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International marketing 2

Week 7 lectureInternational marketing communication and sales negotiations

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Agenda

• Different types of communication tool• Major steps in advertising decision• Major phases in a cross-cultural negotiation process

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Elements of the international communication process

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Communication tools

Advertising

Publicrelations

Salespromotion

Directmarketing

Personalselling

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The major international advertising decisions

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1. Advertising Objectives• Increasing sales from existing customers• Encouraging them to increase frequency of their purchase• Maintaining brand loyalty via a strategy that reminds customer

of the key advantages

• Obtaining new customers• Increasing consumer awareness of the firm’s product• Improving the firm’s corporate image among a new target

customer group

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2. Global Advertising Budget

1. Percentage of Sales Allocating a fixed proportion of sales to the advertising budget

2. Competitive Parity Duplicating the amounts spent on advertising by major rivals 3. Objective-and-Task Method

Determining the advertising objectives and then ascertaining the tasks needed to attain these objectives

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3. Message decisions (creative strategy)

Unique selling proposition (USP) – Advertising AppealThe promise or claim that captures the reason for buying the product or the benefit

that ownership confers• Important decision for international marketers• Whether an advertising campaign developed in the domestic market can be

transferred to foreign markets • with only minor modifications, such as translation

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3. Message decisions Cont.

• Merits of Standardisation:• Scale Economies• Consistent Image• Global Consumer

Segments• Creative Talent

• Barriers to standardisation:• Cultural Differences• Advertising Regulations

The “Standardisation” versus “Adaptation Debate”

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Cathay Pacific chose standardised advertising throughout its markets

http://www.cathaypacific.com

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Approaches to Creating Advertising

1. “Laissez Faire”• Each country subsidiary develops its own ad and there is no centralised decision making

2. Export Advertising• The creative ad is developed in head office and then exported without local office inputs

3. Prototype Standardisation• Ad guidelines are given to the local affiliates concerning the execution of the ad. • These guidelines are conveyed via the Co’s website, manuals, or audiovisual materials

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3. Message decisions Cont.• Approaches to Creating Advertising Copy:

4. Regional Approach • Every region produces its own interpretation and execution of the campaign. • This approach is a combination between centralised and laissez faire decision making

5. Pattern Standardization• Headquarter: provides guidelines on the positioning theme (platform) and the brand identity

to be used and maps out worldwide brand values• Local subsidiaries: responsible for execution

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4. Media decisions: mass or target approach

Reach

Frequency

Grossrating points

(GRPs)=Reach*freq.

Media mix

Impact

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Main media types

Television

Radio

Newspapers

Magazines

Cinema

Outdoor

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Home work

• List out the advantages and disadvantages of each type of media types.

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5. Agency Selection • Local Advertising Agency

• Can provide company with best cultural interpretation in situations where local modification is sought;

• Disadvantages: difficulty of co-ordinating world wide campaign• Company Owned Agency

• Disadvantage: possible lots of local input when located outside the area • Little contact with the host country

• Multinational Ads Agency with Local Branches • Able to provide co-ordinated world wide campaign

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When screening ad agencies, the following set of criteria can be used:

• Market coverage• Quality of coverage• Expertise with developing a international campaign• Creative reputation• Scope and quality of support services• Desirable image (“global” versus “local”)• Size of the agency

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6. Aspects of advertising evaluation

• Communication impact• Pretesting of print and broadcast ads• Testing finished ad: awareness• Sales impact

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Other forms of communications

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Public relations

• Public relations (PR) • Seeks to enhance corporate image building and influence favourable media

treatment

• PR (or publicity) is the marketing communications function • that carries out programmes designed to earn public understanding and

acceptance.

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Public relations

Possible PR methods• Event sponsorship• Prizes at events• Press releases• Announcements of the

firm’s promotional campaigns

Possible PR targets• Employees • Shareholders• Suppliers• Customers• General public• Governments• Financial markets

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Sales promotion

• Sales promotion is a short-term effort directed primarily to the consumer and/or retailer, in order to achieve specific objectives:• consumer product trial and/or immediate purchase• consumer introduction to the shop• encouraging retailers to use point-of-purchase displays for the product• encouraging shops to stock the product

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Types of sales promotion

Price discounts

Catalogues/brochures

Coupons

Samples

Gifts

Competitions

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Direct marketing

• Direct marketing is the total of activities by which • products and services are offered to market segments • in one or more media • for informational purposes or to solicit a direct response • from a present or prospective customer or contributor • by mail, telephone or personal visit.

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Personal Selling

Planned presentation to

one or more prospective buyers

for the purpose

of making a sale.

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Personal Selling

Traditional Selling

Traditional Selling

Relationship Selling

Relationship Selling

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Combination of direct mail and personal selling

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Assessing sales force effectiveness• There are five essential questions to ask in assessing sales force

effectiveness:1. Is the selling effort structured for effective market coverage?2. Is the sales force staffed with the right people?3. Is strong guidance provided?4. Is adequate sales support in place?5. Does the sales compensation plan provide the proper motivation?

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Globally Integrated Marketing Communications (GIMC)

• Integrated Marketing Communications (IMC):– IMC coordinates different communication vehicles –

mass advertising, sponsorships, sales promotion, packaging, point-of-purchase displays, so forth.

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Globally Integrated Marketing Communications (GIMC)

• Globally Integrated Marketing Communications (GIMC):– GIMC is a system of active promotional management

that strategically coordinates global communications in all of its component parts.

– Both horizontally (country-level) and vertically (promotion tools) are used in GIMC.

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Cross cultural sales negotiations: Introduction • Culture is a dimension that intervenes at each stage of the

negotiation• To remain competitive and to flourish in the complex and fast

changing world• Business must look worldwide not only for potential markets but• Also for sources of high quality but less expensive materials and labour

• Managers need to deal with markets and a workforce whose cultural workforce is increasingly diverse

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Cross cultural sales negotiations: Introduction • Negotiations are necessary to reach an agreement on the total

exchange transaction, comprising such issues as • the product to be delivered, • the price to be paid, • the payment schedule and the service agreement.

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International sales negotiations• International sales negotiations have many characteristics that

distinguish them from negotiations in the domestic setting• First and foremost, the cultural background of the negotiating parties is

different.

• It is interesting to note that Japanese negotiators, among other things, routinely request background information on US companies and key negotiators. • Japanese negotiators therefore often know in advance the likely negotiating

strategies and tactics of the other side

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Two different negotiation cultures1. Rule-based culture and

• Western part of the world• Trust the system • Organizes the business around deals that are drawn up as contracts or agreements

enforced by a legal system• Vulnerable to cheating

2. Relationship cultures• Asian part of the world• Loyalty and obligation to friends, family or superiors rather than on a system of rules• Building relationships• Bargaining across the table tends to be regarded as confrontation rather than negotiation• Bribery tends to be more prevalent

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Cross cultural negotiations: example

• Japanese require several meeting before actual negotiation• North Americans and north Europeans are inclined to do business as soon as

possible• The Israeli prefers direct forms of negotiation, and the Egyptian prefers an

indirect form. • The Egyptians interpret Israeli directness as aggressive, and are insulted,

while• the Israelis view Egyptian indirectness with impatience, and consider it

insincere. • This cultural difference endangers any negotiation between business people

in the two countries.

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The cross-cultural negotiation process• A negotiation process can be defined as

• ‘a process in which two or more entities come together • to discuss common and conflicting interests • in order to reach an agreement of mutual benefit’ (Harris and Moran, 1987, p.

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• The cross-cultural negotiation process is very much influenced by• The cultural ‘distance’ between seller and buyer

• The cross-cultural negotiation process can be divided into two different parts: • the non-task related interaction and • task related interaction

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The cross cultural negotiation process

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Status distinction

• Status distinction is defined by • interpersonal rank, age, gender, education, the position of an individual in the

company and • the relative position of one’s company.

• High-context cultures are status-oriented• The words used by negotiators in high-context cultures are not as important

as the negotiator’s status

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Impression formation accuracy

• This stage refers to initial contact between negotiators• Meeting someone for the first time, • individuals have immediate feelings that precede rationalized thought

processes; • these feelings lead to the formation of instant opinions that are often based

on minimal information.• As the perceptions of the individuals from dissimilar cultures differ, the

likelihood of a negotiator forming accurate impressions of the counterpart is reduced.

• A bad impression based on an inaccurate impression formation • may also have negative effects on subsequent stages of negotiation.

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Interpersonal attraction

• immediate face-to-face impression influenced by • the feelings of attraction or • liking between the buyer and seller

• Interpersonal attraction can have either a positive or negative influence on the negotiation outcome.• Similarity between negotiators can induce trust • which leads, in turn, to interpersonal attraction.• Individuals who are attracted are likely to make concessions in the bargaining

process.• Thus an individual negotiator may give up economic rewards for the rewards

of the satisfaction derived from the relationship with an attractive partner.

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Exchange information

• Clear understanding of the negotiator’s needs and expectations is essential• The amount of information that has to be exchanged explicitly will vary

from culture to culture• Extra complexity of

• several thousand languages and local dialects in the world

• Even in cases when participants understand each other and are mutually fluent, • the meaning of the information exchanged can be lost • as a result of different meanings of words and across cultures.

• Subject to non verbal problems

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Persuasion and bargaining strategy

• Negotiator’s attempts to modify the • performance expectations of the other party • through the use of various persuasive tactics

• Representational strategies • communication is based on identification of problems, a search for solutions and the

selection of the most appropriate course of action;• for example, the salesperson may cooperate with the buyer and seek information on the

buyer’s views of the situation.

• Instrumental strategies • Communication involves affecting the other party’s behaviour and attitudes; • for example, a salesperson may influence the buyer with persuasive promises,

commitments, rewards and punishments.

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Concession-making and agreement

• This stage refers to the • Manoeuvring of negotiators from their initial position to a point of

agreement

• Negotiators from different cultures have different approaches to concession-making. • For example,

• while in low-context cultures negotiators are likely to use logic, • individuals in high-context cultures are more likely to use personalized arguments.

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Concession-making and agreement

• BATNA (Best Alternative To a Negotiated Agreement) is a term coined by Roger Fisher and William Ury in their 1981• The BATNA is the only standard that can protect both

• from accepting terms that are too unfavourable and• from rejecting terms that it would be in your best interest to accept.

• In the simplest terms,• if the proposed agreement is better than the negotiator’s BATNA, then the negotiator

should accept it. • If the agreement is not better than their BATNA, then they should reopen negotiations.

• If the negotiator cannot improve the agreement, • they should at least consider withdrawing from the negotiations and pursuing their

alternative

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Negotiation outcome

• The agreement should be the starting point for the development of a deeper relationship between buyer and seller. • The final agreement of a negotiation process may take the form of a • gentleman’s agreement, which is common in high-context cultures, or • more formal contracts, which are more prevalent in low-context countries.

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Implications of Hofstede work

Masculinity/femininity• Masculine culture: negotiation competitive, results

in win-lose situation• Feminine culture: collaborative or a compromising

style-; win-win situation

Uncertainty avoidance:• high-risk avoidance cultures: likely to seek specific

commitments in terms of volume, timing and requirements.

• low-uncertainty avoidance cultures: likely to be comfortable with rough estimates of volume and timing and with constantly changing requirements

Power distance:• High power distance culture: CEO of the company

directly involved in negotiations• Western Europeans and North Americans are

normally informal and downplay status by using first names, dressing in casual attire, etc.

• Negotiators from low power distance cultures may be frustrated by the need of negotiators from high power distance cultures to seek approvals from their supervisors

Individualism/collectivism• Highly individualist country: expects other party to

have the authority to make decision individually

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Gap analysis in a cross cultural negotiation

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Five step approach to prepare salespeople to cope with cultural diversity1. Build awareness about how cultural differences impact upon them

in the sales organization.2. Motivate salespeople and managers to rethink their behaviour and

attitude towards customers.3. Allow salespeople to examine their own biases in a psychologically

safe environment.4. Examine how stereotypes are developed, and how they can create

misunderstandings between buyers and sellers.5. Identify diversity issues that need to be addressed in the

international sales organization.

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Three steps to improve the selling firm’s cross cultural and negotiation competences1. Assessing communication competences of salespersons2. Assessing communication competences of negotiators in the buying

firm3. Matching communication and negotiation competences of buying

and selling firm

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The decision to employ an expatriate salesperson• Expatriates: Employees sent out from the HQ to work for the

company in the foreign markets, often in its subsidiaries• Examine its past experience regarding cultural shock• Identify the elements in the expatriates sales job• If the job is highly technical, • is located in an area with other home country nationals and • involves similar tastes and lifestyles as in the home country, • Then the expatriate sales force may be appropriate.

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Selection of expatriates

• Selection should not be based primarily on technical competence of the salesperson• Substantial emphasis must also be placed on the following attributes:• foreign-language skills• general relational abilities• emotional stability• educational background• past experience with the designated culture• ability to deal with stress.