THE MARKETERS RESPONSE

THE MARKETERS' RESPONSE

At the very heart of marketing lies the product life curve, from which there is no escape. Eventually, over time, sales of any product or service decline, as it loses its appeal , the market becomes saturated , it becomes displaced by newer or cheaper replacement products, or simply as the original need it was satisfying no longer exists. Therefore the basic tool of the marketer is portfolio planning (Table 1.2).

 

Table 1.2

		The changing market
		Existing markets	New markets
	Existing products	Maintaining the sales of existing products to existing markets or established customers	Seeking new markets for existing products or services
The product range available for sale	New products	Developing new products for existing markets or established customers	Developing new products for new markets - either to satisfy existing demand or to create new demands

At first sight, the new international markets are there to grab. But despite the claims of the free market protagonists, what constitutes a market economy differs across the world (Farnham, 1999). Thus marketers should not expect to transfer their own ethnocentric frameworks to other cultures directly without a methodology for dealing with the cultural differences (Table 1.3).

Table 1.3

System	Market	Regulation	Accountability	Labor	Value orientations
Anglo-Saxon/US	"Free"	The contract	Shareholder	Deregulated	Individualistic Achievement
Central European	Social	Public law	Stakeholders	Regulated	Social cohesion
Russian	Anarchic	Power	Managers-workers	Local	Diffuse
Japanese	Managed	Trust	Networks of organizations	Internal	Communitarianism
Chinese	Interpersonal	Trust	Families	Parochial	Paternalistic, Ascribed

In summary, there are many factors that combine to feed the growth of globalization. These include:

• An increasing number of countries opening up their markets, especially the Far East and China.

• The advancing reach of information technology and communications, including the Internet.

• Corporations seeking wider markets for their goods and services, cost reduction (or enhancements), and optimizing logistics.

• Support by the World Bank, OECD, GATT, and other agencies to enable world trade growth.

So how and why are corporations trying or learning to use these global differences in costs and material sources to manage their worldwide operations, achieve sustained growth, and survive against ever-increasing competition?

We refer, throughout this book and in others in the series, to how THT has made extensive use of web-based diagnostic tools in our research and services to our clients. In our portfolio of tools, we have developed the Globalization Readiness Assessment (GRA) tool. This web-based questionnaire has been subject to our usual analytical tests of reliability and validity, and has been completed by many thousands of respondents from a whole range of countries and types of industry. Respondents include our clients from our consultancy assignments, our own research and that of some of our affiliate PhD student projects.

Included in the GRA tool is the following question that seeks to identify the reasons for organizations to "go global": What are the main motives for your organization to pursue an international strategy?

1. Economies of scale: We go abroad to achieve scale advantages in the volume of transactions. We, and our customers, can profit from global economies of scale, where products and services are available everywhere around the world. In our business, competition takes on a worldwide stage instead of being limited to individual countries.

2. To prepare for global convergence: Traditional markets are highly affected by global convergence. Global convergence is the process in which countries develop more and more in the same direction and become more closely interrelated. This process is already far advanced and will continue in the future. As a result nation states will lose their relevance and it is therefore wise to anticipate, and even encourage , a "nationless" world.

3. Economies of scope and new markets: We go abroad to achieve increases in variety and scope, to broaden our range, and to discover new ways of reaching more customers via worldwide communication nets .

4. Lower transaction costs: We go abroad to achieve a critical mass to pay back our investments. These are increasing and any future financial success will largely depend on our ability to offset these costs in shorter periods of time.

5. Lower per unit costs: We go abroad for cheaper per unit costs, that is for the costs of each incremental unit of product or service. This is crucially dependent on the productivity of employees and the speed with which they learn.

6. Reputation of countries: We go abroad to establish and maintain a truly international reputation for our organization. In the past, countries used to have their own distinct characteristics; there were few international markets and strong pressures to respond to local needs. With borders disappearing these pressures will become weaker, while the need to be perceived as an international player, sensitive to needs of the international community, will become stronger.

While we found some variability in responses across respondents' functional disciplines, this was much less than might be expected; overall there is a considerable degree of consistency. Furthermore, option "d" (lower costs as the principal motive for global reach) was rated considerably lower than is normally indicated in the business management press.

Figure 1.2: Motives for global reach

This clearly indicates the high priority that organizations place on the global marketing quest and, hence, the rationale for this book. Such motives for going abroad may be considered a wish list by many, so it is also constructive to look at how well prepared organizations are to meet these quests.

We therefore also asked the following question in our GRA tool. Respondents were asked to place their organization on a scale for each option. For each of the following indicate on the scale how you think your organization is ready for the evolving global market place.

Strategy development	In our company, senior management has created a sense of purpose in the organization, developed clear goals with associated measures, and created a corporate culture in which everyone understands the strategy and sees the connection between their work and the organization's goals, enabling effective international operations.
Performance measurement	In our company, individual and/or group performance measures have been defined clearly and linked to the organization's goals in such a way that it supports the development of an international mindset.
Organizational design	In our company, international roles and responsibilities, distribution of power, and authority facilitate internal operations so that the international customer finds it easy to do business with our organization and we find it easy to work with the international customer.
Knowledge management	The way that information and knowledge is generated in our company, converted from local knowledge to global knowledge and shared across cultural and regional borders, is highly effective. We learn from our cultural experiences around the globe.
Motivational energy	In our company, senior management has created a global working environment where everyone is motivated to engage with the internationalization process of the organization. Thus the potential energy of the organization benefits from the positive emotional states of employees, creating a global mindset.
External focus	Our organization has contingency plans to deal with global technological, political, regulatory, or economic changes that may evolve as different alternate business scenarios unfold across the world.
Strategic vision	In our organization we have a clear strategic vision with supporting basic values and processes according to which we integrate local needs within a global perspective.
Competitiveness	Across our organization, management monitors and anticipates the future direction of key global competitors while constantly innovating its products and/or services.

Answers and rankings based on the above were varied. In particular there were significant differences between responses from senior management and middle management. The former were generally much more bullish about their organization's readiness for the global market - presumably because middle management recognized that it would be their role to implement and deliver on targets. Here's a summary.

Organizational readiness	Mean response from senior management	Mean response from middle management
Strategy development	Well developed	Partly developed
Performance	Needs more development	Over developed
measurement
Organizational design	Needs more development	Well developed
Knowledge management	Ongoing	Ongoing
Motivational energy	Well developed	Poorly developed
External focus	Needs more development	Satisfactory, but needs more development
Strategic Vision	Well developed	Poorly developed
Competitiveness	Well developed	Well developed
Source: clients of THT Consulting, 2000-2003.

The central thrust of this book is based on the analysis of the values of different cultures and the reconciliation of the dilemmas that these differences produce. But let's first note that fundamental marketing mistakes are too often still being made even at the most basic level of cultural differences.

Many of these arise simply from language, religion, and common courtesy . Established product names in one language may have different meanings in others. In advertisements, symbols or gestures in one culture (like the first finger and thumb) may have entirely opposite meanings in another. The color red, often meaning danger in western cultures, can send different messages about a product to Chinese audience, for whom red can represent success. Similarly, yellow as a color in marketing promotions may be offensive to Arabs when used in some contexts, yet convey freshness and summer in western cultures. Launches to promote new products, accompanied by buffet lunches, have been inappropriately scheduled during Ramadan in some parts of the Muslim world. The box on the following page gives some more examples of basic global marketing gaffes.

More important than these overt and more obvious aspects of culture are the differences that derive more subtly from the different meaning given by different cultures to apparently identical products or services.

We can more easily recognize explicit cultural differences by adopting an anti-ethnocentric approach, though we may not be aware of more implicit ones. Cultural due diligence is still absent from the management agenda and from many classic marketing models such as those of Porter. Most classical marketing theory has been based on single-culture research, especially the Anglo-American studies.

As explained in the introduction, it is our thesis that "culture" in today's marketplace is not simply a factor to be added in to the marketing equation, but a fundamental construct that pervades the whole of the marketing paradigm. As we noted there, this book is not a list of "dos and don'ts"; nor is it an ad hoc discussion of cases. We aim to offer a new conceptual framework that provides a way of thinking that can be generalized both across cultures and the spectrum of marketing activities, and that can be applied in a practical way.

Global gaffes

General Motors's promotion in Belgium for a car that had a "body by Fisher" turned out to have, in the Flemish translation, a "corpse by Fisher."

A Canadian importer of Turkish shirts destined for Quebec used a dictionary to help translate the label "Made in Turkey" into French. The final translation was "Fabrique en Dinde." True, dinde does mean turkey - the bird, not the country. That is Turquie.

KFC's "finger lickin' good" slogan was mistranslated in China as "eat your fingers off."

The Ford Pinto flopped when it was launched in Brazil. Mystified executives later learned that "pinto" is local slang for small genitals.

"Pepsi brings you back to life" was translated into Chinese as "Pepsi brings your ancestors back from the grave."

The lager brand Coors' slogan, " turn it loose," became "suffer from diarrhea" in Spanish.

 

Our new marketing paradigm is intended to provide a robust framework for the marketer and is based on the Three Rs: recognize, respect, and reconciliation. The first step is to recognize that there are cultural differences in marketing. Different views about "where the customer is coming from" aren't right or wrong; they are just different. It is easy to be judgmental about people and societies that give a different meaning to their world. The next step is to respect these differences and accept the customer's rights to interpret the world, and our products and marketing efforts, in the way they choose.

Many marketing professionals have told us that very often their clients don't know what they want and that they therefore need to create a market (push). Others, however, say that a marketing professional should thrive on the needs of clients and be able to listen carefully to them (pull). As soon as an organization becomes international it is faced even more with the imperative to reconcile needs and wants. Where internally oriented cultures, such as the US, might start with technology push in order to connect it to the needs of clients at a later stage, the Japanese might first "listen" to their clients' needs and be pulled by them in order to attach them to the developments of technology at a later stage. Because of these different views of the world, we have two seemingly opposing views of the contrasting cultures - those of the seller and buyer. The classical approach is to focus solely on customer satisfaction: "To make what we know we can sell." But we also have to consider our own corporate knowledge: "To try to sell what we know we can make." Thus, in our new approach, the task of the marketer is much more than simply abandoning their own strengths for the sake of customer satisfaction: It is to reconcile these seemingly opposing orientations.

The total reconciliation approach we offer requires the inclusion of stakeholders, customers, suppliers, employees, investors, and the community at large with a well-defined mission that is expressed through clear values and purpose. Thus tomorrow's organization is a business-led "charity" that promotes the reconciliation approach through research and continually refined enabling mechanisms. The role of employees must change from being only a human "resource" to being professionals who can find ways of applying their capacities to inspire these new sustainable organizations.

In the widest view, global marketing has to become the "acceptable face of capitalism ," reconciling values associated with more materialistic cultures with those of "the simple life" ideology.