Factors Affecting Global Advertising Strategies

Factors Affecting Global Advertising Strategies CHAPTER 1 INTRODUCTION This project will analyse how global advertising is affected by numerous problems and what global advertising strategies can be undertaken by multi-national companies. The project will start with an introduction to global advertising and related literature, theories which present the basis of the review. Then, the methods of collecting data and sources will take place such as how the data was gathered and evaluated. Furthermore, with analysis of all relevant outcomes, a conclusion will be drawn. The reason why Kinetic, Turkey, was chosen as a case study is because it has been operating as an advertising company in different countries under different names. In addition, advertising is facing many issues in Turkey and this will provide a better insight to the problems of international advertising such as how the company copes with these issues. Background In the global advertising phenomena, most businesses are keen to expand their brand of products into a market place that is becoming increasingly competitive, an unstoppable debate over the effectiveness of global advertising of products is still continuing. The idea began towards the late twentieth century and gained immense popularity among business communities as the sound of global recognition is a music to anyones ears. It does have some challenges for business men all over the world. Among them is the issue of language, culture to name a few (Andros, 2000). Global advertising involves distribution of a commercial message to target customers in other countries. Individuals differ from country to country which affects the way of how they recognize symbols, react to emotional appeals by considering the intensity of literacy and languages spoken. The structure of advertising function also shows difference. For instance, on the one hand, advertising decisions and budgets are centralized, and specific numbers of worldwide agencies are used by international organisations. On the other hand, organisations can decentralize the decisions and budgets and use the local advertising agencies. Therefore,global advertising is a communication process as a result of existing in different cultures that have different values, communication styles, and consumption patterns. Global advertising can be also seen as a business practice with advertisers and the advertising agencies which generate advertisements and buy media in other states Douglas Craig, (1995) . It is difficult to communicate to a target audience in global markets as communication process passes through in numerous contexts and it varies because of language, literacy, and other cultural influences. Douglas Craig, (2002) propose that there are three different stages are taken place in the process of the communication in global markets. First of all, the advertiser determines the appropriate message for the target audience. Then, to understand the message in different cultural contexts, it is encoded. Finally, the message is ready to be sent through the media channels to the customers who then interpret and respond to the message. However cultural factors can create barriers in these steps in the process of message and communication breaks may occur. Efficiency of message is affected by the cultural context. The context where information is implanted is significant in the collectivist cultures such as Japan and China (Hall, (1976). Conversely, the information is embedded in verbal messages in low context cultures such as Western societies where they only expect whether information relating to the product or service is enough to meet with their expectations for content (De Mooij, 1998). However, image and mood appeals affect individuals easily in high context cultures where they depend on personal networks for information and content. To provide effective communication, it is important to understand these differences in communication techniques. Global advertising can be also considered as business progress when a company introduce its product or services to customers in other countries. An appropriate message is determined by an advertising agency, which also build the media placement. While deciding global advertising strategy, awareness of developing an international or local ad campaign, or tailor communication to differences in home markets (Peebles and Ryans 1984). A standardized international campaign is often preferred to build a strong corporate or global image. Local campaigns are chosen if the purpose is to release a new product or build a new brand, or to differentiate the product or brand from competitors. In 2006, Coca-Cola Company failed when the company launched the campaign of Coke Side of Life, and it only provided simple messages with universal appeal. Coca-Cola used more regional approach rather than using a global marketing campaign (Summerfield, 2002). After this failure the organisation started to use its global resources to run a multi-media and multi-cultural strategy in worldwide markets. The firm has a better understanding of its local connections in which they market their products (Coca-Cola Company News Release, 2006). Altstie and Grow (2006) believes that there are many advantages of standardization. One of the main advantages of standardization is local marketplace. As a brand takes a part in the process of decision-making especially supported by local professionals then it will help to increase the level of local acceptance easily. Having looked at the advantages of standardization, the other effect of it can be observed as off-target advertisements always provide support when there meets an increase related to cultural approach. Moreover, Altstie and Grow (2006) mention it is clear to say that culturally respectful and strategically bound advertising can often be highly successful. Another advantage of standardization is abating the rate of making cultural blunders. When choosing an advertising firm to take care of global promotional needs, companies should consider: the available budget; the promotional message; the complexity of the product or service; market size and location; distribution channels; life cycle and competition (Proctor 2000, pp.227-228). It is vital to use an advertising agency which specializes in that type of campaign as the company operating global. McAllister (1997, p. 39) explains why it is more prudent to use global campaigns. There are many advantages of an international campaign such as building a strong and consistent global image for the company or its products and services across world markets and building awareness by using the same image in other countries. Moreover, utilization of a single campaign reduces the costs and productions in copy development. On the other hand, use of various regional campaigns may create repetition and lead to incoherent brand images and bewilderment in target audiences over the globe. To start with, it is essential to identify the term of global advertising, which has been used for advertising universal brands, such as Marlboro cigarettes, Coca-Cola, Sony home electronics and Gucci accessories. For instance, Jones (2000) argues that if a brand is exactly the same in every way in the countries where it is represented, then this term can be called as global. However there are numerous brands are available; the numbers of truly brands are not that many. For example, Coca-Cola and Pepsi frequently do with some a few changes to contain local norms, tastes, and preferences, but Levis jeans that are very much a global upon the country. In the current economic scenario, many economists as well as media people are predicting that a competition among businesses might resemble the initial stages of E-Commerce when it was not well known. There are pieces of research that have addressed the question of price rivalry on the Internet. Examine price patterns with the competition and their pros and cons for the customer segment, where do they excel and where do they lack in traditional bricks and mortar retail settings (Frasier, 2002) According to Keegan and Green, 2008, United States was the country where advertising industry spent $250 billion whereas they spent half a billion dollars for the world in 2003. In addition to this information, in total over a trillion dollars was spent for various kinds of promotions. The existing literature shows that General Motors spent only %2 of its sales for advertising while Unilever spent %3.2. However, 2 percent of total sales of General Motors which was equal to 3.7 billion dollars were more than double of Unilever expense. $1.6 billion spent for advertising by Unilever. As a whole, in 2003, nearly $100 billion was spent for advertising by the market leaders. However the following statistics shows that global advertising expenditures highly declined as a result of economic crisis. According to Zenith forecasts of 2006, the credit crunch has a negative effect on consumers and organisations in North America and Western Europe from 4.4% to 3.8%, however there is a growth in the rest of the world from 10.9% to 11.1%. TNS Media Intelligence states that U.S. total measured advertising spending dropped 14.3 percent vs. in the first six months of 2009 to $60.87 billion and advertising expenditures during the second quarter of 2009 which was less than last year. The only media increase was internet in the first half of 2009. Zenith forecasts (2006) showed that the top companies such as Verizon Communication, Procter Gamble, ATT, Sprint Nextel, Johnson Johnson, General Motors, General Electric, News Corp., Time Warner and Walt Disney in the first six months of 2009 spent combined total of $7,866.4 million, spending decreased by 3.5 percent compare to last year. As creating the multinational advertising campaigns, not only political and legal forces, but also economic factor needs to be taken into account. Definition of Problem With a better understanding of the adaptation of global advertisements to local environments, the factors which have influence on global advertisements and the strategies can be generated by global companies against to these barriers will be addressed. Aims and Objectives The project will analyse how global advertising is affected by language, culture, colours, numbers and images, religion, education, country image, political and legal forces, production and cost limitations, and global advertising strategies undertaken by multi-national companies. To come to the main point, one ad needs to apply to everyone and their understanding concurrently. The ultimate goal is the adaptation of a global advert which attracts customers attention to the highest point to generate the purchase process. In this study, the analysis of how effectively global advertising can be adopted by different and changing backgrounds in Turkey has been examined. Furthermore, how successfully advertising firms do research as well as market their product and services within other countries to expand globally will be taken into account. Structure of Study The research consists of five different chapters: Chapter 1 presents the background global advertising, and indicates aims, objectives and the structure of the study. This chapter also includes some relevant examples and judgments to the literature review. Chapter 2 provides review of relevant literature describing the challenges of global advertising with theoretical concepts and various examples of many organisations from books and journal articles. Chapter 3 contains the research and data collection methods in detail including both primary and secondary data as well as analysis of data and sampling methods. Besides, reasons of selected research methods and how they were used are explained. Chapter 4 gives a critical evaluation of data gathered from interviews with relevant justification, discussions and judgements. The aims and objectives set in the introduction have been addressed. Chapter 5 provides a summary of the main findings with conclusions and recommendations from both literature review and interview. Additionally, directions for the future study are indicated in this chapter. CHAPTER 2 LITERATURE REVIEW Globalisation During the last decade, organisations have been launched internationally to expand the size of the business and survive in the competitive environment as a result of global competition and to gain global demand for their products. Globalisation has been defined as the homogenization of peoples wants and demands around the globe thanks to easy access of different products (Hammond, Grosse, 2003, p. 288). Organisations have expanded into different markets with the development of communication technology and the communication among countries has become easier for mass media via internet and satellite television broadcast. With high technology, managers can directly access the firms and solve any problem that might exist in other countries (Johansson, 2006). The usage of television increased during the entire world as governments discontinued attempting to prevent TV access from their population in many states; the images publicized in this medium have really introduced existing cultures around the globe such as the public in Japan, Argentina, and Canada. Moreover, the Internet has driven the globalisation of products by removing the barriers which formerly preventing products from gaining more recognition around the world. The physical limitations separating countries are breached as a result of Internet. However it has extended the worldwide scope of products, the global branding strategy should actually be a local plan for each component market, as to apply a standard approach worldwide without considering local preferences and cultural differences is doomed to failure (Dennis Harris 2002, p.142). Global organisations need to consider such as the available budget, the promotional message, the complexity of the product or service, market size and location, distribution channels, life cycle and competition when selecting an agency to heed on global promotional needs (Proctor 2000, p.227-228). It is prudent to select the advertising company which specialized in that type of promotion when the organisation is operating globally McAllister (1997, p. 39). Global Advertising Global advertising challenges with a difficult task. An appropriate communication needs to be for any local market as campaigns also must be organized and controlling of expenses must be provided across the world. As a result of varying media, there will be a change in the possible channels of advertising (Hammond, Grosse, 2003). For business expansion, corporations have to consider many factors. Among these factors, the top most are language, culture, education, politics as well as economic environment (William and Cummins, 2008). Corporations that have been successful in implementing their business have done a great deal of homework in this regard as we see on their websites which are available in many languages, they also analyze the appropriate market for their product and look at the political stability of that particular country in order to make sure that their business is conducted properly (Boris, 2001). This has specially been observed in telecom and computer sector where we can now see just how successfully that have implemented their strategies to cross all the above mentioned hurdles. The product must be within the reach of a common man and they must spend an appropriate amount on advertising as to get the masses interested. Hype must be created to grab even more attention and the price/performanc e ratio of the final product must be in equilibrium (James Badger, 2004). On the other hand they do adjust rather poorly in organizations that need to change. Compensations must only be based on performance and the size of job in hand that must be focused on more promotion and in future striving to get an even bigger job (Murphy et al., 2005). The above mentioned can only be extracted when the company management decides to make a great relationship with the workforce. They must make them feel so comfortable as if they are dealing not just with workers but their own family members. Just like we all work for the benefits of our very own families, similarly they must motivate employees to such an extent that they are able to handle virtually any challenge that lies in the way of their organization (Parker, 2002). But in order to achieve this, they will have to give additional benefits and rewards coupled with bonuses to their employees at regular intervals. As discussed above a factor that unfortunately even today is under use of many organizations, is the seniority factor where they encourage their employees on the basis of seniority rather than performance. Organizations have already begun the transition from relatively simple spreadsheets to the IT based database technology as this process has advanced along with the technology (Vein Heflin, 2008). They can also use their brand name if it is well known to consolidate the quality and customer satisfaction by increased funding on re-structuring the pricing policies as well as present some significant discounts and combine them with a proactive marketing campaign (Vein Heflin, 2008). Although in many countries global advertising can be considered homogenous or not, media tools provide an easy access to a part of the world. While social and cultural differences can pose problems, a simple image of the products can remain in individuals mind; they gradually begin to participate in the global market. The aims of advertising in each country have to be identified by the advertisers. Global advertising management should begin with the evaluation of the position of advertising in each market and the accessibility of the other advertising media. Similarities in Advertising Harris Attour (2003, p. 160) expounded that International advertising standardisation refers to using a common approach (for example common advertising message) to promote the same product across national boundaries. The similarities in advertising can be justified by the following: consistent image and identity throughout the world, single coordination of the marketing mix, and cost-savings; Consistent Positioning Worldwide By having similar advertising, organisations are able to show their consistency and maintain their brand image worldwide. Doing so prevents confusion and distortion of the way frequent travellers perceive brands In other words, the company gain in consistency because it carries the same image everywhere. Smirnoff launched its pure thrill campaign showing distorted images becoming clear when viewed through the Smirnoff bottle; however the specific scenes change from one country to another to appeal to consumers with different assumption about what is thrilling. (Kiefer Carter, 2005, p. 105) Writing instrument common theme stresses Parker and Pen as synonymous. Personalisation of the advertisement can be made at the local level but always with a common theme (Advertising Age, 1984, p. 74). Levis in the early 1980s opted for a pattern advertising strategy, where the broad outlines of the campaign are given but the details not (Chase Bacot, 1981, p. 34). Cost Savings Achieved Through Standardisation The potential for economy of scale achieved through standardization is enormous. Many companies have made huge savings thanks to standardization. In fact, by having one company to design the international advertising strategy, companies not only have a tighter coordination amongst brands but also achieve huge savings. Many companies have benefited from the cost savings potential of uniform advertising campaigns. Coca Cola saved $90 million over 20 years by using McCann-Erickson to produce its worldwide commercials (De Mooij, 1997, p. 15). Challenges in International Advertising It is true that advertising seems to be consistent worldwide, however As Omar (2009, p. 374) noted:Although advertising principles do not vary from country to country, the objectives and methods employed may differ in different markets. As Anholt (2000, p. 8) predicted, it is important for international brands to act locally: International brands succeed when consumers in each market believe they are being spoken to by somebody who understands them, somebody who knows their needs and who talks and feels just as they do . His words give rise to a lot of questions, chief amongst them are: The kind of advertising which would work best in each market environment, the kind of advertisement to be avoided (Zandpour et al, 1994, p. 50). Kotler (1997, p. 309) pointed out that international advertising present challenges at four levels: What to say (message content), how to say it logically (message structure), how to say it symbolically (message format), and who should say it (message source) ? The following paragraphs discuss them in turn. Language These days, organisations are paying great attention on product names and slogans to use in other languages. Language is the foundation to cross cultural advertising. Language must be carefully checked for cultural feasibility as many companies have made big blunders in advertisements of their products. (Payne, 2007). The message needs to be expressed in one language. International advertising often means that, companies are advertising a product which has a name from a different language. Many companies have had difficulties marketing these products mainly because once translated it does not convey the same impression. Firms therefore have skilled interpreters and translators to remove the communication difficulties. Direct translations into other foreign languages often lose meaning and do not put forward the important points originally predicted. Colgate launched toothpaste named CUE; they introduced the product in France and it was a disaster because the word CUE in French is a slang expression for derriere. (De Mooij, 1997, p. 160) Baby food producer Gerber does not make the right impact in France since the word literally means to spew (De Mooij, 1997, p. 145). Mitsubishi failed to advertise their Pajero model in Spain because the word Pajero means masturbator in Spanish: definitely not the right impression. (Haig, 2003, p. 45) IBM had some difficulties in Argentina with its global slogan: Solutions for a small planet and had to fine-tune it to Solutions for a small world because the word Planet lacked the desired conceptual thrust (Haig, 2003, p. 105). Values Culture might be linked to ethnics, national groups, and an age group or to a country. Every individual gains their knowledge about their culture from the society or the group they belong to. Every country has it is own culture, eating, dressing habits change between countries men and women are not treated same everywhere. Culture varies between different levels, so when talking about it, it is important to be clear about the level to avoid confusion. An approach that is true at one level does not mean it is going to be right on another level. Pivotal to the issues faced by international promoters, is the problem of culture: advertising is more than words, it is made of culture (Anholt, 2000, p. 5). In other words, the content of the message should have a local touch. Culture is the totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought characteristic of a community or population. Culture is also learned behaviour. It depends on the environment, not heredity; it is not biologically transmitted. (Keillor et al.2007, p.109) In 1997, De Mooij (p. 7) wrote that, Ideally effective advertising means that the values in the message match the values of the receiver. It is the culture of the consumer that should be reflected in advertising. This excerpt puts a lot of emphasis on the values of the targeted nation. Before launching an advertisement it is important to see whether the message conveyed will match with the values of the nation. In other words, culture is a very complex phenomenon and a challenge to firms that wish to market internationally. How does the firms product or service fit in with the foreign markets culture? How must it be adapted to fit? Every firm must take its own adjustment and adaptation to satisfy customer foreign customers. (Keillor et al., 2007 p. 109) Culture plays an important role in international market. It is complex, challenging and always a problem for companies which operate internationally. When a new product is launched, it is the responsibility of the firm to make sure that the product fits in the international market. If there are changes required to increase customer satisfaction, the firm must take the reasonable steps. Advertising reflects these wider systems of meaning: it reflects the way people think, what moves them, how they relate to each other, how they live, eat, relax, and enjoy themselves. All manifestations of culture, at different levels, are reflected in advertising. In order to analyze advertising as a manifestation of culture at the broader level, it must be understood that culture is expressed in several ways. The Sony Walkman is often thought to be unique because one can listen to music without being disturbed by others. However this contrasts with Akio Morita Ibuka co-founder of Sony Corporation: He wanted to listen to music without disturbing others (Morita et al., 1987, p. 89). This subtlety makes a huge difference in the formulation of the campaign. Muller sparked a lot of controversy with its self-centred campaign showing a mum depriving its child of the yoghurt with the caption: there is motherly love, and there is Muller love. (Kiefer Carter, 2005, p. 68). Haagen-Dazs was lambasted because of its advertisement which related ice cream to sex and presented it as a product for personal pleasure. It offended the Chinese who share all the good things (Kiefer Carter, 2005, p. 68). Values bear hugely on buyer behaviour especially at the problem recognition stage. People in different cultures have different motives to buy a good and it should be reflected in the message of the campaign. When companies advertise, they must consider a wider system of meaning because it reflects people in many ways for example the way they eat, move or think. Advertising reflects to all cultural expressions at different stages. It is important to understand that the culture can be expressed in more than a few ways to analyze advertising as a manifestation of culture. Hofstede (1980, p. 57) proposed four dimensions of national culture: Power distance, uncertainty avoidance, individualism and masculinity. The model can be used in global marketing strategy. If culture has a large effect on customer behaviour, then firms need tools and techniques that analyze cultural differences, so that the firms can avoid the mistake of applying a policy which is not appropriate. Power distance is essentially used to categorise levels of inequality in organisations (Mullins, 2002, p. 25). High power distance countries are autocratic and in such countries, the employees are reduced to a mere condition of doers. Conversely, low power distance is favourable to a participative management. Uncertainty avoidance however, related to the tendency to minimise risks or ambiguous situations. Countries that score high in this area are risk-adverse, and they tend to follow proved methods and rely usually on bureaucracy. Individualism mirrors the extent to which individuals fitted in a group (Brewster, Sparrow, Vernon, 2007, p. 23). In other words, the cohesiveness amongst group members; countries with a high score can be branded egoistic and Nations with low levels of individualism are known for their social dimension. Masculinity is linked to the behaviour and patterns that prevail into a particular culture. In fact, a masculine oriented nation shines by aggressiveness, assertiveness, drive for succeed at all cost while a feminine orientation requires a much less nurturing approach. Later, an additional dimension, Confucian Dynamism (Bond, 1988, p. 8), was put forward. This dimension reflects the length of planning e.g. The Japanese plan for the long-term and this is the basis of their economic growth over the last few years. Conversely, the USA is short-term focused and the bottom line is generally the quarterly meeting. Hofstedes surveys which were carried around the world in 1980 with IBM employees was rather a methodical assessment of different cultures around the globe. Even though there has been changes in the world from the events that occurred in Eastern Europe and Russia cultural roots are much stronger. Hofstedes analysis has proved that countries can be explained in four different categories. The first one is individualism versus collectivism, in individualism cultures individual tend to look after themselves and close family members only in collectivism cultures individuals care more about the group. High and low power distance would be the second dimension the difference is countries with high power distance are less democratic and countries with low level of power distance are more democratic. Masculine and famine is the third on Hofstedes list which refers to equality between males and females in a society. Uncertainty avoidance which relates to self-assurance between individuals in a society is the last demission on Hofstedes list. If the society do not feel threatened from uncertainty avoidance, then that society is does not have any doubt about the future. The Role of Culture in Multinational Business Economic and physical environment are important to international firms but not as much as the cultural environment that has an exceptional importance in business. Because every country has a different culture they require a different approach. A strategy that is successful for a region might not be in another, to avoid failure right techniques and tools should be used. A company would be successful if they can manage the cultural environment and international organizations. So what kinds of problems arise from cultural diversity? The main problem seems to be the lack of knowledge about different cultures between individuals. Many companies are not clear about the cultures around the globe (Miroshnik, 2002). Cultural diversity causes problems, because firms usually over generalize techniques and strategies. Employees think that successful marketing strategies can be applied to more than one country, but this often results in failure. If a product has a naked image on the package, it may not be a problem in the western countries, but it will be highly criticized in Muslim world. It does not matter if it is a well-known art work or the companys logo, therefore firms must adapt well into local markets if they want to be successful (Miroshnik, 2002). Structure of the Message The structure of the message should be consistent with the culture. Hall (1976) argued that communication could take place in a high/low context. According to him, in low context communication there is the necessity to come up with all the background information. Conversely, high context cultures require a straight approach because everyone has all the background information. Because of the differences of context, Gudykunst Ting-Toomey (1988, p. 103) argued that there are fou