Selasa, 16 Juni 2015

How Consumers Value Global Brands

In 2002, we carried out a two-stage research project in partnership with the market research company Research International/USA to find out how consumers in different countries value global brands. First, we conducted a qualitative study in forty-one countries to identify the key characteristics that people associate with global brands. Then we surveyed 1,800 people in twelve nations to measure the relative importance of those dimensions when consumers buy products. A detailed analysis revealed that consumers all over the world associate global brands with three characteristics and evaluate them on those dimensions while making purchase decisions. We found that one factor—American values—didn't matter much to consumers, although many companies have assumed it is critical.
Quality Signal. Consumers watch the fierce battles that transnational companies wage over quality and are impressed by the victors. A focus-group participant in Russia told us: "The more people who buy [a] brand…the better quality it is." A Spanish consumer agreed: "I like [global] brands because they usually offer more quality and better guarantees than other products." That perception often serves as a rationale for global brands to charge premiums. Global brands "are expensive, but the price is reasonable when you think of the quality," pointed out a Thai participant. Consumers also believe that transnational companies compete by trying to develop new products and breakthrough technologies faster than rivals. Global brands "are very dynamic, always upgrading themselves," said an Indian. An Australian added that global brands "are more exciting because they come up with new products all the time, whereas you know what you'll get with local ones."
That's a significant shift. Until recently, people's perceptions about quality for value and technological prowess were tied to the nations from which products originated. "Made in the USA" was once important; so were Japanese quality and Italian design in some industries. Increasingly, however, a company's global stature indicates whether it excels on quality. We included measures for country-of-origin associations in our study as a basis for comparison and found that, while they are still important, they are only one-third as strong as the perceptions driven by a brand's "globalness."
CONSUMERS ALL OVER THE WORLD ASSOCIATE GLOBAL BRANDS WITH THREE CHARACTERISTICS.
Global Myth. Consumers look to global brands as symbols of cultural ideals. They use brands to create an imagined global identity that they share with like-minded people. Transnational companies therefore compete not only to offer the highest value products but also to deliver cultural myths with global appeal.
"Global brands make us feel like citizens of the world, and … they somehow give us an identity," an Argentinean consumer observed. A New Zealander echoed: "Global brands make you feel part of something bigger and give you a sense of belonging." A Costa Rican best expressed the aspirations that consumers associate with global brands: "Local brands show what we are; global brands show what we want to be." That isn't exactly new. In the post-World War II era, companies like Disney, McDonald's, Levi Strauss, and Jack Daniel's spun American myths for the rest of the world. But today's global myths have less to do with the American way of life. Further, no longer are myths created only by lifestyle and luxury brands; myths are now spun by virtually all global brands, in industries as diverse as information technology and oil.
Social Responsibility. People recognize that global companies wield extraordinary influence, both positive and negative, on society's well-being. They expect firms to address social problems linked to what they sell and how they conduct business. In fact, consumers vote with their checkbooks if they feel that transnational companies aren't acting as stewards of public health, worker rights, and the environment. As infamous cases have filled the airwaves—NestlĂ©'s infant-formula sales in Africa since the 1980s, Union Carbide's Bhopal gas tragedy in 1984, the Exxon Valdez spill in 1989, the outcry over Shell's plan to sink its Brent Spar oil rig and the protests at its Nigerian facilities in 1995—people have become convinced that global brands have a special duty to tackle social issues. A German told us: "I still haven't forgiven Shell for what they [did] with that oil rig." An Australian argued: "McDonald's pays back locally, but it is their duty. They are making so much money, they should be giving back."
The playing field isn't level; consumers don't demand that local companies tackle global warming, but they expect multinational giants like BP and Shell to do so. Similarly, people may turn a blind eye when local companies take advantage of employees, but they won't stand for transnational players like Nike and Polo adopting similar practices. Such expectations are as pronounced in developing countries like China and India as they are in developed countries in Europe.
What we didn't find was anti-American sentiment that colored judgments about U.S.-based global brands. Since American companies dominate the international market, critics have charged that they run roughshod over indigenous cultures in other countries. Champions of free trade have countered that people in other nations want to partake of the great American dream, and global brands like Coke, McDonald's, and Nike provide access to it. That debate has cast a long shadow over American firms, and they have become rather circumspect about revealing their origins, culture, and values while doing business overseas. Many have tried to position themselves as more global than (ugly) American.
WHAT WE DIDN'T FIND WAS ANTI-AMERICAN SENTIMENT THAT COLORED JUDGMENTS ABOUT U.S.-BASED GLOBAL BRANDS.
However, we found that it simply didn't matter to consumers whether the global brands they bought were American. To be sure, many people saidthey cared. A French panelist called American brands "imperialistic threats that undermine French culture." A German told us that Americans "want to impose their way on everybody." But the rhetoric belied the reality. When we measured the extent to which consumers' purchase decisions were influenced by products' American roots, we discovered that the impact was negligible.
That finding is all the more remarkable considering that when we conducted our survey, anti-American sentiment in many nations was rising because of the Iraq war. Most of the consumers were like the South African who candidly said, "I hate the country, but I love their products." A Filipino confessed: "I used to go on anti-American rallies when I was a student, but I never thought about the [American] brand of clothes or shoes I wore!" "We aren't concerned with how America governs itself," an Indian said. "What we look for is quality in their products." Since people's concerns with U.S. foreign policy have little impact on brand preferences, American companies should manage brands just as rivals from other countries do.
The relative importance of the three dimensions was consistent across the twelve countries we studied, indicating that the calculus used by consumers to evaluate global brands varies little worldwide. Taken collectively, though, the global dimensions were more powerful in some countries than in others. They have the smallest impact on U.S. consumers, for example. Because of the dominance of American brands in foreign markets, a competitive national market, and a certain ethnocentrism, Americans are relatively uninterested in brands' global presence. The drivers also have less impact on consumers in Brazil and India. That may be because of vestiges of anti-colonial cultures, the strength of local manufacturers, and growing nationalism in those countries. At the spectrum's other end, the dimensions influence consumers in Indonesia, Turkey, and Egypt the most. In those predominantly Muslim nations, we could survey only people who worked in the organized economy and belonged to the top 50 percent of the population in socioeconomic terms. Such people may value global brands particularly highly because they represent a way of life that they cherish—a way of life that may be under threat from religious fundamentalism.

Getting the Marketing Mix Right

Businesses rely on solid marketing strategies to boost sales—yet the tools used to evaluate these strategies often provide misleading results, leaving managers with the inability to accurately measure how they can get the best bang for their marketing buck.
“COMPANIES REALLY NEED TO PAY ATTENTION TO THE EFFECTIVENESS OF THEIR MARKETING INSTRUMENTS”
Thomas J. Steenburgh, an associate professor in the Marketing Unit at Harvard Business School, has developed a new analytical tool that more accurately measures the effectiveness of various marketing efforts. He created the model with Qiang Liu, an assistant professor of marketing at Purdue University, and Sachin Gupta, the Henrietta Johnson Louis Professor of Management and professor of marketing at Cornell University.
Steenburgh believes that the model could help brand managers determine which marketing strategies work best to invest in.
"Companies really need to pay attention to the effectiveness of their marketing instruments," Steenburgh says. "They need to look at whether they're creating new customers or whether they're just drawing customers away from competitors. It's a fundamental question in the field, and this model helps measure that."

THE IDEAL MIX

When planning marketing campaigns, brand managers have a wide portfolio of weapons to draw on, including in-store merchandising, advertising, coupons and sweepstakes, trade promotions, prices, and deployment of a direct sales force. The key is crafting the right mix between them—the ideal brew needed to achieve sales and market share goals.
The trick is that each marketing effort affects consumer behavior in different ways, and also prompts different types of responses from competitors. Some activities result in expanding demand across an entire category of products. Take for example the "Got Milk" advertising campaign, which is intended to increase demand for a category of products, milk. In contrast, an advertisement that points out how one brand is better than a competitor's brand has the goal of encouraging consumers to switch products within a particular category.
If a business seeks to grow demand for a category of products, the effort may not elicit much of a reaction from its competitors; after all, if the entire category grows the rising tide lifts all boats. But a competitor's reaction is typically quite different when a company attempts to move in on its market share, perhaps by offering price discounts. Since this strategy is viewed as more threatening, the competitor can be expected to retaliate with prejudice—often by firing off a campaign to win back many more customers than it lost.
"We know that retaliation happens and that companies worry about that," Steenburgh says. "But nobody benefits when both companies are retaliating. One effort just offsets the other."
Measuring the different effects of these marketing strategies can help brand managers make the right decisions about which strategies to use in their marketing mix. Steenburgh, Liu, and Gupta argue that the tools that have been used in the past to analyze the effectiveness of different marketing activities—called discrete choice models—can skew the results and misguide brand managers.
Traditional discrete choice models—logit, nested logit, and probit, for example—are flawed because they make it appear as if all marketing activities produce the same results, the researchers contend. In reality, differences between various marketing instruments are often significant. The cause of these flawed results comes from what is called the Invariant Proportion of Substitution (IPS) property, which implies that the proportion of demand generated by taking business away from a competitor is the same, no matter which marketing activity is used.
"These models get run all the time in academics," Steenburgh says. "There has been some talk at conferences where there seems to be an understanding that these models are too restrictive."

WIDENING THE VIEW

So the professors created a new discrete choice model called Flexible Substitution Logit (FSL), described in their working paper The Flexible Substitution Logit: Uncovering Category Expansion and Share Impacts of Marketing Instruments. The model relaxes the IPS property and allows a wider variety of results to be analyzed when studying the effects of different marketing instruments. By doing so, "the FSL allows a wider variety of individual-level choice behavior to be recovered from the data," according to the researchers.
The team tested the new model by looking at the marketing of prescription drugs, namely, statins, used to lower cholesterol levels in people at risk for cardiovascular disease. Using data from 2002 to 2004, they studied the three primary ways these drugs were marketed by Pfizer, Merk, Bristol-Myers Squibb, and AstraZeneca: "detailing," in which drug firm representatives personally visit physicians to sell the drug; at professional meetings and events (M&E) sponsored by the pharmaceutical firms; and by using direct-to-consumer advertising (DTCA).
First, they employed the complex mathematical formulas of traditional models to study different marketing strategies used by the drug companies. They found that the IPS property created counterintuitive estimates of demand gains attributable to these marketing investments. Although logically the researchers expected detailing to generate greater demand for the products than either direct-to-consumer advertising or meetings and events, the traditional models would not allow them to discover this because of the IPS.
When they applied their FSL model, however, the results provided much greater detail about the potential effects of different marketing investments. For example, the model predicted that sales gains from DTCA and M&E would come primarily through category expansion (87.4 percent and 70.2 percent, respectively), whereas gains from detailing would come at the expense of competing drugs (84 percent). By contrast, the random coefficient logit model predicted that gains from DTCA, M&E, and detailing would come largely from competing drugs.
"The FSL model is very useful if you want to predict consumer demand," Steenburgh says. "This model gives you a better way to do that."

FIGURING IN PAYBACK

With results that provide a better analysis of how different marketing instruments work, brand managers can now decide how to best invest their marketing dollars. For example, if a brand manager is concerned about retaliation from competitors, the best decision may be to limit investment in detailing and instead put more emphasis on direct-to-consumer advertising or on sponsoring meetings and events, both of which are more likely to expand the category.
Steenburgh notes that future research is needed to find alternative models that overcome the IPS, and he hopes that the FSL model will be applied in other studies that examine the effectiveness of marketing instruments.
"It would be interesting to apply the FSL model in a lot of other situations to see which ones expand the pie and which ones threaten other actions," he says.
5W+1H
1. Who can rely on a solid business marketing strategy?
companies really need to pay attention to the affectiveness of their marketing instruments
2. What the article talking about?
the article talking about companies that can rely on a solid marketing strategy
3. When planning the ideal marketing campaign needed?
when marketing influence consumer behavior
4. Where trick when planning a marketing campaign?
when brand managers have wide portfolio of weapons to draw on, including in-store merchandising, advertising, coupons and sweepstakes, trade promotions, prices, and deployment of a direct sales force
5. Why the ad campaign strategy intended to increase the demand for the product?
because this strategy is viewed as more threatening, the competitor can be expected to retaliate with prejudice—often by firing off a campaign to win back many more customers than it lost.
6. How tricks planning a marketing campaign?
The key is crafting the right mix between them—the ideal brew needed to achieve sales and market share goals.
source: http://hbswk.hbs.edu/item/6828.html