In his classic 1983 book The Marketing Imagination, Harvard marketing professor Theodore Levitt argued that the world was becoming a
■áTi+íil common marketplace where people have the same basic needs, wants, desires, and tastes no matter where they live. Levitt called on marketers to develop global marketing strategies and true global brands that could be sold under one name around the globe. Many multinational companies heeded the call for globalization, and their ad agencies were given the charge of helping them turn their products into global brands that could be promoted with the same advertising theme and approach worldwide.
A number of consumer-product companies such as PepsiCo, Coca-Cola, Procter & Gamble, and Nestlé have been successful in turning many of their products into global brands. However, while many companies refer to their products as "global brands," precious few consumer packaged-goods brands are really global in scope. According to a recent study by the A. C. Nielsen Company, one of the world's leading market research firms, only 43 consumer-product brands can be considered truly global. To be part of Nielsen's global brand list, a brand was required to have sales of over a billion dollars (U.S.), have at least 5 percent of its sales outside of its home region, and have a geographic presence in all major regions of the world. The study findings are based on data from 30 countries that account for 90 percent of the world's gross domestic product (GDP) and are spread across all the major regions of the world.
The 43 brands on the Nielsen global brand list represent 23 companies and more than $125 billion in annual sales. Brands with major presence in North America dominate the list. PepsiCo had the most brands on the list, with six, while Philip Morris Companies (including Kraft Foods) and Procter & Gamble each had five brands, followed by Coca-Cola with four, and Kimberly-Clark, Gillette, and Mars with two each. The product category with the most global brands was beverages, which is probably not surprising to any global traveler. Nearly one-third of the brands on the list were some type of beverage, including five carbonated beverages, two juice brands, one sports drink, two coffee brands, and three beer brands. Beverage companies are clearly ahead on the globalization curve, both in the number of products and in the level of sales. The total CocaCola brand was number one among the beverages, with over $15 billion in sales.
Many of the brands on the global list rely heavily on foreign markets for sales. Coca-Cola generates the most sales outside of its home market, as over 70 percent of its revenue comes from international markets; next are Marlboro cigarettes, Pampers diapers, and Gillette razors and blades, each of which is over 60 percent. All of the global brands on the Nielsen list have their largest markets in North America or the Europe, Middle East, and Africa region. This is not surprising considering that North America accounts for 32 percent of the world's GDP while Europe represents 33 percent.
The Nielsen study shows that despite the efforts of major companies to find new markets for their products and make them more global, there are really not that many truly global brands. Nielsen examined more than 200 brands in this study and while more than half had a global presence, they did not reach the billion-dollar sales figure needed to make the final list. According to Jane Perrin, managing director of global services for A. C. Nielsen, many companies call their brands "global" and Nielsen is trying to set some standards regarding the use of the term. She stresses that there is a difference between a global product or portfolio of brands and a global brand. To meet Nielsen's definition of the latter, consumers should be able to find the same product with the same name around the world.
Many marketers and advertising executives are questioning the criteria used by Nielsen for a brand to achieve global status. One agency executive notes: "Global branding does not mean having the same brand everywhere. It means having an overarching strategy that optimizes brand effectiveness in local, regional, and international markets." He notes that one soap formula sold under different names can achieve global brand status—as long as the marketing efforts are managed centrally.
Many companies aspire to labeling their products "global brands," and marketers are likely to continue to use the term to describe products that are sold in foreign markets. However, A. C. Nielsen hopes that its study will bring some common understanding to what global brand truly is and will ensure that companies rightfully claim the moniker.
Sources: A. C. Nielsen Global Services, "Reaching the Billion Dollar Mark: A Review of Today's Global Brands." September 2001; "AC Nielsen Study Finds 43 Brands Have Billion Dollar Presence," news release, acnielsen.com; Shelly Branch, "AC Nielsen Gives 43 Brands Global Status," The Wall Street Journal, Oct. 31, 2001, p. B8.
The primary focus of this book so far has been on integrated marketing communications programs for products and services sold in the U.S. market. Many American companies have traditionally devoted most of their marketing efforts to the domestic market, since they often lack the resources, skills, or incentives to go abroad. This is changing rapidly, however, as U.S. corporations recognize the opportunities that foreign markets offer for new sources of sales and profits as well as the need to market their products internationally. Many companies are striving to develop global brands that can be advertised and promoted the world over.
In this chapter, we look at international advertising and promotion and the various issues marketers must consider in communicating with consumers around the globe. We examine the environment of international marketing and how companies often must adapt their promotional programs to conditions in each country. We review the debate over whether a company should use a global marketing and advertising approach or tailor it specifically for various countries.
We also examine how firms organize for international advertising, select agencies, and consider various decision areas such as research, creative strategy, and media selection. While the focus of this chapter is on international advertising, we also consider other promotional mix elements in international marketing, including sales promotion, personal selling, publicity/public relations, and the Internet. Let's begin by discussing some of the reasons international marketing has become so important to 658 companies.
One of the major developments in the business world during the decade of the 90s was the globalization of markets. The emergence of a largely borderless world has created a new reality for all types of companies. Today, world trade is driven by global competition among global companies for global consumers. With the development of faster communication, transportation, and financial transactions, time and distance are no longer barriers to global marketing. Products and services developed in one country quickly find their way to other countries where they are finding enthusiastic acceptance. Consumers around the world wear Nike shoes and Calvin Klein jeans, eat at McDonald's, shave with Gillette razors, use Apple and Dell computers, drink Coca-Cola and Pepsi Cola soft drinks and Starbucks coffee, talk on cellular phones made by Nokia and Motorola, and drive cars made by global automakers such as Ford, Honda, and Nissan.2
Companies are focusing on international markets for a number of reasons. Many companies in the U.S. and Western Europe recognize that their domestic markets offer them limited opportunities for expansion because of slow population growth, saturated markets, intense competition, and/or an unfavorable marketing environment. For example, U.S. tobacco companies face declining domestic consumption as a result of restrictions on their marketing and advertising efforts and the growing antismoking sentiment in this country. Companies such as R. J. Reynolds and Philip Morris are turning to markets outside the United States such as Asia and South America, where higher percentages of people smoke, nonsmokers are far more tolerant of the habit, opposition is less organized, and consumers are less litigious.3 Many U.S.-based brewers, among them Anheuser-Busch and Coors, are looking to international markets to sustain growth as beer sales in the United States decline and regulatory pressures increase. However, these brewers are facing strong competition from foreign companies that are also targeting international markets. For example, in 2002 the Miller Brewing Co. was purchased by South African Breweries, whose largest markets are in Asia and Africa. The acquisition gives SAB access to the U.S. beer market while expanding opportunities for Miller brands in global markets.4
Many companies must focus on foreign markets to survive. Most European nations are relatively small in size and without foreign markets would not have the economies of scale to compete against larger U.S. and Japanese companies. For example, Swiss-based Nestlé and Netherlands-based Unilever are two of the world's largest consumer-product companies because they have learned how to market their brands to consumers in countries around the world. Two of the world's major marketers of cellular telephones are from Scandinavian countries. Nokia is based in Finland and Ericsson is located in Sweden. Australia's tourist industry is a major part of its economy and relies heavily on visitors from other countries. Australia's major tourist markets experienced dramatic declines in visitors following the global economic downturn in the tourist industry after the terrorist attacks of September 11.5 Exhibit 20-1 shows an ad used by the Australian Tourist Commission to attract visitors from abroad.
Companies are also pursuing international markets because of the opportunities they offer for growth and profits. The dramatic economic, social, and political changes around the world in recent years have opened markets in Eastern Europe and China. China's joining of the World Trade Organization in 2001 has provided foreign competitors with access to 1.2 billion potential Chinese consumers, and Western marketers are eager to sell them a variety of products and services.6 The growing markets of the Far East, Latin America, and other parts of the world present tremendous opportunities to marketers of consumer products and services as well as business-to-business marketers.
Many companies in the United States as well as in other countries have long recognized the importance and potential profitability of international markets.
The Importance of International Markets
Exhibit 20-1 The
Australian Tourist Commission promotes the country as a tourist destination
Exhibit 20-1 The
Australian Tourist Commission promotes the country as a tourist destination
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