Marketing Case study Paper

59

Customizing global marketing

"The big issue today is not whether to go global but how

to tailor the global marketing concept to fit each business."

John A. Quelch and Edward /. Hoff

In the best of all possible worlds, mar- keters would only have to come up with a great product and a convincing marketing program and they would have a worldwide winner. But despite the obvious economies and efficiencies they could gain with a stan- dard product and program, many managers fear that global marketing, as popularly defined, is too extreme to be practical. Because customers and competitive conditions differ across countries or because powerful local managers will not stand for centralized decision making, they argue, global marketing just won't work.

Of course, global marketing has its pit- falls, but it can also yield impressive advantages. Stan- dardizing products can lower operating costs. Even more important, effective coordination can exploit a company's best product and marketing ideas.

Too often, executives view global mar- keting as an either/or proposition-either full standard- ization or local control. But when a global approach can fall anywhere on a spectrum from tight worldwide coordination on programming details to loose agree- ment on a product idea, why the extreme view? In ap- plying the global marketing concept and making it work, flexibility is essential. Managers need to tailor the approach they use to each element of the business system and marketing program. For example, a manu- facturer might market the same product under differ- ent brand names in different countries or market the same brands using different product formulas.

Mr. Quelch is an associate professor of business administration at the Harvard Business School where he teaches in the new Multinationa} Marketing Management executive program. This is his sixth HBR arti- cle, the last being "How to Build a Product Licensing Pro- gram" (May-June 1985).

Mr. Hoff is a PhD candidate in business economics at Harvard University. He was an instructor in marketing at the Harvard Business School, which awarded him a Dean's Doctoral Fellowship to complete his PhD.

The big issue today is not whether to go global but bow to tailor the global marketing concept to fit each business and how to make it work. In this article, we'll first provide a framework to help manag- ers think about how they should structure the different areas of the marketing function as the business shifts to a global approach. We will then show how compa- nies we have studied are tackling the implementation challenges of global marketing.

How far to go

How far a company can move toward global marketing depends a lot on its evolution and tra- ditions. Consider these two examples:

n Although the Coca-Cola Company had conducted some international business before 1940, it gained true global recognition during World War 11, as Coke bottling plants followed the march of U.S. troops around the world. Management in Atlanta made all strategic decisions then-and still does now, as Coca- Cola applies global marketing principles, for example, to the worldwide introduction of Diet Coke. The hrand name, concentrate formula, positioning, and advertis- ing theme are virtually standard worldwide, but the ar- tificial sweetener and packaging differ across countries. Local managers are responsible for sales and distribu- tion programs, which they run in conjunction with lo- cal bottlers.

n The Nestle approach also has its roots in history. To avoid distribution disruptions caused by wars in Europe, to ease rapid worldwide expansion, and to respond to local consumer needs. Nestle granted its local managers considerable autonomy from the out-

Harvard Business Review May-Iunc 1986

set. Wbile the local managers still retain mucb of that decision-making power today, Nestle headquarters at Vevey has grown in importance. Nestle has transferred to its central marketing staff many former local manag- ers who had succeeded in their local Nestle husinesses and who now influence country executives to accept standard new product and marketing ideas. The trend seems to be toward tighter marketing coordination.

To conclude that Coca-Cola is a global marketer and Nestle is not would be simplistic. In Ex- hibit I, we assess program adaptation or standardiza- tion levels for each company's business functions, products, marketing mix elements, and countries. Each company has tailored its individual approach. Further- more, as Exhibit I can't show, the situations aren't static. Readers can themselves evaluate their own cur- rent and desired levels of program adaptation or stan- dardization on these four dimensions. The gap between the two levels is the implementation challenge. The size of the gap-and the urgency with which it must be closed-will depend on a company's strategy and finan- cial performance, competitive pressures, technological change, and converging consumer values.

Four dimensions of global marketing

Now let's look at the issues that arise when executives consider the four dimensions shown in Exhibit I in light of the degree of standardization or adaptation that is appropriate.

Business (unctions. A company's ap- proach to global marketing depends, first, on its overall business strategy. In many multinationals, some func- tional areas have greater program standardization than others. Headquarters often controls manufacturing, fi- nance, and RikD, while the local managers make the marketing decisions. Marketing is usually one of the last tunctions to be centrally directed. Partly because product quality and accounting data are easier to mea- sure than marketing effectiveness, standardization can be greater in production and finance.

Products. Products that enjoy high scale economies or efficiencies and are not highly culture- bound are easier to market globally than others.

1 Economies or efficiencies. Manufactur- ing and R&D scale economies can result in a price spread between the global and the local product that is too great for even the most culture-bound consumer to resist. In addition, management often has neither the time nor the Ri^D resources to adapt products to each

country. The markets for high-tech products like com- puters are not only very competitive but also affected by rapid technological change.

Most packaged consumer goods are less susceptible than durable goods like televisions and cars to manufacturing or even R&D economies. Coca- Cola's global policy and Nestle's interest in tighter marketing coordination are driven largely by a desire to capitalize on the marketing ideas their managers around the world generate rather than by potential scale economies. Nestle, for example, manufactures its packaged soups in dozens of locally managed plants around the world, with some transference of engineer- ing know-how through a headquarters staff. Products and marketing programs are also locally managed, but new ideas are aggressively transferred, with local man- agers encouraged-or even prodded-to adapt and use them in their own markets. For Nestle, global market- ing does not so much yield high manufacturing econo- mies as high efficiency in using scarce new ideas.

2 Cultural grounding. Consumer products used in the h o m e - like Nestle's soups and frozen foods - a r e often more culture-bound than products used outside the home such as automobiles and credit cards, and industrial products are inherently less culture- bound than consumer products. (Products like personal computers, for example, are often marketed on the ba- sis of performance benefits that share a common tech- nical language worldwide.) Experience also suggests that products will be less culture-bound if they are used by young people whose cultural norms are not ingrained, people who travel in different countries, and ego-driven consumers who can be appealed to through myths and fantasies shared across cultures.

Exhibit I lists four combinations of the scale economy and cultural grounding variables in or- der of their susceptibility to global marketing. Manag- ers shouldn't be bound by any matrix, however; they should find creative ways to prepare a product for glob- al marketing. If a manufacturer develops a new version of a seemingly culture-bound product that is based on new capital-intensive technology and generates supe- rior performance benefits, it may well be possible to introduce it on a standard basis worldwide. Procter & Gamble developed Pampers disposable diapers as a global brand in a product category that intuition would say was culture-bound.

Marketing mix elements. Few consumer goods companies go so far as to market the same prod- ucts using the same marketing program worldwide. And those that do, like Lego, the Danish manufacturer of construction toys, often distribute their products through sales companies rather than full-fledged mar- keting subsidiaries.

Global marketing 61

Exhibit I Global marketing planning matrix: how far to go

Adaptation

Full Partial

Standardization

Partiai Full

Business functions

Products

Research and development

Finance and accounting

Manufacturing

Procurement

Marketing

Low cultural grounding High economies or efficiencies

Low cultural grounding Low economies or efficiencies

High cultural grounding High economies or efficiencies

High cultural grounding Low economies or efficiencies

Marketing mix elements

Product design

Countries Region 1

Region 2

Nestle Coca-Cola

62 Harvard Business Review May-]une 1986

For most products, the appropriate de- gree of standardization varies from one element of the marketing mix to another. Strategic elements like product positioning are more easily standardized than execution-sensitive elements like sales promotion. In addition, when headquarters believes it has identified a superior marketing idea, whether it be a package de- sign, a brand name, or an advertising copy concept, the pressure to standardize increases.

Marketing can usually contribute to scale economies most significantly by creating a stan- dard product design that will sell worldwide, permit- ting savings through globalized production. In addi- tion, scale economies in marketing programming can be achieved through standard commercial executions and copy concepts. McCann-Erickson claims to have saved $90 million in production costs over 20 years by producing worldwide Coca-Cola commercials. To en- sure that they have enough attention-getting power to overcome their foreign origins, however, marketers of- ten have to make worldwide commercials expensive productions.

To compensate local management for having to accept a standard product and to fit the core product to each local market, some companies allow local managers to adapt those marketing mix elements that aren't subject to significant scale economies. On the other hand, local managers are more likely to ac- cept a standard concept for those elements of the mar- keting mix that are less important and, ironically, often not susceptible to scale economies. Overall, then, the driving factor in moving toward global marketing should be the efficient worldwide use of good market- ing ideas rather than any scale economies from stan- dardization.

In judging how far to go in standardizing elements of the marketing mix, managers must also be mindful of the interactions among them. For example, when a product with the same brand name is sold in different countries, it can be difficult and sometimes impossible to sell them at different prices.

Countries. How far a decentralized multinational wishes to pursue global marketing will often vary from one country to another. Naturally, headquarters is likely to become more involved in marketing decisions in countries where performance is poor. But performance aside, small markets depend more on headquarters assistance than large markets. Because a standard marketing program is superior in quality to what local executives, even with the benefit of local market knowledge, could develop themselves, they may welcome it.

Large markets with strong local man- agements are less willing to accept global programs. Yet these are the markets that often account for most of the company's investment. To secure their accep-

tance, headquarters should make standard marketing programs reflect the needs of large rather than small markets. Small markets, being more tolerant of devia- tions from what would be locally appropriate, are less likely to resist a standard program.

As we've seen, Coca-Cola takes the same approach in all markets. Nestle varies its approach in different countries depending on the strength of its market presence and each country's need for assis- tance. In completing the Exhibit I planning matrix, management may decide that it can sensibly group countries by region or by stage of market development.

Too far too fast

Once managers have decided how glob- al they want their marketing program to be, they must make the transition. Debates over the size of the gap between present and desired positions and the speed with which it must be closed will often pit the field against headquarters. Such conflict is most likely to arise in companies where the reason for change is not apparent or the country managers have had a lot of autonomy. Casualties can occur on both sides:

n Because Black &. Decker dominated the European consumer power tool market, many of the company's European managers could not see that a more centrally directed global marketing approach was needed as a defense against imminent Japanese compe- tition. To make his point, the CEO had to replace sev- eral key European executives.

n In 1982, the Parker Pen Company, forced by competition and a weakening financial position to lower costs, more than halved its number of plants and pen styles worldwide. Parker's overseas subsidiary managers accepted these changes but, when pressed to implement standardized advertising and packaging, they dug in their heels. In 1985, Parker ended its much heralded global marketing campaign. Several senior headquarters managers left the company.

If management is not careful, moving too far too fast toward global marketing can trigger painful consequences. First, subsidiary managers who joined the company because of its apparent commit- ment to local autonomy and to adapting its products to the local environment may become disenchanted. When poorly implemented, global marketing can make the local country manager's job less strategic. Second, disenchantment may reinforce not-invented- here attitudes that lead to game playing. For instance, some local managers may try bargaining witb head-

Global marketing 63

quarters, trading the speed with which they will accept and implement the standard programs for additional budget assistance. In addition, local managers compet- ing for resources and autonomy may devote too much attention to second-guessing headquarters' "hot but- tons." Eventually the good managers may leave, and less competent people who lack the initiative of their predecessors may replace them.

A vicious circle can develop. Feeling compelled to review local performance more closely, headquarters may tighten its controls and reduce re- sources without adjusting its expectations of local managers. Meanwhile, local managers trying to gain approval of applications for deviations from standard marketing programs are being frustrated. The expand- ing headquarters hureaucracy and associated overhead costs reduce the speed with which the locals can re- spond to local opportunities and competitive actions. Slow response time is an especially serious problem with products for which barriers to entry for local com- petitors are low.

In this kind of system, weak, insecure local managers can become dependent on headquarters for operational assistance. They'll want headquarters to assume the financial risks for new product launches and welcome the prepackaged marketing programs. If performance falls short of headquarters' expectations, the local management can always blame the failure on the quality of operational assistance or on the standard marketing program. The local manager who has clear autonomy and profit-and-loss responsibility cannot hide behind such excuses.

If headquarters or regions assume much of the strategic burden, managers in overseas subsidi- aries may think only about short-term sales. This focus will diminish their ability to monitor and communi- cate to headquarters any changes in local competitors' strategic directions. When their responsibilities shift from strategy to execution, their ideas will become less exciting. If the field has traditionally been as important a source of new product ideas as the central R6LD lab- oratory, the company may find itself short of the grass- roots creative thinking and marketing research infor- mation that R&X) needs. The fruitful dialogue that characterizes a relationship between equal partners will no longer flourish.

How to get there

when thinking about closing the gap between present and desired positions, most execu- tives of decentralized multinationals want to accom- modate their current organizational structures. They

rightly view their subsidiaries and the managers who run them as important competitive strengths. They generally do not wish to transform these organizations into mere sales and distribution agencies.

How then in moving toward global mar- keting can headquarters build rather than jeopardize relationships, stimulate rather than demoralize local managers? The answer is to focus on means as much as ends, to examine the relationship between the home office and the field, and to ask what level of headquar- ters intervention for each business function, product, marketing mix element, and country is necessary to close the gap in each.

As Exhibit U indicates, headquarters can intervene at five points, ranging from informing to directing. The five intervention levels are cumulative; for headquarters to direct, it must also inform, per- suade, coordinate, and approve. Exhibit U shows the approaches Atlanta and Vevey have taken. Moving from left to right on Exhibit 11, the reader can see that things are done increasingly by fiat rather than patient persuasion, through discipline rather than education. At the far right, local subsidiaries can't choose whether to opt in or out of a marketing program, and headquar- ters views its country managers as subordinates rather than customers.

When the local managers tightly con- trol marketing efforts, multinational managers face three critical issues. In the sections that follow, we'll take a look at how decentralized multinationals are working to correct the three problems as they move along the spectrum from informing to directing.

Inconsistent brand identities. If head- quarters gives country managers total control of their product lines, it cannot leverage the opportunities that multinational status gives it. The increasing degree to which consumers in one country are exposed to the company's products in another won't enhance the cor- porate image or brand development in the consumers' home country.

Limited product focus. In the decentral- ized multinational, the field line manager's ambition is to become a country manager, which means acquiring multiproduct and multifunction experience. Yet as the pace of technological innovation increases and the like- lihood of global competition grows, multinationals need worldwide product specialists as well as execu- tives willing to transfer to other countries. Nowhere is the need for headquarters guidance on innovative orga- nizational approaches more evident than in the area of product policy.

Slow new product launches. As global competition grows, so does the need for rapid world- wide rollouts of new products. The decentralized multinational that permits country managers to proceed at their own pace on new product introduc-

64 Harvard Business Review May-June 1986

Exhibit II Global marketing planning matrix: how to get there

Informing Persuading Coordinating Approving Directing

Business functions

Products Low cuiturai grounding Higfi economies or efficiencies

Low cuiturai grounding Low economies or efficiencies

High cuiturai grounding High economies or efficiencies

iHigh cuiturai grounding Low economies or efficiencies

Marketing mix elements

Product design

Countries Region 1

Region 2

Country E

Nesti6 Coca-Coia

Global marketing

tions may be at a competitive disadvantage in this new environment.

Word of mouth

The least threatening, loosest, and therefore easiest approach to global marketing is for headquarters to encourage the transfer of information between it and its country managers. Since good ideas are often a company's scarcest resource, headquarters efforts to encourage and reward their generation, dis- semination, and application in the field will build both relationships and profits. Here are two examples:

n Nestle publishes quarterly marketing newsletters that report recent product introductions and programming innovations. In this way, each sub- sidiary can learn quickly about and assess the ideas of others. (The best newsletters are written as if country organizations were talking to each other rather than as if headquarters were talking down to the field.)

• Johnson Wax holds periodic meetings of all marketing directors at corporate headquarters twice a year to build global esprit de corps and to encourage the sharing of new ideas.

By making the transfer of information easy, a multinational leverages the ideas of its staff and spreads organizational values. Headquarters has to be careful, however, that the information it's passing on is useful. It may focus on updating local managers about new products, when what they mainly want is infor- mation on the most tactical and country-specific ele- ments of the marketing mix. For example, the concen- tration of the grocery trade is much higher in the United Kingdom and Canada than it is in the United States. In this case, managers in the United States can leam from British and Canadian country managers about how to deal with the pressures for extra mer- chandising support that result when a few powerful re- tailers control a large percentage of sales. Likewise, marketers in countries with restrictions on mass me- dia advertising have developed sophisticated point-of- purchase merchandising skills that could he useful to managers in other countries.

By itself, however, information sharing is often insufficient to help local executives meet the competitive challenges of global marketing.

Friendly persuasion

Persuasion is a first step managers can take to deal with the three problems we've outlined.

Any systematic headquarters effort to influence local managers to apply standardized approaches or introduce new global products while the latter retain their decision-making authority is a persuasion ap- proach.

Unilever and CPC International, for ex- ample, employ world-class advertising and marketing research staff at headquarters. Not critics but coaches, these specialists review the subsidiaries' work and try to upgrade the technical skills of local marketing de- partments. They frequently visit the field to dissemi- nate new concepts, frameworks, and techniques, and to respond to problems that local management raises. (It helps to build trust if headquarters can send out the same staff specialists for several years.)

Often, when the headquarters of a de- centralized multinational identifies or develops a new product, it has to persuade the country manager in a so-called prime-mover market to invest in the launch. A successful launch in the prime-mover market will, in turn, persuade other country managers to introduce the product. The prime-mover market is usually se- lected according to criteria including the commitment of local management, the probabilities of success, the credibility with which a success would be regarded hy managers in other countries, and its perceived trans- ferahility.

Persuasion, however, has its limitations. Two problems recur with the prime-mover approach. First, hy adopting a wait-and-see attitude, country managers can easily turn down requests to be prime- mover markets on the grounds of insufficient resources. Since the country managers in the prime-mover mar- kets have to risk their resources to launch the new products, they're likely to tailor the product and mar- keting programs to their own markets rather than to global markets. Second, if there are more new products waitmg to be launched than there are prime-mover markets to launch them, headquarters product special- ists arc likely to give in to a country manager's de- mands for local tailoring. But hecause of the need for readaptation in each case, the tailoring may delay roll- outs in other markets and allow competitors to pre- empt the product. In the end, management may sacri- fice long-term worldwide profits to maximize short- term profits in a few countries.

Marketing to the same drummer

To overcome the limits of persuasion, many multinationals are coordinating their marketing programs, whereby headquarters has a structured role in both decision making and performance evaluation that is far more influential than person-to-person per- suasion. Often using a matrix or team approach, head-

66 Harvard Business Review May-June 1986

quarters shares with country managers the responsi- bility and authority for programming and personnel decisions.

Nestle locates product directors as well as support groups at headquarters. Together they de- velop long-term strategies for each product category on a worldwide basis, coordinate worldwide market re- search, spot new product opportunities, spark the field launch of new products, advise the field on how head- quarters will evaluate new product proposals, and spread the word on new products' performance so that other countries will he motivated to launch them. Even though the product directors arc staff executives with no line authority, hecause they have all been suc- cessful line managers in the field, they have great cred- ibility and influence.

Country managers who cooperate with a product director can quickly become heroes if they successfully implement a new idea. On the other hand, while a country manager can reject a product director's advice, headquarters will closely monitor his or her performance with an alternative program. In addition, within the product category in which they specialize, the directors have influence on line management ap- pointments in the field. Local managers thus have to he concerned about their relationships with head- quarters.

Some companies assign promising local managers to other countries and require would-be local managers to take a tour of duty at headquarters. But such personnel transfer programs may run into barri- ers. First, many capable local nationals may not he in- terested in working outside their countries of origin. Second, powerful local managers are often unwilling to give up their best people to other country assignments. Third, immigration regulations and foreign service re- location costs arc burdensome. Fourth, if transferees from the field have to take a demotion to work at head- quarters, the costs in ill will often exceed any gains in cross-fertilization of ideas. If management can resolve these problems, however, it will find that creating an international career path is one of the most effective ways to develop a global perspective in local managers.

To enable their regional general manag- ers to work alongside the worldwide product directors, several companies have moved them from the field to the head office. More and more companies require re- gional managers to reach sales and profit targets for each product as well as for each country within their regions. In the field, regional managers often focus on representing the views of individual countries to head- quarters, hut at headquarters they become more con- cerned with ensuring that the country managers are correctly implementing corporatewide policies.

Recently, Fiat and Philips N.V, among others, consolidated their worldwide advertising into a single agency. Their objectives are to make each prod-

uct's advertising more consistent around the world and to make it easier to transfer ideas and information among local agency offices, country organizations, and headquarters. Use of a single agency (especially one that bills all advertising expenditures worldwide) also symholizes a commitment to global marketing and more centralized control. Multinationals shouldn't, however, use their agencies as Trojan horses for greater standardization. An undercover operation is likely to jeopardize agency-client relations at the country level.

While working to achieve global coordi- nation, some companies are also trying to tighten coor- dination in particular regions:

n Kodak recently experimented by con- solidating 17 worldwide product line managers at cor- porate headquarters. In addition, the company made marketing directors in some countries responsihle for a line of business in a region as well as for sales of all Kodak products in their own countries. Despite these new appointments, country managers still retain profit-and-loss responsihility for their own markets.

Whether a matrix approach such as this broadens perspectives rather than increases tension and confusion depends heavily on the corporation's co- hesiveness. Such an organizational change can clearly communicate top management's strategic direction, but headquarters needs to do a persuasive selling joh to the field if it is to succeed.

n Procter & Gamble has established so- called Euro Brand teams that analyze opportunities for greater product and marketing program standardiza- tion. Chaired by the brand manager from a "lead coun- try," each team includes hrand managers from other European subsidiaries that market the brand, managers from P&G's European technical center, and one of P&G's three European division managers, each of whom is responsihle for a portfolio of brands as well as for a group of countries. Concerns that the larger sub- sidiaries would dominate the teams and that decision making would either he paralyzed or produce "lowest common denominator" results have proved groundless.

Stamped & approved

By coordinating programs with the field, headquarters can balance the company's local and glob- al perspectives. Even a decentralized multinational may decide, however, that to protect or exploit some corpo- rate asset, the center of gravity for certain elements of the marketing program should be at headquarters. In such cases, management has two options: it can send clear directives to its local managers or permit them to develop their own programs within specified parame-

Global marketing 67

ters and subject to headquarters approval. With a prop- erly managed approval process, a multinational can exert effective control without unduly dampening the country manager's decision-making responsibility and creativity.

Procter & Gamble recently developed a new sanitary napkin, and P&G International desig- nated certain countries in different geographic regions as test markets. The product, brand name, positioning, and package design were standardized globally. P&.G International did, however, invite local managers to suggest how the global program could be improved and how the nonglobal elements of the marketing program should be adapted in their markets. It approved changes in several markets. Moreover, local managers developed valuable ideas on such programming specifics as sam- pling and couponing techniques that were used in all other countries, including the United States.

Nestle views its brand names as a major corporate asset. As a result, it requires all brands sold in all countries to be registered in the home country of Switzerland. While the ostensible reason for this re- quirement is legal protection, the effect is that any product developed in the field has to be approved by Vevey. The head office has also developed detailed guidelines that suggest rather than mandate how brand names and logos should appear on packaging and in advertising worldwide (with exceptions subject to its approval). Thus the country manager's control over the content of advertising is not compromised, and the company achieves a reasonably consistent presenta- tion of its names and logos worldwide.

The project team countered that by capi- talizing on potential scale economies, its pan-European marketing and manufacturing programs would be supe- rior to any programs the subsidiaries could develop by themselves. Furthermore, it maintained, the already developed pan-European program was available off the shelf. The European sales manager, who was a project team member, discovered that the salespeople as well as tradespeople in the target countries wero much more enthusiastic about the proposed program than the field marketing managers. So management devised a special lure for the managers. The project team offered to sub- sidize the first-year advertising and promotion expen- ditures of countries launching Sista. Six countries agreed. To ensure their commitment now that their financial risk had been reduced, the sales manager in- vited each accepting country manager to nominate a member to the project team to develop the final pro- gram details.

By 1982, the Sista line was sold in 52 countries using a standard marketing program. The Sista launch was especially challenging because it in- volved the extension of a product and program already developed for a single market. The success of the Sista launch made Henkel's field managers much more re- ceptive to global marketing programs for subsequent new products.

Motivating the field

Doing it the headquarters way

Multinationals that direct local manag- ers' marketing programs usually do so out of a sense of urgency. The motive may be to ensure either that a new product is introduced rapidly around the world be- fore the competition can respond or that every man- ager fully and faithfully exploits a valuable marketing idea. Sometimes direction is needed to prove that global marketing can work. Once management makes the point, a more participative approach is feasible.

In 1979, one of Henkel's worldwide mar- keting directors wanted to extend the successful Sista line of do-it-yourself sealants from Germany to other European countries where the markets were underde- veloped and disorganized as had once been the case in Germany. A European headquarters project team vis- ited the markets and then developed a standard mar- keting program. The country managers, however, ob- jected. Since the market potential in each country was small, they said, they did not have the time or resources to launch Sista.

Taking into account the nature of their products and markets, their organizational structures, and their cultures and traditions, multinationals have to decide which approach or combination of approaches, from informing to directing, will best answer their stra- tegic objectives. Multinational managers must realize, however, that local managers are likely to resist any pre- cipitate move toward increased headquarters direction. A quick shift could lower their motivation and perfor- mance.

Any erosion in marketing decision mak- ing associated with global marketing will probably be less upsetting for country managers who have not risen through the line marketing function. For example, lohn Deere's European headquarters has developed advertis- ing for its European country managers for more than a decade. The country managers have not objected. Most are not marketing specialists and do not see advertising as key to the success of their operations. But for coun- try managers who view control of marketing decision making as central to their operational success, the tran- sition will often be harder. Headquarters needs to give the field time to adjust to the new decision-making

Harvard Business Review May-June 1986

processes that multiuountry brand teams and other new organizational structures require. Yet management must recognize that even with a one- or two-year tran- sition period, some turnover among field personnel is inevitable. As one German headquarters executive commented, "Those managers in the field who can't adapt to a more global approach will have to leave and run local breweries."

Here are five suggestions on how to motivate and retain talented country managers when making the shift to global marketing:

1 Encourage field managers to generate ideas. This is especially important when R&D efforts are centrally directed. Use the best ideas from the fit-Id in global marketing programs (and give recogni- tion to the local managers who came up with them}. Unilever's South African subsidiary developed Impulse body spray, now a global brand. R.J. Reynolds revital- ized Camel as a global brand after the German subsidi- ary came up with a successful and transferable posi- tioning and copy strategy

2 Ensure that the field participates in the development of the marketing strategies and programs for global brands. A bottom-up rather than top-down approach will foster greater commitment and produce superior program execution at the country level. As we've seen, when P&G International introduced its sanitary napkin as a global brand, it permitted local managers to make some adjustments in areas that were not seen as core to the program, such as coupon- ing and sales promotion. More important, it encouraged them to suggest changes in features of the core global program.

3 Maintain a product portfolio that in- cludes, where scale economies permit, local as well as regional and global brands. While Philip Morris's and Seagram's country managers and their local advertis- ing agencies are required to implement standard pro- grams for each company's global brands, the managers retain full responsibility for the marketing programs of their locally distributed brands. Seagram motivates its country managers to stay interested in the global hrands by allocating development funds to support lo- cal marketing efforts on these brands and by circulat- ing monthly reports that summarize market perfor- mance data by brand and country.

4 Allow country managers continued con- trol of their marketing budgets so they can respond to local consumer needs and counter local competition. When British Airways headquarters launched its £13 million global advertising campaign, it left intact the £18 million worth of tactical advertising budgets that country managers used to promote fares, destinations, and ttiur packages specific to their markets. Because most of the country managers had exhausted their pre- vious year's tactical budgets and were anxious for fur-

ther advertising support, they were receptive to the global campaign even though it was centrally directed.

5 Emphasize the general management re- sponsibilities of country managers that extend beyond the marketing function. Country managers who have risen through the line marketing function often don't spend enough time on local manufacturing operations, industrial relations, and government affairs. Global marketing programs can free them to focus on and de- velop their skills in these other areas. ^

The universal drink In the postwar years, as Coca-Cola strove mightily to consolidate its territorial gains, its efforls were received with mixed feelings. When limited produc- tion for civilians got under way in the Philippines. armed guards had to be assigned to the trucks carl- ing Coke from bottlers to dealers, to frustrate thirsty outlaws bent on hijacking it. In the Fiji Islands, on the other hand. Coca-Cola itself was outlawed, at the instigation of soft-drink purveyors whose busi- ness had been ruined by the Coke imported for the solace of G.l.s during the war. Most of the opposi- tion to the beverage's tidal sweep, however, was centered in Europe, being provoked by the beer and wine interests, or by anti-American political interests, or by a poweriul blend of oenology and ideology. Today, brewers m England. Spain, and Sweden are themselves bottling Coke, on the if- you-can't-lick-'em-join-'em principle.... In Western Europe, Coca-Cola has had to fight a whole series of battles, varying according to the terrain, not all of which have yet been won, though victory seems to be in sight. Before Coca-Cola got rolling in West Germany, for instance, it had to go to court to halt the nagging operations of something called the Coordination Office for German Beverages, which was churning out defamatory pamphlets with titles like "Coca-Cola, Karl Marx, and the Imbecility of the Masses" and the more succinct "Coca-Cola? No!" In Denmark, lobbyists for the brewers chivied the Parliament into taxing cola-containing beverages so heavily that it would have been economically absurd to try to market Coke there.... At last word, the Danes were about to relent, though. But in Bel- gium the caps on bottles of Coke, including bottles sold at the Brussels Fair, have had to carry, in letters bigger than those used for Coca-Cola," the forbid- ding legend "Contient de la cafeine."

From THE BIG ORINK (Random House) «n959byE.J.Kahn.Jr Originally in The New Yorker

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