Chapter 16 PowerPoint

Chapter PowerPoint

1. Chapter 16 Integrated Marketing Communications and International Advertising Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Learning Objectives LO1 Local market characteristics that affect the advertising and promotion of products LO2 The strengths and weaknesses of sales promotions and public relations in global marketing LO3 When global advertising is most effective; when modified advertising is necessary LO4 The communication process and advertising misfires LO5 The effects of a single European market on advertising LO6 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets 2 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3. Integrated Marketing Communications Integrated marketing communications (IMC) are composed of advertising, sales promotions, trade shows, personal selling, direct selling, and public relations. In many markets, the availability of appropriate communication channels to customers can determine entry decisions. Product and service development must be informed by research regarding the availability of communication channels. Once a market offering is developed to meet target market needs, intended customers must be informed of the offering’s value and availability. 3 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

4. Sales Promotions in International Markets Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Sales promotions are short-term efforts directed to the consumer or retailer to achieve such specific objectives. In markets in which the consumer is hard to reach because of media limitations, the percentage of the promotional budget allocated to sales promotions may have to be increased. 4 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

5. Sales Promotion: Specific Objectives Consumer product trial or immediate purchase Consumer introduction to the store or brand Gaining retail point-of-purchase displays Encouraging stores to stock the product Supporting and augmenting advertising and personal sales efforts 5 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

6. International Public Relations Creating good relationships with the popular press and other media to help companies communicate messages to their publics—customers, the general public, and governmental regulators Encouraging the press to cover positive stories about companies Managing unfavorable rumors, stories, and events 6 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7. Samsung advertisement in Piazza Navona The Baroque exuberance of the figure representing the Rio de la Plata seems to be protesting the banality of the Samsung advertisement in the background. © John Graham 7 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

8. International Advertising Global mass media advertising is a powerful tool for cultural change, and as such, it receives continuing scrutiny by a wide variety of institutions. Advertising expenditures are generally cyclical, though less so in relationship-oriented countries where managers and regulators favor stability and long-term performance. We are just beginning to understand some of the key issues involved in international advertising, but our knowledge will continue to be quite perishable as the revolution continues. 8 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9. Exhibit 16.1 Top 20 Global Advertisers Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 9 Source: Advertising Age, 2014. Copyright © 2014 Crain Communication. Reprinted with permission.

10. Exhibit 16.2 Top 100 Advertisers’ Global Spending by Category Category 2013 (billions) Percent Change from 2012 Percent of Total Automotive $16.5 3.6% 11.9% Retail 16.1 0.2 11.6 Telecommunications, Internet services, ISP 11.2 6.0 8.1 General Services 9.0 3.2 6.5 Food, beverages, candy 8.5 -1.2 6.1 Medicine and remedies 8.2 5.8 5.9 Financial services 7.6 -4.7 5.5 Personal care 7.1 2.1 5.1 Restaurants 6.3 5.3 4.6 Insurance 5.3 7.5 3.8 10 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Source: Advertising Age, Crain Communication

11. Exhibit 16.3a Top Ten Advertisers - Russia ($ millions) Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 11 Source: From Special Report Global Marketing, Advertising Age, 2012. Copyright © 2012 Crain Communication. Reprinted with permission.

12. Exhibit 16.3b Top Ten Advertisers - China ($ millions) Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 12 Source: From Special Report Global Marketing, Advertising Age, 2012. Copyright © 2012 Crain Communication. Reprinted with permission.

13. Basic Framework of International Advertising Seven steps are involved: Perform marketing research. Specify the goals of the communication. Develop the most effective message(s) for the market segments selected. Select effective media. Compose and secure a budget based on what is required to meet goals. Execute the campaign. Evaluate the campaign relative to the goals specified. 13 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

14. Advertising Strategy and Goals Intense competition for world markets and the increasing sophistication of foreign consumers have led to the need for more sophisticated advertising strategies. In many cases, standardized products may be marketed globally. But because of differences in cultures, they still require a different advertising appeal in different markets. Many companies are using market segmentation strategies that ignore national boundaries. Others are proposing newer global market segments defined by “consumer cultures” related to shared sets of consumption-related symbols. 14 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

15. Vehicular ads in London These vehicular ads make an effective advertising medium even in a dense London fog. Because most London cabs are black, the Snickers ad catches the eye immediately. © John Graham © John Graham 15 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

16. Product Attribute and Benefit Segmentation A market offering really is a bundle of satisfactions (or utilities) the buyer receives. The primary function of the product or service Other benefits imputed by the values and customs of the culture While usually agreeing on the benefit of the primary function of a product, consumers may perceive other features and psychological attributes of the item differently. 16 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

17. Regional Segmentation The emergence of pan-European communications media is enticing many companies to push the balance toward more standardized promotional efforts. Companies strive for harmony in brand names, advertising, and promotions across Europe. To avoid the confusion that results when a market is exposed to multiple brand names and advertising messages For reasons of efficiency 17 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

18. The Message: Creative Challenges International communications may fail for a variety of reasons: A message may not get through because of media inadequacy The message may be received by the intended audience but not be understood because of different cultural interpretations The message may reach the intended audience and be understood but have no effect because the marketer did not correctly assess the needs and wants or even the thinking processes of the target market 18 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

19. Global Advertising and the Communications Process An information source. Product message to communicate Encoding. Conversion to effective symbolism for transmission A message channel. Media that conveys the encoded message Decoding. The interpretation by the receiver of the symbolism Receiver. Those who receive the message Feedback. Information about the effectiveness of the message Noise. Uncontrollable and unpredictable influences 19 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

20. Exhibit 16.4 The International Communication Process 20 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

21. The Power of Colors Notice the Coke advantage at work—the red contrasts with the outdoor environment, while the Cristal aqua blends more with the blue sky and trees. © John Graham © John Graham 21 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

22. Red works! David Beckham, in his Manchester United red and Formula 1 racecar driver Michael Schumacher. © Tom Purslow/Manchester United via Getty Images © Mark Baker/AP Images 22 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

23. Coke and McDonald’s black and white logos The stadium pictured is in Buenos Aires, is popularly called La Bombonera, is officially named Albierto Armano , is the home of the club team Boca Junior, and was the home team for Argentina’s most famous futbol player ever, Maradona . The McDonald’s sits adjacent to the city square in the old Inca Empire capital at Cuzco, Peru. © John Graham © John Graham 23 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

24. Decoding Problems Errors at the receiver end of the process generally result from a combination of factors: An improper message resulting from incorrect knowledge of use patterns Poor encoding producing a meaningless message Poor media selection that does not get the message to the receiver Inaccurate decoding by the receiver so that the message is garbled or incorrect Bad luck 24 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

25. Noise: A Disruptive Force Comprises all other external influences: Competitive advertising Other sales personnel Confusion at the receiving end It is frequently beyond the control of the sender or the receiver. 25 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

26. California Fitness Centers in Singapore City streets in Singapore are alive with advertising. Obviously the image of “bodyland” southern California sells well around the world. © John Graham 26 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

27. Legal Constraints Laws that control comparative advertising vary from country to country in Europe. Comparative advertising is heavily regulated in other parts of the world as well. A variety of restrictions on advertising of specific products exist around the world. Advertising on television is strictly controlled in many countries. Internet services are especially vulnerable as EU member states decide which area of regulation should apply to these services. Some countries have special taxes that apply to advertising, which might restrict creative freedom in media selection. 27 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

28. Linguistic Limitations Major barriers include: Different languages of different countries Different languages or dialects within one country Subtler problems of linguistic nuance, argument style, vernacular, and even accent Abstraction, terse writing, and word economy, the most effective tools of the advertiser, pose problems for translators. Low literacy in many countries seriously impedes communications and calls for greater creativity and use of verbal media. 28 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

29. Jamaica The “true ting” in Jamaica is a grapefruit-flavored soft drink. © John Graham 29 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

30. Spain and China Giant bulls are posted on hillsides around rural Spain. GE joined with the Chinese government in promoting a green Olympics. Ironically, many folks around the world see outdoor advertising itself as a kind of pollution! © Denis Doyle/AP Images Courtesy of GE 30 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

31. Cultural Diversity “International advertising is almost uniformly dreadful mostly because people don’t understand language and culture.” Existing perceptions based on tradition and heritages often render advertising campaigns ineffective or worse. In addition to concerns with differences among nations, advertisers find that subcultures within a country require attention. 31 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

32. Media Limitations Limitations on creative strategy imposed by media may: diminish the role of advertising in the promotional program force marketers to emphasize other elements of the promotional mix Creative advertisers in some countries have even developed their own media for overcoming media limitations. 32 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

33. Production and Cost Limitations Creativity is especially important when a budget is small or where there are severe production limitations, such as poor-quality printing and a lack of high-grade paper. The necessity for low-cost reproduction in small markets poses another problem in many countries. 33 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

34. Media Planning and Analysis The network effects of the burgeoning electronic communication media—in the form of PCs, the Internet, and mobile phones—influence not only political events and responses to natural disasters but also everyday life for everyone on the planet. The changes in media in the 21st century are proceeding at a blinding speed. 34 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

35. Tactical Considerations In international advertising, an advertiser must consider the availability, cost, coverage, and appropriateness of the media. The constant competitive churn among these media makes for a tricky and dynamic landscape for decisions. Effectiveness of advertising varies across media types, cultures, and products. Local variations and lack of market data require added attention. 35 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

36. Lack of Market Data Verification of circulation or coverage figures is a difficult task. Even where advertising coverage can be measured with some accuracy, there are questions about the composition of the market reached. Lack of available market data seems to characterize most international markets. 36 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

37. Newspapers and Magazines The newspaper industry is suffering from lack of competition in some countries and choking because of it in others. In many countries, there is a long time lag before an advertisement can be run in a newspaper. Separation between editorial and advertising content in newspapers provides another basis for contrast on the international scene. The use of foreign national consumer magazines by international advertisers has been notably low for many reasons. Few magazines have a large circulation or provide dependable circulation figures. Technical magazines are used rather extensively to promote export goods, but as with newspapers, paper shortages cause placement problems. 37 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

38. Exhibit 16.5 Media Spending, US$/household, in Selected Countries (average annual growth rate 2008–2013) Country TV Radio Print Cinema Outdoor Online World (11.4) 90 (1.7) 16 (-2.7) 60 (-7.4) 1 (4.1) 15 (-0.6) 45 China (21.3) 41 (15.2) 4 (6.5) 21 (6.9) 0.2 (10.4) 11 (8.8) 18 Japan (5.4) 304 (-1.4) 21 (-4.5) 143 (-7.4) - 79 (-5.8) 155 Australia (14.3) 445 (-0.6) 117 (-0.9) 378 (-9.8) 12 (0.0) 57 (0.6) 409 Russia (29.8) 72 (4.3) 7 (1.3) 14 (-7.6) 3 (13.8) 18 (-3.3) 32 Brazil (18.0) 154 (-2.6) 9 (5.6) 36 (-0.9) 1 (1.9) 6 (8.1) 12 Israel (3.2) 159 (-2.6) 19 (-6.6) 123 (-10.6) 3 (-1.0) 20 (-9.1) 89 South Africa (17.9) 104 (10.3) 33 (9.2) 72 (-1.0) 2 (-8.5) 10 (7.7) 6 Canada (14.4) 254 (-0.3) 117 (-0.2) 181 (-5.7) - 36 (0.3) 239 USA (12.7) 532 (1.4) 137 (-3.5) 333 (-10.5) 6 (4.1) 65 (1.3) 277 Germany (9.7) 130 (-0.6) 24 (-0.1) 281 (-4.5) 2 (-1.3) 25 (-1.5) 131 Source: Euromonitor, 2015. 38 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

39. Radio and Television Most adults view television and listen to radio daily. Television and radio advertising availability varies between countries. Some countries do not permit any commercial radio or television. Several of the traditional noncommercial countries have changed their policies in recent years because television production is so expensive. 39 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

40. Satellite and Cable TV Of increasing importance in TV advertising is the growth and development of satellite TV broadcasting. The expansion of TV coverage will challenge the creativity of advertisers and put greater emphasis on global standardized messages. 40 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

41. Drawbacks of Satellite TV Governments fear further loss of control over their airwaves and the spread of “American cultural imperialism.” Because of their ability to span a wide geographical region covering many different country markets, a single message is broadcast throughout a wide area. With cultural differences in language, preferences, and so on, a single message may not be as effective. Most satellite technology involves some government regulation that seldom works for long. 41 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

42. Irish beer advertisements Ireland is behind only the Czech Republic when it comes to per capita consumption of beer. © John Graham © John Graham © John Graham 42 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

43. Direct Mail and the Internet A viable medium in an increasing number of countries Especially important when other media are not available Subject to some odd and novel quirks A meaningful way to reach their markets The Internet can reach a large portion of the business-to-business market and is widely used in business-to-business communications and promotion via catalogs and product descriptions. Beyond the control of undesirable information, issues such as pay-per-view, taxes, unfair competition, import duties, and privacy are being addressed all over the world. The Internet industry is lobbying for a global understanding on regulation to avoid a crazy quilt of confusing and contradictory rules. 43 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

44. Exhibit 16.6 Top Ten Websites (31.9 million visitors per month) Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 44 Source: comScore Media Metrix, 2012, online. Reprinted with permission.

45. Social Media Powerful marketing tools: social networking, blogs, virtual worlds, and video sharing Consumer-generated content is having an impact on brands (both positive and negative) Consumers from many different countries and cultures can and do interact online At more than one billion users, Facebook dominates social networking around the world 45 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

46. Exhibit 16.7 Top 10 Social Media Users Average Time Spent on Social Networking Sites, October 2011 (hours per user) Source: Michael Jung, “Social Networking Is the Most Popular Online Activity,” http://www.thenewage . co.za/38836-1021-53-Social_ networking_is_the_most_popular_ online_activity, December 26, 2011, online. 46 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

47. Mobile Phone Applications and Other Media As the number of mobile phones continues to explode around the world, now over 7 billion, so do the number of applications available to users. The top 1 percent of mobile phone users consume half of the world’s bandwidth, and the gap is growing! Restrictions on traditional media or their availability cause advertisers to call on lesser media to solve particular local-country problems. The cinema is an important medium in many countries. Billboards are especially useful in countries with high illiteracy rates. 47 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

48. Pizza Hut and Diet Pepsi’s novel advertising Not only do the Russians sell space for space tourists on their rockets, they also sell advertising space! The Japanese beverage company Suntory promotes its products with “Monitor Man” during a football match at National Stadium. © Yuri Kochetkov European Press Agency/Newscom © Tatsuyuki Tayama/Fujifotos/The Image Works 48 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

49. Campaign Execution and Advertising Agencies Just as manufacturing firms have become international, so too have U.S., Japanese, and European advertising agencies expanded internationally to provide sophisticated agency assistance worldwide. Local agencies also have expanded as the demand for advertising services by MNCs has developed. In most commercially significant countries, an advertiser has the opportunity to employ a local domestic agency, its company-owned agency, or one of the multinational advertising agencies with local branches. 49 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

50. Exhibit 16.8 World’s Top Ten Advertising Agencies 2013 Agency (parent) Headquarters Global Revenues ($ billion 2013) Percent Change from 2012 1 WPP Dublin $17.3 4.8% 2 Omnicom Group New York 14.6 2.6 3 Publicis Groupe Paris 9.2 8.7 4 Interpublic Group New York 7.1 7.0 5 Dentsu Tokyo 5.8 -9.4 6 Havas Suresnes, France 2.3 2.1 7 Hakuhodo DY Holdings Tokyo 1.8 -15.7 8 Alliance Data Systems International Irvine, TX 1.4 10.6 9 IBM International Experience Armonk, NY 1.3 74.3 10 MDC Partners Toronto/New York 1.2 6.1 Source: From Special Report Global Marketing, Advertising Age. Crain Communication. 50 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

51. International Control of Advertising: Broader Issues A study of a representative sample of European consumers indicated that only half believed ads gave useful information. The non-Europeans praised advertising as a way to obtain valuable information about products. European Commission officials are establishing directives to provide controls on advertising as cable and satellite broadcasting expands. Decency and the blatant use of sex in advertisements also are receiving public attention. The assault on advertising and promotion of tobacco products is escalating. Product placement within TV programming is another area of advertising receiving the attention of regulators. 51 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

52. Summary An IMC program includes coordination among advertising, sales management, public relations, sales promotions, and direct marketing. Global marketers face unique legal, language, media, and production limitations in every market. The major problem facing international advertisers is designing the best messages for each market served. Advances in communication technologies are causing dramatic changes in the structure of the international advertising and communications industries. 52 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.