3. Lovemarks or SafeBets?
What drives consumers
in emerging versus mature markets
Professor Koen Pauwels
Ozyegin University, Istanbul
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4. My background: merging academics with business
• From Belgium to UCLA to Tuck @ Dartmouth to Istanbul
• Most publications & Awards in my academic cohort
• Editorial board IJRM, JM, JMR, Marketing Science
• Founded the Marketing Productivity Group
• AIMark: Advisory Board & Coordinator Digital Marketing
• #1 expert on Research/Metrics @marketingprofs.com
• EU reintegration project: Return on Marketing
Investment in Mature vs. Emerging Markets

5. across countries and industries
• Fast moving consumer goods : e.g. Unilever
• Durable goods : e.g. Nissan, Sony Eurasia
• Retailing : e.g. Old Navy, Marks & Spencer Russia
• Online services : e.g. Groupon, Kayak
• Business-to-business: Inofec Dutch Furniture
• Pharmaceuticals: eg. cholesterol reducers
• Banking: North-Eastern US banks, Credit Europe

6. Marketing Performance: Measuring & Improving ROI
Search Engine Opt. Click throughs?
Paid online ads Awareness ?
? New Products Sales leads ?
Satisfaction?
Price Promotions
Loyalty?
New Channels
Social media
Brand advertising •
• •
•
Sales?
ROI? Profits? ?
Stock Price?

7. Problem: smarter marketing in emerging markets
Developed Markets Emerging Markets
Emerging markets needed for growth
But: institutional, Imply ≠ response
cultural & economic • What your research
differences between words mean
countries (ICE) • How much they trust
and react to ads
• How they respond to
marketing

8. Overview
• What do your market research words mean ?
• How do consumers trust and share advertising?
• How do consumers’ hearts, minds, wallets react?
• Case study: Personal care in Brazil vs the U.K.
• Conclusion
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9. What do your market research words mean ?
• Even the best translation leaves true meaning ambiguous
Case: what does ‘environment’ mean in Germany & Turkey?
Leading multinational of cleaning products was surprised to
find out that Turkish consumers had similar enthusiasm
and willingness to pay for environment-friendly product
When probed what they meant by ‘environment’, many
Turkish respondents said: “My home, my family”
To the follow-up question “What about streets, rivers, lakes?”
they responded: “That is the government’s task, not mine”
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10. How much do consumers trust and share advertising?
2,75
• “Consumers in emerging Brazil
vs. mature markets are 2,7
Trust in general advertising
India
more likely to talk about 2,65
China
any kind of online 2,6
advert” Mindshare 2011 2,55
US
• Studies show higher 2,5
UK
trust in offline and 2,45
Netherlands
online advertising in
2,4
emerging markets
2,35
0 50 100
Individualism
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11. How do my (e)MBA students decide on electives ?
• USA: Construct individual utility function based on
information search and then each ‘bid’ on electives
• Turkey: Get together and decide on which elective
they should all take and then let administration know
If this differs for students with >6 years of business
experience, it may reflect cultural differences
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12. Which Route should your ads focus on?
Experiential Route Functional Route
• Evoke Sensations, • Focus on product features
Feelings, Imaginations and benefits
Has higher impact on ad Drives ad affect + cognition,
affect, which lifts purchase which both lift intent in
intent in mature markets Emerging Markets
Germany, France, U.K, Italy, BRIC, MIST, Argentina, Mexico, Chile,
the Netherlands Poland, Morocco, Saudi Arabia, Pakistan,
Thailand, Vietnam, Indonesia, Philippines
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13. Romance & Reliability
• Roberts (2005) identifies 3 key elements of a
Lovemark: mystery, sensuality and intimacy: "We
have passed through the age of information and
knowledge and we now live in the age of ideas.
Successful brands tell stories. They are romantic
and mysterious.“
• Mr Zhou (CEIBS, 2008) “In the end, it’s really the
basic work, whether you have reliable quality, good
service, that are the fundamental attributes of a
brand.”
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14. Customer Attitude Dynamics (Srinivasan et al. 2010)
What marketers do
• Advertising
Marketing • Price
• Distribution
builds
What customers think & feel
Attitudes
Awareness Consideration Liking
which convert
to brand sales What customers do
Brand purchases

15. How does this differ in emerging markets ?
• Pauwels, Erguncu and Yildirim, just published in IJRM
• Explain marketing impact by 2 criteria of attitude
dynamics
– Responsiveness to Marketing
– Conversion to Sales
• We show that attitude dynamics (and thus marketing
effects) differ for emerging vs. mature markets
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16. 1) Responsiveness: can marketers move the attitude?
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17. 2) Conversion: does it translate into sales/profits ?
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18. Cultural
Differences
- ndividualism
I
Marketing Response
- Uncertainty av Attitude Dynamics: of each attitude to:
- ower Distance
P Stickiness, Conversion
- Ad Awareness - dvertising
A
- onsideration
C - Distribution
Economic
- Liking - rice
P
Differences
- ncome
I
- egal Protection
L
- ompetition
C
Marketing Effectiveness
-Sales

19. Case study: FMCG in Brazil vs U.K.
• Recent Data for 3 brands x 2 personal care FMCGs
• Econometric model of marketing, attitude, sales
Controls for other potential differences:
1) Brands: same brands in emerging/mature market
2) Market (share) position: similar positioning, share
3) Similar potential: for attitude metrics
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20. Advertising Response in Emerging vs Mature Market
category 1 category 2 TOTAL
0,020
0,015
AD AWARE 0,010
Emg > Mature 0,005
0,000
0,008
0,006
CONSIDER 0,004
Emg << Mature 0,002
0,000
0,012
0,010
LIKING 0,008
0,006
Emg << Mature 0,004
0,002
0,000 18

21. Sales Conversion in Emerging vs Mature Market
category 1 category 2 TOTAL
0,05
0,04
0,03
AD AWARE 0,02
Similar 0,01
0,00
0,20
0,15
CONSIDER 0,10
Emg > Mature 0,05
0,00
0,25
0,20
LIKING 0,15
Emg << Mature 0,10
0,05
0,00 19

22. ‘Cost More’ Sales Conversion: + Emg, - Mature Market
category 1 category 2 TOTAL
0,04
0,02
0,00
-0,02
-0,04
-0,06
-0,08
-0,10
-0,12
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23. Love Marks or Safe Bets ?
Low sales High sales
conversion conversion
Low response to Liking Emerging Consideration Emg
marketing
Awareness Mature Cost More Mat (-)
High response to Consideration Mat Liking Mature
marketing
Awareness Emg Cost More Emerging
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24. As illustrated in US-China debates on what a brand is
• “Qualitative research reveals that the Chinese consumers
feel the need to wear at least three branded items to feel
comfortable at work. Yet, when probed further, they were at
a loss, unable to define the features of a brand. However,
they had no difficulty describing the product. It seems that
for them, the product is the brand. The emotional
connection is simply absent” (Lindstrom 2011)
• Advani (2006) : "We are trying everyday to make Lenovo a
global brand. Our goal is, not only people here but also
people around the world know us. They will have an
emotional connection with Lenovo. Becoming a name is
one thing but having a deep emotional connection with the
company is quite another. That is what our aspirations are:
to become a brand that people around the world love.” 22

25. KEY TAKE AWAYS
• You should probe for what words mean exactly
• You should use higher trust in marketing & research
• You should check which attitudes (cognition, affect)
translate most into behavior in emerging markets
• You should probe for the attitude response to
advertising (higher-lower), price (good-bad),…
• You should verify how consideration is driven by
(online or offline) word-of-mouth
• Quant needs to be validated by Qualitative Research
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26. Want to learn more ?
• It’s not the size of your data, it is how you use it: how to market
smarter with analytic dashboards
• Your free copy at: koen.pauwels@ozyegin.edu.tr
• Website: www.marketdashboards.com
• LinkedIn/Twitter: koenhpauwels
• Facebook: http://www.facebook.com/pages/
marketdashboardscom/207532115957700

27. The rise of the middle class
• Even in countries with high income inequality (e.g. Brazil,
Turkey), we see a strong rise of the middle class since 2001
• Buying in food, cleaning, personal care much more equal
• Narrow focus on top quarter of consumers would leave
more than half of the market to competition!
• From ‘high ground’ expensive products in mature markets
to ‘good enough’ less expensive in emerging markets
• But for travel, recreation, culture: top covers 60% of market
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