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Lovemarks or SafeBets?
Consumer attitudes
in emerging versus mature markets
Prof Koen Pauwels
Ozyegin University, Istanbul...
Problem: smarter marketing in emerging markets

Developed Markets

Emerging Markets

Emerging markets needed for growth
Bu...
How do my (e)MBA students decide on electives ?
• USA: Construct individual utility function based on
information search a...
Do consumer behavior & marketing effects differ ?
“Consumers in emerging markets are more likely to talk about any
kind of...
Overview
• Differences between emerging and mature markets
• Implications for Customer Attitude Dynamics
• Case study 1: P...
Emerging Markets
• are countries that are restructuring their economies
along market-oriented lines;
• offer a wealth of o...
Cultural, Economic & Institutional
Cultural
Differences
Economic &
Institutional
Differences

• Individualist / collectivi...
BIC versus Anglo-Saxon market descriptives (st.dev.)
Brazil, India, China

USA, UK, Netherlands

Individualism

35 (14,19)...
50

2.75

45

2.7
Brazil
Trust in general advertising

GDP per capita (US$)

40
35
30
25
20
15
10

2.65
India
2.6
China
2....
Customer Attitude Dynamics (Srinivasan et al. 2010)

Marketing

What marketers do
• Advertising
• Price
• Distribution

bu...
Customer Attitude Dynamics Criteria
• Hanssens, Pauwels, Srinivasan and VanHeule (MSI 2010)

• Explain marketing impact by...
1) Potential: does attitude have room to grow ?

40%

95%

12
2) Stickiness: how much carries over ?

13
3) Responsiveness: can we move it?

14
4) Conversion: does it translate into sales/profits ?

15
Differences emerging vs mature markets
Emerging

Mature

Potential

+

-

Stickiness

-

+

++

_

-

+

Responsiveness
Co...
Our Framework
Cultural
Differences

-Individualism
- Uncertainty av
-Power Distance
Economic
Differences

Attitude Dynamic...
Case study 1: FMCG in Brazil vs U.K.
• Data for 3 brands x 2 personal care FMCGs for 2004-2009

Controls for other potenti...
Attitude Stickiness in Emerging vs Mature Market
category 1

AD AWARE
Emg < Mature

category 2

TOTAL

1.0
0.9
0.8
0.7
0.6...
Sales Conversion in Emerging vs Mature Market
0.05

category 1

category 2

TOTAL

0.04

AD AWARE
Similar

0.03
0.02

0.01...
„Cost More‟ Sales Conversion: + Emg, - Mature Market
category 1

category 2

TOTAL

0.04

0.02

0.00

-0.02

-0.04

-0.06
...
Advertising Response in Emerging vs Mature Market
category 1

AD AWARE
Emg > Mature

category 2

TOTAL

0.020
0.018
0.016
...
Data 2: France vs. Spain FMCGs (Kantar Worldpanel)
• Spain is NOT an emerging country, but falls right in
between France a...
Consistent results of these comparisons
• Spain is similar to France in terms of advertising
and price responsiveness for ...
Love Marks or Safe Bets ?
Low sales
conversion
Low response to
marketing , high
staying power

High response to
marketing,...
As illustrated in US-China debates on what a brand is
• “A recent study reveals that the average Chinese consumer
feels th...
Romance & Reliability
• Roberts (2005) identifies 3 key elements of a
Lovemark: mystery, sensuality and intimacy: "We
have...
CONCLUSIONS
• Different long-term marketing effectiveness in
emerging versus mature markets
• Can be explained by differen...
Want to learn more ?
• It‟s not the Size of the Data, it is How You Use It:

Smarter Marketing with Analytics & Dashboards...
Prochain SlideShare
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Lovemarksorsafebetskoenpauwels

how do you increase brand performance in emerging and mature markets? Recently published research reveals how consumer attitudes respond differently to marketing and convert into sales to different degrees. Prof Pauwels quantifies how advertising, price and promotions increase awareness, consideration and brand love. Brands that got big in emerging markets should refocus on multiple communication touch points and brand love when aiming to gain hearts and minds in mature markets. Brands that got big in mature markets should refocus on advertising reach and communication awareness to gain WOM and consideration in emerging markets. More details in chapter 9 of Pauwels' first book: "It's Not the Size of the Data - It's How You Use It: Smarter Marketing with Analytics and Dashboards"

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Lovemarksorsafebetskoenpauwels

  1. 1. Lovemarks or SafeBets? Consumer attitudes in emerging versus mature markets Prof Koen Pauwels Ozyegin University, Istanbul 1
  2. 2. Problem: smarter marketing in emerging markets Developed Markets Emerging Markets Emerging markets needed for growth But: institutional, cultural & economic differences between countries Imply ≠ response • Attention to advertising? • Attitude response to marketing? • Sales conversion of attitudes?
  3. 3. 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 3
  4. 4. Do consumer behavior & marketing effects differ ? “Consumers in emerging markets are more likely to talk about any kind of online advert than their counterparts in mature markets” (Mindshare 2011) “In emerging markets, brands are seen as an important mark of quality and status. People value the reassurance provided by a well-known brand name, and if they can, they may be willing to pay more for it. They believe it is important to get the right brand even if they have to shop around for it. In mature markets, people are more likely to assume that all brands stocked by mainstream retailers will deliver the same basic quality” (Nigel Hollis, MillwardBrown 2010) 4
  5. 5. Overview • Differences between emerging and mature markets • Implications for Customer Attitude Dynamics • Case study 1: Personal care in Brazil vs the U.K. • Case study 2: Food & beverage in Spain vs France • Conclusion and contact information 5
  6. 6. Emerging Markets • are countries that are restructuring their economies along market-oriented lines; • offer a wealth of opportunities in trade, tech transfers, and foreign direct investment; • are regional economic powerhouses with large populations, resource bases, and markets; • will also become more significant buyers of goods and services than industrialized countries.
  7. 7. Cultural, Economic & Institutional Cultural Differences Economic & Institutional Differences • Individualist / collectivist • Power distance/egalitarian • Uncertainty Avoidance • Income • Consumer Protection • Technology, Competition,…
  8. 8. BIC versus Anglo-Saxon market descriptives (st.dev.) Brazil, India, China USA, UK, Netherlands Individualism 35 (14,19) 87 (6,08) Power Distance 75 (5,69) 38 (2,52) 4.310 (3.636) 43.313 (6.971) Technology Level 3,89 (0,30) 5,38 (0,75) Trust in General Advertising 2,7 (0,12) 2,4 (0,03) Trust in Traditional Advertising 2,8 (0,15) 2,5 (0,06) Trust in Online Advertising 2,6 (0,10) 2,3 (0,03) GDP per capita (US$) 8
  9. 9. 50 2.75 45 2.7 Brazil Trust in general advertising GDP per capita (US$) 40 35 30 25 20 15 10 2.65 India 2.6 China 2.55 US 2.5 UK 2.45 Netherlands 2.4 5 0 2.35 0 50 Individualism 100 0 50 100 Individualism 9
  10. 10. Customer Attitude Dynamics (Srinivasan et al. 2010) Marketing What marketers do • Advertising • Price • Distribution builds Attitudes What customers think & feel Awareness Consideration which convert to brand sales What customers do Brand purchases Liking
  11. 11. Customer Attitude Dynamics Criteria • Hanssens, Pauwels, Srinivasan and VanHeule (MSI 2010) • Explain marketing impact by 4 criteria of attitude dynamics – Potential: room to grow ? – Stickiness: do changes last ? – Responsiveness to Marketing – Conversion to Sales • We propose that attitude dynamics (and thus marketing effects) differ for emerging vs. mature markets 11
  12. 12. 1) Potential: does attitude have room to grow ? 40% 95% 12
  13. 13. 2) Stickiness: how much carries over ? 13
  14. 14. 3) Responsiveness: can we move it? 14
  15. 15. 4) Conversion: does it translate into sales/profits ? 15
  16. 16. Differences emerging vs mature markets Emerging Mature Potential + - Stickiness - + ++ _ - + Responsiveness Conversion 16
  17. 17. Our Framework Cultural Differences -Individualism - Uncertainty av -Power Distance Economic Differences Attitude Dynamics: Stickiness, Conversion Marketing Response of each attitude to: - Ad Awareness -Consideration - Liking -Advertising - Distribution -Price -Income -Legal Protection -Competition Marketing Effectiveness -Sales
  18. 18. Case study 1: FMCG in Brazil vs U.K. • Data for 3 brands x 2 personal care FMCGs for 2004-2009 Controls for other potential differences: 1) Brands: same brands in emerging/mature market 2) Distribution System: similar in emerging/mature market 3) Market (share) position: similar positioning, market shares 4) Similar potential: for attitude metrics 18
  19. 19. Attitude Stickiness in Emerging vs Mature Market category 1 AD AWARE Emg < Mature category 2 TOTAL 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 0.7 0.6 CONSIDER Emg > Mature 0.5 0.4 0.3 0.2 0.1 0.0 0.7 LIKING Emg >> Mature 0.6 0.5 0.4 0.3 0.2 0.1 0.0 19
  20. 20. Sales Conversion in Emerging vs Mature Market 0.05 category 1 category 2 TOTAL 0.04 AD AWARE Similar 0.03 0.02 0.01 0.00 0.20 CONSIDER Emg > Mature 0.15 0.10 0.05 0.00 0.25 LIKING Emg << Mature 0.20 0.15 0.10 0.05 0.00 20
  21. 21. „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 21
  22. 22. Advertising Response in Emerging vs Mature Market category 1 AD AWARE Emg > Mature category 2 TOTAL 0.020 0.018 0.016 0.014 0.012 0.010 0.008 0.006 0.004 0.002 0.000 0.008 CONSIDER Emg << Mature 0.006 0.004 0.002 0.000 0.012 LIKING Emg << Mature 0.010 0.008 0.006 0.004 0.002 0.000 22
  23. 23. Data 2: France vs. Spain FMCGs (Kantar Worldpanel) • Spain is NOT an emerging country, but falls right in between France and Brazil on „individualism‟ & uncertainty avoidance dimensions • Monthly data for EACH brand in 6 categories (bottled water, bath gel, laundry detergent, dairy, milk, soft drink) 2001-2010 on same marketing mix actions (price, promotion and advertising) and consumer attitude metrics as French analysis of bottled water and shampoo (Hanssens et al. 2010) • We compare all Spanish to all French categories, and matched category (water, shampoo-bath gel) 23
  24. 24. Consistent results of these comparisons • Spain is similar to France in terms of advertising and price responsiveness for all metrics, and for the sales conversion of awareness • Compared to France, ad awareness has a lower stickiness in Spain (as in emerging market) • Compared to France, sales conversion in Spain is higher for consideration and lower for liking. 24
  25. 25. Love Marks or Safe Bets ? Low sales conversion Low response to marketing , high staying power High response to marketing, low staying power High sales conversion Liking Emerging Consideration Emg Awareness Mature Cost More Mat (-) Consideration Mat Liking Mature Awareness Emg Cost More Emerging 25
  26. 26. As illustrated in US-China debates on what a brand is • “A recent study reveals that the average Chinese consumer feels 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.” 26
  27. 27. 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.” 27
  28. 28. CONCLUSIONS • Different long-term marketing effectiveness in emerging versus mature markets • Can be explained by differences in stickiness, responsiveness and sales conversion of attitudes • Emerging markets experience a higher stickiness of consideration & liking (interdependent self) • But a higher responsiveness of ad awareness to advertising & distribution (more search) • Consideration converts more than liking 28
  29. 29. Want to learn more ? • It‟s not the Size of the Data, it is How You Use It: Smarter Marketing with Analytics & Dashboards • Available at: http://www.amazon.com/Its-NotSize-Data-How/dp/0814433952 • Blog: http://analyticdashboards.wordpress.com Site: www.notsizedata.com ; www.marketdashboard.com • Twitter: @koenhpauwels • https://www.facebook.com/pages/marketdashbo ardscom/207532115957700?ref=hl • http://www.linkedin.com/profile/view?id=113444 12&trk=nav_responsive_tab_profile 29

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