The International Promotional Mix and Advertising Strategies

1. The International Promotional Mix and Advertising Strategies Dana-Nicoleta Lascu Chapter 13

2. Chapter Objectives • Describe international promotional mix and the international communication process. • Explore the international advertising formats and practices around the world. • Describe the international advertising infrastructure and infrastructure-related challenges in different markets. • Describe advertising strategies and budgeting decisions and offer examples of international applications.

3. International Promotional Mix • Components of the promotional mix are: • International advertising. • International sales force management. • International sales promotion. • International public relations. • Publicity. • Companies use the promotional mix to communicate with international consumers about their products and services.

4. SENDER RECEIVER MEDIUM International Communication Process • The sender: • The sponsor of the ad, usually represented by an advertising agency. • The sender encodes the message into words and images and communicates it to the target market. • The sender’s goal is for the message to be received as intended. • The receiver: • Receives the message and decodes it into meaning. • The medium: • Channel of communication – see next slide.

5. International Communication Process (contd.) • The channel of communication: • The communication medium used to send the message to the target market. • Types of media: • Nonpersonal print media: Magazines, billboards, pamphlets, or point-of-purchase displays. • Nonpersonal broadcast media: Television and radio. • Personal media: Salespeople, telemarketers, or individuals involved in a tradeshow. • Interactive media: Web pages, computer terminals on retailer premises.

6. International Communication Process (contd.) • Noise: • Interference in the communication process. • Often, cultural differences and multiple languages increase the level of noise. • Feedback: • Message feedback is offered through purchase of the product promoted. • Product awareness or other measures are also used to evaluate the effectiveness of the message.

7. Advertising • A nonpersonal communication by an identified sponsor across international borders, using broadcast, print, or interactive media. • The media infrastructure provides challenges for sponsoring firms in low-income or middle-income countries.

8. Media Infrastructure Challenges • Media Availability: • The extent to which the media needed for particular communication exists locally and can be used by the sponsor. • Example: Even if newspapers exist in the target market, it may be unusual to see newspaper ads and consumers may react negatively to such advertising. • Media Reliability: • The extent to which media reliably reach target consumers in the intended format and within the intended time frame. • International constraints: • Print lag times • Poor quality • Off-air television or government-controlled television and radio that does not allow advertising.

9. Media Infrastructure Challenges (contd.) • Media Restrictions: • Examples of limitations imposed by existing media: • Limiting the number and types of advertisements. • Cultural differences. • Clustered ads. • Media scheduling. • Media Costs – vary depending on: • Income per capita of target market. • Extent of competition for media from advertisers. • Firm status. • Translation costs.

10. International Formats, Features, and Trends: Kiosks, Fences, Billboards, and Bus Stops • Useful and inexpensive means of communicating with the target market. • They offer local ads a chance to compete with those of multinational firms by being of comparable quality. Kiosks have many formats; this format is popular in Germany. Initially, round structures used to serve as public toilets – and they typically were covered with advertisements.

11. International Formats, Features, and Trends: Outdoor Umbrellas, Awnings • Used by local and multinational brands alike.

12. International Formats, Features, and Trends (contd.) • Dominance of Global Media: • Both television shows and magazines are gaining popularity around the world, allowing for easier global advertising. • Examples: CNN, NBC, BBC • Infomercials and Television Shopping Networks: • Exist in much of the industrialized world; growing business in emerging markets and low-income countries. • Examples: QVC, Home Shopping Network, Home Order Television.

13. International Formats, Features, and Trends (contd.) • English in Local Advertising: • English is used more and more, not just by international firms, but also by local firms communicating with local consumers to endow the product with status. • It takes less space than other languages. • Product Placement: • Involves placing brands in movies and in regular television programming to promote the product to viewers.

14. International Formats, Features, and Trends (contd.) • Advertising Regulations: • Advertisers encounter numerous restrictions imposed by host-country governments that limit their ability to communicate effectively with the target consumer. • Examples of these regulations are: • Restrictions on comparative advertising. • Restrictions on advertising to children. • Rules for advertising vice products; for example, cigarette advertising is banned in certain media and not in others – and the ban is not consistent from one country to another.

15. Advertising Agency Decisions • Firms have the following options: • Hiring Local Advertising Agencies: • This strategy is more likely to be used by a company that uses a localized marketing strategy, appropriate when knowledge of the target market and adaptation are important. • Such a relationship between the multinational corporation and the agency allows for easier interaction with local media and government. However, the quality of advertising is often not at the level provided by a large international advertising agency.

16. Advertising Agency Decisions (contd.) • Hiring International Advertising Agencies: • International agencies are generally used by multinational companies. • There are many firms that use the same agency for all their international communication. • Firms often hire international agencies for their global strategy, but then work with local agencies to tailor the message for the local market. • Hiring Local Advertising Agencies: • Local agencies help tailor company messages to local consumers.

17. Top 10 Ad Agencies (by advertising revenue) Source: Advertising Age, “Top 10 Consolidated Agency Networks,” April 26, 2007

18. International Advertising Strategy • Standardization vs. Adaptation • Using a standardized strategy worldwide: • Reduces costs. • Allows for more effective coordination. • Represents a better fit with the trend of shrinking product life cycles. • However, there are barriers to standardization: • The communication infrastructure. • The consumer literacy level. • Legal restrictions. • Other differences.

19. Budgeting Decisions • Objective-and-Task Method • Involves first identifying advertising goals in terms of communication goals, then conducting research to determine the cost of achieving these goals. Based on this research, firms allocate the necessary sum for advertising expenditures. • This is the most popular method for multinational firms deciding on their advertising budgets. • Percent-of-Sales Method • Determines the total budget allocated to advertising based on past or projected sales.

20. Budgeting Decisions (contd.) • Historical Method • Bases advertising budget on past expenditures, usually giving more weight to more recent expenditures. • Competitive Parity • Uses competitors' level of advertising spending as a benchmark for the firm's own advertising budgeting.

21. Budgeting Decisions (contd.) • Executive-judgment method • Executive opinion determines the advertising budget. • A third of international firms rely heavily on executive judgment. • All-you-can-afford • Firms allocate a total amount that they can afford to advertising. • This strategy is used by small and medium-sized companies entering new international markets. • This approach, however, ignores important strategy issues.

22. Chapter Summary • Addressed the international promotional mix and the international communication process. • Explored international advertising formats and practices around the world. • Described international advertising and media infrastructure, and infrastructure-related challenges in different markets. • Addressed advertising strategies and budgeting decisions.