International Marketing REPORT
ibrhim4
week_5_-_understanding_international_consumers.pptxChapter 5 Understanding international consumers
Prepared by Alistair Hodgson & Robin Roberts
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Key Themes
Following this lecture and reading Chapter 5, you should be able to:
Describe how the international marketplace is changing dynamically and, as a result of this, understand the role that consumer behaviour plays in international marketing
Discuss the status of the standardisation/ customisation debate
Key Themes
Identify factors affecting consumer purchase and consumption patterns in international markets
Discuss the emergence of a global consumer culture and global consumers [this topic returns to last week’s content]
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Overview
Consumer behaviour is at the centre of all marketing efforts – both domestic and international
Many key factors have affected the international marketplace
economic, financial, political, legal, cultural (Weeks 1-4)
The combination of many of these factors can affect consumer wants and needs around the world
This was hopefully evident from the first few lectures
Refer to header: Overview
Understanding the unique behaviour of consumers is integral to developing a marketing strategy that best provides value to the consumer, irrespective of whether the organisation is marketing to consumers in a domestic, regional or international market, or to consumers globally.
Every person forms a preference and a purchasing behaviour with an organisation based on the numerous messages they receive from it, as well as an attitude about its products and services based on the experiences they have with it.
Those attitudes are based on an equation that weighs prices again quality and performance.
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Scene Setter (Exporting Wine to China)
Concerns over export of wine from Australia in general (globally)
Pressures due to strength of the Australian dollar
Oversupply of budget wines
However, Chinese consumers are focused towards the higher end of Australian wines
Distribution issues in China though (knowledge of products, finding buyers)
Fears over ‘dumping’ of Australian wines
Having a good understanding of international consumers can enable companies to access opportunities in new markets
The changing international marketplace
The marketplace is increasingly a global one
a long history of globalisation
recent incarnation is often tied to ‘Americanisation’
Consumerism can mainly be associated with recent trends in globalisation.
has been the source of anger and concern in some communities about the dilution of local cultures (mass concentration of economic power amongst large companies)
Disneyland Paris example from last week
others argue that globalisation delivers liberation to poorer classes and recognises real local effort
Increasing trend towards consumers looking for an ‘authentic’ experience (i.e. ecotourism)
Refer to header: The changing international marketplace
Globalisation has been the focus of both academic and practitioner research over the past four decades.
Economists, marketers, business strategists, linguists, IT experts and those studying popular culture have all contributed to a mounting body of knowledge on globalisation and its consequences.
Most aspects of everyday life are affected either directly or indirectly by this phenomenon. The food we eat, the fashions wear, the music we listen to, the media we consumer and even the words we use in everyday conversation have become imbued with some international flavour.
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Standardise or adapt?
The ongoing debate — keep the same or change?
Samsung more successful in emerging markets, due to product adaptation (low-end smartphones in particular)
central to the discussion of international marketing
Standardisation arguments tend to accept the idea that distinct, culturally-determined consumer preferences are becoming obsolete
Other arguments consider standardisation as a manifestation of increased access to global markets – standardisation makes more sense in terms of cost structures
Standardise — offering a uniform marketing strategy globally (minor modifications do occur though)
Refer to header: Standardise or adapt?
Since the 1960s the arguments for and against globalisation and the implications for marketing have become polarised.
Standardisation – a strategy of offering a uniform product across a region or worldwide with minor modifications to meet local regulations or market conditions.
This strategy of standardising is to down play cultural differences and regard the world as if it were a single, homogenous market; in effect, to ‘standardise’ or create a uniform global advertising approach.
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Standardise or adapt?
Adaptation
an approach used by organisations that focus on cross border differences in the needs and wants of an organisation’s target consumers
This occurs to varying degrees
Adaptation strategy
reflects a customer focus
meets local conditions
ultimately can increase consumer satisfaction
Possible damage to brand identity though (no unified sense of what a company represents)
Refer to header: Standardise or adapt?
Adaptation is an approach used by organisation that focus on cross border differences in the needs and wants of an organisation’s target consumers.
This strategy reflect a customer focus, where suitable changes are made to meet local conditions, to increase consumer satisfaction by adapting to local needs.
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Standardise or adapt?
Figure 5.1
Refer to header: Standardise or adapt?
This figure illustrates factors pulling firms to adapt and forces pulling firms to standardise
The figure also shows which factors within the 7P framework may need to be adapted or standardised.
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Standardise or adapt?
Is it possible to see additional nuance in this process, rather than just ‘standardise vs. customise’?
can we have a blend of the two?
Glocalise (Unilever, McDonald’s)
Compromise between brand identity and local responsiveness
can we make our local nature a key feature rather than a disadvantage?
Localise
Effective when points of difference offer a competitive advantage (tourism)
Refer to header: Standardise or adapt?
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Glocalisation versus localisation
Glocalisation
a strategy of offering a uniform product across a region or worldwide, with minor modifications to meet local regulations or market conditions
McDonald’s offer rice in Thailand, beer in France and Tofu burgers in India but still keeps the ‘Big Mac and Fries’ in all three markets
Also uses the same branding, operational approach, and similar promotion strategies
Refer to header: Standardise or adapt?
Glocalisation – efforts to optimise the balance and harmony of a organisation’s marketing activities at the operative, tactical and strategic levels in terms of standardisation, homogenisation, similarity, concentration, dependence, synchronisation and integration.
Balance of centralised decision-making with varying degrees of local autonomy and input.
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Glocalisation versus localisation
Localisation
a strategy that proposes that local organisations should capitalise on the ‘local culture and diversity’ to offer something different from global organisations
Dick Smith Food Products sells products based on their ‘Australian-ness’
Some companies just benefit from being associated with their country of origin, even if the product sold is similar to that offered by global competitors
i.e. Costa in the UK, benefited in particular when Starbucks was seen to be avoiding tax.
Refer to header: Standardise or adapt?
Localisation a strategy that proposes that local organisations should capitalise on the ‘local culture and diversity’ to offer something different from global organisations.
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Question
When does local knowledge or expertise help to sell a product or service? What types of product/service could this affect?
Glocalisation versus localisation
Figure 5.2
Refer to header: Standardise or adapt?
This figure illustrates four distinct quadrants using the two dimensions of degree of decision-making centralisation and advertising standardisation.
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Drivers of consumer behaviour
Values
Reference groups
Commercial and social information
Situational conditions
Demographics
Lifestyles
Motivation
Social class
Refer to header: Drivers of consumer behaviour
Consumers in different parts of the world lead extremely different lives, but they share many patterns of consumption.
Key drivers of consumer behaviour are now discussed in detail.
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Drivers of consumer behaviour
Values
Beliefs about what behaviour is desirable
Differences exist across cultures, as we discussed in last week’s lecture
Reference groups
Groups we look to for guidance in decisions
Parents, peers, colleagues and pop groups, to name just a few
Refer to header: Drivers of consumer behaviour
Values – beliefs about what behaviour is desirable.
Differences in values are discussed in chapter 4, in examining the international cultural environment.
Reference groups – the set of people to whom an individual looks for guidance in values and attitudes.
Reference groups provide consumers with a means to compare and evaluate their own purchasing behaviour.
This is also discussed in detail in Chapter 4.
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Drivers of consumer behaviour
Commercial and social information
Set of commercial sources that try to inform or persuade consumers directly or indirectly
companies, salespeople, friends, government, etc.
TEDx talk from the Head of Consumer Packaged Goods (CPG) at Google
Refer to header: Drivers of consumer behaviour
Commercial and social information – the set of commercial sources (e.g. family, friends, colleagues at work) who transmit information via word-of-mouth, email or private websites.
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Drivers of consumer behaviour
Situational conditions
Consumer influences that refer to:
timing of purchase of sale (consider timing of previous finance offer)
point of purchase (online vs. physical environment)
Oniomania (shopaholics) and the influence of online retail
What to do in developing countries where credit card facilities are not available?
Largely a response to banking trends in developing nations
Refer to header: Drivers of consumer behaviour
Situational conditions – consumer influences that refer to :
The terms and conditions of purchase (e.g. transactions on credit cards, lay-bys, interest-free periods), loyalty schemes and memberships and online shopping services
Time of purchase affecting consumptions patterns (e.g. seasonal differences, past and present events and consumption times)
Point of purchase noticeable through differences in locations and physical surroundings (e.g. atmosphere of retail stores, outdoor markets that affected by weather conditions) and social surroundings shown in the number, mix and actions of other people.
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Drivers of consumer behaviour
Demographics
Ageing populations in developed countries
Japan, Australia, USA
Half the population under 30 years of age
India, South Africa
Demographic structure particularly informs market segmentation, targeting, and positioning (Week 7)
What type of products will you offer? Who will these be offered to?
Refer to header: Drivers of consumer behaviour
Demographics – objective descriptors such as age, gender, household type, income and employment status.
These are discussed further in Chapter 7, in looking at how international marketers use demographic and lifestyle variables to segment their markets and position their products and services.
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Drivers of consumer behaviour
Lifestyles
An individual’s mode of living, involving activities, interests and opinions
Improving quality of life in some developing countries
Associated with rapidly-developing technologies
Refer to header: Drivers of consumer behaviour
Lifestyles – an individual’s mode of living, involving activities, interests and opinions. As noted previously, this is discussed in Chapter 7.
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Drivers of consumer behaviour
Motivation
The energising force that activates behaviour and provides purpose and direction to it
Maslow’s Hierarchy of Needs (a familiar model)
Motivations change with economic development – when basic needs are met, consumers focus on other aspects
Even when needs are universal (i.e. thirst, the need for water), the way in which this need is met can be different (these trends change over time too)
It is suggested that consumers buy motive satisfaction or problem solutions, rather than just a product
A fairly obvious point
Refer to header: Drivers of consumer behaviour
Motivation – we all seek different pleasures and spend our money in different ways.
However, the diversity in human behaviour often causes us to overlook that people are really much alike. Most people tend to experience the same kinds of needs and motives but express them in different ways.
Motivation – is an energising force that activates behaviour and provides purpose and direction to tat behaviour.
More simply, it is why a person does something.
It is suggested that ‘consumers do not buy products… they buy motive satisfaction or problem solutions’.
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Drivers of consumer behaviour
Social class
A hierarchical division of a society into relatively distinct groups with respect to attitudes, values and lifestyles
Class system is different in different locations
emerging middle class in developed countries
Vietnam, India, Indonesia
700 million in China by 2020
Implications for both consumer markets and product development (future entrepreneurialism)
Refer to header: Drivers of consumer behaviour
Social class can be defined as a ‘hierarchical division in society into relatively distinct and homogenous groups with respect to attitudes, values and lifestyles’.
However, it is suggested that the criteria used to define social class in developed countries are somewhat more difficult to use in rapidly developing and changing societies such as China, India, Indonesia and Vietnam.
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Evolving global consumer culture
Many of the globalisation arguments can be seen as the drivers of global consumer culture, including:
spread of capitalism
growth of global consumerism
proliferation of MNC’s marketing similar consumer goods around the world
Refer to header: Evolving global consumer culture
Consumer culture can be distinguished by the global marketing of virtually every good, service, image, idea and experience.
What constitutes global consumer culture?
Many of the globalisation arguments can be seen as the drivers of global consumer culture, including:
the spread of capitalism
the growth of global consumerism
the proliferation of MNC’s marketing consumer goods
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Evolving global consumer culture
The global brand
companies are seeing an increasing advantage to managing brand equity in a global context
Interbrand (world’s top 100 brands, 2013)
some groups choose one or two brands and pursue a global strategy for them
Fosters Beer (from the Fosters Group)
Louis Vuitton (from LVMH)
Refer to header: Evolving global consumer culture
One significant trend in consumer culture is the global spread of brands and consumption practices.
Every year Interbrand, an international brand consultancy, produces its top 200 global brands.
Even though there is some wrestling for positions in the lower orders, there is little change between the top ten, and they would be familiar to most people irrespective where they live (e.g. Coca-Cola, IBM).
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Emergence of a global consumer
Who is the global consumer?
is there even such a thing?
shows similarities to consumers from other markets
are consumers becoming more homogenised in an increasingly global world?
or are they truly different?
globalisation backlash > localisation
will certain trends even continue?
The ultimate questions for global marketers
Refer to header: Emergence of a global consumer
Consumer around the world display both similarities and differences depending on their cultural backgrounds, values, motives and demographics.
While standardisation / adaptation arguments continues, the focus of researchers and commentators will remain organisationally fixed on the international landscape and whether we are, as consumers, actually becoming more homogenised, forming part of a global consumer segment.
In recent years, the literature has presented us with examples of where this global consumer is taking home.
Some believe that there is such a person; others believe it is a myth.
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Emergence of a global consumer
Myth or reality?
are there really global segments?
do some people really view the world as a ‘single place’?
can some people really relate to others across the globe at some level?
what role does increased travel and communications play in this?
what role do media images have in this?
Refer to header: Emergence of a global consumer
The concept of a global consumer started to appear in the literature in the early 1980’s about the time the standardisation versus adaptation gained momentum.
Supporters propose a standardised strategic approach in international markets because of this emerging ‘global consumer’.
They conclude that the consequence of an increasing commonality in the lifestyle of consumer and education back ground has meant that consumers worldwide are starting to develop homogenised needs.
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Emergence of a global consumer
Global tribes
a strong ‘ethnic’ identity across markets that persists despite changes in the global economic and political order
a global network based on trust that operates beyond national borders
an openness to cultural and/or scientific development
The textbook suggests Gen-Y as a global tribe
Even this is a huge generalisation
‘Discount shoppers’ as a global tribe: evident in many parts of the world, but also cultural and economic influences
i.e. Aldi success in Germany (significant market share), the UK (strong growth through the GFC), and Australia (an emerging 3rd force in the grocery market but way behind Coles & Woolworths)
Refer to header: Emergence of a global consumer
The concept of tribalisation is not new.
Societies have been operating within a tribal structure for thousands of years.
However, while traditional tribal groups and their way of life are disappearing in some part so the world, a new concept of the ‘tribe’ is emerging.
Criteria characterising global tribes are:
A strong ethnic identify and sense of mutual independence that helps the group adjust to changes in the global economic and political order with out losing its essential unity.
A global network based on mutual trust that allows the tribe to function collectively beyond the confines of nation or regional borders.
A passion for technical and other knowledge from all possible sources, combined with an essential open mindedness that fosters rapid cultural and scientific development, critical for success in the current work economy.
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Summary
You should now have an understanding of:
How the international marketplace is changing and, as a result of this, understand the integral role that consumer behaviour plays in international marketing
The status of the standardisation/customisation debate
Refer to header: Summary
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Summary
The factors affecting consumer purchase and consumption patterns in international markets
The emergence of a global consumer culture and global consumers
Refer to header: Summary
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