Opportunities and Risks of Effective International Advertising Strategies

OPPORTUNITIES AND RISKS
OF EFFECTIVE INTERNATIONAL
ADVERTISING STRATEGIES

Bachelor thesis
By Víctor Clar Bononad
Matriculation number: 193707
Summer Semester 2008

CONTENTS

1. Introduction………………………………………………………………………………………. p. 4
1.1. History
1.2. What Is Modern Advertising?
1.2.1. Definition
1.2.2. Art & Science
1.2.3. Build the Brand
1.2.4. Today’s Revolutions
1.2.4.1. Globalisation
1.2.4.2. New Communications and Media

2. Advertising and Marketing Concepts………………………………………………. p. 11
2.1. The Marketing Mix
2.2. Marketing Communications
2.3. The Advertising Plan
2.4. The Advertising Campaign

3. International Marketing and Advertising………………………………………….p. 18
3.1. Standardization vs. Differentiation
3.2. The International Marketing Mix
3.2.1. The Product
3.2.2. The Price
3.2.3. The Place
3.2.4. The Promotion

4. The International Advertising Environment………………………………………p. 28
4.1. The International Advertising Industry
4.1.1. International Branding
4.1.2. The Advertising Agency
4.2. Demographic and Economical Conditions
4.3. Cultural Environment
4.3.1. What Is Culture?
4.3.2. Elements of Culture
4.3.2.1. Language
4.3.2.1.1. Verbal Language
4.3.2.1.2. Nonverbal Language
4.3.2.1.3. High- & Low-Context Cultures

2

4.3.2.2. Needs and Values
4.3.2.3. Religion and Moral
4.3.2.4. Customs and Consumption Patterns
4.3.3. Cultural Classification
4.3.3.1. Hofstede’s 5-D Model
4.3.3.2. Intercultural Subcultures
4.3.3.3. Culture-Bound Products and Universals
4.4. Political and Legal Environment
4.4.1. Political Issues
4.4.2. Legal Differences
4.4.3. Self-Regulation
4.5. Social Responsibility
4.6. The New Conversational Media

5. Research and Objectives…………………………………………………………………. p. 58
5.1. International Research
5.2. International Target Groups
5.3. Setting Objectives

6. The International Advertising Strategy…………………………………………… p. 65
6.1. The Creative Strategy
6.1.1. Creativity in Advertising
6.1.2. Creativity in an International Environment
6.2. The media strategy

7. Measuring Effectiveness…………………………………………………………………… p. 73

8. Conclusions………………………………………………………………………………………. p. 75

9. Bibliography…………………………………….……………………………………………. p. 79

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1. INTRODUCTION

1.1. HISTORY

Advertising has been always present in human civilizations. In ancient times,
Egyptians created sales messages in papyrus wall posters. Commercial
messages have been found in the ruins of Pompeii. Wall or rock painting for
commercial advertising can be traced back to Indian rock-art paintings, in the
year 4000 BC. And in fact, nearly all monuments could be considered just as
big propaganda, a certain form of political or governmental advertising: the
pyramids of Gizeh reflect the eternity of the pharaohs, the Vatican the power
of the Catholic Church, the City of Arts and Sciences in Valencia is the new
image of modern Valencia, the City Hall and Roland in Bremen represent the
liberty of Bremen… Well, going back to proper advertising, the first print ads
were published in English newspapers in the 17th Century. They promoted
books, newspapers, medicines and other products that became more
affordable thanks to the technological progress.

In fact, modern advertising roots in the Industrial Revolution, such progress
made mass-production possible and producers had to find new markets and
expand existing ones to maintain profits and keep control over prices. At this
time, retailers and wholesalers had the power to decide which products were
offered, so manufacturers branded goods and advertised such brands to
appeal to the middle class customers so that these would ask for the
products.

As the economy was expanding during the 19th century, the need for
advertising grew at the same pace. In the 20th century, after the Second
World War, two big events changed advertising: the welfare state and the
marketing concept. When the welfare state was created, working classes had
enough income to purchase products. Therefore, advertising, which was
saturated in the middle classes, started to target lower classes too. And
modern marketing was born with the marketing concept, first articulated by
General Electric, shifting the question from ‘what do we want to sell’ to
‘what does the consumer want to buy’.

It was also during this last century when international trade emerged with
power. Historically, the US was vast enough for corporate expansion, but at
the early 1900s some American firms started to expand to other countries.

4

The globalisation trend slowed down between the 20s and 40s because of the
Great Depression and the Second World War. But after the war, it was the US
who really started to invest outside, trying to strengthen the devastated
European countries mainly to avoid communism expansion. After the conflict,
the relative international peace, together with the creation of the
International Monetary Fund and General Agreement on Tariffs and Trade
encouraged the growth of international trade.

The 1960s was a golden decade for
the advertising industry: advertising
had a more scientific approach and
creativity was allowed to shine,
producing impacting messages
which appeared tempting to the
eyes of the consumers. Volkswagen
Beetle’s “Think Small” campaign
was the first one to promote a
‘unique selling proposition’,
associating a brand with a specific
idea in the mind of the public. See
FIGURE A:

FIGURE A: “Think Small” print ad.
Source: Google Images

And we finally arrive to the Communication Revolution. With Internet,
destruction of traditional mass media (TV, radio and newspapers) didn’t
happen, as some experts thought it would. Instead, the trend was an increase
in media clutter and fragmentation brought on by the web and digital media.
Marketing through the Internet opened new frontiers for advertisers and led
to the ‘.com’ boom of the 1990s.

In the international sphere, new markets emerged in the last decades of the
20th Century making globalisation truly global: the fall of communism opened
the markets of many countries, some underdeveloped countries like Brazil,
China and India have become important players in international trade, tariff
unions like the NAFTA between Canada, Mexico and the USA or the European
Union have suppressed many trade barriers.

5

The combination of these two phenomena (the new information technologies
and globalisation) fosters the growth in international advertising. This is
reflected in the fact that New York’s Madison Avenue is no longer the centre
of advertising, there are main leading ad cities all around the world: Buenos
Aires, London, Tokyo, Sao Paolo, Shangai...1

1.2. WHAT IS MODERN ADVERTISING?

1.2.1. DEFINITION

Due to the relative youth of the topic as subject of study and its particular
nature, there are numerous definitions for ‘Advertising’. As a general
accepted one I will take Philip Kotler’s:

“Advertising is any form of non-personal presentation and promotion of
ideas, goods or services by an identified sponsor.”

We can find a more complete one in “Essentials of Contemporary Advertising”
by William F. Arens and David H. Schaefer:

“Advertising is the structured and composed non-personal communication of
information, usually paid for and usually persuasive in nature, about
products (goods, services and ideas) by defined sponsors through various
media.”

However, we can find all type of definitions, some of them may even sound
lyrical, like my personal favourite one, from Lluis Bassat’s (President of the
WPP Group Spain, Creative President of Ogilvy Europe… in short: ‘the Spanish
advertising guru’) book “El Libro Rojo de la Publicidad” (“the Red Book of
Advertising”):

“ADVERTISING IS THE ART OF CONVINCING CONSUMERS.”

1
Sources of this section:
- Wikipedia
- “International Advertising” – pgs. 1-20
- “The Advertising Handbook” - pgs. 5-13

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1.2.2. ART & SCIENCE

One thing is for sure: advertising is part of marketing. All marketing branches
have a magic formula based on a certain proportion of science and art.
Advertising is the one that most art has. But the science is also there, the
counterweight, the alter ego that prevents the publicist forgetting about the
market’s reality. A kilo of adverting can have 999 grams of rationality, but it
will shine and it will be remembered for its gram of creativity.2

Gerard J. Tellis in his book “Advertising and Sales Promotion Strategies”
supports this point saying that one basic principle of advertising is that it
depends on: the scientific judgement of the businessmen, the natural
creativity of the people and luck. There have been many studies about the
influence and predominance of these three factors. The conclusion is that
creativity has not diminished its importance while science illuminates the
paths for the communication strategies, art directors and copywriters.
Science does not substitute creativity but reduces the dependence of luck. 3

The role of advertising has always been inform and convince, but also seduce
and persuade. Seducing requires tiny drops of passion and utopia. The
advertising must talk to the consumer, promise him something, seduce him.
Saying ‘how beautiful I am’ we talk about the product, but if we say ‘how
happy you will be with me’ we talk to the consumer about the benefits that
he will receive.4

1.2.3. BUILD THE BRAND

Agencies claim that advertising’s power lays in building long-term brand
loyalty, which is unquantifiable. The ‘power’ of a brand is eroded by greater
choice of brands. But a customer doesn’t think only in one brand when
thinking in a product. Each brand has to try to be in the short list, a mental
relation of brands that are the first ones to come to our head as ‘favourites’,
‘liable’ or ‘best’. Customer loyalty is not won by impacts but with a gradual
process. The best advice is to ascend step by step. If the customer fixes its
attention in the brand, that’s already a success.5

2
Cf.: “El Libro Rojo de la Publicidad” – pg. 121
3
Cf.: “Estrategias de Publicidad y Promoción” – pg. 5
4
5
Cf.: “El Libro Rojo de la Publicidad” – pgs. 39, 79

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Some time ago, in the early 90s, some people predicted the end of the
brands, particularly after the “Marlboro Friday”, one of the most important
moments in recent advertising history. The 2nd of April 1993, Phillip Morris
announced a 20% price reduction for their Marlboro cigarettes in order to fight
against the cheap brands that were increasing their market share. The experts
cried out that it was a terrible move, the end not only of Marlboro but also of
all image-based brands. They defended that if a prestigious brand like
Marlboro, with such an advertising icon like the Marlboro Man (an image and
identity built up so carefully and constantly over so much time) was so
desperate that it had to enter a price war against unknown cigarettes, every
concept of ‘brand’ lost validity. In fact, not only did Philip Morris’ share value
fall, but also other big brand’s like Coca-Cola and Heinz. Experts said that
branding was dead and the advertising industry entered a crisis. However,
nothing like that happened. In fact, it helped to understand the value of the
brand name and no single brand, not even Marlboro was doomed. And right
now brands stand up even more powerful.6

Why do brands have such a power? Because brands are a guarantee, but also
an emotion. The products are rational but brands are emotional, although it
is just an idea in the buyer’s mind. That is the challenge for today’s
advertising: SELL TODAY AND BUILD THE BRAND FOR TOMORROW.7

1.2.4. TODAY’S REVOLUTIONS

We are living times of change, and these are expected to be each time more
and faster. Two big factors or phenomena shape not only today’s industries
and the new products, but also our current economies, societies and everyday
life: globalisation and the new communications and media.

1.2.4.1. GLOBALISATION

The internationalisation of business operations is not new, but what is new is
the speed and extension at which the process has happened lately and is still
happening nowadays. It is also quite amazing that people all around the globe
smoke the same cigarettes, go jogging with the same shoes, drink the same

6
Cf.: “No Logo” – pg. 40
7

8

refreshments and eat the same hamburgers, despite belonging to completely
opposite cultures.

Globalisation is a phenomenon that feedbacks itself, magnifying it up to the
nth power. The globalisation of the economy both forces and helps businesses
to expand out of their homeland and place themselves as international
competition players. Businesses go global for several reasons:

- The home market may be saturated and new markets are a good exit
for overproduction.
- The increase of competition makes the businesses more sensitive to the
costs of salaries and raw materials.
- In many industries, the product life cycles have shortened. Innovations
become more profitable by selling in other markets.
- Some industries may even be useless in their home countries but can
find their way to be profitable for others, like for example with big
industries like aircraft, not worthy only taking into account one single
market.
- The disadvantages of seasonality can also be lessened. E.g.: switch ski-
selling in northern to southern hemisphere and vice versa when the
summer arrives.
- In many sectors, such as luxury goods, there is the same consumer
behaviour, so the same product can be exploited in more markets.
- Other firms from outside may be more competitive because they sell
better products or at a better price, so going outside is a way to strike
back.
- Foreign markets may present higher profit opportunities.
- The more customers, the bigger the economies of scale and the less the
cost of producing.
- If a firm operates in more countries, the risk is diversified.
- The customers are leaving the home country.
- The technical advance in the transports and communications increase
the chances of mobility making it much easier.8

This tendency marks a dynamic in which through internationalisation firms can
both expand to foreign markets but also receive more competition from
abroad. So globalisation also changes the environment in which the business
already operate. However, internationalisation is not relevant for all

8
Cf.: “Werbung” - pg. 388 & “Marketing Management” - pg. 385

9

businesses in the same way. For small firms it may be completely irrelevant,
while for middle-sized with a local or regional action area, national expansion
should be considered first.

1.2.4.2. NEW COMMUNICATIONS AND MEDIA

Traditional mass media is saturated with advertising, and it is increasingly
difficult to contact and impress the ad-vaccinated consumer of today’s media
and information society. Historically, advertisers have been the exclusive top-
down communicators, in control of what information is released, when, to
whom and through which communication channels.9 But the Internet has
democratised media, giving the individual important tools for making
themselves heard.

Internet is now an important part of our daily life, at work, at home… In soon
all of us will have constant access to the web in our cell phones! The
interactivity it offers makes audiences actively involved in the ‘management
of media culture’, inventing new types of consumer interaction, participation
and productivity. So there is a shift from mass media to the new media of
mass conversation. Conversational media are the communication services of
the global network economy and information society.10

Youtube, Veoh and similar website are excellent platforms for conversational
media. They diversify and extend the strategies available to independent
producers to include bottom-up approaches. These videos catch the attention
of the brands, sometimes even from mass media, adding further fuel to a
wider conversation in professional marketing communication networks about
the role of consumer-generated brand communications in marketing
strategies.11

All of this happens at a global scale, at a fairly relative low price. You will
find a deeper analysis in section 4.6: “The New Conversational Media”.

9
Cf.: “Advertising and New Media” – pg. 1
10
Cf.: “Advertising and New Media” – pg. 2
11
Cf.: “Advertising and New Media” – pgs. 3-4

10

2. ADVERTISING AND MARKETING CONCEPTS

For a better understanding in international advertising, first we need to set
the basic knowledge with some concepts, especially to include advertising as
an important part of Marketing.

2.1. THE MARKETING MIX

There is a common mistake amongst the general public, and this mistake
consists in considering ‘advertising’ as everything that the business says to the
consumers. The correct term for these various tools is marketing
communications, and advertising is just one type.

Marketing is an organisational function and a set of processes for creating,
communicating and delivering value to consumers and for managing customer
relationships in a way that they benefit the organisation and the
stakeholders.12

The essence of this function is the Marketing Mix, the set of marketing tools
that the business uses to pursue its marketing objectives in the target
market13, grouped in four key aspects, the 4Ps: Product, Price, Place and
Promotion. Promotion involves disseminating information about a product,
product line, brand or company.14 Advertising is one of the promotional tools,
as you can see in FIGURE B:

FIGURE B: THE MARKETING STRATEGY
Source: “Essentials of Contemporary Advertising” – pg. 5

12
Cf.: “Essentials of Contemporary Advertising” – pg. 4
13
Cf.: “Marketing Management” – pg. 15
14
Cf.: Wikipedia

11

The 4Ps was formulated by McCarthy in 1960, and it represents the tools from
the seller’s point of view. Robert Lauterborn suggested in 1990 that from the
buyer’s point of view, the 4Ps corresponded to the 4Cs:

- Product = Customer Solution
- Price = Customer Cost
- Place = Convenience
- Promotion = Communication

Winning companies will be those meeting the customer’s needs in an
economical and convenient way, with an effective communication.15

2.2. MARKETING COMMUNICATIONS

The different promotional tools conform the Marketing Communications Mix.
The company must consider four different factors when developing the
promotional mix or marketing communications mix:
- The market position: advertising is better to keep market leaders in
their position, while smaller competitors gain more with sales
promotion.
- The type of product: consumer markets spend more on sales
promotions and advertising, but business marketers spend more on
personal selling.
- The buyer-readiness stage: advertising is more important at the
beginning to raise awareness, but personal selling influences more
when closing the sale.
- The product life cycle stage: in the introduction phase, advertising
and personal selling are important to sell the products to early
adopters, while at the decline only sales promotion is important to sell
the remaining stocks.16

All the different elements must be in harmony. All these communications or
brand contacts (sponsored or not) are melt together in the customer’s mind
creating one integrated product that determines the customer’s perception of
17
the company. Inconveniently, most companies rely in only one tool of the

15
16
17

12

marketing communications mix while some others now understand better that
all parties involved in a campaign should be coordinated and work together.
The different departments must blend together their messages to achieve
common goals, and therefore obtain synergy and be more competitive in an
increasingly sophisticated market.18 So it is imperative for firms to embrace
Integrated Marketing Communications:

“Integrated Marketing Communications (IMC) is the process of building and
reinforcing mutually profitable relationships with the employees, customers,
other stakeholders, and the general public by developing and coordinating a
strategic communications program that enables them to have a constructive
encounter with the company/brand through a variety of media or other
19
contacts”

The IMC recognises the added value of a comprehensive plan that evaluates
the strategic roles of the different communicative tools and combines them to
provide a clear and consistent impact by the seamless integration of discrete
messages.20

With this idea in mind, many big advertising agencies bought businesses
specialised in sales promotion, public relations and direct marketing in order
to be able to offer the client the whole package. However, few clients liked
the idea and preferred to put together the specialised agencies themselves.
This is because large companies have different professionals for each tool,
who do not really know about the other fields and that usually have different
favourite outside agencies. They defend that it is better to choose the best
agency for each purpose, and not a worse one only because it belongs to a
‘superagency’.21

The level of IMC to which a firm operates depends on the corporate culture,
the relation firm-agencies and also the relation between the different
agencies. An example of a firm that does a good job with IMC is Apple Inc.
Apple and its CEO Steve Jobs are well known for having everything strictly
centralised and under control, up to the tiniest detail. In every single activity
that they do towards the public you can perceive the same tone: the sense of
design, simplicity and ‘coolness’ is reflected in the Mac vs. PC spots, the iPod

18
Cf.: “Advertising Campaign Strategy” - pg. 15
19
20
21

13

Silhouettes print ads, the Mac Conferences, even in the purchasing experience
at an Apple Retail Shop.

2.3. THE ADVERTISING PLAN

Planning is a key factor for successful advertising. The advertising plan is a
natural consequence of the marketing plan. It starts where the marketing plan
finishes: setting the advertising goals, which then are converted into specific
advertising objectives (what do we want to achieve in respect to consumer
awareness, attitude and preference). The advertising strategy is designed to
achieve these goals. It consists of two ‘substrategies’:

- Creative Strategy: the ‘making of’. Here ideas are developed to reach
the target audience, after specifying which product benefits will be
communicated.
- Media Strategy: the timing and different communication channels in
which the ad (or other actions) is going to be exploited.22

On the following diagram (FIGURE C) you can see the entire process: first how
the marketing acts, then how the advertising objectives are drawn, later the
strategy is developed and finally we have an ad and the timing. The boxes
that directly influence in the advertising process are in bold, This is also the
structure that I am going to follow along the rest of this project. (The figure
lacks the development of the other elements of the Promotional Mix.)

22
Cf.: “Essentials of Contemporary Advertising” - pg. 196

14

FIGURE C: PLANING PROCESS
Source: “Estrategias de Publicidad y Promoción” – pg. 36

Philip Kotler refers to the process in another way. He defends that the
advertising program starts by the identification of the target and the buying
motives. Once that is done, five major decisions have to be made to develop
the advertising program, “the 5Ms”: Mission (what are the objectives?),
Money (how much can we spend?), Message (what message should be sent?),
Media (what media should be used?), Measurement (how are results
evaluated?).23 See FIGURE D.

23

15

FIGURE D: THE FIVE Ms OF ADVERTISING
Source: “Marketing Management” – pg. 591

Creative ideas are the campaign’s heart and soul of a campaign, but the
strategy is the brain. Strategy gives the campaign its competitive edge and
also provides a framework for all those elements involved in the campaign.
But a major problem for strategies is that they take a long time and effort to
develop, sometimes even running the so-called ‘paralysis by analysis’ risk. Ten
years ago there was a contingency plan for every single thing that could go
wrong. Today markets change so quickly that contingency plans are no longer
worthy. Instead, firms should have sufficient flexibility to respond to changing
situations in a timely manner.24

2.4. THE ADVERTISING CAMPAIGN

The advertising campaign is the output of the entire process, a series of
advertisements and the activities that help produce them, which are designed
to achieve interrelated goals. It is the best way to plan promotional activities
because it unifies all promotional efforts, interrelating all activities, making
ads have a greater retentive value. Consumers will remember more and better
the ads if there are other actions of the promotional mix supporting,
reinforcing or even intensifying the message. Given the case, it could be
called a ‘marketing communication campaign’.25

24
25

16

What makes a campaign different from a collection of ads is the degree to
which each execution is connected. A campaign offers continuity by
maintaining some elements that can be observable (physical) or something
one thinks about (psychological).26

26

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3. INTERNATIONAL MARKETING AND ADVERTISING

3.1. STANDARDIZATION VS. DIFFERENTIATION

International Marketing is the development of marketing activities in more
than one land, starting from two until all the countries on Earth. The very
first step in international marketing strategy is to choose Standardisation or
Differentiation (sometimes other terms like specialisation or customisation
are used instead of Differentiation). Will the firm design a unique
standardized marketing concept to be applied equally in all markets, or an
individual programme will be established for each one considering national
idiosyncrasy?

The standardisation strategy is the handling of the several markets under the
same uniform marketing mix. This situation is known as Global Marketing,
while the opposite country-specific differentiation is called Multinational
Marketing.27 See FIGURE E.

FIGURE E: BASIC CONCEPTS IN INTERNATIONAL MARKETING
Source: “Werbung” - pg. 391

The Marketing Concept defends that consumer’s needs are different and that
marketing programmes are more effective when designed specifically for the

27
Cf.: “Werbung” - pg. 390

18

target group, ant this idea is also applied to foreign markets.28 However,
there are many thesis against and in favour of both strategies. Theodore
Levitt was one of the first defenders of Standardisation with an article in 1983
in the Harvard Business Review. He wrote:

“The globalisation of markets is at hand. With that, the multinational
commercial world nears its end, and so does the multinational corporation.
[…] The global corporation operates with resolute constancy – at low relative
cost – as if the entire world were a single entity; it sells the same things in
the same way everywhere. […]

The world’s need and desires have been irrevocably homogenized. This makes
the multinational corporation obsolete and he global corporation absolute
[…]

Cosmopolitanism is no longer the monopoly of the intellectual and leisure
classes; it is becoming the established property and defining characteristic of
all sectors everywhere in the world. Gradually and irresistibly it breaks down
the walls of economic insularity, nationalism and chauvinism. What we see
today as escalating commercial nationalism is simply the last violent death
rattle of an obsolete institution. […]

The modern global corporation contrasts powerfully with the aging
multinational corporation. Instead of adapting to superficial and even
entrenched differences between nations, it will seek sensibly to force
suitable standardized products and practices on the entire globe.”

It is true that many consumer needs and wants around the globe are growingly
similar because of the increasingly analogy of social-demographic and
psychographic characteristics amongst the market segments, as well as the
better mobility and the communication technologies. This is what Marshall
McLuhan called “the global village” to describe the emerging world tightly
linked through telecommunications.29 The convergence of the consumer needs
leads to a worldwide homogenization of the demand.30

28
29
Cf.: “International Advertising” – pg. 25
30
Cf.: “Werbung”– pg. 390

19

Standardisation is embraced by big global brands such as Coca-Cola, Marlboro,
Nike… But even these, that may seem pretty much the same from one country
to the other, they adapt in some degree to regional tastes. For example:
Coca-Cola has more gas in Brazil and tastes sweeter in France, while
McDonalds has no beef hamburgers in India…

If the differences between the consumers in each country are more than the
similarities then differentiation should be chosen instead of standardisation.
The adaptation to local tastes will make the product or service more suitable
and have a higher competitive advantage. The economies of scale will not be
as big, but national concepts in an internationally directed business will
certainly generate profitable synergies for the global brand.31

The decision of taking one path or the other corresponds to Michael Porter’s
competition analysis of cost or quality market leadership. See FIGURE F.

FIGURE F: STRATEGIC DECISIONS IN INTERNATIONAL MARKETING
Source: “Werbung” pg. 392; taken from “Interkulturelles Marketing” by Müller/Gelbrich,
München 2004, pg. 462

31

20

The more the marketing mix is standardised, the more economies of scale can
be generated but the more inflexible is a firm to react. Standardisation is
production-oriented and aims at reducing costs, while differentiation is
directed at the particular market factors.32

In the real world, it is not such a radical option, there are many mixed
possibilities. The position you take towards one or the other depends on the
product itself. It is true that many consumer needs are globally uniform,
“cross-cultural-groups” are also a reality… But in many other types of
products this is not the case because the differences among the countries are
too big.33

3.2. THE INTERNATIONAL MARKETING MIX

The marketing environment has changed in the last decade, and the forecast
for the immediate future is more change. For a marketing programme to be
successful, all the components of the equation must be in harmony, and this is
even more difficult to obtain operating internationally. We must have the
right product, with the right promotion, at the right price and place. 34

3.2.1. THE PRODUCT

Getting the right product is more difficult nowadays, requiring a deep
understanding of how consumers and markets change. Years ago it was much
more simple, marketing-oriented companies produced what consumers
wanted, but now consumers often do not know what they want. We live in
advanced times, and we are provided with all type of products that cover all
our necessities. So as it is easier for consumers to focus on feelings than what
they really want, researchers ask for them about their complaints.
Researchers are focusing less on needs and wants, but more on their current
choice dissatisfactions. Consumers are also more sophisticated; they make
their decisions based on ‘microissues’. So now for firms, every tiny aspect
can be considered to get an edge.

32
33
34
Cf.: “Advertising Campaign Strategy” – pg. 4

21

However, if there is no valuable information in the consumers’ problems for
the business to exploit, the research focus is shifted from consumers’
problems to consumer interests. And if there is nothing worthy of promotion
in this aspect, then advertisers try to build a psychological value into a
35
product with a personality or brand image.

International product planning requires marketers to understand the needs
and wants of consumers in different markets and determine how the firm’s
products can satisfy these. And they do not only have to decide which
products have to be offered, but also if modifications are necessary. 36

One option is Product Standardisation, to sell exactly the same product
abroad as in the home market. This is especially advantageous because of the
reduction of costs. More economies of scale are generated but also the
research, development and design costs are saved. Standardisation is worthy
or not depending on product category. Non-durables are believed to require
more differentiation because they are directly influenced by tastes, habits
and customs, which are country-specific. Industrial products are more suitable
for standardisation because manufacturers are driven by efficiency, and
standardisation reduces costs. High-tech products are the same worldwide
because it is a fairly recent and modern industry (not affected by national
specification apart from slight adaptations like the letters in the keyboard…)
and also because all the high-tech users around the globe share the same
language.

A mandatory product adaptation occurs when a product adapts to a country
because it has no other choice. Examples: frozen foods cannot be marketed in
countries with retailers that do not have freezer facilities; variations in
electrical systems due to the differences in frequency and voltage;
government regulations about product standards, which can function as a non-
tariff barrier.

A discretionary product adaptation happens if there are differences in
consumption patterns. The product may not be purchased by the same
consumer group in the foreign market, or for the same purpose, maybe the
preparation method is different, the advantages and disadvantages of the
product may not be of the same relevance… Campbell Soup failed in the 50s

35
36

22

when they were introduced in the UK because English housewives were
37
unfamiliar with condensed soups.

One study revealed that at least one marketing mix adaptation is made in 80%
of the exports38. Sometimes, so many product modifications can make
standardisation not longer profitable, so a new product should be developed.

3.2.2. THE PRICE

Setting a standard worldwide price means having exactly the same uniform
price for a product all around the world. But it can be too high for consumers
in less developed countries, or too cheap for consumers with high purchasing
power in industrialised economies. Usually firms use a differentiated pricing
strategy, where the price is based on a number of factors to take account of
the many local market considerations that play an important role in setting
product prices. These factors are: objectives, competition, consumer
demand, government and regulatory considerations.39

When selling abroad, multinationals also face several pricing problems that
prevent a standardised pricing strategy. There is price escalation because of
the profit margins that the intermediaries add. Transfer prices (the price
that the firm sets for another unit in the company) are also a problem to take
into account because it affects directly the amount of tariff fee imposed.
Dumping could make the firm face serious legal action. Inflation and
exchange rates are determinant factors, causing for example grey markets,
like for example with the first iPhone. The iPhone was very expensive in
Europe and many Europeans bought in the US taking advantage of the weak US
Dollar.

3.2.3. THE PLACE

Firms have to decide about channels between countries (exporting,
manufacturing abroad, licensing, joint ventures, etc) and within countries
(wholesalers and retailers).40

37
Cf.: “International Advertising” – pgs. 28-30
38
39
40

23

Distribution channels change a lot from one country to another. A
standardised approach may offer economies of scale, but the variation on
number, size and nature of wholesalers and retailers, the differences in
infrastructures and packaging requirements make that when multinationals
first enter a country they rather work with local distributors that have good
local know-how, but normally there are frictions. Multinationals should first
choose the right distributor and invest in them to get a better and more
efficient relationship.41

Another option is to market the products directly to consumers via
catalogues, home shopping networks and especially through Internet.
Computer databases enable businesses to target narrowly defined consumers
with a minimum waste.42

3.2.4. THE PROMOTION

From all the marketing mix, advertising is the most difficult to standardise.43
Advertising is standard when exposed internationally without changing the
topic, text or picture, except of course for the necessary translation.
Basically, advertising can be classified in three categories: 44

- National products with national advertising
- International Products with national advertising
- International products with international advertising

Despite the dimension of globalisation, advertising of the last type is not very
common.

The experts in favour of standardised campaigns say that the consumers have
the same needs all around the globe and therefore such needs can be
addressed in the same way. Others defend that consumers differ from one
country to the other, and according to this only customised campaigns should
be realised to target them. Nevertheless, the needs may be similar or even
the same, but we cannot assume that they can be addressed globally in the

41
42
43
44
Cf.: “Werbung” – pg. 402

24

same way.45 Besides, the role that advertising plays in society is not the same
in each country.

Some agencies jumped on the ‘globalisation bandwagon’ while others stay
committed to customisation. BBDO and Saatchi & Saatchi are firm believers,
but Grey Advertising suggests that each world business challenge is unique so
it defends a “global vision with a local touch”.46

If the company adapts only the campaign, it goes through a process called
communication adaptation. If both product and communication are change,
it is a dual adaptation. Considering the message, a firm has three
possibilities:

- Use the same message all around the globe, only changing the
language, name and colours if necessary. Example: in Spain, Mitsubishi
changed the name of its model ‘Pajero’ (in Spanish means
‘Masturbator’) to ‘Montero’ (‘Mountaineer’) for obvious reasons…
- Use the same theme globally but adapt the copy to each local
market. This is what Absolut Vodka does, under the claim ‘In An
Absolut World’ we can see different local views of the perfect Absolut
world (Madrid with a beach, Times Square with master art pieces
instead of ads…). See FIGURE G1

FIGURE G1: MADRID IN AN ABSOLUT WORLD

45
46
Cf.: “International Advertising” - pg. 56

25

- Develop a pool of ads from which each country selects the most
appropriate.47 Absolut also does this in its IAAW campaign with ads that
address universal problems, like global warming, sex discrimination,
false politic promises, etc (See FIGURE G2). They are then published
nationally if suitable.

FIGURE G2: POLITICIAN & PREGNANT MAN IN AN ABSOLUT WORLD

Not only creative considerations have to be taken care of, also media
decisions require international adaptation because media availability changes
from in each country.

Another factor to take into account is the Country-of-Origin Effect, due to
which consumers evaluate the nationality of the products. Some have
especially positive associations and the firm may want to take use of it. The
use of ‘made in’ appeals fall into three categories:48

- Patriotism: to motivate the purchase of good produced in the home
country. E.g.: Chevrolet used the slogan “Baseball, apple pie and
Chevrolet” in the USA.
- Highlight positive/stereotype attributes enhancing the image of the
product. The Marlboro Man is a clear example of this.

47
Cf.: “Marketing Management” – pg. 397-398
48

26

- Appeals to a particular expertise associated with the country. E.g.:
Grey Goose, a super-premium vodka created in the US that uses the
‘frenchness’ of the ingredients to establish its super premium image.

In this case it also depends on what type of product it is about. For example,
the “Bacardi Feeling” can be communicated and understood worldwide,
because of the rum and its Caribbean style and values, understood in the
same way everywhere. Milka is promoted in Germany as being made with milk
from the Alps, considered the best in the country. But in Belgium such an idea
would make no sense because they have a rich chocolate culture, and for
them the best milk comes from the Ardennes.

27

4. THE INTERNATIONAL ADVERTISING ENVIRONMENT

It is important for the advertiser and the advertising agency to understand
how the industry works. Acquiring and interpreting information from the
foreign marketplace relating to each of the following areas is crucial for
spotting opportunities and risks and the development of marketing and
advertising strategies.

4.1. THE INTERNATIONAL ADVERTISING INDUSTRY

In FIGURE H (below this lines) you can see a table with the twenty largest
worldwide advertisers. Most of them belong to the automobile, food and
personal hygiene industry.

FIGURE H: (part of) THE TOP 100 GLOBAL MARKETERS
Source: Ad Age Data Center
Spendings in Millions of US$

All of these face the question not only of standardised campaigns, but also of
brand name and logo. This is also called International Branding.

28

4.1.1. INTERNATIONAL BRANDING

In international markets, brands have the same functions: differentiate the
product from the competition and facilitate the purchasing decision by
lowering the risk. The difference is that in an international level, the brand is
judged by the cultural background of each of the countries. The
standardisation of the name and logo is normal when the objective is to build
a global brand. In such case, the name must be pronounceable, have similar
associations and meaning, protected legally… An exception is when a
corporation enters a market by acquiring a brand; changing both the name
and logo would destroy the recently purchased brand equity, but in order to
have a degree of standardisation, you can do like Unilever did with its
‘Heartbrand’ icecream product line, which has always the same logo but
keeps the old name, being called differently in nearly every country
(Langnese in Germany, Algida in Italy, Frigo in Spain, Kibon in Brazil, Wall’s in
the UK…).49 See FIGURE I:

FIGURE I: DIFFERENT HEARTBRANDS FROM UNILEVER

AC Nielsen stated that a brand could be defined as global when the following
requirements are fulfilled:
- Annual turnover at least 1 billion US$
- Geographical presence in all general regions of the world: North
America, South America, Asia-Pacific, Europe-Middle East-Africa.
- Sales volume outside of the homeland must be at least 5% of the
total.50

However, a global brand name does not mean that the corporation also
standardises the product, package or advertising. There is a saying in the
marketing world:

“BRAND GLOBALLY, ADVERTISE LOCALLY”.

49
Cf.: “Werbung” – pgs. 398-399
50

29

4.1.2. THE ADVERTISING AGENCY

The American Association of Advertising Agencies defines an advertising
agency as an independent organisation of creative people an businesspeople
that prepare and develop marketing and advertising plans, advertisements
and other promotional tools. It also purchases advertising space and time in
the different media on behalf of different clients to find customers for their
offerings.51 One of the ways to classify advertising agencies is by being
internal or external to the advertiser.

- In-House Agency: it is cheaper, the company has all the control and it
is easier to coordinate (specially if you approach IMC). You have all the
information you want about the brand, products and company. It gives
the liberty to create a unique style (Benetton for example).52
- External Agency: as it is independent (not owned by media, advertiser
or suppliers) it can bring an objective point of view. They also have
more experience in media and the creation of communicative ideas
because they are exposed daily to a broad spectrum of marketing
situations and problems,53 both here and abroad if we talk about
international agencies and global networks. It is easier to coordinate
international advertising because agency networks offer multi-country
coverage, although there is no guarantee that offices in each county
will be equally strong.54

Managing an international campaign brings problems derived of the
complexity. To be able to develop an international advertising programme,
the need of information and coordination is huge. And the wider the
campaign, the more difficult it gets. In international advertising, marketers
have three possibilities of control that correspond to the standardisation or
differentiation of a firm, affecting directly the relation between the parent
company and the national subsidiaries:

- Centralization: the parent company decides everything about the
global advertising. It corresponds to standardisation. Everything is
conducted in the headquarters, normally in the country of origin. There
are advantages like complete control (which is essential if the marketer

51
52
53
54

30

plans on integrated marketing communications) and easier
coordination. But there are some disadvantages like the lack of ability
to sense changes in foreign markets and the management in foreign
markets will not have motivation and capability to respond correctly to
the national changing environment.

- Decentralisation: local managers in the foreign markets make all
advertising decisions. Promotional programs are tailored to the specific
national needs (Differentiation). It is more difficult to coordinate and
to achieve economies of scale, but it is an optimal approach if markets
are small or the volume of international business and advertising is too
limited to warrant close attention from the headquarters.

- Combination Approach: in practice, there are many mixed forms.
Some promotional decisions are taken at the headquarters others are
left up to local managers. An international (or network) agency can be
designed as a lead agency, responsible for the ‘pattern advertising’
(what is advertised is centralised while how is localised). The result is
an international umbrella campaign in which there is a certain degree
of national variations and adjustments.55

John Hartrey Jr., senior vice president for marketing for Seagram’s global
brands division said: “The idea of a global campaign is not to say here’s one
ad and everybody will use it around the world; it is having the flexibility of
global execution.”56

Advertising agencies can also be classified following the range of services
they offer: full-service, consumer agency, B2B advertising, media buying
services, interactive agency, creative boutiques… 57 Also through their
geographical spam of action (local/regional/national/international). In the
80s and the 90s there was a lot of merging and acquisitions amongst agencies
worldwide in order to build the necessary agency infrastructure to face the
challenge of global clients and international campaigns. This made that
nowadays we have a handful of conglomerates that own most of the big
agency networks and many times also media agencies and some other
businesses of related sectors. For example, Omnicom Group (the largest

55
Cf.: “International Advertising” – pgs. 122-123 & Cf.: “Werbung” - pgs. 396-398
56
57
Cf.: “Essentials of Contemporary Advertising” pg. 60

31

conglomerate of the industry as you can see in FIGURE J) owns BBDO, DDB and
TBWA, three of the biggest agency networks (see FIGURE K).

FIGURE J: (part of) WORLD’S TOP 50 AGENCY COMPANIES
Ranked by worldwide revenue in million US$

FIGURE K: TOP 10 WORLDWIDE AD AGENCIES
Ranked by worldwide revenue from core advertising services in million US$

32

The life in an advertising agency is very dynamic because it is a fast-changing
market. The intense rivalry is reflected in the workforce in several ways: the
contracts are for short periods of time (never indefinite), they are pressured
with possible streamlining, continuous renewal of workers… However, despite
the job insecurity, the challenge of making original spots attracts talented
people to this sector. It is so competitive because of two reasons:

- Agencies offer ad-hoc services; each project is different and adapted
to the client’s needs and problems, so there is a constant pressure to
conceive new creative solutions as well as a complete dedication to the
clients.
- It is easy to enter the market. Only a few qualified people and some
fixed assets are required. From the top 10 agencies in Spain, no one has
more than 300 people. The only thing you need is a client. Take for
example what happened to McCann-Erickson: in 1992, after 37 years
being Coca-Cola’s agency, Coke decided to counterattack the effective
advertising of Pepsi by contracting the services of Creative Artists
Agency, an important but small model agency in Hollywood. The new
original style of CAA made the new spots (the ones of the digitally-
animated polar bears for example) very successful. Coca-Cola gained
market share against Pepsi and displaced completely McCann-Erickson
as the main agency.58

As we have seen, the relationship agency-client is a really important factor
in this industry. The three most successful ways to develop new business are
having clients who strongly champion the agency, having superior ideas and
presentation skills, and cultivating a personal relationship with a network of
top executives. There are four forces influencing the agency-client
relationship, the 4C’s, that need to be taken care about in order to don’t
loose a client:

- Chemistry: a close contact with the client, dine every now and then.
- Communication: constant open communication and a explicit
agreement on mutual contribution for mutual gain.
- Conduct: the image of an agency affects the client’s image too.
- Changes: the client’s market position or policies may change, or new
management may arrive.59

58
Cf.: “Estrategias de Publicidad y Promoción”– pgs. 82, 87-88
59
Cf.: “Essentials of Contemporary Advertising” - pgs. 60, 81

33

4.2. DEMOGRAPHIC, GEOGRAPHIC AND ECONOMICAL CONDITIONS

Demographic, geographic and economical characteristics are important to
evaluate the potential market of a country but also to design the marketing
mix for the specific market.

The first macroenvironmental force to monitor is population because markets
consist of people. Generally speaking, the larger the market’s population, the
more potential it has, but if all the other factors are equal. Only population
figures are not enough.60 The world population has exploded over the last
decades up to more than 6.7 billion and it is said to be 9 Billion in the year
2040 (following the last information from the U.S. Census Bureau for
Worldwide Population Information). Such an increase could be problematic
because certain resources will be scarce (fuel, clean water, minerals…) to
support so many people. Another problem is that population grows more in
countries that can least afford it. More population does not mean bigger
markets unless the consumers have enough purchasing power.61

The population is divided in age groups and the most populous group shapes
de national marketing environment. In western countries, the population
pyramid is turning upside down. While in other emerging economies like
Brazil, 56% of the population is less than 29 years old.62 The age group,
together with other factors like the historical moments they live and the
technological progress, create generations. Each generation normally has their
own characteristics, values and different ways to be approached. For
example, Donald Tapscott named one of the last generations (born between
1077 and 1994) “Net-Gens” and said: “To them, digital technology is no more
intimidating than a VCR or a toaster.”

Another factor to consider is the ethnic. Ethnic groups have specific desires
and buying habits. Ethno-marketing (targeting ethnic groups) is an important
tool in multi-cultural societies. However, marketers have to be careful not to
overgeneralize, within each ethnic group are individual consumers and
sometimes completely different cultures.63 For example: in the US it is very
difficult to target the Asian community because it is composed of many
different countries, cultures and languages (Vietnamese, Filipinos, Japanese,

60
61
62
Cf.: Instituto Brasileiro de Geografia e Estadistica
63

34

Koreans, Chinese…). Hispanics are easier to target because even though they
come from all over Latin America, they share the language, religion and
general values (the importance of family and respect, etc).64

The educational level of the people is something important too, the higher
the quantity of educated people, the more sophisticated the market is and
the higher the supply skills.65

Household refers to the people (related or not) who occupy a housing unit,
and the pattern has changed a lot recently. For example Spain is changing fast
in this aspect. The traditional household was a married couple with three
children, now there are single men and women, homosexual couples, un-
married people living together, single fathers and mothers, divorced, families
that adopted children from other countries… it is also important to consider
the location, where do the people leave. Location makes a difference In
product preferences. Also migratory movements and shifts in population
change a lot from one country to the other.66

The economic environment surrounding the customers is another important
factor because markets require people but also purchasing power. Income
distribution and industrial structure are good indicators of this aspect.
Consumer expenditures are also affected by savings, debt and credit
availability.67

Geography, or in other words: surface, climate, proximity, topography and
available resources affect whether to enter a country.68 Sometimes a country
prefers to enter another country because of psychic proximity. For example,
many firms from the US sell in Canada, England and Australia instead of
Mexico (larger and closer) because they feel more comfortable with the
language, laws and culture. Normally, a company enters countries with an
attractive market, little market risk and with competitive advantages. But
many other considerations have to be taken, like for example Eastern Europe
or Singapur have all of the above-mentioned conditions, but maybe not
enough infrastructures and a small population (respectively).69

64
Cf.: “Advertising Campaign Strategy” – pgs. 257-260
65
66
67
Cf.: “Marketing Management” – pgs. 168-169
68
69

35

The result of all these tendencies is the fragmentation of the mass market
into many micromarkets differentiated by all type of characteristics. Each
segment prefers different things and is approached by targeted media and
distribution channels, which is possible thanks to the advance in transport and
communication technology.70

4.3. CULTURAL ENVIRONMENT

4.3.1. WHAT IS CULTURE?

Culture is the set of meanings, beliefs, attitudes and ways of doing things
that are shared by some homogeneous social group and typically handed down
from generation to generation.71 People absorb their culture and consequent
values unconsciously, defining their personal view towards themselves,
others, organisations, society, nature and the universe.72 As Edward T. Hall
said: “No matter how hard man tries, it is impossible for him to divest himself
of his own culture”73.

Advertising pursues the same internationally as nationally. Essentially,
advertising in the international environment differs from national advertising
due to complexity and culture. As advertising is a mirror of society, it must
consider cultural specifications, and these peculiarities are reflected in two
factors:

- The acceptance of advertising as a whole. In some countries,
advertising may not be seen as something positive, or maybe only for
certain industries or product origins. In others it may seem like a
symbol of American capitalism (in extremist Islamic countries like Iran).
- The advertising message is understandable. This is not only because
countries have different levels of sophistication, but also because if a
campaign develops its message on something that is not universal (E.g.:
a particular wording, a nationally famous person…) it is doomed to fail
in a global scale. The communication style shall correspond to the
country’s values and imagery (the use of certain symbols, colours, the
importance of status or he role of women…).

70
71
72
73

36

Both factors influence the format and content of the advertising message,
making cultural differences the main handicap for standardisation of
advertising campaigns.74 Have a look at FIGURE L as an example. The
cigarettes West advertisement (the original, on the right) was too provocative
for Russia (on the left).

FIGURE L: CIGARETTE ADS IN RUSSIA AND GERMANY
Source: “Werbung” – pg. 405

4.3.2. ELEMENTS OF CULTURE

The audience’s individual socio-cultural background influences how the
information is processed and the subsequent interpretation of the advertising
message. The problem of communicating to people from different cultures is
one of the biggest challenges in marketing communication. International
marketers have to be culturally sensitive to be successful.75

74
75

37

4.3.2.1. LANGUAGE

Culture and communication are inextricably linked, culture both influences
and is influenced by language. And the more evident communicative barrier is
the language, both verbal and nonverbal.

4.3.2.1.1. VERBAL LANGUAGE

Language adaptation is essential because to communicate with potential
consumers, marketers have to choose a brand name, select a copy or text that
will be included in the packaging, develop slogans, create advertising
messages… All this will only be understood if it said in the language that the
target speaks or if the original will be used, it should be pronounceable and
do not lead to problems of significance (the Ford ‘Pinto’ could not be sold in
Brazil with that name because ‘pinto’ means ‘little penis’).76

The vocabulary of all languages is adapted to the elements considered
important, like for example in the Eskimo language there are many different
words to describe ‘snow’, while in English is only one. The Sapir-Whorf
hypothesis suggests that languages are not just a mechanism for
communicating, but also a shaper of ideas, so we are only capable of thinking
what our language permits. This is also called “linguistic determinism”.77

There are many important facts to consider about language. There are over
3,000 languages in the planet. Countries that contain different languages are
pluricultural, and sometimes the different linguistic groups clash (like for
example in Spain, where Catalans and Basques want to be independent). The
same language can be spoken in different countries (Spanish is the official
language in 21 nations, English in 53, French in 3078), but can differ a lot from
one country to another. There are many dialects, idioms, tones, humours and
slang expressions, and translators need to be familiar with these to avoid
translation blunders. On top of that we must consider different alphabets and
different reading directions (in Western cultures you read from left to right,
in Arab cultures it is the other way round), and also the fact that there are
some words and phrases simply cannot be translated.79

76
Cf.: “International Advertising” – pg. 90 & “Werbung” – pg. 424
77
78
Cf.: Wikipedia
79

38

4.3.2.1.2. NONVERBAL LANGUAGE

It has been estimated that only slightly more than 20% of the communication
between individuals is verbal, the rest (an astonishing 80%) is non-verbal. It is
very complex and there are many classification systems, but it is important to
note that nonverbal methods are not more universal than verbal methods.
Nonverbal communication regulates human interaction in several important
ways: sends messages about attitudes and feelings, elaborates on our verbal
messages and governs the timing and turns between the people
communicating. Non-verbal communication is transmitted through facial
expression, gesture, the clothes you wear, the accessories you carry, eye-
contact, touching, space usage (the physical distance you maintain with
others), time symbolism, colours and other signs and symbols, including
numbers, shapes and animals.

For example: in many Asian countries, the European businessmen are judged
immediately by the brand of the watch, or how expensive the shoes because
these represent your status, a really important characteristic in Eastern
countries. An example regarding different colour significance: in Western
cultures, black signifies mourning, while purple is more adequate in such
situations in Brazil and white means death in Japan and India.80

4.3.2.1.3. HIGH- & LOW-CONTEXT CULTURES

In each cultural group verbal and nonverbal communication have a different
relation with each other. Edward T. Hall elaborated a theory to explain this
relationship: high-context and low-context cultures. Low-context cultures
place high value on words, and communicators are encouraged to be direct,
exact and unambiguous. Verbal communication is supposed to give all the
important information. This is the case of Scandinavia and Germany, here a
‘no’ means ‘no’ and there is no margin for further interpretations. In
contrast, high-context cultures consider verbal communications to be only
part of the overall message, and communicators rely much more heavily on
contextual cues and nonverbal communication. This happens in Far East
countries, Arab nations and South-European countries. In these markets,
direct fact advertising messages should be avoided. As we have seen, the

80
Cf.: “International Advertising” – pgs. 92-98 & “Werbung” - pg. 420

39

differences between communications styles in high- vs. low- context cultures
have direct implications for the international advertiser.81

4.3.2.2. NEEDS AND VALUES

The assessment of cultural values helps in the success of marketing operations
in foreign countries. Edward C. Steward said that values “represent a learned
organisation of rules for making choices and for resolving conflicts.” Several
studies have been realised to categorise the population under values criteria,
for example the Values and Life Styles (VALS), and the VALS 2, but such
classification is very difficult to develop even at a national level, so extremely
difficult in an international level. The well-known theory of the Pyramid of
Needs by Abraham Maslow is based on Western culture and has not proven
applicable to non-western or developing countries. However, insights to
values (such as family belonging, respect) and life styles amongst consumers
from different cultures can influence the advertising strategy selection.82

4.3.2.3. RELIGION AND MORAL

Robert Bartel stated: “the foundation of a nation’s culture and the most
important determinant of social and business conduct are the religious and
philosophic beliefs of people”

The influences of religion on international marketing depend on how
important and strict is the religion for society. In some countries, references
to god or religion are taken seriously. Religion impacts directly the way its
believers live their daily life, the gender roles, how they feel about work and
the value they place on material goods. Religious traditions may forbid the
sale, consume or the advertising of various products. In Saudi Arabia, for
example, alcoholic beverages are completely banned. Moral behaviour is also
directly influenced by religion, a clear example: human nudity. While in
Europe it is not difficult to see an ad with a woman practically naked, in Arab
countries, this is unconceivable. Many major holydays are also tied to religion,
and these have to be considered in the timing of a marketing program.83

81
Cf.: “International Advertising” – pg. 114 & “Werbung” – pgs. 421-423
82
83

40

4.3.2.4. CUSTOMS AND CONSUMPTION PATTERNS

The customs of a society affect directly the consumption patterns. The kind of
products consumed, how are they purchased, who makes the purchase, who
consumes it and how much is bought and consumed. For example, in the US
nearly all consumer goods are bought in big quantities, everything ‘king size’
and not so often, while in Europe less quantity is purchased and Europeans go
on a more regular basis to the supermarket. A marketer must be aware of
these factors to be able to target the correct audience, adapt the packaging,
etc.84

4.3.3. CULTURAL CLASSIFICATION

4.3.3.1. HOFSTEDE’S 5-D MODEL

For a better understanding of the culture and how marketers can adapt or
standardise their approaches (if cultures are similar), to see if the message
will be adequate, there are specific cultural factors that must be considered.
After making a survey to 116,000 IBM employees from 48 different countries,
Hofstede saw how nationality affects personal assumptions and designed a
model with five dimensions in which culture can be classified, the 5-D Model.

Power Distance: reflects the extent at which people accept authority and
hierarchy. In countries with a high power distance like in the Far East or the
Mediterranean, subordinates consider their superiors another type of person.
While in low power distance countries like in Scandinavia, superiors are more
accessible and employees can bypass them to get their work done.85

Individualism & Collectivism: responds to how independent or involved are
you in relation with a group. In individualist cultures, the identity of a person
is defined individually, people are expected to take care of themselves and
self-respect is very important (Anglo-Saxon countries for example). In
collectivist societies, the groups to which a person belongs shape the person’s
identity. In individualist cultures there is a strict separation between personal
and professional life, while for collectivists it is not strict at all.86

84
85
86

41

Masculinity & Femininity: in ‘male’ cultures (Austria, UK, Australia) the
important values for society are money and success, while in ‘female’
societies (Scandinavian countries), relationships, cooperation and quality of
life are more important than performance. 87

Uncertainty Avoidance: the level at which people approach risk, trying to
avoid ambiguous, unstructured or unsafe situations. This dimension is
associated with dogmatism, authoritarianism, traditionalism and superstition.
Latin-European countries have hard uncertainty avoidance, Scandinavian and
Anglo-Saxon countries have weak uncertainty avoidance.88

Short- vs. Long-term Orientation: responds to what time perspective does
the society have. Long-term orientation means that decisions are taken
thinking in the far future and with patience, while in short-term only the
immediate future is important.89

Hofstede’s dimensions can be applied to many other aspects. For example:
national wealth and mobility between the social classes are related to
individualism; masculine states have more interest in the military industry and
less in social areas; a long-term orientation country has more possibilities of
solid economic growth; individualistic societies prefer verbal communication
while in collectivist cultures are more visual directed… These aspects should
be reflected in the advertisements, with more group situations in collectivist
societies, more care given to status signs in ads for countries with a high
power distance…90

Culture influences our perception, it affects how and what we communicate.
Hoftede’s 5-D model points out that an advertising message developed in a
country will only be understood and cause the desired action in other cultures
only in exceptional cases: “There may be global products but there are no
global people” (de Mooij 1998, S.XIV). If two nations belong to the same
culture then it is not that difficult. This phenomenon is explained by the
Cultural distance concept.91

87
88
Cf.: “Werbung” - pgs. 432-433
89
90
Cf.: “Werbung” - pgs. 435-436
91
Cf.: “Werbung” - pgs. 437

42

Cultural distance origins in early international trade, it explains why trade
tended to be concentrated in similar foreign markets. Migration is the reason,
because migrants carry their culture to other countries. When messages are
communicated cross-nationally between similar cultures, the decoding effect
of the receiver produces results more nearly like those intended in the
original message encoding by the sender. So a campaign in the US will be
easier accepted in Canada, UK or Australia, not only because they share the
language but also because they belong to the same Anglo-Saxon ‘base’
culture.92

4.3.3.2. INTERCULTURAL SUBCULTURES

However, there are also variations within the cultures. Each culture has
subcultures, groups of people that share values based on common
experiences. Subcultures provide more specific identification and socialisation
for their members. These are nationalities, religions, race, political groups,
geographic regions, etc. It can also be included the specific age or income
group, and of course, an individual can belong to more than one subculture.
Understanding a subculture in one country can help to understand similar one
in other countries: a businessman from Paris will have more in common with a
colleague from the US than with a French farmer.93

Supporters of standardisation usually compare the job and age group of the
different countries to state similarities. William Roedy, director of MTV
Europe said: “Eighteen-year-olds in Paris have more in common with
eighteen-year olds in New York than with their own parents. They buy the
same products, go to the same movies, listen to the same music, sip the same
colas”. The existence of intercultural subcultures or segments may help on
aggregating similar demands, but how are those demands approached by
advertising are not similar because of cultural differences. The Sony Walkman
for example, was a hit worldwide, but in Western cultures it was seen as a
way to listen to music without being disturbed, while in Eastern it was seen as
a way to listen to music without disturbing others. 94

92
93
Cf.: “International Advertising” – pgs. 88-89 & “Marketing Management” – pgs. 183-184
94

43

4.3.3.3. CULTURE-BOUND PRODUCTS AND UNIVERSALS

Certainly the degree to which culture influences also depends on the product
type. There are culture-bound and culture-free products. Standardisation is
more possible in culture-free products like investment and technological
goods (they respond to objective and homogeneous criteria), while consumer
goods and services are more bounded to culture and require a differentiation
approach.

FIGURE M: CULTURE BONDAGE AND STANDARDISATION POTENTIAL OF PRODUCTS
Source: “Werbung” - pg. 438; taken out of “Interkulturelles Marketing” by Müller/Gelbrich,
München 2004 – pg. 555

Much has been said about the cultural differences because differences stand
out more the similarities. Universal appeals are defined as values, emotions
and modes of behaviour common to all cultures because as human beings we
all share basic biological similarities and feelings, such as love, beauty, social
prestige, luck, mourning, deception, humour, surprise, relax… However, how
we respond to the biological drives is shaped by culture.

44

4.4. POLITICAL AND LEGAL ENVIRONMENT

Business regulation exists for three reasons: to protect companies from unfair
competition, protect consumers from unfair business practices, and to protect
the society from uncontrolled business behaviour. When does the costs of
regulation exceed the benefits? Each new law may have a fair reason to exist,
but it may cut innovation and slowdown economic growth.95

4.4.1. POLITICAL ISSUES

Entering a new market is normally a long-term commitment. And even though
in most countries the political situation is stable, the marketer has to be
cautious. The politics and laws of a country shape its national business
environment and can impact directly on the marketing programme in positive
or negative ways.

The political environment usually supports international marketing efforts of
national firms, for example reducing trade barriers to increase trade
opportunities or taking protective measures to ensure domestic production
(like tariffs and quotas). In other extreme cases, governments restrict the
flow of goods with trade sanctions. These happen during wars or as a measure
to pressure a country (for example the US has nowadays trade sanctions
against Cuba and North Korea). Export controls are used to prevent rivals
acquiring important goods or technology. This is very common in the defence
and weapon industry.96

If the political risk is high in a host country, the firm may have to face
nationalism, terrorism, war, social instability… The international firm could be
subject to expropriation, confiscation or domestication (when the host
government demands a partial transfer of power from the firm). Exchange
controls and exchange rates can make international firms have problems to
remove their investments or have the same value. Sometimes international
corporations may believe it is still profitable to do business in unstable
countries, but the situation affects directly how business are conducted.97 A
perfect example of this is happening right now in Iraq: many US firms operate

95
96
97

45

there especially because of the profits from petrol, but only a few places are
not life-threatening…

International firms have to pay attention to the political climate, if trade is
cut off, it would be a significant loss for the business. There are several
political risk assessment techniques available for firms to study entering a
market or not, and the status of the country changes as the national situation
develops.

4.4.2. LEGAL DIFFERENCES

Apart from the political climate, many legal issues have to be considered.
Many countries have strict laws on what to say, show and do in
advertisements. There are also severe restrictions on advertising certain
products, like for children. In Sweden TV spots for children are forbidden, in
Greek TV there is no toy spot before 22h.98 Sometimes, legal restrictions are
based on religion, and marketers have to be very careful in extremist
religious societies. For example: in Malaysia, Islam is the national religion.
The watch company Seiko had to change the slogan “Man invented time,
Seiko perfected it” to “Man invented timekeeping, Seiko perfected it”
because Allah, not man, invented time.99

In some countries the regulation affecting advertising may be limited or lax,
especially in developing markets. Meanwhile in others, advertising regulation
may be extensive and highly restrictive. Deceitful advertising (occurs when
the claim is false or the information presented is too little or not completely
true…) is illegal all around the world. And such practices should be avoided
because they harm the consumers but also the advertisers and the entire
image of the advertising industry.100

Advertising regulation covers all different aspects of a campaign. Some
countries have restrictions on the products advertised, mainly alcohol,
cigarettes and medicines. Sometimes even unanticipated restrictions, like in
France, where margarine cannot be advertised. Countries may also restrict
the content or creative approach. In Taiwan, when the consumer buys the

98
99
100

46

product, the advertising claims are considered a contract rather than a simple
solicitation. Comparative claims are rare in Japan not because of laws but
because in their culture, direct confrontations are taboo. The extent of
puffery changes from one country to another. In the US, puffery is “an
advertiser’s opinion of a product that is considered a legitimate expression of
biased opinion”, but in Canada, puffery that actually claims superiority over
other brands may cause legal action.101 In Germany only scientifically provable
superlatives can be advertised (McCann-Erickson once had to change Coke’s
slogan “Refreshes you best” for “Refreshes you right”).102 However,
sometimes the situation turns out to be beneficial. France’s ban to show
people smoking in cigarette ads was the reason for the birth of ‘Joe Camel’,
the smiling camel and the brand’s most successful trade character.103

Media availability is also limited in most countries and regulation varies
greatly depending on tradition, technological advancement and
infrastructure. Other laws may also require the ads to be produced in the
country (in Malaysia all ad footage and music has to be produced locally and
using local talent). Governments do this to provide jobs in the country and
guarantee an adaptation to the culture to avoid cultural imperialism.104

To cover the needs of an international client, agencies need to be located in
many countries. But maybe there are restrictions to the ownership or the
amount of locals that must work there. Taxes are also a factor to be aware
of. In Australia, to raise money for the advertising industry watchdog, since
1992 there is a 0.01% levy on gross media billings. In England, all media are
taxed except newspapers.105

Despite the diversity of legal and political situations, there are some
initiatives to unify the requirements. The European Union dictates some
guidelines, but the country may adopt them or not, or even add more
restrictions. Examples: all type of tobacco broadcast advertising is forbidden
all throughout Europe; alcoholic beverages spots can’t promote they have
stimulating effects or contributes to social success (amongst others); no
advertising of prescriptive medicines is allowed; ads targeted at children shall

101
102
103
104
105

47

not contain images or messages that can damage the children physically or
morally….106

The European Commission also admits that there is some overregulation
amongst the EU members, sometimes even violating the freedom of
commercial speech.107 Comparative advertising was accepted by a Guideline
of the European Parliament in 1997 and had already been adopted most of the
members. But it can’t be deceptive and must compare objectively one or
more essential characteristics.108

4.4.3. SELF-REGULATION

There are a variety of international laws and organisations that regulate
international business: the International Monetary Fund, the World Bank, the
World Trade Organisation, the International Chamber of Commerce… This
last one (together with advertisers, media and agencies) developed the first
self-regulatory advertising code.109

The editor of Adweek (an American advertising publication) Andrew Jaffe
said: “The industry should do all it can to raise standards and try to drive out
that which is misleading, untruthful, or downright tasteless and
irresponsible. Otherwise, the pressure to regulate even more will become
overwhelming.”110

At the early 20th Century there were many claims against deceitful
advertising, with fake medicines for example, which were very dangerous for
the people’s health. Consumer movements and government reacted with
laws to regulate the advertising industry. In order to promote professionalism
and safeguard the integrity of the industry, advertising practitioners in the US
formed organisms like the current Association of National Advertisers (ANA)
and the American Advertising Federation to self-regulate the industry.
Nowadays there are similar organisations in most countries.111

106
Cf.: “Estrategias de Publicidad y Promoción” – pgs. 62-66
107
108
Cf.: “Estrategias de Publicidad y Promoción” - pg. 53
109
110
111

48

Voluntary self-regulation follows three objectives:
- Protect consumers against false or misleading advertising and against
advertising that intrudes on their privacy.
- Protect legitimate advertising from competitor’s false/misleading ads
- Promote public acceptance of advertising so it can continue as an
112
effective institution in the marketplace.

Self-regulation of advertising started in the US and is proven successful. From
all ads reviewed by the Federal Trade Commission (the US governmental
agency that takes legal action against incorrect ads) in a year, about 97% is
satisfactory.113

The trend towards self-regulation is clear throughout the world. In Spain, the
Asociación para la Autorregulación de la Publicidad (also named
‘Autocontrol’) was founded in 1995 to enforce a code of ethics in Spain. It is
part of the European Advertising Standards Alliance, an organisation of the
different self-regulatory bodies of the European countries.114 Thirteen Latin
American countries formed the Inter-American Society for the Freedom of
Commercial Speech to combat government restrictions and censorship. In
addition, media organisations also act in monitoring advertising content (for
example in the US with the National Association of Broadcasters) because
the ads they show could also affect negatively to their image. On top of that,
many large corporations like Procter & Gamble or Revlon draw their own
guidelines.115

Self-regulation is more agile and cheaper than the governmental control. It
prevents new regulation and administrative control, being not as expensive
for the business and the consumers, who are the ones that actually pay the
government. If it fosters the legal principles, doesn’t restrict competition and
if it does not reduce the information directed to the consumer, self-regulation
will be legitimate and beneficial both for consumers and competitors.116

112
113
114
115
116

49

4.5. SOCIAL RESPONSIBILITY

Advertising as a social force has been a major factor in improving the
standards of living. By publishing the material, social and cultural
opportunities of a free enterprise society advertising has encouraged
increased productivity by both management and labour. Advertising gives you
(as a free individual) the opportunity to select the products that match your
functional, financial or social needs and aspirations.117

With the increasing concern about international marketing, the highest
standards must be applied to each of the elements in the marketing mix.
Agencies have to ask themselves whether they represent clients that also
work to such standards, if not, the agency’s image could be affected.118 The
societal marketing concept states that the organisation’s task is to determine
the needs, wants and interests of the target, and satisfy them better than the
competitors but always in a way that preserves and enhances the well-being
of consumers, society119 and also of the environment. Businesses and
industries try to achieve them drawing ethical codes, and forming self-
regulatory organisations (like in the advertising industry, mentioned above).
However, these are not very impressive for consumers.

Special interest groups have flourished and gained importance in the defence
of all type of people’s rights. Important to business in particular is the
consumerist movement: an organised movement of citizens and government
to strengthen the rights and powers of buyers against sellers. 120

The consumer movement has made demands in three areas:
- Consumer information: data about the products and services.
- Consumer education: develop the basic knowledge of the public to
have intelligent consumers.
- Consumer protection: ask for governmental and legal action to
safeguard consumer rights.121

The issue of advertising effects in developing nations is controversial. On
one hand, it educates consumers and enables them to compare goods,

117
118
119
120
121

50

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