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Global Marketing

Video Advertising Yesterday, Today, and Tomorrow

Yesterday

The first video advertisement was a 10-second Bulova Watches ad aired on July 1st, 1941 prior to a game between the Brooklyn Dodgers and the Philadelphia Phillies. Since then , TV evolved to being filled with mostly 30-second and 60-second long commercials during and between shows on every television network. Some of these ad slots are cheap during daytime television, others are during the biggest events in television such as the Super Bowl, and these ad slots can cost millions of dollars for 30 seconds of ad-space. All of us grew up with ad this format on cable TV, and had become accustomed to it. But are the 30 and 60-second advertisements still effective today?

Today

Today’s Television industry looks a lot different than it did a decade ago. Between 2010 and 2019, over 60% of Americans have ditched their cable subscriptions, starting with the younger generations. Cable has been replaced by the new subscription services, offering ad-free shows and movies for a flat monthly fee. So where did this leave advertisers going? As a result of this, rather than seeing video advertising on television, most people now see video advertising online on social medias. The most popular places for video advertising is on YouTube, Facebook, Instagram, Snapchat, and Twitter. An important difference to notice between these social media companies and the cable television we grew up with is the attention span required. The most popular media outlets with young and young adult audiences today require a much shorter attention span than cable television does. As such, advertisements on these platforms also must adjust to shorter attention spans. Ads on these platforms generally run up to 30 seconds on average, but they only have about 1-5 seconds to get their point across or catch a potential customer before the viewer has the option to skip (and most often will). Unless it is non-skippable, as some YouTube ads are, any video that is 30 seconds or longer will likely get skipped and ignored by the viewer. The shortest ad slots available on YouTube currently are 6-second slots.

Tomorrow

The future of video advertising to millennials and younger generations will be quick 1-5 second ads. As toleration for ad interruption is declining steeply among younger audiences, I believe that the advertisements will become more brief and succinct than ever before. Rather than the 2 minute YouTube ads that are skippable after 5 seconds, in a year or two I would be unsurprised to instead see brief, impressionable video advertisements that are finished before the viewer would even have a chance to skip. The rise of the streaming platforms was just the beginning of a decreasing tolerance for long advertisement interruption by consumers. The recent rise of video sharing platforms such as TikTok also support this hypothesis. The videos on the app are generally shorter than most television ads. Even a 15 second ad between videos seems like a lot. In the future I see more video advertisements showing up on social media platforms, but the ads will become even shorter than they are today.

Takeaway

As the way people consume media continues to evolve, so does the most effective ways to advertise. The media that people are consuming has resulted in a shortening of attention spans, and a decrease in tolerance for ad interruption. This will continue into the future, and the way companies advertise will be continuously adapting to this.

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Global Marketing

International Retailing

Retailing, or the activities that involve selling commodities directly to consumers, has been around for centuries. People have made a living bartering, marketing, and selling their goods for a very long time, but there is great opportunity that presents itself to modern retailers that has not been available to the same retailers from the recent past. The global economic boom that has happened in the past few decades has allowed for trade and commerce to flourish and has resulted in a lot of capital creation. A large part of the boom can be attributed to something called “globalization,” which continues to be much of the reason why our international markets operate so efficiently. Amenities like plane travel and the internet have made international retailing much easier than it was in the past and has attracted more and more businesses into the mix. This has created a domino effect within the market, which does not show any signs of slowing down soon.

So who are these retailers that I am speaking of?… Well, they are many well known businesses that have become household names throughout the past few decades, including, but not limited to: Walmart, Gucci, GAP, IKEA, Lego, Carrefour and Tesco. Broadly speaking, almost all of the international retailers fall into two categories… Grocery retailers and fashion retailers.

The best example one can give about what an international grocery retailer is or does is through the exemplary operations of Walmart. Walmart operates in more than 25 different countries and under 56 different names, if you can believe that. It is the world’s largest company by revenue, which totals more than $500 billion in revenue per annum. According to MSG.com, international grocery retailers follow a multi brand and multi product business format which includes all products like food (fruits, veggies, juices), fashion and clothing (bed linens, multi gender clothing/apparel), branded consumables from other companies, liquor and a myriad of other goods. The most common countries for international grocery retailers to operate in have been those in North America and Europe, but globalization has made it possible to enter into other countries in Asia and even South America.

International fashion retailers include famous companies like Ralph Lauren, Hugo Boss, Jimmy Choo, and Swarovski. When these retailers embark on their business ventures, they often start in their host or domestic countries first, but then gradually understand that in order to compete on a global scale, they must take advantage of the opportunities present in international markets. What used to be a luxury for only the rich to enjoy is now available to people all around the world, regardless of their levels of disposable income.

As retailers move their businesses international, they need to consider four major issues.

  1. The culture of the people in that country. How will they respond or react to your products?
  2. The legal and regulatory barriers of entering into that host country.
  3. How prepared is your company for going international? Does it have the capital to do so?
  4. Do you have a team that will help you market in this unfamiliar country?

SOURCE:

https://www.managementstudyguide.com/international-retailing.htm

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Global Marketing

International Distribution Channels

Importance of International Distribution

International distribution is one of the most important aspects of operating a global company. Every global company must decide how they will physically get their product in the hands of the consumer. Considerations in this decision include how much control the company wants to have in the selling process, the difficulty of getting the product to the consumer, and the type of product the company sells.

Tesla sells directly to consumers through storefronts and online.

Types of Channels

  • Direct Sales – Direct sales are ideal for a company that wants full control over the selling and distribution process. Direct selling allows the company to deal more closely with its customers and ensure every part of the customer experience is decided by the company. An example of this is Tesla, which owns its own stores for consumers as well as an online store for customers to purchase their Tesla vehicle and have it delivered to their home. Tesla does this because founder Elon Musk did not want customers to have to deal with pesky car salesman like most other car brands require for purchase at dealerships. Direct selling becomes more difficult however for companies with customers all over the globe. It makes sense for higher ticket items such as those offered by Tesla, however is more difficult for cheaper goods.
  • Agent Intermediaries – Agent intermediaries are intermediaries who take care of the selling/distribution process for the company in return for a commission from the sale. The agent never takes ownership of the product, it simply facilitates the transaction. This is a popular distribution channel for insurance companies. The products are sold and distributed to new customers by the agent for commission, and the insurance company gains a new premium-paying customer without having to worry about making each individual sale. This can be very beneficial for distributing internationally because the agent often has the necessary contacts and skills to sell to customers in the specific market they specialize in.
  • Merchant Intermediaries – Merchant intermediaries purchase the goods from the company, and then resell the goods to customers for a profit. This allows the company to sell in wholesale to the merchant intermediary, allowing for larger sales and avoiding the issues involved with dealing with customers. An example of this is Coca Cola. You will never see a Coca Cola store, however almost anywhere you go you can find a Coke. Coca Cola utilizes merchant intermediaries such as retail stores all over the globe to sell their product to wholesale, then the retailers are responsible for selling Coca Cola products to consumers in that market.

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Global Marketing

International Pricing

When selling products/services in foreign markets, it is crucial that those in charge of setting the prices of these products/services understand the numerous factors that go into setting these costs. For example, some of these factors include…

  1. Consumer perceptions, expectations and ability to pay.
  2. Need for the product in the market.
  3. Market structure.
  4. Market growth and whether or not the product is elastic or inelastic.
  5. Competition.
  6. Product adaptation or standardization.
  7. Shipping costs.
  8. Product lifecycle.

As one can see, there is a lot to think about when doing business in a foreign market. However, these decisions can be broken down and narrowed into four major strategies that will help those responsible for setting international prices make the right decisions.

Let’s use the Pricing Strategy Matrix to help explain the four different types of avenues a company can go down.

  1. Economy – Low Price, Low Quality – This type of pricing strategy is interesting in that it tends to work well only when a company has low overhead and other costs compared to competitors. This low cost will allow the company to set discounts on price and gain more market share. This strategy could be good in markets where the customers are not wealthy. However, it could be a bad move for companies who cannot meet the sales volume necessary to remain profitable.
  2. Penetration – Low Price, High Quality – This strategy will help companies penetrate the market quickly, as customers will be intrigued to buy a high quality product at a low cost. The theory is that once companies gain a large portion of the market share, they will start to increase prices and move towards a premium pricing strategy. Companies who use this strategy can increase their sales volumes fast enough to achieve economies of scale and lower their costs. There are, however, negatives to this strategy. Due to the price being set low, this may have a big impact on margins and if they are too low, then it could send the perception to customers that the brand is “low quality.”
  3. Price Skimming – Low Quality, High Price – This strategy aims to generate a high amount of revenue from the small amount of people who are willing to pay this price for a low quality product/service. This strategy is used in markets where a high number of new products are launched. An example would be the book market. A new book will be sold in hardback form for a high price and then for paperback later on down the road. This is a good move for those who are looking to ensure that their production costs are covered, but you may run the risk of losing customer loyalty and interest in the brand.
  4. Premium Pricing – High Quality, High Price – Use this strategy when you have high production costs, but a unique product/service that you can charge a premium on! This strategy can allow companies to achieve a high profit margin on their products and can enhance the identity of the brand with the high price tag, but there are some disadvantages to this strategy. First, your product/service will be under fire from other companies who want to undercut your prices. Second, it is crucial that the company forecasts sales and try to meet demand. If you overproduce, you risk the production costs negatively impacting profit margins.

Good luck on your international pricing venture!

https://www.mindtools.com/pages/article/pricing-strategy-matrix.htm

Categories
Global Marketing

Global Branding

What is Global Branding?

A typical definition of a global brand is “a brand that is marketed under the same name in multiple countries with similar and centrally coordinated marketing strategies” (Czinkota & Ronkainen 2006). Global brands have the goal of creating and maintaining a consistent identity with consumers all over the world. This can be accomplished in a number of ways, but it is no simple task.

Global Branding Strategies

  • Solo Branding – A branding strategy under which each product that the parent company sells has its own name brand. An example of this is Coca-Cola. Each of their products such as Sprite, Fanta, Dasani, Minute Maid, etc., have their own global brand names that they are marketed and sold under individually. This strategy is beneficial for targeting specific market segments and consumer groups.
  • Hallmark Branding – In this branding strategy the firm tags one brand, generally the corporate brand, to all of the products and does not use sub-brands. Examples of this include most banks, such as Wells Fargo or Chase using the same brand name for all of the services and branches the company has. This strategy keeps the branding simple for consumers to remember and allows the company to focus on one brand name.
  • Family (Umbrella) Branding – This branding strategy focuses on the parent company brand name, and everything the company sells is under that brand name, no matter the product. An example of this is the Virgin Group, which includes Virgin Atlantic, Virgin Galactic, Virgin Mobile, Virgin Voyages, and more. This is a corporate brand name focus so that consumers associate one of the company’s business units with the quality and reputation of the all-encompassing brand.
  • Extension Branding – A company with a pre-existing established brand enters a new product category using the same branding, now over multiple product categories, by extending the brand to the new markets. An example of this is Samsung, who have extended the brand from televisions to cell phones, washers and dryers, refrigerators, and more. Having established their name with a strong reputation, they extended the corporate brand name from the original product of TV’s to all of the products the company offers today. This is a good strategy for a company with a pre-existing good reputation entering a similar market that people will perceive well.

Is Global Branding Worth It?

When it comes to global branding, there are as many, if not more stories of failures than successes. Companies must make many considerations before deciding on a global branding strategy. However if a company succeeds in creating and maintaining a global brand, the great level of exposure and sales that comes with a global brand make all of the marketing expenditures and difficult decisions worth it. Just make sure you are aware of the various strategies available and conduct adequate market research to improve the chances of success.

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Global Marketing

Business to Business Marketing

Although Business to Business (or B2B) marketing is such an integral part of many company’s success, it often gets overshadowed and overlooked by Business to Consumer marketing which could be seen as more appealing or exciting. This is probably because most people who are learning about this topic are consumers themselves, not businesses. Nevertheless, it is something that everyone should be aware of, especially if you currently are, or are thinking of becoming, a business owner.

So what is Business to Business marketing? It is when products or services of one business are sold to another business and not to the ordinary public consumer. This market is actually larger than the Business to Consumer market and contains players such as manufacturers, wholesalers, retailers, farms, construction firms, service industries, the government, or even non-profits (https://www.marketingcareeredu.org/business-to-business/). It is also worth mentioning that B2B marketers spend about $85 billion a year in promoting their goods and services to other businesses all around the world.

What makes B2B marketing very interesting is that there is a lot at stake with marketing and selling these products and services. For example, a clothing company that is domestically or internationally selling their apparel to consumers has to worry about fewer things when trying to get the consumer to purchase than does a B2B company who is selling a software program to another company that is crucial for its existence. There is often a lot more capital that is tied up in these transactions, and they usually take longer to close because the company is going to want to make sure that the company they are purchasing from is going to provide the ROI they need, vetted for expertise and experience, and worth their investment. These calls are also made by many people and executives and not always by just one person.

With this in mind, it is necessary to understand that different marketing techniques may be needed in order to obtain the best results. For example, a B2B company marketing their products or services on social media may not see as good of results as compared to say sending representatives from the firm to speak with the target company’s management team in person. Social media marketing can be great for companies looking to appeal to consumer emotions which stimulates them to make an impulse decision to buy their products or services, but with B2B companies, their customers are not typically making these impulse decisions. That is not to say that social media marketing cannot be utilized by B2B companies to build brand awareness and their reputation, but it is worth noting that their conversion rates for those ads will most likely be lower than that of a Business to Consumer company. On top of this, a B2B company must also keep in mind the exchange rate of currencies and how this could potentially affect the transaction.

Overall, it is important for B2B companies to really understand their customer and product/service, as well as how it is best marketed to their target customer as well. A company or management team that is used to selling goods or services to consumers has to be willing to adapt to the changing landscape of selling to businesses in order to become successful.

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Global Marketing

Cross-Cultural Consumer Behavior

Understanding High- and Low-Context Cultures

In different parts of the world, there are different native languages spoken. Some of these languages are very concise and clear (low-context) while others rely heavily on context clues in addition to what is being said (high-context). This is an extremely important distinction when doing business globally, because it can make the difference as to whether or not the business effectively communicates with consumers.

High-Context Cultures

High-context cultures are characterized by a heavy reliance on implicit communication and non-verbal cues. Common high context cultures are found in Asia, Africa, the Middle East, Central Europe, and Latin America. Relationships in these cultures develop slowly and are based on trust. Common non-verbal elements such as tone, facial expressions, and gestures hold a high significance, meanwhile verbal communication can often be vague or indirect. Space is often considered very communal and people stand close to one another and share space. Low-context cultures believe everything deserves its time, and timing is difficult to plan and stick to a strict schedule.

Low-Context Cultures

Low-context cultures rely on explicit verbal communication between individuals. Information is defined specifically and clearly. These cultures often have western European roots, including the United States and Australia. Relationship in these cultures generally begin and end quickly. Social structure is much more decentralized and communication is more open. Non-verbal elements are insignificant and often overlooked, while information and opinions are clearly laid out in a verbal manner. Most spaces are compartmentalized and people desire privacy and a “personal space bubble.” Meetings and events have a strict beginning and end time, and individuals consider their time as their own and value it very highly.

Take-Away

Not all communication is equal. Individuals and businesses need to adapt the way they communicate depending on the culture they are doing business in. If you plan to do business somewhere, have a clear understanding of what to expect when it comes to communication and how to best convey your message. You do not want to show up for an important business meeting in Hong Kong not knowing what to expect and missing significant social cues and trying to do all of the business verbally. Know the culture you are doing business in.

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Global Marketing

Global Marketing Intelligence

Before entering into a market, especially an international market, it is extremely important for companies to know as much as they can about how beneficial the market will be for the company to enter into. One way of ensuring that the executives are making the right decision to enter (or not) into a market is through the use of market intelligence

Market intelligence is the use of external information by companies to make better decisions about their role in domestic or, in this case, global markets. This information could consist of things like: online resources (company websites, comments on social media, news articles, etc.) data about the population age, consumer habits on travel or spending, government laws & regulations, facilities within the target country, etc. Having and understanding this information is what gives companies and the executives that run them a “higher IQ” in regards to what will make their business successful in the global marketplace. This external market analysis goes hand in hand with something called business intelligence, which directly relates to the company’s internal information such as sales reports, shipments, returns, budgets, purchases, etc. The collection and analysis of this information is what allows businesses to make sound decisions within their own company. One could argue that business intelligence should be analyzed and understood by companies before they even start thinking about market intelligence or entering into a new market. Similarly to the famous question, “what came first, the chicken or the egg?” which do you think comes first, business intelligence or market intelligence?…

Now, lets look at some examples of how market intelligence was and was not used by companies when entering into the marketplace…

Back in 2011 and 3 years after the company had launched in the United States, Airbnb decided that it wanted to really start honing in on the UK and expand its business there. The company wanted to be swift in their decision making regarding the quickly growing market, but needed to accumulate information about it first. So, they partnered with a company called London & Partners and collected competitive environment information which helped to boost their market intelligence in order to make the right decisions when moving forward. As a result, Airbnb grew by 748% in 2012 and listed a total of 10,000 properties by the end of the year. Without market intelligence, Airbnb could have ended up making poor decisions within the UK market…

On the contrary, Blackberry did not make as good of decisions back in 2011 when they did not have enough market intelligence to understand that there was a massive change in consumer behavior. Up until that time, predominant smartphones did not have touchscreens and typically had physical keyboards on the phone itself. However, companies like Android and Apple started to pave the way for touchscreen smartphones around 2011, which left Blackberry in the dust. Blackberry saw this coming, but decided not to act until it was too late to do so. The company is not a major player anymore in the industry, but very well could have been if they had more market intelligence.