11121501 COMAS 2011 Winter - Global Marketing - Chap007 - Understanding Local Customers

8/3/2019 11121501 COMAS 2011 Winter - Global Marketing - Chap007 - Understanding Local Customers

1/39

Session 7

Understanding local customers


2/39

Outline

local buyer behaviour basics

the consumer decision process

local market research

how new brands change perceptions three market environments

summary


3/39

Local marketing

The marketer is not at company headquarters but abroad

And so must now

Analyse and segment the markets

Manage distribution channels

Position products and services

Develop effective promotions

Capture market share Increase sales


4/39

Some of the challenges / differences

Learning more about the environmental factors political,

financial, legal restrictions can create unexpected problems

Social and cultural networks of customers and competitors

work in new and different ways

Marketing infrastructure has developed differently so

wholesalers, retailers, advertising agencies and other

middlemen, agents etc may be quite different from

expectations

Different language(s) spoken by co-workers, different

agendas, different allegiances, different religion, different

behaviour


5/39

Focus is no longer on national boundaries

The market may or may not be the nation

It could be larger a free trade group of close countries,

Or, smaller, ethnic or urban subgroups within the country

Dont forget the importance of local knowledge!

The local marketer is there on-site - so there will also

relationships (communications) with a distant

headquarters to take into account


6/39

People (buyers?) are the same everywhere only different!

Customers may ultimately want the same things, but

specifically their product and service needs and preferences

may be very different

This is due to different cultural and socioeconomic andgeographic conditions

A marketer needs to understand what customers

specifically want as well as why customers and competitors

behave the way they do Technical marketing skills may be similar but what are

different are the conceptual skills to understand what

motivates the people


7/39

New skills needed

Imagination

Learning

Fresh ways of thinking about marketing

Some of this can be applicable in other markets

Some can usefully be used back at home to understand

buyer behaviour there better


8/39

Culture and buyer behaviour

marketing and materialism

built-in assumption? more and better goods will bring an

increase in consumers standard of living, an increase in their

satisfaction, and perhaps even more happiness

but, when anticipating customers reactions to new products

and increased product choices, note the limit on the

relationship between material affluence and personal

happiness [is more choice better?]

money cant buy you love


9/39

External

Influences

Culture

Economics

Technology

Politics

Buyer

characteristics

Models of ManProduct choice

Brand choice

Store choice

Supplier choice

Buyer Choices

Buyer

decisionprocess

Local

Marketing

Effort

Local buyer behaviour

If youre satisfied you tell a friend; if youre not satisfied, you tell 10


10/39

James Duesenberry - Relative Income hypothesis

consumers well-being is a function of how much income theyhave relative to their peer groups, not the actual income

[running away from lions; do you earn more than your wifes

brother? Promotion plateauing?]

Milton FriedmanPermanent income, defined as the

regularly expected income, is what determines an individuals

consumption [disposable incomeRothschild ]

Thorstein VeblenConspicuous consumption the notion

that people make purchases of expensive brands and products

[only expensive? what about high-tech?] in order to display

their ability to afford them



11/39


what does the product/service do for the buyer?

how does it fit into the consumption and use pattern of the

buyer?

what are the core benefits?

what is the perceived risk and how high is it? the core benefit often differs between local markets

the generic function of a product depends more on the

local environment than on innate individual preferences

buyers are GOAL-ORIENTED they buy for a reason

the point is to understand what that reason is


12/39

Problemrecognition

Search

Evaluation

ofalternatives

Choice Outcomes

The buyer decision process

or perhaps AIDA: Attention-Interest-Desire-Action

How rational are we? Decoy effect?


13/39


problem recognition

a problem is when an individual perceives a difference

between an ideal and an actual state of affairs

new products often lead to tension and a recognizedproblem

for the local marketer it is important to recognize that

education about the core benefits might be necessary in

order to create a demand for the product


14/39

The buyer decision processsearch

a consumers search for alternative ways to solve the problem isclosely related to his or her level of involvement with the product

category

for a product with which involvement is high, search tends

to be more comprehensive and time consuming for convenience and habit purchases, the decision process is

shorter, with little need for extensive searches or

alternative evaluations

search intensity is dependent on the perceived availability of the

alternative

one advantage for a product with high global brand

awareness is that initial distrust is easier to overcome


15/39


evaluation of alternatives

when a new product or service is in the consideration set

a highly involvedindividual will process the availableinformation matching the pros and cons of the alternatives

against preferences consumers can deal with multi-attribute evaluations in several

ways:

they can use gradually less-important features to successively

screen out alternatives a hierarchical decision rule

they can consider all features simultaneously:

a compensatory rule hard to do


16/39

Multi-attributeevaluation

(BI)

Preference

Behavioralintent

Choice

Socialnorms

Socialforces

Motivationto comply Situational

factors(P-O-P)

B = beliefs about product attributes; I = importance of the

beliefs; P-O-P = point of purchase

Fishbeins multi-attribute model


17/39

The buyer decision processchoice

the final choice of which alternative to select or try istypically influenced by social norms and by situationalfactors

social norms

where group pressures to comply are strong social normsinfluence is expected to override multiattributedevaluation

the social norms can be usefully analyzed by the

extended Fishbein model the social norms involve two aspects

social forces

motivation to comply


18/39

The buyer decision process outcomes

the main question about the outcomes revolves around thedegree of customer satisfaction

customer satisfactionis particularly important in maturemarkets where choices are many and the needs are already wellmet

satisfaction engenders loyaltyto the brand and to the company

because buying is typically a risky choice between differentbrands, the marketer has to make sure that the customer doesnot encounter cognitive dissonance, a sense of possibly making

the wrong choice [Festinger] one approach is to get satisfied customers to endorsethe

product, a common strategy in advertising [do endorsementsbring you closer or drive you away? G. Yafit? Amazonrecommendations? friends?]


19/39

A strong brand simplifies the decision process

reduces information search reduces perceived risk

places a brand in the evoked consideration set more easily

brand loyalty means decisions go fast

aglobal brandcan focus oninfluencing:

attitudes

social norms

P-O-P (Point-of-Purchase) behaviour


20/39

Problemdefinition

Sampling

Researchdesign

Measurement/scaling

Exploratory

Descriptive

Causal Trade surveys

Observation

Experiments

Causal Models

Secondary data

Qualitativeresearch

Consumersurveys

Questionnaireconstruction

FieldworkData

analysis

The local market research process


21/39

Focus groups

focus groupshave become standard for initial exploratory

research

in foreign markets, focus groups have the advantage of

being relatively inexpensive, can be completed quickly, and

can reach local pockets of the market

unfortunately, they can also constitute an unrepresentativesample because typical screening criteria are incorrect in the

new environment or are not implemented correctly

Local market research


22/39

Survey researchConsumer surveys - surveys of large (n = 500 and above) random samples

drawn from a sampling frame of representative product users are of central

importance in marketing research

cultural problems involved in the typical consumer survey:

in high contextcultures especially, one cannot fully understand

consumers from their responses to standard survey questions

at the same time, informal face-to-face interviewsare prone to bias

because of demand characteristics

but even if surveys are afflicted by a number of problems in many foreign

markets, they can still be useful if care is taken



23/39

Trade surveys

trade surveysof distribution channels and trade

associations can provide a good starting point for further data

gathering and analysis

in the US, the use of middlemen for information about

consumers is usually limited to the sales and scanner records

of retailers and wholesalers

in countries with less social mobility and less diversity than

the US, key informantsin the trade are good sources of

information about buyers



24/39

Measurement and scaling

in attitude scaling, very basic factors can create

difficulties

the cognitive and emotional concepts measured might

not be equivalent across cultures

this means measurement equivalence is questionable



25/39

the questionnaire employed in the typical consumer

survey needs to be carefully pre-tested and translated

into the foreign language

it should then be back-translated for verification and

adjustment [be very careful: machine translation can cause all kinds ofproblems: The spirit is willing but the flesh is weak -> The vodka is fine, but the

meatis tasteless or out of sight, out of mind -> blind idiot!]

in high context cultures, questionnaires are typicallymuch longer because of the need to establish the proper

context for the questions


Questionnaire construction


26/39

Sampling

lack of comprehensive and reliable sampling frames has

long been a problem for marketing researchers in many

countriesemergence of firms that specialize in developing lists for

direct marketing and survey research is gradually

resolving this problem

but sampling equivalence can still be questionable

because appropriate profiles differ (eg high income in

one country might not be high in another)



27/39

Segmentation criteria

Economics GDP per capita

Demographics age and family status, type and size Values: strivers (12%) [developing Asia]; devouts (22%)

[least in developed Asia and Western Europe]; altruists

(18%) [Latin America and Russia]; intimates (15%) America];

fun seekers (12%) [developed Asia]; creatives (10%)[Western Europe]

Ethnicity example Hispanics, Mexicans, Koreans, Indians

Peer groups ex. Benetton (generation X); Nike (rebels);

Levis (American wannabes); British Airways (Anglo-Saxons) Lifestyle (AIO = attitudes, interests, opinions)

Benefits sought example, Body Shop (green products and

business)


28/39

typically handled by a subcontracting marketing

research firm, sometimes a full-service advertisingagency

as economic growth occurs, mature markets with

differentiated demand requiring formal and scientific

market research applications will emerge in many

countries

Fieldwork



29/39

New brands in local markets

Three effects on buyers when a globally standardized

product or brand is introduced on a local market:

1. the new brand simply targets one untapped segment

(new option for an unfilled need)

2. consumers change their perceptions, learning aboutfeatures they did not know about (internet access on cell

phones)

3. buyer preferences are changed: (pent-up demand for a

previously unavailable brand)

In practice, all three processes often work simultaneously

Japan changes the US auto market


30/39

Oldsmobile

Cadillac

Mercedes

Buick

Has a touch of class. Distinguished looking

BMW

Pontiac

Plymouth VW

Porsche

Ford

Sporty

looking.

Fun todrive.

Appeals toolder people

Conservative

looking

Very practical. Gives good gas mileage.

Toyota

Datsun

(Nissan)

Chevrolet

Dodge

Chrysler

Lincoln

4 5

3

2

1

Japan changes the US auto market(product positioning in 1970s


31/39

Local mispositioning

when existing products enter local markets abroad theyare often mispositioned (not well adapted to the localpreferences)

if the new product or brand fails to change the market

preferences to their advantage, there are still threereasons why local consumers might choose it:

brand image

country of origin lower price


32/39

Brand image

mispositioned products that are global can be attractive to

potential customers because ofbrand image and status

conspicuous consumption let people see what you buyand how much you buy

lower perceived risk and cognitive dissonance when

giving a gift, for example


33/39

Country-of-origin

where a product or brand comes from often counts a

great deal with consumers

country-of-origin effectdeals with quality perceptions

of products: the quality level at which a country produces

influences local consumers perceptions

country-of-origin bias customers can overstate the

advantages and disadvantages of a countrys productscausing a bias towards (or against) products from that

country

7 33


34/39

Lower price

through a reduced price, a customer can often be

induced to buy a mispositioned brand because they

feel that they are getting a good deal

but price deals can backfire on the marketer, since the

price paid gradually loses salience, while the less

desirable brand stays as a reminder


35/39

understanding local markets involves conceptual skills

and imaginative rethinking more than new analyticalmarketing skills

the core benefit of a product or service can vary

considerably across countries because of differingenvironmental conditions surrounding product usage

Summary

S


36/39

consumer behaviour concepts and models are useful tools

when examining buyers in foreign markets, but underlyingcultural assumptions have to be reconsidered

Summary

S


37/39

local market research is difficult because of lack of data,

language problems, and cultural differences in how peoplerespond to surveys, but can be done with proper adaptation

Summary

S


38/39

entering new brands typically affect the local consumers

perceptions of the existing market place in fundamental ways

when consumer preferences are well-established, the

entering brand cannot count on changing preferences, but has

to localize and adapt

Summary

Summary


39/39

Useful to distinguish between three market environments:

1. mature

2. new growth

3. emerging

Summary

Documents

11121501 COMAS 2011 Winter - Global Marketing - Chap007 - Understanding Local Customers