Evaluación

Once a firm decides whether it will adopt standardization or a localization strategy, it is time to plan for the Four Ps.

Product Decisions

MTV is betting its hit show Jersey Shore, that chronicles the (uniquely American?) drunken antics of a group of tanned “guidos” during a summer in New Jersey, will become a hit among young people the world over who have never had the experience of “going down the

shore.” The network exported the show to 30 countries after it became a runaway hit in the U.S. One overseas promotion boasts, “In the show that’s got America talking . . . prepare to meet a whole new kind of crazy.” Another advertising poster pretty much sums up why MTV believes it can export the show to many different cultures: “Muscles⫹ gel ⫹ tanning bed ⫽ sex.”39

A firm has three choices when it decides on a prod- uct strategy:

1. Sell the same product in the new market.

2. Modify it for that market.

3. Develop a brand-new product to sell there. A straight extension strategy retains the same product for domestic and foreign markets. For genera- tions, proper etiquette in Japan was for girls to bow and never raise their eyes to a man.40_{However, the new gen-}

eration of Japanese women wants to look straight at you, showing their eyes and eyelashes. Japanese eyelashes are very short, so they have to be curled to show. To meet

this need, L’Oréal introduced its Maybelline brand Wonder Curl that dramatically thickens and curls lashes as a woman applies it. The launch was such a success in Japan that local tel- evision news showed Japanese customers standing in line to buy the product.

Aproduct adaptation strategyrecognizes that in many cases people in different cul- tures do have strong and different product preferences. Sometimes these differences can be subtle yet important. In India, Pizza Hut offer pizzas with traditional toppings such as paneer and tikka.41_{Many people in Argentina pronounce “Pepsi” as “Pesci” so the company}

adapted to the local dialect by formally changing its name there.42_{Kraft had a tough time}

for years persuading Chinese consumers to eat its Oreo cookies. People thought they were too sweet and they were too expensive. The package was too big for small Chinese families. Kraft International embraced a product adaptation strategy as it reformulated the snack to be less sugary and cheaper. As a result Oreos now account for about 7% of the $1.6 billion Chinese cookie market.43

Aproduct invention strategymeans a company develops a new product as it expands to foreign markets. For example, in India Coca-Cola and Pepsi now offer their versions of a traditional lemonade, Nimbu Panni.44_{In some cases, a product invention strategy takes the}

form of backward invention. For example, there are still nearly one and a half billion people on the earth without electricity, primarily in Africa, Asia, and the Middle East. This provides a challenge for firms to develop products such as refrigerators and air conditioning systems that can operate without electric power.45

Promotion Decisions

Marketers must also decide whether it’s necessary to modify how they speak to consumers in a foreign market. Some firms endorse the idea that the same message will appeal to every- one around the world, while others feel the need to customize it. The 2006 World Cup was broadcast in 189 countries to one of the biggest global television audiences ever. This mega- event illustrates how different marketers make different decisions—even when they create ads that run during the same game. MasterCard ran ads that appeared in 39 countries, so its ad agency came up with a spot called “Fever,” in which 100-odd cheering fans from 30 coun- tries appear. There’s no dialogue, so it works in any language. At the end, the words, “Foot- ball fever. Priceless” appeared under the MasterCard logo.46_{In 2009, Coke launched its first}

global ad campaign with the tagline “Open Happiness.” More recently, Sprite followed with

straight extension strategy

Product strategy in which a firm offers the same product in both domestic and foreign markets. product adaptation strategy Product strategy in which a firm offers a similar but modified product in foreign markets.

product invention strategy

Product strategy in which a firm develops a new product for foreign markets.

backward invention strategy Product strategy in which a firm develops a less advanced product to serve the needs of people living in countries without electricity or other elements of a developed infrastructure. Local customs provide opportunities for product invention strategies. Most American consumers would not be familiar with this Indian product, cooling hair oil.

its global “The Spark” ad campaign (along with a new global package) in Europe, North America, Africa, and Asia.47

Price Decisions

It’s often more expensive to manufacture a product in a foreign market than at home. This is because there are higher costs stemming from transportation, tariffs, differences in cur- rency exchange rates, and the need to source local materials. To ease the financial burden of tariffs on companies that import goods, some countries have established free trade zones. These are designated areas where foreign companies can warehouse goods without paying taxes or customs duties until they move the goods into the marketplace.

One danger of pricing too high is that competitors will find ways to offer their product at a lower price, even if they do so illegally. Gray market goodsare items that are imported without the consent of the trademark holder. While gray market goods are not counterfeit, they may be different from authorized products in warranty coverage and compliance with local regulatory requirements. The Internet offers exceptional opportunities for marketers of gray market goods from toothpaste to textbooks. But, as the saying goes, “If it seems too good to be true, it probably is.” Consumers may be disappointed when they find gray mar- ket goods may not be of the same quality, so the deal they got may not look as good after they take delivery.

Another unethical and often illegal practice is dumping, in which a company prices its products lower than it offers them at home. This removes excess supply from home markets and keeps prices up there. In 2009, even with the economic downturn, China speeded up its manufacture of steel products. With government subsidies of between 40 and 90 percent, companies dumped a lot of very low-priced steel on the U.S. market. In response, U.S. steel- makers filed complaints against China because they claimed that the dumping threatened the livelihoods of American workers.48_{Later in the year, China in retaliation conducted its}

own subsidy and dumping investigations and imposed import duties on U.S. steel products based on allegations of dumping by the U.S. firms.49

Distribution Decisions

Getting your product to consumers in a remote location can be quite a challenge. It’s essen- tial for a firm to establish a reliable distribution system if it’s going to succeed in a foreign market. Marketers used to dealing with a handful of large wholesalers or retailers in their domestic market may have to rely instead on thousands of small “mom-and-pop” stores or distributors, some of whom transport goods to remote rural areas on oxcarts, wheelbarrows, or bicycles. In least developed countries, marketers may run into problems when they want to package, refrigerate, or store goods for long periods.

Even the retailing giant Walmart occasionally stumbles when it expands to new mar- kets. The company joined the ranks of multinationals like Nokia, Nestlé, and Google that have failed to adjust to the tastes of South Korean consumers. Walmart (as well as European rival Carrefour) stuck to Western marketing strategies that concentrated on dry goods from electronics to clothing. It failed to figure out in time that local rivals like E-Mart and Lotte emphasize food and beverages that are more likely to attract South Koreans to large stores. Local customers also didn’t take to a relatively sterile environment where products sell by the box; their competitors enticed shoppers with eye-catching displays and clerks who hawked their goods with megaphones and hand-clapping. Walmart bailed out of South Ko- rea entirely in 2006.50

Now that you’ve learned about global marketing, read “Real People, Real Choices: How It Worked Out” to see which strategy Robert Chatwani of eBay selected.

free trade zones

Designated areas where foreign companies can warehouse goods without paying taxes or customs duties until they move the goods into the marketplace.

gray market goods

Items manufactured outside a country and then imported without the consent of the trademark holder.

dumping

A company tries to get a toehold in a foreign market by pricing its products lower than it offers them at home.

Real People, Real Choices

To learn the whole story, visit www.mypearsonmarketinglab.com.

Why do you think

Robert chose option #3?

Here’s my choice. . .

Brand YOU!

Do what you love and love what you do.

It’s a mantra for life. Explore what you love to do (and don’t love to do) and how that can translate into your career in Chapter 3 of the Brand You supplement. You’ll be surprised at the choices you have and how easily you’ll be able to narrow down the direction that is best for you.