Tim G. Andrews, Nartnalin Chompusri

and Bryan J. Baldwin OBEAuthors: P r e s e n t e d

b y: S h a n d y Po h

The Changing Face of Multinationals in Southeast Asia

Advertising &

Promotion

About the article

★ This article is about the A&P strategies that MNCs should adopt in the Southeast Asia region.

★ It shows how A&P strategies are traditionally implemented, the emerging trend and the difficulties faced by MNCs and local managers in its implementation.

★ It also tries to justify whether MNCs should customize or standardize their A&P strategies in this region.

★ Finally, it talks about the “cross-vergence” of A&P strategy that can potentially succeed in achieving the optimal compromise

Introduction

★ MNCs generally view advertising and promotions strategy to be the main means of communicating how it differentiates itself from the rest in the market base.

★ The MNC promotional mix is difficult to standardize as:

1. It is traditionally implemented by local employees &

2. Presence of differences in regulations and cultures

★ But, there is now stronger incentives for seeking coordination of advertising and promotion strategy because of:★ Growth of computer-generated technology★ Growth of the “global brand”

The Traditional Dilemma….

★ Traditionally in Southeast Asia:

★ Personal Selling & outdoor emplacements are most important due to technological and cultural constraints

★ Heavy traffic and bustling crowds ensure there are large audiences for outdoor messages such as billboard advertising

★ Bus shelters, telephone cabins and panels on bodies of buses and trains are also used extensively

The Traditional Dilemma….

★ Emerging trend in ASEAN:

∮ Global technological advances led to multiplication of information dissemination

∮ Increase in consumer spending

∮ Increase in per capita incomes results in expanded television set ownership levels

∮ Greater affluence of consumers means appearance of more products and services ∮ Thus, consumers now need more information

∮ Advertising is more important, with advertising expenditure on the rise

The Traditional Dilemma….

★ Emerging trend continued

∮ Advertising focus is now on consumer goods, rather than industrial products

∮ Advertising content now encompass modernity and technology association∮ This shows a fascination with cultural values that

are considered “western”

∮ There is also an increase in the types of available advertising vehicles such as neon signage.

∮ Host economies of Southeast Asia are continually integrating recently, leading to MNCs being anxious to push for scale efficiencies

Continued

What’s the dilemma then?

★ Most of Western MNC’s campaign advertising has been accepted locally, however the following shows the existing pitfalls of western advertising in Southeast Asia:

★ Differing business traditions stand in the way for MNCs to incorporate the “standardization” of advertising and promotion strategies.

★ Culture diversity in Southeast Asia is the main reason for large cultural gap between Western corporate clients and their global advertising agencies and their ethnic Chinese counterparts on the other.

So how?

★ MNCs ensure that sufficient research is done before embarking on a domestic campaign★ This is to prevent potential conflicts with societal

values

★ Expatriates managers are also aware of the need to develop an advertising strategy that is responsive to the needs of the target population★ To do so, many MNCs employ local staff to head the

PR department as their understanding of culture values are much stronger than the average expat

★ Thus, rather than imposing standardized advertising, MNCs are taking to adapting to cultural differences in their campaigns

Illustrating Advertising

★ Main example: Unilever★ In Mekong Delta, there are very high rates of

illiteracy and very low per capita income figures

=No TV, no reading of billboards or T-shirts

★ Unconventional media is used to create contact with these consumers by:

★Establishing presence wherever people frequently gather in numbers★E.g. Advertising color photographs of its brand

in markets and riverbanks

★Giving free samples of product through regular distribution on market days

Illustrating Advertising

★ Generally, great care has to be given in the portrayal of the female form in advertising ★ E.g. In Malaysia, Muslim women’s heads have to

be covered, thus Muslim female models in posters etc cannot show their hair, ears and neck etc.

★ Another sensitive area is the bedroom shots for shampoo and health-care products★ It should be checked thoroughly in order not to

cause offense across the region.

Illustrating Promotions

★ Unilever noteworthy for its innovative promotional activities in the region★ In Thailand, it staged the world’s biggest catwalk★ In Cambodia, it created the world’s longest

washing line for the VISO detergent★ Both these events made it to the Guinness

Book of Records.

★ Generally, local managers feel that customers are happier with what they can get “on the spot”★ Thus, the giving away of coupons, tissue boxes

and lucky draws etc.

Customized or Standardized?

★ The illustrations showed that A&P strategies used by MNCs in the region are domestically customized.

★ However, there are still instances where the region shows the potential for future convergence in A&P

★ This is most evident from Vietnam in recent years in what is deemed as the “opening up” of Vietnam★ Vietnam’s state approved of beauty contests

and calendars in recent years

★ With these developments, MNCs are focusing on younger audience than they would at home, through use of Internet ★ This is to mainly establish brand awareness and

positioning, rather than increasing sales

Analyzing shift toward standardization in response to Asian Economic Crisis

★ There is general assumption of converging societal cultures★ Thus, MNCs attempt to appeal to global consumer

trends★ Shell used to develop localized campaigns, but

changed to using the same advertisement in Thailand and Vietnam★ It then relied on localized promotions in domestic

markets.

★ MNCs also faced economic downturns in their home environments★ During bad times, they cut their budget for A&P, but

maintained or even increased the budget after the crisis.

★ This proved to be shocking to local managers who find it disrespectful since these MNCs were at the same time retrenching staff to cut costs.

Analyzing shift toward standardization in response to Asian Economic Crisis

★ MNCs adopt a long term strategic perspective★ They believe that the spending on A&P is

necessary to build their brands so as to be able to grab more market share during economic upturn

★ They also directed former advertising spending on cheap advertising rates on the Internet, believing that the internet would become a part of consumers’ everyday life. (Especially so for the young, professional Asian customer)

Analyzing shift toward standardization in response to Asian Economic Crisis

★ MNCs perceive adaptation and customization of promotional resources to local culture as wasteful

★ Their thinking is that their brand is globally coherent, and by having individual local practices in A&P, the company is doing duplicative and redundant work

★ Taking advantage of the crisis as a catalyst, MNCs condemned customized A&P as serving to divert resources away from more “essential” regional activities (brand development and long term segmentation analysis)

Resistance

★ The shift towards standardization is met with resistance as expected.

★ Added to this, the refusal of MNCs to cut down their A&P expenditure came across as insensitive and unethical to local managers

★ Corporate response was that this is the norm in their home environment as well★ But this response was criticized as being arrogant

and imperialistic

★ MNCs decision to ditch domestically adapted promotions material came across as culturally insensitive

Intra ASEAN promotion strategy

★ Within ASEAN countries itself, there are also conflicting views on A&P strategies employed

★ E.g. Thailand Vs Lao★ Thailand Pro-business powerhouse for incoming MNCs

into the ASEAN bloc★ Lao perceiving Thailand as “rampant consumerist

culture”, Lao struggles to retain its identity from the “cultural pollution” creeping in from Thailand

★ It should be noted that MNCs should not fall into the trap on viewing any region as a single entity.

★ Even Thailand and Lao with apparently closely related cultures requires different A&P strategies

Cross-vergence

★ Generally, the push for standardization by MNCs in the post crisis period was progressively relaxed over time

★ There were also broader moves towards the engaging of local advertising agencies

★ “Practical application of corporate promotional guidelines in the region was also redefined in the progressive “cross-vergence” of the MNC headquarters-subsidiary priorities”

★ Though there’s incorporation of corporate regulations, there's also concessions made to the ‘Asian style’ of business

★ Generally though, there's also acceptance of a number of “Western” methods and practices by the local sales and marketing team.

★ Local managers who were previously resentful have also come to appreciate the added resources and time that comes with “Westernization”

Conclusion

★ In an increasingly unstable, changing marketing context no single medium or promotional method regardless of merit, is likely to satisfy all the complex demands of the ASEAN region marketplace.

★ MNC promotions strategy should therefore seek to identify the optimal compromise between cost-efficient global/regional standardization on one hand and local adaptation on the other.

★ Cross-vergence of A&P as explained earlier may be the key to obtaining the optimal compromise

~The End!~