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Global Issues in Marketing

INTRODUCTION Is International Marketing for big companies


No, not only big cos like IBM, McDonalds, Coca-Cola, GM, Nike

which establish themselves in the competitive arena of

globalization but there are some other examples as well like Red

Spot Paint & Varnish Co., Hanover Wirecloth, Bromide

Engineered Abrasives, Hawg Heaven Bait Co. etc. and names we

have not even heard of. And there's a lot that goes into

expanding globally that a layman businessman can ever


The changing competitive structures coupled with shifts in

demand characteristics in markets around the world. The firms

find themselves enmeshed with foreign customers, competitors,

and suppliers, even within their own borders.

Some examples like 7-Eleven Convenience stores or Firestone

stores are Japanese stores operating in US. Acquisitions are the

order of the day where some of the well known brands are no

longer owned by US companies. E.g. Carnation(Swiss), Burger

King (British).

The last US company to produce TV sets was Zenith, which was

recently acquired by South Korea's LG. Electronics Inc. Honda,

BMW, Mercedes are perhaps the major players that have

revolutionised the international business scene in the world.

Another reason why globalisation went off with a boom, is that

the US market provided an opportunity for continued growth

and shared its environment with a variety of foreign companies

nad products. Companies with only domestic markets found it

difficult to sustain customary rates of growth and so sought

greener pastures in foreign markets. Forex earnings added to

the bottomlines and heightened the image of the company.

Global Marketing thus came to be defined as the performance of

business activities designed to plan, price, promote and direct

the flow of a company's goods and services to consumers or

users in more than one nation for a profit.


The task is daunting enough as it involves combating not only

the controllables and uncontrollables of the Domestic

environment but also the uncontrollables of the foreign

environment. In addition, there are environmental

uncontrollables in country market A,B,C etc. A firm in its parent

country fights internally on social, technical, political and

environmental fronts. Assuming the necessary overall corporate

resources, the marketing manager blends price, product, place,

promotion and channels to capitalize on demand.

On the international front, the scene becomes more complex

because there are various social backgrounds and several

political contexts that a lot of permutations and combinations

arise and obviously, all of these need to be handled. The firm

might find polar extremes in political stability, class structure

and economic climate. e.g. to be a legal person in China, the

company or person must have registered as such with the

chinese government. To complicate matters further,

negotiations may only take place with "legal representatives" of

the legal person to have the power to bind the company. So if a

firm enters into negotiation with a Chinese company or person,

it must ask for signed, legal documents establishing the right to

business. The formalities must also be considered. Even when

all is done properly, the govt might change its mind. Such are

the complexities and hurdles a company can face when

implementing its global strategy.

There are 7 significant uncontrollables in the international

environment :

 Political

 Economic

 Competitive

 Technology levels

 Structure of distribution

 Geography and infrastructure

 Culture.

The project focuses on cultural differences, consumer and brand

approaches. They compose the principal elements of risk and

uncertainty a global marketer must cope with in chalking out a


THE CULTURAL ENVIRONMENT Firms first look into the

geography and the history of the country. Climate plays an

important part in the success of the firm. Take a major food

processing company, which had production problems after

building a cannery at the delta of the river in Mexico. The

problem arose because crop maturity coincided with the flood

stage of the river. The current was far too strong to allow

backhauling of barges upstream and so the crop could not be

transported. With no other option left, the firm had to close

down. Resale of assets was done at a loss. Agreed that a firm

chooses favorable climatic environs for itself, there is social

responsibility and environment consciousness to be followed.

Apart from resources, crossing borders can also mean issues like
population trends such as rural/urban shifts, control of

population growth and oops!!!!! gender issue as well.

e.g. there is danger of a serious gender imbalance in China by

2000 due to 3 reasons:

 One-child policy to curb population growth

 Tradition dictates superiority of men and preference for


 Unwanted female fetuses are aborted.

Though unbelievable, this creates a tremendous change for

business. There is a possibility for a big marriage gap and the

ratio is as high as 163.8 to 100. So not only will theer be a

gender mismatch there may also be a social mismatch since

most of the men would be peasants having little education

whereas women will be having the best education and living

standards. Women who labor their minds are less popular and

less attractive men do not qualify as good mates. The result is

easy to guess. The history defines a country's mission, how it

perceives the world and its neighbors and how it sees itself. In

transporting ice to the world, a New England resident, Frederic

Tudor, pioneered the transportation of ice to the tropics. His first

venture was not a success so he solved his problem with

inefficiency in harvesting, keeping ice from melting and

developing a market. He showed how ice could be used to make

ice-cream, can be stored in ice-boxes, tried medical uses and

sold it at very low prices. By 1833 his business was a financial

success and he expanded his business further in India.


MNCs become flexible and alert to local cultures when operating

in global markets.

Take a US Domino's Pizza :

In US, the delivery system is the major differentiator.

In Britain, people don't like a deliveryman to knock- its rude by

their standards.
In Japan, houses aren't numbered sequentially so delivery can

be a real hassle.

In Kuwait, Pizza is likely to be delivered to a limousine than to


In Iceland, since there is no telephone service, there is a drive-

in movie theatre chain to access consumers.

People feel as strongly about their cultures as we do ours. Every

country thinks its culture is the best and every foreign

peculiarity titillates others.

There stand 5 major sub-elements of culture:

Material Culture

Social Institutions

Humans and the Universe


For example the following are the ways a gift can get attention

in various countries.

Japan: do not open a gift in front of him unless asked and do

not expect the same in return. Avoid ribbons and bows. The gift

should not depict a fox or badger. Fox symbolises fertility, the

badger, cunningness.

Europe: avoid red roses and white flowers, even numbers and

the number 13. Do not use paper to wrap flowers.

Arab: do not give a gift the first time. Can be taken as a bribe.

Do not give it when he is alone. Give in front of less personal


China: never make an issue of a gift presentation- publicly or

privately. Give it privately, with the exception of collective

ceremonial gifts.
If culture were dynamic in nature, it was easy. What are tough

to handle are cultural changes and the change is paradoxical.

The foreign societies change in same ways as the parent

country but due to the phenomenal permutations, the problem

is not easy. And besides, culture gives the means to adjust the

biological, environmental, psychological and historical

components of human existence.

It is not easy to avoid the fact that habits, tastes, styles,

behavior and values are not constant. The degree of resistance

to new patterns varies. Observations indicate that those

innovations most readily accepted are those holding the

greatest interest within the society and those least disruptive.

e.g. O-Kome-honorable rice-in Japan means different things to

different people. Japan claimed its superiority over other

countrioes simply on basis of rice. Stiff import controls protected

the market from inferior rice. But poor weather betrayed the

Japanese and all controls were released. Dire consequences

were predicted-riots,hoarding,theft etc. as a result, Japan had to

carry out a research to find whether their rice was really better .

The govt went to the extreme of endorsing the foreign and thus
curbed the possibility of a rice crisis. Later they found out that

Japanese executives who had worked in the US knew all along:

they often imported California rice when transferred back home.


misunderstandings can play havoc with even the best business


When an American went ahead to strike a deal with a Japanese,

he invited his counterpart to play golf on the first day. Till three

consecutive days, they played golf and the American won. On

the fourth day, the American asked" when are we going to do

business?" the Japanese replied "well, we are doing business".

Misunderstanding like this can hamper businesses seriously.

In this case, the Japanese man was practicing his culture of

working collectively, fostering relationships and beginning with

the family. The USian on the other hand wanted to sign the

contract. He was from a place that stressed on self-reliance and

individual accomplishment. Secondly, both had different

concepts of time. For American, time was important, but for the

Japanese, the contract was signed by the weekend. Unlike the

Japanese, the American displayed frustration and he was

culturally naïve.

The incident explains that there is considerable latitude in ways

business is conducted. No matter how thoroughly prepared, a

marketer is bound to get those cultural shocks when diiferences

in contact-level, communications emphasis, tempo and formality

of foreign businesses are encountered.

Sources of level and business authority.

Size, ownership, public accountability and cultural values

determine the status and position and the authority structures.

If rank and status of clients is well understood he can deal out

any type of decisions be it top-level, decentralized, committee

or group decisions.

The Top level arises when there are family owned firms and

where business is small enough to make such central decisions.

e.g. France. Mexico has an autocratic and paternalistic structure.

Decentralized can be found in places where the business is

growing and turning more professional. E.g. US firms.

Committee decision making is by group and is mostly found in

Asia where there is stress on harmony and collectivism. The

marketer's ingenuity and adaptability are critical for success.

Management objectives and aspirations

Business is in no way untouched by the training and background

of its runners. Personal goals,security and mobility, personal life

social acceptance and power ………. All these change the

business rules and create complex situations to operate.

Communications emphasis

Switzerland is a place of low-context culture with explicit,

verbally expressed communications. Japan is a high-context

culture depending heavily on context or nonverbal aspects of

communication. UK, Italy and France stand midway.

Can Americans and English communicate?

Let us look at some terms which have different connotations in

both places.

English American

Newspaper bookstalls

Ground floor main floor

First floor second floor

Block of flats apartment

Cupboard closet

W.C. Water closet toilet

Bathing suit bathing costume

Blouse tunic

Colar button stud

Suspenders garters

M.D. Mental deficient doctor

Well there are other factors which need to be kept in mind:

Formality and Tempo

P-time Vs M-time

Negotiations Emphasis

OOPS!!!!!!.... The Gender Bias in International Business

The gender bias has pervaded for a lot many years and it

creates hesitancy in MNCs to offer women international

assignments. The fact is that the traditional roles of

soci>Negotiations Emphasis

OOPS!!!!!!.... The Gender Bias in International Business

The gender bias has pervaded for a lot many years and it

creates hesitancy in MNCs to offer women international

assignments. The fact is that the traditional roles of socibility,

authority and importance.

Infact women in a foreign country are seen first as a foreigner,

then as a woman.


MANAGEMENT Management in 21st Century will not be basically

different from management in 20th Century, but breakthrough

can be expected in the development of management theories,

which will adapt to national cultural value systems worldwide.

Today's fads-privatization or Total Quality Management are

being applied anywhere, whether in North America, France,

Brazil, Russia, Thailand, or China. If they don't work

somewhere, this is the fault not of principles but of people who

implement these principles. Management processes differ less

from period to period than from part of the world to part of the

world, and even from country to country.

The essence of management is in dealing with human nature. It

will remain stable till human nature seems to be extremely

stable over recorded history.


Management in the 21st century will not be basically different

from management in the 20th.

A case study may illustrate this:

A group of refugees, about ten thousand, follow their

charismatic leader in search of a safe haven. A friend sent a

consultant to help them. The consultant noticed that the leader

tried to handle all problems and conflicts of his people himself.

People queued up before his office; because he was overworked,

he could not handle all the business. So the consultant talked

with the leader and told him to structure his organization by

delegating authority: to nominate able men as managers of

thousands, hundreds, fifties, and tens. Candidates should be

selected on their leadership abilities and character: They should

be law-abiding, truthful, not driven by material gain. The

management structure should resolve all daily issues at the

lowest levels; only the big and difficult issues should be brought

before the leader.

He should focus on strategy--on dealing with the supreme

authority, on establishing new rules and laws and teaching

these to the people, on showing them the way to go and the

work to be done.

The case shows many modern elements. The role of the

management consultant has become important. The consultant

turns Moses, the leader, into a Chief Executive with a strategic

task; he should stay out of operational details. The selection

criteria for the appointment of middle managers are also


The nature of future management problems will centre around

values, relations and culture. (Values are "broad tendencies to

prefer certain states of affairs over others." Relations in a

society are affected by the values that form part of the

collective programming of people's mind). As usual, cultural

values will differ among societies, but within a society they

would remain stable over time.

For different national cultures within the same multinational

organization (IBM): National cultures affect mainly people's

values, which were considerably different from country to

country in spite of the similarities in job practices among IBM

employees in similar jobs.

For different organizational cultures across a variety of

organizations within the same nations (Denmark and the

Netherlands): Similar people in different organizations within

the same countries showed many differences in practices but

much smaller differences in values. Cultural differences at the

country level resided mostly in values, less in practices. At the

organizational level, "culture" differences consisted mostly of

different practices, not of different values.

National cultures would differ along three dimensions: Power

Distance (large versus small), Masculinity versus Femininity,

and Uncertainty Avoidance (strong versus weak).


There will be three major drivers:


*Corruption (bribery and extortion) and


Subornation and lubrication

"Trust" as a management concept has also gained popularity as

a condition for successful strategic alliances.

Corruption: We speak of corruption when those in power use

illegal means to get the collaboration of authorities or to enrich

themselves. But what to say about the US practice of lobbying,

and of its levels of Chief Executive compensation that, although

formally legal, rest on similar motives? In Japan, China, and

many other cultures, the giving of gifts is an important ritual,

and the borderline between gift giving and bribing is diffuse. To

a purist, even tip giving can be considered a form of bribing.

Subornation involves a small sum of cash or gift given to a low-

ranking official in a place where such practice is not prohibited.

Lubrication is a small payment to dockworkers to speed up their


As cultural indexes a country can score on four dimensions

identified in an IBM research: Individualism, Power Distance,

Uncertainty Avoidance and Masculinity.


That management problems remain the same, but the solutions

differ from country to country, isn't accepted in an age where

business will globalize. Global business will look for global

management solutions. Businesses are and will remain less

global than management authors think they are and their

leaders would like them to be. Businesses have home countries

that stand for values that are functional, even essential, for
their effectiveness and corporate identity. Supra-national

organizations without a home country, like various UN agencies,

suffer from poor efficiency and effectiveness.

Multinational organizations have and will stand for values that

originated in their home country and that will not be shared

equally with their employees and managers from other national

origins. They are kept together by shared practices, not by

shared values.

Philippe d'Iribarne has remarked that international cooperation

consists of doing things together, even if each partner does

them for a different reason.

RETAILING The habitual mall visitor in India is likely to be

different from his/her counterpart in the US. In India, customers

belonging to the inveterate shoppers club will frequent malls

and, perhaps, account for the single largest chunk of traffic. To

them, the experiences that count will be those built

predominantly around shopping.

By contrast, the typical mall habitue in the US is likely to be

younger. Children and adolescents hang around malls in the US-

their primary concern being not shopping but having fun.

A more strategic approach to other aspects of merchandising

will be required for retailers to win on the global playing field.

· New approaches to product sourcing to lower total product

costs and increase product quality.

· For specialty niche players, seeking new products throughout

the reaches of the world will become essential.

 Making one's store the destination for certain branded

lines and categories of merchandise.

 Leverage in private label development and consolidating

core competence; consistent product design and quality.


Expansion is done to take advantage of volume discounts from

manufacturers, logistic efficiencies, fast turnover and low


An ethical dilemma is the social issues: starvation, deprivation,

poverty, land available for farming and cash crops. Another is

the danger from CFCs released into atmosphere. So is such

stock reduction possible?


 Cost vs control

 Desired rate of amrket expansion

 Legal barriers

 Market knopwledge reqquired

 Good locations.

 Unique format
 Financial strength

 Recognised name

 Performance objectives.



 Doing it alone

 Acquisition

 Joint ventures

 Franchising

 Concessions

 Licensing

Highly developed markets include US, Canada, UK, Germany,

France and Spain.

Difficult entry markets include Italy, Republic of Korea and


There are some markets with economic volatility like Turkey,

Mexico and Argentina.

High-risk markets include Brazil, Russia, China and India.

Whatever be the format, retailers will find adaptation across

national boundaries will be easier as consumers get exposed to

global concepts and brands.




A new construct, global consumer culture positioning (GCCP), is

proposed and tested. It associates brand with a widely

understood and recognized set of symbols believed to constitute

emerging global consumer culture. Many advertisements today

employ GCCP, as against positioning the brand as a member of

a local consumer culture or a specific foreign consumer culture.

GCCP is one way through which certain brands come to be

perceived by consumers as "global". It gives managers with

strategic direction in the multinational marketplace.

One opportunity in globalisation is the growth of global

consumer segments that associate similar meanings with certain

places, people, and things. Parallel to this is the emergence of

global consumer cultures, shared sets of consumption-related

symbols (product categories, brands, consumption activities,

and so forth). Mass media programming, flowing primarily from

the United States, has played a major role in the creation,

learning, and sharing of such consumption symbols.

GCCP (Global consumer culture positioning) can be contrasted

with two other types of consumer culture positioning: local

consumer culture positioning (LCCP), in which the brand is

associated with the local consumer culture (e.g., Budweiser's

association with small-town American culture in its U.S.

advertising), and foreign consumer culture positioning (FCCP),

in which the brand is associated with a specific foreign culture

(e.g., Singapore Airline's use of the "Singapore Girl" in its global

media advertising).

Brand equity flows from associating a brand with global

consumer culture and is a powerful means of increasing sales. It

gives a brand more power and value, which is derived from

consumer attributions of enhanced self-worth and status

through purchase of the brand. i.e. consumers may purchase

certain brands to reinforce their membership in a specific global

segment, such as teenager, business, governmental/diplomatic,

elite, and so forth and/or their self-image as cosmopolitan,

knowledgeable, and modern.

GCCP is not globally standardized advertising. Such advertising

entails the use of similar content around the world. Though

GCCP and FCCP can be employed in a standardized advertising

campaign (e.g., Louis Jadot wine positioned globally as a "taste"

of France). Or, a manager may position the brand using GCCP in

one national market, FCCP in a second, and LCCP in a third.

And, GCCP may be communicated (somewhat) differently in

each market. For example, P&G's "all-in-one" shampoo with

conditioner, Wash & Go, has been positioned globally as a time

saver in a busy world. In the United States and Europe, this was

signified by a woman rushing into a gym locker room and

slamming the locker door. In Thailand, the creative content was

toned down, though it still communicated convenience in a

hectic world.


Increasing interconnectedness of varied local cultures as well as

through the development of cultures without a clear anchorage

in any one territory."

A relevant framework for global consumer culture uses five

paths of global cultural flow, including mediascapes, which

"provide (especially in their television, film and cassette forms)

large and complex repertoires of images, narratives and

'ethnoscapes' to viewers throughout the world, in which the

world of commodities and the world of 'news' and politics are

profoundly mixed." From these sources, "scripts can be formed

of imagined lives, their own as well as those of others living in

other places".
Mass media plays central roles in the creation of global

consumption symbols. Its direct influence is evident in teens

who watch MTV or similar channels being more likely to display

the signs of teen global culture, such as jeans, running shoes,

and denim jackets. Access to television is creating a global

culture of consumption, what he refers to as a "global mall."

As a result, certain product categories have become signs of

global cosmopolitanism and modernity (e.g., air conditioners,

CDs, the hamburger, business suits). Brand managers are likely

to on the semiotic nature of the product category by positioning

their brand as symbolic of global consumer culture. The

objective would be to have consumers identify the brand as a

sign of membership (real or imagined) in the globally

cosmopolitan segment.



A GCCP strategy identifies the brand as a symbol of a given

global culture. It does so using meaning transfer, an advertising

process through which the brand is associated with other signs

that reflect this cultural orientation (e.g., language, aesthetics,


If advertising features this idea it invests the brand with the

cultural meaning of being a conduit to feeling at one with global

culture. Brands that have used such strategies include Sony

("My First Sony"), which positioned one of its products as

appropriate for young people around the world; Philips ("Let's

Make Things Better"), whose advertisements explicitly feature

people from different countries; and Benetton ("The United

Colors of Benetton"), whose slogan emphasizes the unity of



LCCP (local consumer culture positioning) associates the brand

with local cultural meanings, reflects the local culture's norms

and identities, is portrayed as consumed by local people in the

national culture, and/or is depicted as locally produced for local

people. For example, Chevy Trucks and Dr Pepper soft drinks

been positioned in U.S. advertising as part of the "American"

way of life.

FCCP (foreign consumer culture positioning) positions the brand

as symbolic of a specific foreign consumer culture; that is, a

brand whose personality, use occasion, and/or user group are

associated with a foreign culture. For example, rnationalized

outlook when used on packaging in Japan. Extensive use of

English in print advertisements around the world suggests to

consumers that they are cosmopolitan. So, one way could be to

communicate GCCP in English words, written and/or spoken, in

its communications. Contrarily, a brand manager wanting to use

LCCP might emphasize the local language. Finally, a brand could

associate itself with a specific foreign consumer culture (FCCP)

by employing spoken and written words from that culture

irnationalized outlook when used on packaging in Japan.

Extensive use of English in print advertisements around the

world suggests to consumers that they are cosmopolitan. So,

one way could be to communicate GCCP in English words,

written and/or spoken, in its communications. Contrarily, a

brand manager wanting to use LCCP might emphasize the local

language. Finally, a brand could associate itself with a specific

foreign consumer culture (FCCP) by employing spoken and

written words from that culture in its advertising and/or brand

name. For example, Volkswagen has used the slogan

"Fahrvergnugen" in U.S. advertisements.

A distinct set of spokesperson characteristics is coming to reflect

GCCP, and use of this will give the brand a more global image

(e.g., Michael Jordan for Nike, Pierce Brosnan for Omega) to the

extent that the spokesperson embodies aesthetic characteristics

that reflect the local culture. (E.g., a French businesswoman

driving a Peugeot in a French television advertisement) or a

specific foreign culture (e.g., a German engineer spokesperson

for Audi in a U.S. television advertisement). The consumers will

associate the brand with that culture.

The aesthetic construction and display of brand logos also may

reflect alternative consumer culture positionings. e.g. some

logos may be tied less to specific cultures in terms of their

appearance, such as the logos for AT&T (abstract globe), Nike

(swoosh), Royal Dutch/Shell (shell), Mercedes-Benz (star), and

so forth. Others may be more symbolic of specific cultural

traditions. Cathay Pacific, for example, recently changed its logo

to a white Chinese calligraphy stroke that suggests the wing of

a bird to "give itself a more Asian air". Of course, it is likely that

most consumers would view the logo in its aesthetic entirety

(including shape, color, texture, and overall design) and form

linkages to global, foreign, or local consumer culture.

Certain story themes will be identified generally as symbolic of

global consumer culture. For example, the young, professional

businessperson who is on the rise uses a Toshiba laptop whether

in New York, New Delhi, or Paris. Thus, the story theme implies

that ownership of this brand signifies that the consumer is a

member of the "transnational commerce culture". Other story

themes are more likely to be associated with a specific foreign

positioning, such as the purple cow in the Alps in the

advertisements for Milka chocolate, or with local themes, such

as scenes from the characteristic landscape of Tyrol for

Tirolmilch. Thus, depending on the story-related themes in an

advertisement, consumers are more or less likely to associate

the brand with a specific consumer culture.

The detailed expression of that structure can be influenced by

local culture. For example, Nescafe's advertising projects the

image of a brand consumed globally. However, in the

Netherlands, this positioning is executed by featuring an old

man from South America enjoying the coffee. In Greece, the

advertisement setting portrays several young people on a raft

with a small hut for a cabin at the sea shore. Thus, local culture

members should determine whether signs in their country's

advertising symbolize global, foreign, or local consumer culture.

A brand can be

(1) uniquely positioned on GCCP, LCCP, or FCCP;

(2) positioned predominantly on one of the three types while

incorporating elements of other types of positioning; or

(3) not positioned predominantly on any of the dimensions.

The advertising series in which Tina Turner sings the Pepsi-Cola

theme song with local bands in different countries to provide

local identification in a global campaign is an example of a

mixed strategy.

Advertising content differences.

Turning to advertising format/style, there are strong reasons to

expect advertisements employing GCCP to use more often a

"soft-sell" instead of a "hard-sell" approach. Soft-sell

advertisements use more visual imagery and are more subtle

and ambiguous than hard-sell ones, which are relatively more

informational and focus on tangible product features.

Furthermore, because soft-sell advertisements typically use a

lot of visual imagery, and use messages that require implicit,

rather than explicit, communication. Soft-sell advertisements

that use imagery instead of features are also, by implication,

usually more abstract than hard-sell advertisements.

So soft-sell advertisements (subtlety, implicitness, and

abstractness) would seem to make them more suitable for

advertisements using GCCP. Advertising using this positioning

should be more effective if it communicates in a subtle, indirect,

and abstract fashion. A more direct and tangible approach runs

a greater risk. Possibly, advertisements using GCCP are more

often image oriented than informational because of linkages

between the brands and the imagined membership in a global

consumer segment.

Product category differences.

Recall that GCCP involves associating a brand with globally

shared, consumption-related symbols that signal membership in

global consumer segments. It also may involve appeals to

certain human universals.

It follows that the use of GCCP will be easier and more frequent

in product categories for which consumers exhibit common

behaviors, rather than in those consumed in locally idiosyncratic

ways. In addition, GCCP will be potentially more relevant in

product categories that have come to symbolize modernity and

cosmopolitanism rather than tradition.


It is heritage worth of envy and is the world's best stories of

organic growth. Colgate emerged as the no. 1 brand this year. It

goes to show that in the global market as well, the brand equity

is a dynamic thing. As the MD quotes, the brand is successful

due to all the years of commitment to oral care. And all the

work done in rural healthcare. The brand's power score has risen

since the downfall in 80's and 90's.

There are 3/4 reasons for Colgate's Unohood:

Leadership and positioning: the brand commands half the Indian

market for dental care.

Duration of presence: it has been around the Indian consumer

for more than 60 years. The company had developed intimacy

with the consumer in providing basic-need products.

Colgate had launched its first product in 1873. The familiarity

played a big role in brand eminence, as it created a 'sense of

comfort'. This aspect led to success of the brand.

Consistent communication: the brand has focused on giving its

consumers cleaner teeth, fresher breath and strong gums,

taking care of all things in one orifice.

Brand breadth: it appeals to a wide spectrum of the market as

against Pepsodent, which is only for children and the health

conscious. Colgate is for everybody. Now Colgate had a minor

weakness among lowest income respondents.

The real battle with HLL in 80's led to the short downfall.

Colgate launched its plain white 'dental cream' while Lever

segmented the market by launching Close-up and Pepsodent for

health care.

Colgate retaliated with Colgate Gel and Calciguard, which failed.

Finally the brand bored people and there was failure till the

90's. New players like promise, Cibaca and Forhans. At this time

the packaging also failed. The biggest failure was Colgate Total,

a germ fighter, due to high price. Colgate learned that India was

a disproportionately conservative market, with price sensitivity

taking precedence over value.

But there were opportunities to come. The Indian consumer in

the 90's simply needed foam to act as a lubricant for bristle

action. The toothbrusher did not want to labor his tongue. The

focus went to scientific benefits. There were a lot of demands:

fresh breath for a long time, bacteria-free and protection at

night. Some used dual pastes as well. Colgate took the brand

defence strategy into stride. The concept changed - it was not

the gaining of market shares but how long the brand remained a

leader in the minds of the people. Colgate total has been

recently launched in a new pack at a reasonable price giving

foolproof pre-bed oral hygiene. Ad campaigns like 'when Harry

met Sally' and Colgate gel's on-n-on-n-on have checked close-

up's growth. There is also a dentist targeting programme and a

new Colgate 'Sensation whitening', a cosmetic product.

The target for volumes is the rural and semi-urban India. There

is a lot of potential as per capita toothpaste consumption is way

below China's. Old Colgate is now Super Shakti to convert non-

paste users at the lower segment. The dental powder now has a

herbal variant. With a rural education(vans, infomercials and

samples) scheme, it turned 15000 out of 20000 into users.

The concept of brushing is different in villages and the people

are used to the ritual use of Colgate. And they resist change.

There, not the brand , but the name exists. Yet Colgate passes

every test of the Mega brand. Colgate has definitely passed the

CRISP test.

C- consumer's consideration set


I- Identity

S- Search

P- perceived Value

Colgate has passed all the tests of premium, degree of loyalty

and plain familiarity. In sum, the brand has watched trend

carefully and has directed market trends to its own advantage.


Back to top
The Nestle case presents facts about every aspect covered

under this effort. It has all the meat it takes to build a very

strong basket of brands.

What follows is a consolidated game of every strategy and tactic

that Nestle has applied to build itself. Nestle had two big


Go international and the product is in 5 European countries.

Own a brand

The old Nestle adage says: Think global, act local.

The strong identity was managed through the nest image

symbolizing nurturing values of family, warmth and caring.

Being outward looking, the company concentrated on the global

and local markets. As a Swiss company, they get a lot of

advantage due to being politically more neutral. To increase the

presence, every co. in the group has the Nestle name.

What on hanging on, in other pastures?

Nestle did not leave India despite the instabilities, as it believes

that quitting is the option of those vesting in short term

interests. Nestle instead carried on investing, created jobs etc.

The priority was not financial performance but presence and

goodwill. For core competence, it was knowing more about some

areas of business than others.

How are basic decisions made?

A mix of bottom-up and top-down approaches. They compare

positions in various countries see political contexts and

competitor's position. They guide their local markets initially

and leave the rest to them. US market was forced to accept the

ice creams and that too in the frozen confectionery segment.

Competition through R&D.

To remain in the global market, they have an extensive

research center to know about both product and the raw

materials. At the research centre they give a lot of space to

experiment and at the country levels, there are small

applications groups that adapt the products. Adaptation is done

to suit tastes and wants.

The entire thing is decentralised but there is control by

consolidating the brands and their resources. Each product has

to be supported by at least one corporate brand.

E.g. when Rowntree was acquired, the KitKat became Nestle


Global brands are the onus of the SBUs & general management

who talk on

· Planning policy

· Minimum labelling standard

· Brand positioning and Communications platform.

Partners in success.
At corporate level, it has relations with a small no. of

communication partners rather than a lot of advertising

agencies. The communications are told to the VP and the CEO

and approved, then work with all the agencies and the operating

companies is done. Resistance was met with the marketing

manager selling himself as a true resource.

Though the brand is a huge frame, and the position of the

markets and SBUs can't be changed, the local managers work

out what that brand means to them and it is relevant for their


What if trade customers expand globally?

Global expansion of the trade customers can pose problems

especially if they start bad mouthing. But things will come out

in the open and the partner can come to know about it. The

answer is: go to someone else. Information flow is helpful and

getting buttoned up everywhere is necessary.

In addition, the issues have to be handled locally since laws are

better known there and the implications are tremendous.

Consolidating brands?

Yes, and it worked for Maggi when it was introduced in

Germany. For frozen foods, it thinks of using Maggi and not

Findus. But for products having relevant core competence,

separate brand identities work best for Nestle.

What about owning up?

The purity problem with Perrier is like a bad son beig reformed

but still accepted though one has to bear the shame in the

society. Nestle owns up and takes the responsibility for the

mistake as well.

If local teams do inconsistently…..

Correct them. In this sense, the SBUs have a direct

responsibility over the operational company.

Labeling standards protect the brands. There is no discussion;

the local markets must apply the minimum standard.

But brands do vary in the amount of freedom they have. E.g.

Maggi. For Maggi in Russia, it is only "You and MaggiÉ make the
best meals". Maggi communications beginning with "You and

MaggiÉ" position the brand as a friend of the person cooking,

but the rest is up to the market.

KitKat is another matter. It is basically the same product in the

same packaging all over the world, so local markets don't have

much freedom.

Encourage more multi-country campaigns

No, not at all. Food is extremely local. If you try to be too

global, you lose efficiency in communication. The same

commercial, projected in a different market can bring

completely different connotations. Taking a spot that is

successful in one place and playing it in another just doesn’t


Do consumers view it as a local company or a


Its the largest food company in Brazil with revenues of over $3

billion. Yet few consumers in Brazil know we are Swiss. With

incessant stress on the Nestlé brand and its related core

attributes, it knows they'll gradually realize they are Swiss,

which will be to their benefit because Swiss products have an

enviable image for high quality there.

There is more control over your business as there is more

transparency in the economic environment, especially inflation,

which has dropped drastically. Administration is no more a

problem and a company can focus on real business-related

issues, where marketing, innovation, and speed — among

others — become key factors. But, competition is getting

tougher, and prices are being squeezed.

Economic scene at Brazil

Due to the new economic plan in mid-1994, and an increase of

income power, volumes grew tremendously; there was real

internal growth of 23 percent.

As against the former situation, when there were high inflation

rates, they want to raise profits within the confines of increased

competition and trade pressure. That involves taking steps like

rationalizing and restructuring.

Response to Brazil's expanding retail trade.

Nestle learnt the tough way in Latin America. In other words,

they thought local, and tried to act global or international.

Though Carrefour had delisted Nestle temporarily, not just in

Brazil, but also in France and other European countries, trying

to apply pressure within a global context it still represents 5 %

of the sales. They did this by convincing that each market has

its own characteristics and that they have to act locally.

Then there was the problem with a major US discounter. In

Brazil, it recently entered the market with a very low pricing

policy; sometimes it undercut net list prices by 20 or 30

percent, practising a clear loss leader policy with our main

brands. Nestle's comments blew up into a kind of scandal, with

surprisingly instant repercussions far outside Brazil. In the end,

it had to issue a statement saying they were misunderstood by

the press and clarified what it had really said.

Addressing the challenge of developed markets.

It has almost become fashionable to have less and care more,

say, about ecology. In this environment, their old axiom of

being a customer-driven company is not sufficient.

They intend to handle their corporate and strategic brands as

they are an enormous asset. Direct ordering via computers and

the Internet are other important developments to give better

and more direct access to consumers and more power to

influence their buying decisions.

A big effort is being made to keep hiring top-quality people and

train them adequately. The belief is in cross-fertilization.

"Our success today is largely due to the fact that we went

outside Switzerland and Europe early in our history. There are

still countries emerging today that we are just entering or have

yet to enter, so that’s another priority — getting into new

markets before the rest of the competition and securing an

adequate stronghold".

Role of retailer?

The retailers, in the widest sense, are Nestle's most important

partners to bring the products to the consumers.

Their present retail channels developing for core grocery

products are not dependent exclusively on traditional

supermarket channels. E.g. in home delivery, in Switzerland,

many frozen foods and beverages are home delivered. Germany

too has a fantastic system — 38 percent of all ice-cream there is

home delivered.

retailers have to fight out the trend towards alternate channels

like home delivery, gas stations, and even virtual shopping and

save the huge investments involved.


Making products available in India throughout has been

challenging due to scanty infrastructure and a complex retail

structure. dIrect selling is an innovation. And it does away with

selling in shops and sales depends entirely on a commission-

based sales force that is not on the manufacturer's payrolls.

A large no. of distibutors are housewives who have never

worked earlier or are salaried employees who have no

experience of running a business. These people need quite a bit

of handholding from the company initially.

Hefty bonus and well-defined incentive packages for distributors

have boosted direct selling cos like amway, Oriflame, avon and

Tupperware and they are constantly expanding worldwide.


Amway, a subsidiary of the world's largest direct selling

multinational , turned its world-tested distribution model on its

head in India and came up with Operation Ghar, a novel

delivery strategy. In just 7 months of starting operations

Amway's immediate priority was to expand ts offices swiftly. By

servicing distributors in 160 cities through 13 locations in India

was curbing Amway's growth due to unavailability of critical

infrastructure like networked banks, tol free phones and multi-

service courier companies.

For Amway there were three issues-

 Cost of making long distance calls

 Non acceptance of cash by courier cos.

 Time taken to deliver products

The aim of Amway is to offer the convenience of just being a

local phone call away, doorstep delivery within 48 hours and

collect the cash. And also to enable distributors to order, pay,

receive and return the products.

Being a large seller of arrange of FMCG goods, it claims to have

1.00,000 distributors. With 139 products in its portfolio, it

reports an average 1,400 transactions a day. Direct sellers like

Amway devised innovative solutions, including a model which

has a central warehouse located close to the factories, which

sends products to regional hubs like metros and then to

fledgling and few branch offices. Instead of distributors,

companies carry warehouses and their region-specific

distribution centres hold stocks. Courier companies handle the

distributor's business in cities where the company has no

existence. Amway recently reversed its strategy of having few

company locations and is now on a regional expansion spree.

Amway does not follow this model anywhere in the world. But

due to high costs involved., it outsources. For instance, in the

new offices which would handle relations with distributors, store

products and sell to dealers, only one company employee is

required alond with a C&FA. This cuts costs and the company's

manager himself is involved in issues like training and


Training is a critical input and companies need to provide

distributors with not just continuous supply but also training.

Amway also invested in IT as information flow both to and from

distributors is critical in direct selling. Amway opted for "real

time" V-sat linkages between all its offices. As the

multinational's distributors worldwide receive their bonus

cheques by the mid of each month, it is critical that orders are

recorded online. The Michigan central computer captures all

information from around the world at the end of the day.

It is important for Amway since it has distributors all over the



It has a base of 1,00,00 scattered countrywide. Due to lack of

funds to amintain inventory, Oriflame deals with a huge number

of orders, normally of small value, and theer is the criticality of

having it delivered to them in the shortest period. The whole

philosophy is to move as close to the customer as possible-from

a centralised to a more decentralised structure.

Oriflame also outsources and has arrangements with its service

providers like courier and paging firms. Two days a week, the

office of its paging services in Baroda also doubles up as the

local Oriflame outfit. Distributors can interact with them


This benefits both parties. They have the infrastructure and the

manpower, which can get optimal use and are also able to defer

a part of their fixed expenses. The Baroda 'roving window' offers

distributors the convenience of having an Oriflame office in their

vicinity on predetermined days. This concept is both popular and

cost-effective. This option is also very flexible. The roving

centres are serviced out of Oriflame's eight stock points in India

in the metros and in a handful of other big towns.

They say that growth will be through distributors, sub-

contractors and third parties.

Regards training, Oriflame focuses on high performers who can

train the trainers.

The company's Delhi based courier service is now ready to

accept 'cash-on-delivery' and Oriflame guarantees delivery in 5

days or else refund.





The strict advertising regulation by FTC(1971-1981) brought a

stringent period, as against the subsequent period. The FTC

effect saw more than 60,000 US advertisements giving fewer

objective information claims. This was in no way an after-effect

of contemporaneous trends in the United States, or global

economic factors.

An important implication or public policy is that strict

advertising regulation may have reduced the amount of

advertising information available to consumers.



Public policy makers, researchers, and managers still have

questions regarding the use, abuse, and overall

effectiveness of comparative price advertising. The effects of

various aspects are being assessed:

(a) presence of an advertised reference price,

(b) advertised reference price levels, and

(c) advertised sale price levels on consumers' internal reference

price, perceived value, price offer believability, purchase

likelihood, and search intentions.

There is evidence indicates that comparative price advertising is

a powerful advertising tool, which can successfully deceive and

which requires careful management and monitoring.



The issue is Ethics in Advertising. There is much concurrence on

the harms advertising may create among vulnerable groups and

in the developing world, including the treatment of women.

In February 1997, Pontifical Council for Social Communications

at the Vatican had released a report, Ethics in Advertising (EIA)

on the state of advertising worldwide. It solicited materials from

advertising practitioners and scholars through a variety of

venues, including a plea in the trade magazine Advertising Age.

It commented on the ethics of advertising and considered the

five sections of economic, political, cultural, and moral

dimensions of advertising as they affect society.

The topic has become one of ongoing importance to the

advertising world, business community, educators, and society

at large. The author has addressed the current status of

advertising ethics in America, and he provides several

suggestions for improving ethics in the field of advertising.

But EIA is not an attack on advertising as a process. The

document makes clear that advertising per se is a morally

neutral process that communicates the vast array of choices

available to consumers.

In Washington, D.C., gambling ads have drawn criticism from ad

agencies, which say that regulations are already onerous. The

National Gambling Impact Study Commissions have

recommended for more state laws.

The panel's draft report slammed lottery ads that tout instant

success or the joy of gambling. According to the panel, states

should ban "aggressive" advertising that targets the poor or

children. It said, "Lottery

advertising messages often exploit themes that conflict with the

state's role as protector of the public good". Many

advertisements emphasize luck over hard work, instant

gratification over prudent investment, and entertainment over


Ad agencies avoid promising lifestyle changes because many

states consider that misleading. In addition, promotion of a

winning strategy is not always successful

The agencies' defense is"You are left with a 'playing the lottery

is fun' approach, and you end up putting a happy face on

everything. It limits the strategies available to agencies, making

it more difficult to get players." Agencies also claim there is

nothing wrong with saying that a legal service is fun. As per

them, it is giving people an opportunity to have a break in their

day by playing the game.

A Grey Advertising representative in New York says: "These

guidelines are common sense and all the state lotteries have

been following them for years. It won't change a thing in terms

of what is done for the New York State Lottery."

The federal government has been recommended to collect

information on the content and accuracy of lottery advertising.

Similar issues have arisen in other parts of US and also in UK,

France and Germany.


McKinsey Quarterly, 1996

Business Today Oct-Nov, 1999

Journal of Marketing, Jan 1, 1999

Retailing for success

A&M, 15 Nov, 1999

Advertising Age

Ad Week, June 7, 1999


Journal of Public Policy and Marketing

International Marketing by Philip R. Cateora and John L.

The Secret Formula (the Coca-Cola success story) by Frederick