Why Marketing Strategies of Global Companies Sometimes Fail

‘The world today is a global village’ it’s a fact. But the global village still has some tribes and it is very important to keep all the tribes happy if we need to have good relationship with all of them. Since the globe is accessible to everyone, it is also vital to design the marketing strategy and develop it in the perspective of variations in the culture, traditions, taste, weather and norms of a country.

One of the most striking trends in business has been growing internationalization of the business. Companies are going global but they have to keep their customers satisfied domestically and internationally. The internationalization affected the business strategies and the companies are in the rethinking process to counter the problems in the global marketing strategies. Marketing is no exception to this. Attitude of the customers in this regard is very important for designing the marketing strategy, especially when you are going global. There are four different types of attitudes normally seen in the world, i.e. ethnocentrism (home country orientation), polycentrism (host country orientation), regiocentrism (a regional orientation) and geocentrism (a world orientation). Each attitude has to be dealt according to its own pro and cons but the very common mode of being in an international market is using a global brand. Now it’s the internal decision of a company whether it wants to go for standardization or adaptation. If we talk about standardization, it means the company will keep producing the product according to their own standard and the customers should adapt their products. But adaptation strategy is used where a company wants to revolutionize itself according to the wishes of its customers globally.

Developing a global brand largely depends on the brands ability to explore fresh avenues and to sustain its competitive advantages in terms of economies of scale and productivity. A global brand is one which is perceived to reflect the same set of values around the world. A global brand removes the national barriers and linguistic blocks while marketing internationally. The basic of brand building applies to the global branding strategy also. For a brand to become successful, a genuine demand or a psychological need must exist in the market. Today when we are looking at a global market, one has to realize that at the most basic level all human beings share common physiological and safety needs as explained by Abraham Maslow (Maslow’s Theory of Basic Needs). What separates a customer from another customer at some distant geographic location is the complex social, cultural and esteem needs of the customer depending upon the stage at which the civilization/nation is in the process of development.

There are many situations when the global marketing strategies fail and it makes the firms changing their approach. It is also very important to decide which marketing strategy would be feasible for a firm for one corner of the globe and which would suit for other corner. For example Nokia manufactures the mobile phone sets for its customers all over the world but it offers different range of sets for wide-ranging nations and it makes Nokia successful in this global village. Similarly Sony Ericsson is also offering specific series of sets for the particular country where the sets meet the requirements of the local people.

The Coca-Cola Company found in 1886 is a leading beverage company with its customers in over 200 countries and headquarter in Atlanta, Georgia. The brand Coca-Cola is a non-alcoholic soft drink and it has a great recognition all over the world. Talking about the success of the company, former chairman of the Coca- Cola Company, Douglas Ivester stated that being global is the main strength of the company (Annual Report 1998). It is a business with affordable prices with a strong foothold in many countries. There are some other companies as well for example PepsiCo, Cadbury Schweppes who are making their achievements in the international markets.

The real challenges comes for a brand manager when he has to make the consumer aware about the product/service offered in a distinctive pattern, may be with a name, logo or color so that the strategy enables the customer to correctly identify and choose the brand from a cluttered basket. The brands strength is not confined to the degree of recognizability and the quality of the product offering. Brands deliver more than just a predictable assurance about quality. Strong global brands deliver to the strong emotional need. A brand like Nike talks about believing in one’s limitlessness. Rin speaks about destroying dirt which we see in its most fundamental form as a threat that disrupts the neat orderly world that we live in a strong global brand while addressing a fundamental human motivation delivers to this motivation in a distinctive way. They are driven by distinctive brand ideas. The product is seen in the market place as an expression of brand idea. The product merely translates the brand idea in to a tangible form with features and styles that is delivered to the consumer. Dettol being a global brand is driven by an idea of absolute certainty it provides in feeling protected against the hostile forces of the dirty world. This brand idea the company is pursuing through out the globe irrespective of the fact to which cultural domain they are targeting for. Consumers in all these countries experience the brand idea only through the strategic actions of the brand in the market place. These brands send market signals consistent with the idea that they stand for. Starting from the tangible attribution of the brand through the product to the integrated marketing communication, the brand consistently sends the same signal in every market. The more consistent is this marketing signal, more clear is the brand image across the country for the global brands. The research suggest that strong brands and are built over time. A brand trust gets built over a large number of interactions across a range of situations. So a strong global brand is like a network of complex psychological and market structural issues that include situations, associations, behaviors feelings and symbols held by a strong and powerful driver with a central idea. A successful marketing strategy has two options in creating a market presence. It has to kill competition by constant communication and advertising or use communication to make the customers feel the method to discriminate in favor of the brand. A strong global brand creates associations in consumer mind to make them see differently by guiding consumers to attach distinct functional and emotional benefits and appropriate meanings and beliefs to the brand. As a response to this effort the consumer is willing to pay a premium for these brands only if they represent added value whether as superior quality or a clear emotional benefit. The brand communication should also communicate and connect to the people. The connectivity of Britannia with health is well felt all over the world. This connectivity is the rational justification for them to overcome the extra spending to acquire the brand. Successful brands live beyond generations due to this connectivity. It is not only satisfying customers of different countries with varied cultural background but also connects with new generations with their new set of values, hopes and ambitions. For a successful global brand it has to click across the vertical class of generations and horizontal mass of global market. In a global economy organizations must reach customers in markets far from their home base. Strong brand acts as an ambassador when the companies enter new market or offer new products. It also helps in rectifying the corporate strategy to define which initiatives fit within the brand concept. Brand building for service firms have to modify their corporate strategy also. Professional Services Company such as Anderson consulting re-branded as Accenture have realized that conveying a sense of trust and shared mission is as important as technical competence in winning multi million dollar contracts across the globe. Information and the media have made us all global citizens. This presents an organization with the opportunity to broaden market scope by internationalizing product and service marketing in order to reap the benefits of economies of scale.

There are various issues at the organizational level that decides about the global branding strategy. There are two strategic parameters affecting the decision of global branding. They are the relative strength of globalization pressure in that particular industry and the degree to which the company has internationally transferable assets. If globalization pressures are weak and the company’s assets are not transferable including the brand then the company need not go for a global brand. It should concentrate in the domestic market in creating a higher brand value. If globalization pressures are weak and the company has transferable assets then the company should look for extending in to a similar market with a global brand. The home advantage due to a strong brand proposition can be used as a platform for building brands in selective markets. By this the company can reap added revenue and scale economies with valuable international marketing experience. This category of global brand extension goes for looking at analogous international markets which are similar to the home market in terms of consumer preference, geographic proximity, cultural similarity or even government regulation. Bajaj Auto’s extension to the south Asian market for their three wheelers is an example of brand success in analogous market. The story of Asian Paints in Indian market has made it to go for global branding in countries like Nepal, Fiji and Korea with its typical low cost formulations and service delivery propositions to support the brand name called “Asian Paints”.

Companies from emerging markets can also go global and launch global brands. However for having a global brand one has to take in to consideration a different set of opportunities and constraints. The low cost of wage and proximity to raw materials also give a competitive advantage for domestic companies to go global. If these players can overcome the deficiencies in skills and financial resources then launching a global brand will be a difficult proposition. The success of Infosys and Wipro as brands in the global market is example of global branding success in high-tech industry. However there are many complex factors that can affect a global marketing strategy. These include the nature of the product (for example consumer durable products being more suited to standardization than non-durables), features of a particular market and even organizational history.

The development of standardized marketing strategies can vary dramatically — for example, should the strategy be based upon the common features of a trans-national mass market or upon the identification of common clusters in different countries? The problem for a multi-national organization is that it operates in a number of countries and adjusts its products and practices in each at substantial cost. So by standardizing elements of the marketing mix through an international strategy, the argument is that efficiency can be greatly improved. Master Foods is also moving forward with its international market in different countries. Selling the chocolate brand under ‘snickers’, Maser Foods is uses the policy of internationalization.

In today’s increasingly interdependent world, barriers to trade and international exchanges are constantly diminishing. However, the dimension of culture remains the single most enduring feature that is necessary to be integrated in marketing strategies and in their implementation, especially when they focus on international markets. Inspired by the above notion, a case study of IKEA Shanghai in China with reference to IKEA Malmö in Sweden, shows how IKEA conducts its marketing strategies to appeal to customers cultivated in a different culture from the country of its origin and how the company combines its global marketing strategy with local culture-based marketing activities. Originating from a small village in the south of Sweden in 1943, IKEA has grown into the biggest furniture retailer with 253 stores in 37 countries and territories around world. The company’s attempts in the Chinese market started from Shanghai 3 in 1998, when its first store in Mainland China was opened. During the next 9 years, IKEA took its time, getting to know the Chinese customers. A series of prudent experiments have been proven effective. IKEA’s sales in China increased 500% from 2000 to 2005. At the same time, price has also been paid for a lesson on how to balance global marketing strategies and local marketing activities. IKEA’s business actually started from the production concept, which holds that consumers will favor products that are available and highly affordable. In its earliest days, IKEA was selling products bought in bulk from Stockholm. The goods were delivered by the local milk van to the train station and then the buyers. In this way, the products were easily available to his customers and at low prices. Because of its competitors’ jealousy and hostility, IKEA had to design its own products and search cheaper suppliers in Poland, when the product concept was proved worth trying. The product concept holds that consumers will favor products that offer the most in quality, performance, and innovative features (ibid). Nowadays, in order not to impress its customers as it is sacrificing quality when charging low prices, the company has been working on quality assurance even at low prices. The work remains one of the company’s focuses in 2007.

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