Global Marketing
Global marketing can be defined
as “marketing on a worldwide scale by reconciling or taking commercial
advantage of global operational differences, similarities, and opportunities in
order to achieve global objectives.”
Global marketing is not a revolutionary shift; rather, it is an evolutionary process. Although the stages described below may not apply to every company, they generally represent the progression followed by many companies that initially operate only in their domestic markets.
1. Domestic Marketing
Domestic marketing refers
to marketing activities that are restricted to the political boundaries of a
particular country.
A company engaged only in
domestic marketing primarily focuses on competition within its home market.
Even when some of its competitors are foreign companies, the company generally
considers only those competitors operating in its domestic market.
The major challenge faced by
domestic marketers is the possibility of being blindsided by emerging global
competitors. Since they generally do not pay close attention to
developments in the global marketplace, they may fail to recognize a potential
competitor that is already a market leader across several continents.
Domestic marketers can be
described as ethnocentric, as they are primarily concerned with their
company's performance and reputation within their home country.
2. International Marketing
International marketing
begins when a company's export operations become successful, but conducting
business from its headquarters creates challenges such as high operating
costs, time-zone differences, language barriers, and limited understanding of
foreign cultures. These factors may reduce the company's competitiveness in
international markets.
To overcome these challenges, a
company may establish offices or subsidiaries in foreign countries. In
some cases, companies may acquire existing firms in foreign markets to benefit
from their established business relationships, retail outlets, factories,
distribution networks, and personnel.
Although these foreign offices
continue to report to the headquarters in the home country, many marketing-mix
decisions are made locally, because employees in each country have a better
understanding of the needs, preferences, and characteristics of their target
market.
International marketers are
therefore considered polycentric, because they recognize that different
countries and markets have different needs and require different marketing
strategies.
Elements of the Global Marketing Mix
The “Four Ps” of
marketing—Product, Price, Place, and Promotion— are all affected as a company
progresses through the various evolutionary stages of becoming a global
organization.
At the global marketing level, a
company that aims to communicate with one consistent voice across different
markets faces several challenges when developing a worldwide marketing
plan. These challenges become more complex when the company does not hold the
same competitive position in every market—for example, being a market leader in
one country but a low-cost competitor or a challenger in another.
1. Product
A global company aims to create a
standardized product that can be marketed across different countries
while making necessary modifications to suit local market requirements.
For example, Coca-Cola
uses different formulations in some markets, including versions made with sugar
and others made with corn syrup. Its packaging also varies from country to
country. The contour bottle design may include the local language, while
the size and packaging formats are adapted to match the beverage containers
commonly used in each market.
Thus, global companies attempt to
achieve a balance between product standardization and local adaptation.
2. Price
Price varies from one market
to another and is influenced by numerous factors. These include the cost of
product development, whether the product is manufactured locally or imported,
the cost of ingredients or raw materials, transportation expenses, tariffs,
taxes, distribution costs, and other market-specific factors.
The company's competitive
positioning also influences pricing. Whether the product is positioned as a
premium or high-end offering, an economical low-cost option, or a product in
between helps determine the appropriate price point for each market.
Therefore, global companies must
develop pricing strategies that take into account both global objectives and
local market conditions.
3. Place (Placement)
Place refers to how and where
a product is distributed and made available to customers. Distribution
decisions are generally influenced by the characteristics of each country's
market, consumer habits, infrastructure, and competitive environment.
Using Coca-Cola as an example,
not every culture or market relies on vending machines to the same
extent. Similarly, beverage distribution methods differ across countries. In
the United States, beverages may be sold in large quantities through
warehouse-style retail stores, whereas such a distribution approach may not be
equally suitable in India.
Therefore, placement decisions
must be adapted to local market conditions while also considering the
product's competitive position and target customers.
4. Promotion
After product research,
development, and creation, promotion is often one of the largest components
of a global company's marketing budget.
A global corporation generally
aims to reduce costs, minimize duplication of work and personnel, accelerate
implementation, and maintain a consistent global brand message.
However, communicating the same
core message across different countries presents a significant challenge.
Cultural differences, languages, consumer preferences, media habits, and local
market conditions can affect how a message is received.
Therefore, the key challenge for
a global company is to communicate a consistent brand message in a relevant,
engaging, culturally appropriate, and cost-effective manner.
Advantages of Global Marketing and Advertising
Global marketing and advertising
provide several important benefits to organizations operating across
international markets. By coordinating marketing activities on a global scale,
companies can reduce costs, strengthen their brand image, improve efficiency,
and take advantage of opportunities across different markets.
1. Lower Marketing Costs
Global marketing can help
companies reduce marketing costs by developing common strategies,
advertising campaigns, promotional materials, and communication programs that
can be adapted and used across multiple countries.
2. Greater Power and Scope
Operating in international
markets gives a company greater market power and broader reach. A global
presence can strengthen the company's competitive position, increase its
customer base, and provide access to a wider range of markets and resources.
3. Consistency in Brand Image
Global marketing helps maintain a
consistent brand image across different countries. Using similar brand
elements, messages, logos, and communication strategies enables customers
worldwide to recognize and associate the brand with the same values and
identity.
4. Uniformity of Marketing
Practices
Global marketing encourages a
greater degree of uniformity in marketing practices. Common approaches
to advertising, branding, product positioning, and promotional activities can
improve coordination and make it easier for companies to manage their
international operations.
5. Benefits of eMarketing over
Traditional Marketing
eMarketing provides
several advantages over traditional marketing, particularly for companies
operating globally. Digital platforms allow businesses to reach customers
across different countries quickly and at relatively lower costs. Companies can
also target specific customer segments, measure campaign performance, interact
directly with consumers, and modify campaigns in real time.
6. Economies of Scale in
Production and Distribution
Global operations enable
companies to achieve economies of scale by producing and distributing
products in larger quantities. Higher production volumes can reduce the average
cost per unit, while coordinated distribution systems can lower transportation,
storage, and other operating costs.
7. Ability to Leverage Good
Ideas Quickly and Efficiently
Global companies can identify
successful ideas in one market and quickly adapt or implement them in other
markets. This allows organizations to share knowledge, successful
advertising campaigns, innovative products, and effective marketing practices
across their international operations.
Disadvantages of Global Marketing and Advertising
Although global marketing and
advertising provide several advantages, companies operating in international
markets also face a number of challenges. Differences in markets, cultures,
regulations, consumer behavior, and competitive conditions can make it difficult
to apply a single marketing strategy worldwide.
1. Differences in
Administrative Procedures
Administrative procedures,
regulations, legal requirements, taxation systems, and business practices vary
from country to country. These differences can make it difficult for companies
to standardize their marketing and advertising activities across
international markets.
2. Differences in Product
Placement
The methods and channels used to
distribute and present products may differ significantly across countries.
Differences in retail structures, distribution networks, infrastructure,
consumer shopping habits, and market conditions can require companies to
adopt different product-placement strategies.
3. Differences in Consumer
Response to Marketing Mix Elements
Consumers in different countries
may respond differently to product, price, place, and promotion. An
advertising campaign or promotional strategy that is successful in one market
may not produce the same results in another because of differences in culture,
values, preferences, and purchasing behavior.
4. Differences in Consumer
Needs, Wants, and Usage Patterns
Consumer needs, wants,
preferences, and product-usage patterns vary across countries. Factors such
as culture, income levels, climate, lifestyle, traditions, and social values
influence consumer behavior. Therefore, a standardized product or marketing
strategy may not satisfy customers equally in every market.
5. Differences in
Administrative Procedures and Product Placement
The combination of different
administrative requirements and distribution practices can create additional
challenges for global companies. Organizations may need to modify their
operating procedures, distribution systems, and marketing activities to
comply with local requirements and effectively reach consumers.
6. Differences in Brand and
Product Development
The process of brand building
and product development may differ across international markets. Products
that are successful in one country may require modification in another to meet
local consumer expectations, cultural preferences, regulations, or market
conditions.
7. Differences in the
Competitive Environment
The competitive environment
varies from country to country. A company may be a market leader in one country
but face strong competition from established local or international brands in
another. Differences in competitors, market share, pricing strategies, and
competitive intensity can therefore make it difficult to follow a uniform
global marketing strategy.
DAGMAR Approach
The DAGMAR advertising model
was proposed by Russell H. Colley in 1961. DAGMAR is an acronym for Defining
Advertising Goals for Measured Advertising Results.
Colley identified 52
advertising goals that could be applied to a single advertisement, an
annual advertising campaign for a product, or the overall advertising
philosophy of a company.
DAGMAR is essentially an approach
to advertising planning that provides a precise method for defining,
selecting, and quantifying advertising objectives and using those objectives to
measure advertising performance.
The approach places particular
emphasis on measurement and clearly defined objectives. It encourages
advertisers to establish objectives that are specific, operational, and
measurable so that the effectiveness of an advertising campaign can be
evaluated objectively.
The Four Steps of DAGMAR
According to the DAGMAR approach,
a potential customer generally passes through four stages before making
a purchase:
1. Awareness
The first step is to create awareness.
The consumer must become aware of the existence of the brand, product, or
company.
2. Comprehension
Once awareness has been created,
the consumer must develop an understanding of the product, including
what it is, what it offers, and what benefits it provides.
3. Conviction
At this stage, the consumer
develops a positive mental attitude or conviction toward the brand. The
consumer becomes persuaded that the product can satisfy a particular need and
develops an intention to purchase it.
4. Action
The final stage is action,
in which the consumer actually takes the desired action, such as purchasing
the product.
ACCA Formula
The four stages of DAGMAR are
also known as the ACCA advertising formula:
A → Awareness → C →
Comprehension → C → Conviction → A → Action
DAGMAR is considered a descendant
of the AIDA advertising model and is often regarded as more comprehensive
because it places greater emphasis on specific objectives and the
measurement of advertising effectiveness.
Importance of DAGMAR
The DAGMAR approach:
- Helps advertisers define clear and measurable
advertising objectives.
- Provides a framework for measuring advertising
effectiveness.
- Maps the states of mind through which a
consumer passes before taking action.
- Helps evaluate whether an advertising campaign has
achieved its intended communication objectives.
- Makes advertising planning more systematic,
objective, and measurable.
Characteristics or Objectives of the DAGMAR Approach
The DAGMAR approach emphasizes
the development of clear, specific, and measurable advertising objectives.
The major characteristics of effective DAGMAR objectives are as follows:
1. Concrete and Measurable
The communication task or
objective should be a precise statement of what the advertiser wants to
communicate to the target audience. The objective should clearly specify the
desired communication outcome and should also include a method for measuring
whether the objective has been achieved.
2. Well-Defined Target
Audience
A key principle of DAGMAR is that
the target audience must be clearly defined. For example, if the
objective is to increase brand awareness, the advertiser must know exactly which
group of consumers is being targeted.
A reliable benchmark cannot be
established unless the target market or audience segment is clearly specified.
3. Benchmark and Degree of
Change Sought
Another important aspect of
setting advertising objectives is establishing a benchmark measure. The
benchmark indicates where the target audience stands at the beginning of the
advertising campaign with respect to communication variables such as:
- Awareness
- Knowledge
- Attitudes
- Brand image
- Understanding
The advertiser can then determine
the degree of change desired and measure the progress achieved during or
after the campaign.
4. Specified Time Period
Every advertising objective
should specify a time period within which the objective is expected to be
achieved, such as six months or one year.
The time period should be
appropriate to the nature and complexity of the communication objective. Simple
objectives, such as increasing brand awareness, may be achieved
relatively quickly, whereas more complex objectives, such as repositioning a
brand, may require considerably more time.
5. Written Goal
Finally, advertising objectives
should be clearly written down. Written objectives help identify
shortcomings, eliminate misunderstandings, and ensure that the objective
contains all the essential elements of the DAGMAR approach.
A clearly documented goal also
makes it easier to evaluate whether the advertising campaign has achieved its
intended results.
Criticism of the DAGMAR Approach
Although DAGMAR provides a
systematic framework for setting and measuring advertising objectives, it has
been criticized on several grounds.
1. Problems with the Response
Hierarchy
DAGMAR assumes that consumers
move through a sequence of stages—from awareness and comprehension to
conviction and action. In reality, consumer behavior may not always follow
this linear sequence. Consumers may purchase a product without passing through
every stage in the expected order.
2. Focus on Sales Objectives
DAGMAR primarily focuses on communication
objectives, such as awareness, comprehension, and attitude change, rather
than directly on sales. However, advertisers and managers are often more
interested in the actual sales and profits generated by advertising.
3. Practicality and Costs
Implementing DAGMAR can be time-consuming
and expensive because it requires clearly defined objectives, benchmark
measurements, research, and post-campaign evaluation. Smaller organizations may
find such detailed measurement difficult or costly.
4. Inhibition of Creativity
The strong emphasis on specific,
measurable objectives may sometimes restrict the creative freedom of
advertising professionals. Excessive focus on measurable outcomes could
discourage innovative or unconventional advertising ideas whose impact may be
difficult to quantify immediately.
Hierarchy-of-Effects Model
Among the various theories of
advertising, the Hierarchy-of-Effects Model is one of the most widely
recognized models. It explains the different stages through which
advertising influences consumers and shows how advertising can gradually
move consumers from awareness to purchase.
The model can be represented in
the form of a pyramid. At the lower levels, advertising objectives focus
on creating awareness, knowledge, and comprehension. Once these
objectives are achieved, subsequent objectives aim to move potential customers
toward higher levels of the pyramid, such as liking, preference, conviction,
and ultimately purchase.
It is generally easier to
accomplish advertising objectives at the base of the pyramid than those
at the higher levels. As consumers move upward toward more action-oriented
objectives, the number of prospective customers tends to decrease. Thus,
while many consumers may become aware of a product, fewer may develop a
preference for it, and an even smaller number may ultimately purchase and
regularly use it.
Stages of the Hierarchy-of-Effects Model
1. Awareness
If most members of the target
audience are unaware of a product or brand, the communicator's first task is to
create awareness. This may involve establishing basic brand or
product-name recognition through simple messages and repeated exposure.
However, merely capturing a
consumer's attention does not necessarily mean that the consumer will notice,
remember, or recognize the brand name. Therefore, advertising must be
designed to make the brand clearly identifiable.
2. Knowledge
The target audience may be aware
of the product but may not know much about it. Therefore, the next stage
involves developing brand knowledge.
Advertising should communicate
information such as:
- What are the brand's key benefits?
- What specific appeals does the brand offer?
- How is it different from competitors?
- Who is the target market?
- Why should consumers consider the brand?
The objective is to provide
sufficient information for consumers to develop a meaningful understanding of
the brand.
3. Liking
Once consumers know about the
product, the next question is: How do they feel about it?
If the target audience has an
unfavorable attitude toward the product, the communicator must identify the
reasons for this negative perception. If the problem is related to the actual
product, the company must first correct or improve the product before
communicating its renewed quality or benefits through advertising.
4. Preference
Consumers may like a product but
still prefer competing brands. At this stage, the communicator's
objective is to build consumer preference for the brand.
This can be achieved by
emphasizing factors such as:
- Quality
- Value
- Performance
- Features
- Benefits
- Competitive advantages
The aim is to make the brand more
attractive than competing alternatives.
5. Conviction
A consumer may prefer a
particular product but may still lack the confidence or conviction to
purchase it.
At this stage, the communicator's
task is to strengthen the consumer's belief that the product is the right
choice and encourage a strong intention to buy.
6. Purchase
Finally, some consumers may have
developed both preference and conviction but may still postpone the
actual purchase. They may want additional information, wait for a suitable
opportunity, or simply plan to purchase at a later time.
The communicator's task is to
encourage these consumers to take the final step toward purchase. This
can be achieved through techniques such as:
- Offering a special price or discount
- Providing a premium or promotional benefit
- Offering product trials or samples
- Providing additional information
- Creating a sense of urgency
Hierarchy of Consumer Response
The complete sequence can be
summarized as:
Awareness → Knowledge → Liking
→ Preference → Conviction → Purchase
The model therefore explains how
advertising can gradually move consumers from knowing about a brand to
developing positive attitudes and ultimately taking purchasing action.
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