks

Figure 17.1 The shift from seller initiative to buyer initiative

Figure 17.2 Elements of the international communication process

Figure 17.3 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Advertising evaluation

What is this? Percentage of sales method Which form of budgeting means that the firm simply allocates a fixed proportion of sales to the advertising budget? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Percentage of sales method

Percentage of sales method Advantages Guarantees equality among markets Easy to justify Guarantees only what is affordable is spent Disadvantages Based on historical performance Ignores necessity of increased spending during declining sales Does not consider goals Fails to address relationship between advertising and sales

What is this? Competitive parity Which form of budgeting simply duplicates the amounts spent on advertising by major rivals? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Competitive parity

What is this? Objective and task approach Which form of budgeting starts with determining the advertising objectives and then ascertaining the tasks needed to attain the objectives? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Objective and task approach

What is this? What term refers to the total portion of the target market exposed to at least one ad in a given time period? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Reach

What is this? What term refers to the average number of times within a given timeframe that each potential customer is exposed to the same ad? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Frequency

European agency selection factors National Supports national subsidiary Investment in existing brand best handled nationally Closer to marketplace Personalized service and greater creativity Diversity of ideas Pan-European Reflects new European reality Economies of scale in new product development and branding Uniformity of treatment across Europe Resources and skills of major agency Easier to manage one agency group Source: adapted from Lynch, 1994, Table 11-4.

Aspects of advertising evaluation Communication impact Pretesting of print and broadcast ads Testing finished ad Sales impact

Public relations Possible PR methods Event sponsorship Prizes at events Press releases Announcements Lobbying Possible PR targets Employees Shareholders Suppliers Customers General public Governments Financial markets

What is this? Sales promotion What term refers to a short-term effort directed primarily to the consumer and/or retailer to achieve specific objectives such as product trial? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Sales promotion

Factors leading to expansion of sales promotion activities Greater retail competition Higher levels of brand awareness Improved retail technology Greater integration of promotional mix in media campaigns

Factors leading to expansion of international direct marketing activities Developments in mailing technology Escalating costs of other forms of promotion Increasing availability of quality lists Developments in information technology Increasing availability throughout developed world of interactive television facilities

Questions to ask when assessing sales force effectiveness Is the selling effort structured for effective market coverage? Is the sales force staffed with the right people? Is strong guidance provided? Is adequate sales support in place? Does the sales compensation plan provide the proper motivation?

Using expatriates Advantages Product knowledge Training for promotion Greater home control Disadvantages Highest costs High turnover High training costs Source: Reprinted from Industrial Marketing Management, Vol. 24, Honeycutt, E.D. and Ford, J.B. (1995) ‘Guidelines for managing an international sales force’, p. 138, Copyright 1995, with permission from Elsevier.

Staffing the sales force from the host country Advantages Economical High market knowledge Language skills Best cultural knowledge Faster implementation Disadvantages Needs product training May be held in low esteem Importance of language skills declining Difficult to ensure loyalty

Staffing the sales force from a third country Advantages Cultural sensitivity Language skills Economical Allows regional sales coverage May allow sales in a country in conflict with home country Disadvantages Face identity problems Blocked promotions Income gaps Needs product/company training Loyalty assurances

What is this? Viral marketing What term refers to a marketing technique that seeks to exploit existing social networks to produce exponential increases in brand awareness through online word-of-mouth communication? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Viral marketing

Viral marketing Advantages Inexpensive Active and participatory Effectively targeted through peer-to-peer networks Disadvantages Requires technologically compatible programs Filtering programs may prevent receipt Must be easy

Developing a viral marketing campaign Step 1: Create compelling content Step 2: Target the right audience Step 3: Seed the message Step 4: Control/ measure results

Courvoisier cognac used a localization strategy http://www.courvoisier.com/

Negotiation A negotiation process can be defined as a process in which two or more entities come together to discuss common and conflicting interests in order to reach an agreement of mutual benefit

Figure 18.1 The cross-cultural negotiation process Non-task related interaction Seller’s cultural background 1 Status distinction 2 Impression formation accuracy 3 Interpersonal attraction Cultural distance between seller and buyer Task related interaction 4 Exchange of information 5 Persuasion and bargaining strategy Buyer’s cultural background 6 Concession making and agreement 7 Negotiation outcome Source: Adapted from Simintiras, A.C. and Thomas, A.H. (1998) and Simintiras, A.C. and Reynolds, N. (2001).

What is this? The best alternative to a negotiated agreement is known as ______. There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. BATNA

Hofstede’s cultural dimensions Masculinity/femininity Uncertainty avoidance Power distance Individualism/collectivism

Figure 18.2 Gap analysis in a cross-cultural negotiation

Disney had to adapt to European cultures

Approach to general intercultural preparation (1) Build awareness about how cultural differences impact upon them in the sales organization Motivate salespeople and managers to ‘rethink’ behaviour and attitude towards customers Allow salespeople to examine their own biases in a psychologically safe environment

Approach to general intercultural preparation (2) Examine how stereotypes develop and how they can create misunderstandings between buyers and sellers Identify diversity issues that need to be addressed in the international sales organization

Steps for improving cross- cultural negotiation competences Assess communication competences of salespersons Assess communication competences of negotiators in the buying firm Match communication and negotiation competences of buying and selling firm

What is this? Expatriates What term refers to employees who are sent out from the headquarters to work for the company in the foreign markets, often in its subsidiaries? There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image. Expatriates

Attributes to consider when selecting expatriates Foreign-language skills General relational abilities Emotional stability Educational background Past cultural experience Ability to deal with stress

Risk of culture shock is lower when expatriate exhibits Open-mindedness Empathy Cultural sensitivity Resilience Low ego identity

Expatriate training methods Area/country descriptions Cultural assimilation training Role playing Handling critical incidents Case studies Stress reduction training Field experience Extensive language training

Figure 18.3 ‘Bottom-up’ learning in global marketing

For discussion (1) Identify and discuss problems associated with assessing advertising effectiveness in foreign markets Compare domestic communication with international communication. Explain why ‘noise’ is more likely to occur in the case of international communication processes Explain how personal selling may differ overseas from how it is used in the home market

For discussion (2) Why do more companies not standardize advertising messages worldwide? Identify the environmental constraints that act as barriers to the development and implementation of standardized global advertising campaigns What is meant by saying that advertising regulations vary around the world?

For discussion (3) Evaluate the ‘percentage of sales’ approach to setting advertising budgets in foreign markets Explain how the multinational firm may have an advantage over local firms in training the sales force and evaluating its performance Identify and discuss problems associated with allocating the company’s promotion budget across several foreign markets