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CHAPTER 14GLOBAL MARKETING COMMUNICATIONS DECISIONS II: SALES

PROMOTION, PERSONAL SELLING, SPECIAL FORMS OF MARKETING COMMUNICATION

SUMMARY

Sales promotion is any paid, short-term communication program that adds tangible value to a product or brand. Consumer sales promotions are targeted at ultimate consumers; trade sales promotions are used in business-to-business marketing. Sampling gives prospective customers a chance to try a product or service at no cost. A coupon is a certificate that entitles the bearer to a price reduction or other value-enhancing consideration when purchasing a product or service.

Personal selling is face-to-face communication between a prospective buyer and a company representative. The Strategic/Consultative Selling Model that is widely used in the United States is also being utilized worldwide. The model's five strategic steps call for developing a personal selling philosophy, a relationship strategy, a product strategy, a customer strategy, and a presentation strategy. The six steps in the presentation plan are: approach; presentation; demonstration; negotiation; close; and servicing the sale. Successful global selling may require adaptation of one or more steps in the presentation plan. An additional consideration in global selling is the composition of the sales force, which may include expatriates, host country natives, or sales agents.

Several others forms of communication can be used in global marketing. These include direct marketing, a measurable system that uses one or more media to start or complete a sale. One-to-one marketing is an updated approach to direct marketing that calls for treating each customer in a distinct way based on his or her previous purchase history or past interactions with the company. Direct mail, catalogs, infomercials, teleshopping, and interactive television are some of the direct marketing tools that have been successfully used on a global basis. Global marketers frequently try to place their products in blockbuster movies that will reach global audiences. Sponsorships and product placement are also becoming vital communication tools that can be used on a global basis.

OVERVIEW

In 2005, China’s Lenovo Group acquired IBM’s personal computer business for $1.25 billion. The acquisition vaulted China’s top computer company into third place among the world’s PC marketers, behind Dell and Hewlett-Packard.

The crown jewel in the acquisition was the popular ThinkPad, a laptop that features an exceptionally well-designed keyboard. Chief Executive Amelio was tasked with gradually eliminating the IBM logo as Lenovo built a global brand identity.

© 2011 Pearson Education, Inc. publishing as Prentice Hall304

Chief executive Amelio and his marketing team decided to use the Olympics as a vehicle for building awareness about the corporate name and its products. Lenovo paid more than $60 million to become China’s first Olympic sponsor.

Lenovo is also the computer provider for the 2008 Beijing Summer Olympics.

Sponsorships have been a crucial marketing tool for Lenovo as it rebrands the ThinkPad. When developing IMC solutions and strategies, global companies and advertising agencies are giving sponsorship and other forms of promotion an increasingly prominent role; in the first decade of the twenty-first century, worldwide expenditures on sales promotion are growing at double-digit rates.

Sales promotion, direct marketing, and specialized forms of marketing communication such as infomercials and the Internet are also growing in importance. Of course, personal selling remains an important promotional tool as well. Taken together, the marketing mix elements discussed in this chapter and Chapter 13 can be used to create highly effective integrated promotional campaigns that support global brands.

ANNOTATED LECTURE/OUTLINE

SALES PROMOTION

What is sales promotion?

Sales promotion refers to any paid consumer or trade communication program of limited duration that adds tangible value to a product or brand.

In a price promotion, tangible value may take the form of a price reduction, coupon, or mail-in refund.

Non-price promotions may take the form of free samples, premiums, "buy one, get one free" offers, sweepstakes, and contests.

Consumer sales promotions may be designed to make consumers aware of a new product, to stimulate nonusers to sample an existing product, or to increase overall consumer demand.

Trade sales promotions are designed to increase product availability in distribution channels.

At many companies, expenditures for sales promotion activities have surpassed expenditures for media advertising. At any level of expenditure, sales promotion is only one of several marketing communication tools. Sales promotion plans and programs should be integrated and coordinated with those for advertising, PR, and personal selling.


What are some of the advantages of using sales promotions?

Worldwide, there are several explanations for the increasing popularity of sales promotion as a marketing communication tool. In addition to providing an tangible incentive to buyers, sales promotions also reduce the perceived risk buyers may associate with purchasing the product.

From the point of view of the marketer, sales promotion provides accountability; the manager in charge of the promotion can immediately track the results of the promotion.

Overall, promotional spending is increasing at many companies as they shift advertising spending away from traditional print and broadcast advertising (Table 14-1)

As with other aspects of marketing communication, a key issue is whether promotion efforts should be directed by headquarters or left to local country managers.

Four factors have been identified that contribute to more headquarters involvement in the sales promotion effort: cost, complexity, global branding, and transnational trade:

1. As sales promotions command ever-larger budget allocations, headquarters naturally takes a greater interest. 2. The formulation, implementation, and follow-up of a promotion program may require skills that local managers lack. 3. The increasing importance of global brands justifies headquarters involvement to maintain consistency from country to country and ensure that successful local promotion programs are leveraged in other markets. 4. As mergers and acquisitions lead to increased concentration in the retail industry and as the industry globalizes, retailers will seek coordinated promotional programs from their suppliers.

What factors influence the degree to which sales promotions should be localized?

Local managers in the market know the specific local situation. A number of factors must be taken into account when determining the extent to which the promotion must be localized:

In countries with low levels of economic development, low incomes limit the range of promotional tools available.

Market maturity can be different from country to country; consumer sampling and coupons are appropriate in growing markets, but mature markets might require trade allowances or loyalty programs.

Local perceptions of a particular promotional tool or program can vary. Local regulations may rule out use of a particular promotion in certain countries

(see Table 14-2). Trade structure in the retailing industry can affect the use of sales promotions.


What is the difference between “sampling” and “couponing”?

Sampling

Sampling is a sales promotion technique that provides potential customers with the opportunity to try a product or service at no cost. Disadvantages associated with sampling: cost of sampling and difficulties in assessing the contribution a sampling program makes. Many companies utilize event marketing and sponsorships to distribute samples at concerts, sports events, or special events.

Compared with other forms of marketing communication, sampling is more likely to result in actual trial of the product.

Couponing

A coupon is a printed certificate that entitles the bearer to a price reduction or some other special consideration for purchasing a particular product or service.

Nearly 90 percent of all coupons are distributed in a printed ride-along vehicle known as a free-standing insert (FSI).

Sunday papers carry the vast majority of FSIs.

On-pack coupons are attached to, or part of, the product package; they can frequently be redeemed immediately at check out.

In-pack coupons are placed inside the package.

What is a cross coupon?

Cross coupons are distributed with one product but redeemable for a different product. For example, a toothpaste coupon might be distributed with a toothbrush.

Sales Promotion: Issues and Problems

As noted earlier, many companies are being more strategic in targeting their sampling programs. In the case of coupons, retailers must bundle the redeemed coupons together and ship them to a processing point. Many times, coupons are not validated at the point of purchase; fraudulent redemption costs marketers hundreds of millions of dollars each year.


Companies must take extreme care when formulating and executing sales promotions. In some emerging markets, sales promotion efforts can raise eyebrows if companies appear to be exploiting regulatory loopholes and lack of consumer resistance to intrusion.

One implication for marketing in developing countries is that, despite cultural differences, increased availability of promotions will result in higher levels of consumer utilization. PERSONAL SELLING

Personal selling is person-to-person communication between a company representative and a prospective buyer.

The seller's communication effort is focused on informing and persuading the prospect, with the short-term goal of making a sale and with a longer-term goal of building a relationship with that buyer.

Effective personal selling in a salesperson’s home country requires building a relationship with the customer; global marketing presents additional challenges because the buyer and seller may come from different national or cultural backgrounds. It is especially important in marketing industrial products that may be expensive and technologically complex.

It is difficult to overstate the importance of a face-to-face, personal selling effort for industrial products in global markets.

Personal selling is a popular marketing communication tool in countries with various restrictions on advertising.

Personal selling is used frequently in countries where low wage rates allow large local sales forces to be hired. The cost effectiveness of personal selling in certain parts of the world has been a key driver behind the decision at many U.S. – based firms to begin marketing products and services overseas.

The challenge to companies that wish to pursue low-cost personal selling overseas is to establish and maintain acceptable quality among members of the sales team. The old saying, "You get what you pay for" has come to haunt more than one company that has undertaken global expansion.

The risks inherent in establishing a personal selling structure overseas remain today. The crucial issues is not whether in-country sales and marketing people can provide more benefit than a remote force. The issue is whether the country team should consist of in-country nationals or expatriates (also known as expats); that is, employees who are sent from their home countries to work abroad.

Environmental issues and challenges that may have an impact include:


Political risks. Unstable or corrupt governments can completely change the rules for the sales team.

Regulatory hurdles. Governments sometimes set up quota systems or impose tariffs that affect entering foreign sales forces.

Currency fluctuations. There have been many instances where a company's sales effort has been derailed not by ineffectiveness or lack of market opportunity, but by fluctuating currency values.

Market unknowns. When a company enters a new region of the world, its selling strategy may unravel because of a lack of knowledge of market conditions, the accepted way of doing business, or the positioning of its in-country competitors.

What are the steps involved in the Strategic/Consultative Selling Model?

The Strategic/Consultative Selling Model

Figure 14-2 shows the Strategic/Consultative Selling Model, which has gained wide acceptance in the United States. The model consists of five independent steps, each with three prescriptions that can serve as a checklist for sales personnel.

First, a sales representative must develop a personal selling philosophy. This requires a commitment to the marketing concept and a willingness to adopt the role of problem solver or partner in helping customers.

The second step is to develop a relationship strategy, which is a game plan for establishing and maintaining high-quality relationships with prospects and customers.

This step connects sales personnel directly to the concept of relationship marketing, an approach that stresses the importance of developing long-term partnerships with customers.

This step connects sales personnel directly to the concept of relationship marketing , an approach that stresses the importance of developing long-term partnerships with customers.

In developing personal and relationship strategies on an international level, the representative is wise to take a step back and understand how these strategies will likely fit in the foreign environment.

In many countries, people have only a rudimentary understanding of sales techniques; acceptance of those techniques may be low as well.

Sales representatives must understand that patience and a willingness to assimilate host-country norms and customers are important attributes in developing relationships built on respect.


The third step is the development of a product strategy. This results in a plan that can assist the sales representative in selecting and positioning products that will satisfy customer needs.

This step must include comprehension of the target market’s charactieristics and the fact that prevailing needs and wants may mandate products that are different than those offered in the home country.

Next is the customer strategy, a plan that ensures that the sales professional will be maximally responsive to customer needs.

The customer strategy step also includes building a prospect base, consisting of current customers as well as potential customers (or leads). A qualified lead is someone whose probability of wanting to buy the product is high.

The final step, the actual face-to-face selling situation, requires a presentation strategy.

What are the stages of the presentation plan?

This consists of setting objectives for each sales call and establishing a presentation plan to meet those objectives.

The presentation plan that is at the heart of the presentation strategy is divided into six stages: approach, presentation, demonstration, negotiation, closing, and servicing the sale. The relative importance of each stage can vary from country or region.

In the six-step presentation plan, the first step, approach, is the sales representative's initial contact with the customer or prospect. The most crucial element of the step is to completely understand the decision-making process and the roles of each participant, such as the decision maker, influencer, ally, or blocker.

In the presentation step, the prospect's needs are assessed and matched to the company's products. To communicate effectively with a foreign audience, the style and message of the presentation must be carefully thought out. In the United States, the presentation is typically designed to sell and persuade, whereas the intent of the international version should be to educate and inform

High-pressure tactics rarely succeed in global selling.

Next is the sales demonstration, during which the salesperson has the opportunity to tailor the communication effort to the customer and alternately tell and show how the product can meet the customer's needs.

During the presentation, the prospect may express concerns or objections about the product itself, the price, or some other aspect of the sale. Dealing with objections in an international setting is a learned art.


A common theme in sales training is the concept of active listening; in global sales, verbal and nonverbal communication barriers of the type discussed in Chapter 4 present special challenges.

Negotiation is required to ensure that both the customer and the salesperson come away from the presentation as winners. Some foreign customers consider American-style persistence (inferring tenacity) or arm-twisting can be consider rude and offensive.

Having completed the negotiation step, the sales representative is able to move on to the close and thus asks for the order.

Is the sale over with the “close”?

The final step is the servicing the sale. A successful sale does not end when the order is written.

To ensure customer satisfaction with the purchase, an implementation process must be outlined and a customer service program established .

Sales Force Nationality

As noted previously, a basic issue for companies that sell globally is the composition of the sales force in terms of nationality. It is possible to utilize expatriate salespersons, hire host- country nationals, or third- sales personnel. (Table 14-3).

The staffing decision is contingent on several factors, including management's orientation, the technological sophistication of the product, and the stage of economic development exhibited by the target country.

A company with an ethnocentric orientation prefers expatriates and adopts a standardized approach. (See Table 14-3)

Polycentric companies selling in developed countries use expatriates for hi-tech products; a host-country sales force is used for low-tech products.

In less developed countries, host-country nationals should be used for high tech- products and local agents for low-tech products. Wide diversity of sales force nationality is found in regiocentric companies.

Except for high-tech products in developed countries, third-country nationals are used in all situations.


In addition to the factors just cited management must also weigh the advantage and disadvantages of each nationality type (see Table 14-4). There are advantages and disadvantages of each nationality type:

Advantages: Expatriates possess a high level of product knowledge, a demonstrated commitment to service standards, training for promotion, and greater headquarters control.

Disadvantages: Expatriates are very expensive, turnover is high, language and cross-cultural training are costly.

An alternative is to build a sales force with host-country personnel: Advantages: economical, superior market knowledge, language skills, and

superior knowledge of local culture, and implementation is quicker. Disadvantages: needs product training, may be held in low esteem, language

skills may not be important, and it is difficult to ensure loyalty.

What is the advantage to hiring third country nationals?

A third option is to hire persons who are not natives or either the headquarters country or the host country; such persons are known as third country nationals.

Advantages: cultural sensitivity, language skills, economical, allows regional sales coverage.

Disadvantages: identity problems, blocked for promotions, income gaps, needs product and/or company training, loyalty not assured.

After much trial and error in creating sales forces, most companies today attempt to establish a hybrid sales force comprised of a balanced mix of expatriates and in-country nationals.

The operative word is balanced, as there remains the potential for conflict between the two groups.

This is the most expensive proposition since relocation of expats and extensive training of in-country nationals is required.

But short term costs are deemed necessary to do business and conduct personal selling overseas. A fourth option is to utilize the services of sales agents. Agents work under contract rather than as full-time employees.

It makes sense to set up one or more agents to gain entry to a selected country or region.

In a remote area where there is a lack of revenue, agents are retained on a permanent level (e.g., U.S., Asian and European companies with an Africa- sales presence use agents).


Agents are much less expensive than full-time employees and understand the market.

If success is achieved, agents can be replaced by employee-based teams; if the market is not financially viable, it is less costly to withdraw from an agent-oriented territory.

Other international personal selling approaches: Exclusive license arrangements: a firm pays commissions to an in-country

company’s sales force to conduct personal selling. Management-only agreements: a corporation manages a foreign sales force in a

mode similar to franchising. Joint ventures: Since many countries place restrictions on foreign ownership,

partnerships allow a company to obtain a personal sales capability and a customer base.

SPECIAL FORMS OF MARKETING COMMUNICATIONS: DIRECT MARKETING, SUPPORT MEDIA, EVENT SPONSORSHIP, AND PRODUCT PLACEMENT

What is direct marketing?

The Direct Marketing Association defines direct marketing as any communication with a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business. Companies use direct mail, telemarketing, television, print, and other media to generate responses and build databases filled with purchase histories and other information about customers.

By contrast, mass marketing communications are typically aimed at broad segments of consumers (see Table 14-5).

Don Peppers and Martha Rogers advocate an approach known as one-to-one marketing. One-to-one marketing calls for treating different customers differently based on their previous purchase history or past interactions with the company.

Define the four steps in one-to-one marketing.

Peppers and Rogers describe the four steps in one-to-one marketing as follows:1. Identify customers and accumulate detailed information about them.2. Differentiate customers and rank them in terms of their value to the company.3. Interact with customers to develop more cost efficient forms of interaction4. Customize the product or service offered to the customer.

Worldwide, the popularity of direct marketing has been steadily increasing in recent years. One reason is the availability of credit cards. Another reason is societal: dual-income families have money to spend but less time to shop; technological advances have made it easier for companies to reach customers directly (see Table 14-5).


One reason is that direct marketing programs can be readily made to conform to the “think global, act local” philosophy.

Rainer Hengst of Deutsche Post offers the following guidelines for U.S.-based direct marketers that wish to go global:

The world is full of people who are not Americans. Be sure not to treat them like they are.

Like politics, all marketing is local. Although there is an EU, there is no such thing as an "European." Pick your target, focus on one country, and do your homework. Customers need to be able to return products locally.

Direct Mail

Direct mail uses the postal service as a vehicle for delivering a personally addressed offer to a prospect targeted by the marketer.

Direct mail is popular with banks, insurance companies, and other financial services providers.

The United States is home to a well-developed mailing list industry.

The availability of good lists and the sheer size of the market are important factors in explaining why Americans receive more direct mail than anyone else.

Compared with the United States, list availability in Europe and Japan is much more limited.

Catalogs

A catalog is a magazine-style publication that features photographs, illustrations, and extensive information about a company’s products. Catalogs have a long and illustrious history as a direct marketing tool in both Europe and the United States.

U.S.-based catalog marketers include JC Penney, Lands' End, L.L. Bean, The Sharper Image, and Victoria's Secret.

Historically, catalogers in the United States benefited from the ability to ship goods from one coast to the other, crossing multiple state boundaries with relatively few regulatory hurdles.


Prior to the advent of the single market, catalog sales in Europe were hindered by the fact that mail order products passing through customs at national borders were subject to value-added taxes (VAT).

Today, the single market means that mail order goods can move freely throughout the EU without incurring VAT charges.

Since January 1993, VAT exemptions have been extended to goods bound to the European Free Trade Area countries (Norway, Iceland, Switzerland, and Liechtenstein).

In Japan, the domestic catalog industry is well developed.

Even as they continue to develop the Japanese market, Western catalogers are now turning their attention to other Asian countries. In Hong Kong and Singapore, efficient postal services, highly educated populations, wide use of credit cards, and high per capita income are attracting the attention of catalog marketers.

Infomercials, Teleshopping, and Interactive Television

An infomercial is a form of paid television programming in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number shown on the screen.

In Asia, infomercials generate several hundred million dollars in annual sales. Infomercials are also playing a part in the development of China’s market sector.

With teleshopping, home-shopping channels such as QVC and the Home Shopping Network (HSN) take the infomercial concept one step further; the round-the-clock programming is exclusively dedicated to product demonstration and selling.

Industry observers expect the popularity of home shopping will increase during the next few years as interactive television (ITV or t-commerce) technology is introduced into more households.

ITV allows television viewers to interact with the programming content that they are viewing.

Support Media

Traditional support media include transit and billboard advertising (see Table 14-6).

Outdoor advertising is growing at a faster rate than the overall advertising market. Worldwide spending on outdoor advertising amounts to about 6 percent of total ad


spending in Europe, 6.4 percent is allocated to outdoor, compared with 4 percent in the United States.

As countries add mass transportation systems and build and improve their highway infrastructures, advertisers are utilizing more indoor and outdoor posters and billboards to reach the buying public.

Sponsorship

Sponsorship is an increasingly popular form of marketing communications whereby a company pays a fee to have its name associated with a particular event, team or athletic association, or sports facility.

Sponsorship combines elements of public relations and sales promotion. Sponsorship can be used in countries where regulations limit the extent to which a

company can use advertising or other forms of marketing communication. Sponsorship can be an effective component of an integrated marketing

communications program. It can be used in countries where regulations limit the extent to which a company can use advertising or other forms of marketing communication.

Product Placement: Motion Pictures, Television Shows, and Public Figures

Why has product placement become such a big deal in motion pictures and television shows?

Companies can achieve a unique kind of exposure by using product placement: arranging for a company’s products and brand names to appear in popular television programs, movies, and other types of performances.

Marketers can also lend or donate products to celebrities or other public figures; the products get publicity when the celebrity appears in public using the product. This tactic is especially popular with auto manufacturers and fashion designers and is often used in conjunction with the Academy Awards and Grammys.

For the premiere of Superman Returns in 2006, Atkinson arranged for 35 Audis to chauffer Kevin Spacey and other stars to the event.

Worldwide audience figures for a blockbuster movie hit can equal tens of millions of people. In many instances, product placements generate considerable media interest and result in additional publicity.

Placements can be arranged in several different ways. Sometimes companies pay a fee for the placement; alternatively, a show’s producers will write the product into the script in exchange for marketing and promotion support of the new production.


A brand’s owner can also strike a barter agreement.

In the case of television placement, the blurring of advertising and programming content comes as companies increasingly question the effectiveness of traditional advertising. In fact, there is research evidence suggesting that a prominent product placement in a television program leads to better recall than a traditional ad.

Sometimes called branded entertainment, is the effective integration of products and brands with entertainment can be seen on the monster TV hit “American Idol.”

As the cost of marketing major films increase, studios are increasingly looking for partnerships to share the cost and attract the broadest possible viewing audience.

Product placement raises an interesting issue for global marketers: once footage of a scene is shot and incorporated into a movie or television, the image of the product is “frozen” virtually dictating a product standardization around the world.

When advertising appears in conventional forms most consumers are aware of the fact that they are being expose to an ad This is not necessarily the case with product placement; in effect, viewers are being marketed to subliminally without their consent.


DISCUSSION QUESTIONS

1. Briefly review how the main tools of sales promotion (e.g., sampling and couponing) can be used in global markets. What issues and problems can arise in different country markets?

Sampling is likely to result in actual trial of the product in global markets. For example, in China, shoppers are reluctant to buy untried, imported products at higher prices, so Procter & Gamble distributes free samples of shampoo and detergents. In the EU, couponing is widely used in the UK and Belgium. However, different countries have different regulations concerning coupon promotions as outlined in Table 14-2. Coupons face a cultural issue in Asia. Couponing is not as widely used in Asia where saving face is important; some Asians are reluctant to use coupons because doing so might bring shame upon them or their families.

2. What potential environmental challenges must be taken into account by a company that uses personal selling as a promotional tool outside the home country?

Environmental issues and challenges surface in implementing a personal selling strategy:

Political risks. Unstable or corrupt governments can change the rules for the sales team.

Regulatory hurdles. Many countries set up quotas, tariffs, and capricious rules that affect a foreign sales force.

Currency fluctuations. A sales effort can derailed by fluctuating currency values.

Market Unknowns. A lack of knowledge of market conditions, the accepted way of doing business, or the positioning of its in-country competitors affect a selling strategy.

3. Identify the six steps in the strategic/consultative selling model and the six-step presentation plan. Do these steps have global applicability, or are they only used for selling in the home-country market? What special challenges face a sales representative outside his or her home country?

The Strategic/consultative selling model consists of the following steps: Develop a personal selling philosophy: a commitment to the marketing

concept, a willingness to be a problem solver or partner, and a belief that selling is a valuable activity.

Develop a relationship strategy: a game plan for establishing and maintaining high-quality relationships with prospects and customers.

Develop a product strategy: a plan that assists the sales rep in selecting and positioning products that will satisfy customer needs.

Develop a customer strategy: a plan that makes the sales professional responsive to customer needs.


Develop a presentation strategy: objectives for each sales call and a presentation plan to meet those objectives.

The presentation plan is divided into six stages:

Approach. This is the sales representative's initial contact with the customer or prospect.

Presentation The prospect's needs are assessed and matched to the company's products.

Sales demonstration. The salesperson tailors the communication to the customer and shows how the product meets the customer's needs.

Negotiation. This step ensures that both the customer and the salesperson come away from the presentation as winners.

Close. The rep. asks for the order. Follow up. An implementation process (which may include delivery and

installation) must be outlined and a customer service program established.

These steps have global applicability, but the importance of each stage can vary by country or region. The challenge is to adapt to the culture of the foreign country. For example, in some countries, the approach is drawn out (e.g., in some parts Latin America and Asia, rapport development may take weeks, even months. Also, to communicate effectively with a foreign audience, the style and message must be carefully thought out. High-pressure tactics rarely succeed in global selling. American-style persistence inferring tenacity or arm-twisting is considered rude and offensive by some foreign customers.

Attitudes toward the degree of bluntness in making a request vary among countries. For example, In Latin America, a bold closing statement is respected, whereas in Asia, it is done with deference to the decision maker. Persistence often means endurance, a willingness to patiently invest months or years before an actual sale. For example, entering the Japanese market takes 3 to10 years.

4. How does management's orientation (e.g., ethnocentric, polycentric, or regiocentric) correlate with decisions about sales force nationality? What other factors affect sales force composition?

A company with an ethnocentric orientation prefers expatriates and adopts a standardized approach. Polycentric companies selling in developed countries use expatriates for hi-tech products; a host-country sales force is used for low-tech products. Wide diversity of sales force nationality is found in regiocentric companies. Factors that affect sales force composition include the development level of the country and the type of products sold. In less developed countries, host-country nationals should be used for hi-tech products and local agents for low-tech products.


5. Procter & Gamble (P&G) has a “golden store” program in Mexico and other emerging markets. P&G’s representatives visit participating stores to tidy display areas and arrange promotional material in prominent places. At first, P&G, used its own manufacturer’s sales force; now it relies on independent agents who buy inventory (paying in advance) and then resell the items to shopkeepers. Is this approach in line with the recommendations in Table 14-4?

Using host country sales people have key advantages and several disadvantages as noted in Table 14-4. The advantages are: economical, superior market knowledge, language skills, superior cultural knowledge, and can implement actions sooner. In Mexico, and other emerging markets, Proctor and Gamble products are packaged in single-use quantities at a relatively high per-unit cost. Mexicans tend to shop in tiny independent “mom-and-pop” stores called by P&G “high-frequency stores” so using this method of sales coverage is advantageous. Disadvantages include: Need for extensive product training, low esteem by host country, language skills not important, difficult to ensure loyalty.

6. What role does direct marketing have in a global company's promotion mix? Name three companies that have successfully used direct mail or other forms of direct-response advertising.

Direct marketing is designed to generate an order, a request for further information, and/or a visit to a store or other place of business. Direct mail is the primary marketing tool for retail specialists such as LL. Bean and Lands' End. In 2000, Nestlé launched a successful direct mail campaign in Malaysia that offered cat owners free samples of Friskies brand cat food, coupons for discounts on purchases of Friskies, and the opportunity to join the Friskies Cat Club.

7. Why are infomercials, sponsorship, and product placement growing in importance for global marketers?

Infomercials and home shopping television are important marketing communications channels for global marketers. Advertisers use infomercials and home shopping television to identify prospective buyers, support ad campaigns, and educate consumers by offering a demonstration. In Asia, infomercials generate several hundred million dollars in annual sales. Infomercials are playing a role in China. A number of local and regional teleshopping channels have sprung up in Europe.

An Olympic sponsorship can help a company reach a global audience (e.g., Sony recently became an official U.S. sponsor of the National Basketball Association for $10 million per year). Sponsorship can be used in countries where regulations limit advertising or other forms of marketing communication. In China, where tobacco advertising is prohibited, Philip Morris sponsors the Hong Kong-Beijing car rally.


CASES

Case 14-1: Lenovo: The Assignment

Overview: In 2005, China’s Lenovo Group acquired IBM’s personal computer business. President and CEO William J. Amelio’s task was to gradually eliminate the IBM logo as Lenovo built a global brand identity. Amelio and his marketing team decided to use the Olympics as a vehicle for building awareness about the corporate name and its products. Some observers have suggested that Lenovo is moving too quickly to distance itself from the IBM brand name. Amelio faces additional challenges, such as bridging cultural differences among the company’s far-flung employees and maintaining profitability.

1. In the third quarter of 2008, Lenovo posted a loss of nearly $100 million. Do you think that Olympic sponsorships pay off for companies such as Lenovo?

Student answers will vary depending upon the value they place in sponsorships, however, good students will note that sponsorships are an increasingly popular form of marketing communications and when used as a component of an integrated marketing communication strategy are quite effective. Better students will make the connection between the use of the Olympic sponsorship with the lack of an integrated communications strategy aimed at computer purchasers by Lenovo.

2. What is the biggest global marketing challenge facing Lenovo today?

For Lenovo, their biggest challenge is cultural. Their headquarters are located in the United States, although most of their employees are in China. Cultural communication issues such as the one noted in the case have to be addressed if the company is to forge ahead and be successful.

3. In 2009, as his three-year contract came to an end, Bill Amelio resigned as president and CEO of Lenovo. What nationality will the new chief executive likely be?Most likely the new CEO will be of Chinese nationality.

Case 14-2: Marketing an Industrial Product in Latin America

Overview: Business in every country has its own peculiarities. Culture and traditions influence such aspects as international trade relationship. In order to establish good relationships between both parties, the culture of each involved society must be learned. In the given case, the American sales manager didn’t want to adjust to Latin American way of business behavior and consequently lost a contract.

1. What impression do you think the sales manager made on the purchasing manger?

One of the rules that the attaché told the sales manager was to respect the culture and history of Latin America. By showing the ignorance concerning the history


and heritage of the country, the sales manager showed his disrespect to the purchasing manager and lost the respect accordingly. Respect is important in Latin America for both sides to trust each other and to do business. This case proved that one of the most important Latin American business rules is “No respect – no business.”

2. How would you critique the quality of the communication among all parties in this case?

Talking about the sales manager, he was too ethnocentric and didn’t want to accept cultural differences. However, I would not judge only the sales manager. The purchasing manager could also learn a little bit about the American way of doing business and find a compromise. Of course, the sales manager was in the asking position and could not set the rules, but to learn about the opposite side is the matter of respect.

3. Is a high-context culture or a low-context culture at work in this case? Explain your answer.

It’s a clash of a low-context and a high-context cultures that played a negative role in this case. The United States is a low-context culture where words mean everything and problems are solved when they appear without any delay. Latin American countries are high-context cultures where nonverbal communication and the respect to the opposing side mean a lot in making business decisions. The clash of cultures in this case couldn’t be resolved because none of the sides wanted to accept the difference of the other one and find a compromise.


TEACHING TOOLS AND EXERCISES

Additional Cases: “WE Marketing Group: Building a Global Marketing and Communications Company in China “. Ali Farhoomand; Kineta Hung; Grace Loo. HBS HKU734.

Activity: Students should be preparing or presenting their Cultural-Economic Analysis and Marketing Plan for their country and product as outlined in Chapter 1.

Out-of-Class Reading: Taylor, Charles R., George R. Franke, and Michael L. Maynard. "Attitudes toward Direct Marketing and Its Regulation: A Comparison of the United States and Japan." Journal of Public Policy & Marketing 19, no. 2 (Fall 2000), pp. 228-37.

Internet Exercise: Ethics and the Internet. Do you want regulation of the Internet? Explain your answer? If you favor regulation, what type of regulation of the Internet do you favor? What do you think is the most unethical practice currently on the Internet (if any)? Go to a business ethics resource website to explore issues in business ethics and marketing ethics (http://www.business-ethics.com/).

Guest Speaker: Invite a manager from a local department, specialty, or discount store to speak to the class about the use of sampling, coupons, special events, and other sales promotion tools.

SUGGESTED READINGS

BooksDeMooij, M. K. and Warren Keegan. Advertising Worldwide. London: Prentice Hall International, 1991.

Grey, Anne-Marie and Kim Skildum-Reid. The Sponsorship Seeker’s Toolkit. New York: McGraw-Hill, 2002.

ArticlesBlandauf, Artur, David W. Cravens, and Nigel F. Piercy. “Examining the Consequences of Sales Management Control Strategies in European Field Sales Organizations.” International Marketing Review 18, no. 5 (2001), pp. 474-508.

Gupta, Pola B. and Kenneth R. Lord. “Product Placement in Movies: The Effect of Prominence and Mode of Audience Recall.” Journal of Current Issues and Research in Advertising 20 (Spring 1998), pp. 47-60.

Gould, Stephen J., Pola B. Gupta, and Sonja Grabner-Krauter. "Product Placements in Movies: A Cross-Cultural Analysis of Austrian, French and American Consumers' Attitudes Toward this Emerging, International Promotional Medium." Journal of Advertising 29 no. 4 (Winter 2000) pp. 41-58.


http://www.business-ethics.com/

Hill, John S., Richard R. Still, and Unal O. Boya. “Managing the Multinational Sales Force.” International Marketing Review 8 (1991), pp. 19-31.

Honeycutt, Earl D. Jr., and John B. Ford. "Guidelines for Managing an International Sales Force." Industrial Marketing Management 24 (March 1995), pp. 135-144.

Kashani, Kamran, and John A. Quelch, "Can Sales Promotion Go Global?" Business Horizons (May-June 1990), pp. 37-43.

McGuinness, Dalton, Mike Brennan, and Philip Gendall. "The Effect of Product Sampling and Couponing on Purchase Behavior: Some Empirical Evidence," International Journal of Advertising 14, no. 3 (1995), pp. 219-230.

Samli, A. Coskun, Gregory P. Wirth, and James R. Wills, Jr. "High-Tech Firms Must Get More Out of Their International Sales Efforts." Industrial Marketing Management 23 (October 1994), pp. 333-342.

Wei, Chun-Chin, Sheen, Gwo-Ji, Tai, Cheng-Ting, Lee, Kuo-Liang. “Using Six Sigma to Improve Replenishment Process in a Direct Selling Company”. Supply Chain Management: An International Journal. 2010. v. 15, issue 1.


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