1. Chapter 20 International Advertising and Promotion

2. McGraw-Hill/Irwin 20-2 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. The International Environment International Marketing And Promotional Decisions Cultural Environment Economic Environment Demographic Environment Political/Legal Environment

3. McGraw-Hill/Irwin 20-3 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Economic Environment Stage of economic development Economic infrastructure Standard of living Per capita income Distribution of wealth Currency stability Exchange rates

4. McGraw-Hill/Irwin 20-4 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Cultural Environment Language Lifestyles Values Norms and customs Ethics and moral standards Taboos

5. McGraw-Hill/Irwin 20-5 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Demographic Environment Size of population Number of households Household size Age distribution Occupation distribution Education levels Employment rates Income levels

6. McGraw-Hill/Irwin 20-6 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Political/Legal Environment Government policies Laws and regulations Political stability Nationalism Attitudes toward multinationals

7. McGraw-Hill/Irwin 20-7 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. The Big Question... Should the global marketer offer the same product, marketing, and advertising throughout the world? or Should the global marketer adapt the product, marketing, and advertising to each of several societies throughout the world?

8. McGraw-Hill/Irwin 20-8 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Global Marketing and Advertising Advantages Economies of scale in production, distribution Lower costs with less in planning and control Lower advertising and production costs Ability to exploit good ideas worldwide Ability to introduce products quickly, worldwide Consistent international brand, company identity Simplification of coordination and control

9. McGraw-Hill/Irwin 20-9 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. When is Globalization Appropriate Brands can be adopted for a visual appeal, avoiding the problems of trying to translate words into dozens of languages Brands that are promoted with image campaigns that play to universal appeals such as sex or wealth High-tech products and new products coming to the world for the first time, not steeped in cultural heritage of the country Products with with a nationalistic flavor if the country has a reputation in the field Products that appeal to a market segment with universally similar tastes, interests, needs, and values

10. McGraw-Hill/Irwin 20-10 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. International Advertising The U.S. accounts for over half of world advertising expenditures Advertising expenditures outside the U.S. are growing more rapidly than inside Every country in the world has advertising of one form or another The more affluent the country, the more is spent on advertising

11. McGraw-Hill/Irwin 20-11 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. International Ad Agencies Many large, American general agencies operate internationally Foreign billings account for over a third of total billings by the top 10 American agencies Large multinational companies often deal with large, international agencies Overseas offices are usually staffed with multilingual, multinational personnel

12. McGraw-Hill/Irwin 20-12 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Foreign Local Agencies Staffed with local talent who understand local attitudes, culture, media, and conditions Especially effective for launching consumer products in a single, new geographic area Poses some problems if a product is to be launched in multiple, local, foreign markets

13. McGraw-Hill/Irwin 20-13 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Criteria for Selecting an Agency for International Advertising Ability of agency to cover relevant markets Quality of agency work Market research, PR, and other services offered Roles of company advertising department and agency Level of communication and control desired Ability of agency to coordinate internationally Size of company’s international business Company’s desire for local vs. international image Company organizational structure Centralized vs. decentralized Company level of involvement with international operations

14. McGraw-Hill/Irwin 20-14 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Areas of Foreign Market Research Information on demographic characteristics of markets Information on cultural differences such as norms, 1ifestyles and values Information on consumers’ product usage, brand attitudes, and media preferences Information on media usage and audience size Copy testing to determine reactions to different types of advertising appeals and executions Research on the effectiveness of advertising and promotional programs in foreign markets

15. McGraw-Hill/Irwin 20-15 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Commercials Shown Per Hour 57 40 38 36 34 33 30 16 0102030405060 United Kindom Australia Thailand Mexico France China Philippines Turkey

16. McGraw-Hill/Irwin 20-16 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Who Allows What Promotions In-pack premiumsYesYesNo Maybe Yes Multi-purchase offersYesYes Maybe YesYes Extra productYesYes Maybe YesYes Free productYesYesYesYesYes Mail-in offersYesYes No YesYes Purchase-with-purchaseYesYes No YesYes Cross-promotionsYesYes No YesYes ContestsYesYes Maybe YesYes Self-liquidating premiumsYesYes No YesYes SweepstakesMaybe Maybe No Maybe Maybe Money-off couponsYesYes No Yes Maybe Next-purchase couponsYesYes No Yes Maybe Cash rebatesYesYes Maybe Yes No In-store demosYesYesYesYesYes PromotionU.K.SpainGermanyFranceItaly

17. McGraw-Hill/Irwin 20-17 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Number of Coupons Redeemed, 1998 4.8 Billion 310 Million 130 Million 68 Million 13.5 Million 0 100 200 300 400 U.S.U.K.CanadaItalySpain

18. McGraw-Hill/Irwin 20-18 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Central vs. Local Roles in International Sales Promotion Design Execution Information Transfer Adoption + Adaptation Design Execution Strategy Cross-Fertilization Information transfer Strategy Information transfer Cross-fertilization LocalRegionalGlobal Subsidiary Influences Headquarters Influences Minimum Maximum Minimum Design Execution Strategy International brand uniformity HighLow