Onkvisit S., Shaw J. International Marketing: Analysis and Strategy

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Carbide failed to anticipate potential problems that

could have occurred. As a result, the company was

severely criticized for its handling of the devastating

Bhopal (India) gas leak. Many inquiries in the early

stages went unanswered, and at times the company

appeared evasive when it did issue a response.

In dealing with the media, candor, preparedness,

speed, and cooperation are all essential. If a

company’s guilt is undeniable, it is better to admit

this at the outset so that attention can be shifted to

the steps being taken to resolve the situation.

Although a team effort is likely taking place, it is

highly desirable that a top executive acts as the

company’s sole spokesperson so that inconsistencies

can be minimized.The executive should be prepared

to communicate quickly and professionally. He or

she must possess accurate information and be ready

to answer all questions. Since the media are eager

to receive information, they can and should be

accommodated, as well as exploited.The company

can call news conferences that allow it to relay the

information to the public through the media at no

cost. At such conferences, the spokesperson can

outline the steps being taken to protect the public

interest. In effect, this tactic provides the company

with free advertising and positive publicity.

If the product has serious potential ramiﬁcations,

corporate image advertising may be used to rein-

force the trustworthiness of the company and prod-

uct. Market research can be valuable in tracking the

public mood so that appropriate communication

strategies may be adopted. Figure 14.2 shows how

South Africa attempted to use advertising to deal

with its country’s negative image and bad publicity.

The company should also be decisive. Its decision

should be based on the public good rather than cost

as an overriding motive. If product recall is war-

ranted because a situation is potentially dangerous

to the public, the recall should proceed immedi-

ately. A company should avoid vacillation or

hedging. Procter & Gamble poorly handled a

problem of contaminated cake mixes in California

by making contradictory announcements about the

product’s recall.A decisive response does not mean,

however, that product recall is always the preferred

strategy. Gerber Foods took legal action against

those states that wanted its baby food taken off the

shelves because of broken glass found in some jars.

The company’s rationale was that the incident was

an isolated one not related to its normal manufac-

turing process and that any recall would unduly

alarm the public. Its position was subsequently

supported by the results of an investigation.

SALES PROMOTION

The nature of sales promotion

Sales promotion consists of those promotional activ-

ities other than advertising, personal selling, and

publicity. As such, any promotional activities that

do not fall under the other three activities of the

promotion mix are considered to be sales promo-

tion. Qantas, for example, offers its passengers

Connection Cards that may be used to purchase

London Fog coats wholesale. The trade often uses

the term indiscriminately. Businesspeople may use

the term “promotion” when they actually mean

“sales promotion.” In this book, promotion is a broad

term that encompasses sales promotion as well as

the other three promotional activities.

The techniques of sales promotion are varied and

numerous. The common ones used are coupons,

sweepstakes, games, contests, price-offs, demon-

strations, premiums, samples, money refund offers,

and trading stamps.A combination of these may be

used and is sometimes used in the same campaign.

When Kelloggs expanded its business abroad, it

had to enlighten consumers in South and Central

America, the Middle East, and Asia about dry cereal

and cold breakfasts.To instill this new eating habit,

Kelloggs used samples and demonstrations in con-

junction with a heavy advertising campaign. To

regain market share in Japan, Procter & Gamble

distributed 1.5 million diaper samples of improved

Pampers. Each diaper box also carried a picture of

a little bear. Parents could get baby items by saving

the required number of bears.

Sales promotion is temporary in nature. Not

being self-sustaining, its function is to supplement

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advertising, personal selling, and publicity. To

launch Budweiser beer in Great Britain, Anheuser-

Busch employed the “American” theme. Its TV

commercials on the 4th of July and Thanksgiving

Day were spots ﬁlmed in California with American

actors. To supplement its advertising effort, the

company used a variety of sales promotion tech-

niques. It made posters, bunting, ﬂags, pennants,

T-shirts, and sweatshirts available to pubs and discos

for promotional parties. Bud ashtrays, bar towels,

coasters, football pennants, and similar items were

offered for sale. Moreover, American disc jockeys

were brought in to program American music nights.

Sales promotion is not restricted to the stimula-

tion of demand at the consumer level; it may be used

to gain middlemen’s support as well. Moreover,

the use of sales promotion is not limited to con-

sumer products. It may be used with industrial

selling too. Misawa Homes promoted its House 55

by sending samples to US Homes and Germany’s

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Figure 14.2

Management of negative

publicity

Source:

Reprinted with permission

of the South African Consulate

General, Washington, DC.

Okal. Pﬁzer, like other drug ﬁrms, attracts drug

wholesalers by sponsoring trips and other events.

Gifts are given to doctors, and doctors’ wives are

taken on shopping tours.

Sales promotion is effective when a product is

ﬁrst introduced to a market. It also works well with

existing products that are highly competitive and

standardized, especially when they are of low unit

value and have a high turnover. Under such condi-

tions, sales promotion is needed to gain that “extra”

competitive advantage.

The effectiveness of sales promotion can be tem-

pered by psychological barriers, and this fact is

applicable to middlemen as well as to consumers.

Some foreign retailers are reluctant to accept

manufacturers’ coupons because they fear that

they will not be reimbursed. Consumers, on the

other hand, may view rebates, mail-in coupons, and

money-back guarantees with suspicion, thinking

that something must be wrong with the product.

International marketers need to conﬁrm the

validity of a statement concerning the effectiveness

of a sales promotion technique. Sometimes, casual

observation and hearsay have a way of making a par-

ticular claim become a statement of fact without

support of empirical evidence.

Restrictions

Although sales promotion is generally received

enthusiastically in developing countries, the activity

is still largely underused, which may be due more

to legal barriers than psychological barriers.

European countries have a larger number of restric-

tions than the USA in this area. The legal require-

ments are so diverse that the European Association

of Advertising Agencies (EAAA) decided that the

standardization of promotion regulations was very

unlikely in the near future.

Since it would be impossible to know the

speciﬁc laws of each and every country, marketers

should consult local lawyers and authorities before

launching a promotional campaign. For example,

Belgium requires a government tax stamp on win-

dow signs.The purpose of this section is to show how

certain sales promotional tools might be affected by

local regulations.

Premiums and gifts

Most European countries have a limit on the value

of the premium given. Colgate was sued by a

local blade manufacturer in Greece for giving away

razor-blades with shaving cream.Austria considered

premiums to be a form of discriminatory treatment

toward buyers. In France, it is illegal to offer pre-

miums that are conditional on the purchase of

another product. In Finland, premiums are allowed

as long as the word free is not used with them. A

gift is usually subject to the same restriction as a

premium. Compared to the USA and the United

Kingdom, which are very lenient, Belgium,

Germany, and Scandinavia have strict laws concern-

ing promotion owing to their desire to protect con-

sumers from being distracted from the true value of

a given product or service. Argentina, Austria,

Norway, and Venezuela virtually ban the use of

merchandise premiums. Other countries, being less

restrictive, do not permit the value of the premiums

to exceed more than a certain percent (e.g., 10

percent in Japan) of the value of a product that must

be purchased so as to receive a premium.

Price reductions, discounts, and sales

Austria has a discount law prohibiting cash reduc-

tions that give preferential treatment to different

groups of customers. Discounts in Scandinavia

are also restricted. In France, it is illegal to sell a

product for less than its cost.In Germany, marketers

must notify authorities in advance if they plan to

have a sale. Unlike in the USA, where there are all

kinds of sales for all occasions (e.g., manager’s sale,

assistant manager’s sale, buyer’s sale), a sale in

Germany is limited to such events as going out of

business, giving up a particular product line, end

of January (winter), end of July (summer), and a

twenty-ﬁfth anniversary. Both Austria and Germany

are similar in the sense that special sales may be

made only under certain circumstances or during

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PROMOTION STRATEGIES

speciﬁed periods of time (seasonal sales). Moreover,

discounts for payment on delivery may not exceed 3

percent, and any quantity discounts must be within

the applicable industry’s usual numerical range.

Samples

In Russia, tobacco ﬁrms freely distribute samples.

The “Lucky Strike girls,” for example, tour Moscow

bars offering patrons a smoke and a light. Due to

public criticism, Philip Morris has stopped the sam-

pling practice in the USA. In addition, the USA does

not allow alcoholic beer to be offered as a free

sample, and this law also holds for taste tests.

Germany restricts door-to-door free samples that

limit population coverage as well as the size of the

sample pack.

Sweepstakes, games, and contests

For a sweepstake to be legal in France, an entry

form must be separate from an order form.

Germany permits sweepstakes as long as they do not

create psychological pressure on customers. In addi-

tion, they cannot be misleading, and they must not

offer a prize of substantial value.

Lotteries that are not operated by governments

tend to be illegal in many countries (e.g., France,

England, the USA). A lottery has three elements –

chance, consideration, and price. For a sweepstake,

game, or contest not to become an illegal lottery, a

company must make certain that at least one of these

three elements is missing (see It’s the Law 14.1).

OVERSEAS PRODUCT EXHIBITIONS

One type of sales promotion that can be highly

effective is the exhibition of a product overseas.This

type of promotion may be very important because

regular advertising and sales letters and brochures

may not be adequate. For certain products, quality

can be judged only by physical examination, and

product exhibition can facilitate this process.

One very effective way to exhibit products

abroad is to use trade fairs. Unlike trade shows in

the USA, where the social or party atmosphere is

prevalent, European trade fairs are an important

part of the marketing mix that must be prepared

with great care. These shows can account for one-

third of a European ﬁrm’s marketing budget. The

state of Colorado helped Alpine Map Co. to pay for

a booth at an international sporting goods show in

Munich. The company has been going back ever

since, and foreign sales now account for 40 percent

of its total sales. In fact, the company is probably

better known in Europe than at home.

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Sometimes, it is difﬁcult to tell whether McDonald’s

is in the food business or the toy business. Its Happy

Meals contain toys for kids. In Hong Kong, the

company offered cheap, limited-edition plastic Snoopy

toys which, when resold, fetched as much as $40.

One of its most popular premiums centers on the

Hello Kitty characters.This cute and stuffed feline toy

by San Rio was designed in Japan for children a

quarter of a century ago. While Hello Kitty appeals

to the young in the USA, it has met with enthusiasm

among adults in Hong Kong, resulting in a Hello Kitty

café and a Hello Kitty credit card. When McDonald’s

offer began, almost 1000 people lined up on the ﬁrst

morning.The promotion increased sales by 10 percent.

In Singapore, the Hello Kitty characters were

dressed in various wedding outﬁts ranging from

“romantic” to traditional Korean. Huge crowds gath-

ered every Thursday when McDonald’s released the

next toy in the wedding series. In some instances the

ﬁght for toys became violent, while some people

fainted.

Sources:

“Hello Kitty Brings Chaos to McDonald’s,”

San

José Mercury News

, January 29, 2000; “Hong Kong’s Kitty

Craze,”

Business Week

, August 9, 1999, 8.

MARKETING STRATEGY 14.1 HELLO KITTY

There are two main types of trade shows: hori-

zontal and vertical. At one end of the spectrum are

broad, well-established, annual affairs (horizontal

trade shows). The Hamburg Fair, for instance,

exhibits almost everything in both consumer and

industrial goods. At the other end of the spectrum

are specialized types for products in specialized

industries (vertical trade shows). Electronica, held

annually in Munich, is a vertical trade show.

There are more than 800 international trade fairs

each year.Trade fairs allow thousands of ﬁrms from

many countries to set up “temporary stores or

ofﬁces” in the marketplace to display their products.

A strong feature of a trade fair is that prospects

are in a buying mood. Another advantage is that

buyers are seeking out sellers at a central location.

Obviously, a trade show presents a much easier

contact situation for a salesperson because there is

no travel to many diverse locations to call on poten-

tial buyers.

An exhibitor should investigate whether it is

worthwhile to use a carnet for products that will be

shipped or taken to the exhibition. A carnet is an

international customs document that facilitates the

temporary duty-free importation of product

samples in lieu of the usual customs documents

required to bring merchandise into several major

trading countries (see Figures 14.3 and 14.4).That

is, a carnet is a series of vouchers listing the goods

and countries involved where the product will be

exhibited. For a fee based on the value of the goods

to be covered, a carnet may be purchased in advance

in the USA by American ﬁrms. Foreign ﬁrms can

turn to their local carnet associations, which are

members of the International Bureau of the Paris-

based International Chamber of Commerce. By

issuing carnets, these associations in effect guaran-

tee the payment of duties that may become due on

goods temporarily imported and not re-exported.

A carnet holder is required to post security equal to

40 percent of the value of the goods to cover duties

and taxes in cases where goods are not re-exported

and duties not paid.

Because different national customs regulations

can act as trade barriers, the World Customs

Organization adopted the “Customs Convention on

the ATA Carnet for the Temporary Admission of

Goods” in 1961. The initials ATA are from the

French and English words “Admission Temporaire/

Temporary Admission.”A carnet offers a number of

beneﬁts: no temporary imports bonds, no registra-

tion of goods when leaving a country, unlimited

reuse for all products listed on a carnet for one year,

and coverage of most business-related items. The

system is recognized by ﬁfty-eight countries and

twenty-seven territories worldwide.

In the USA, the US Council for International

Business (USCIB), appointed by the US Treasury

Department, is the sole issuer and guarantor of car-

nets.All carnet applicants submit a security deposit

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Germany’s national safety standards for consumer

products are higher than those of the United

Kingdom. While the USA, the United Kingdom,

Poland, and Spain have by and large minimal regula-

tions on promotional bonuses, it is not the case in

Germany, Belgium, and the Scandinavian countries.

In the latter group, retail sales that are combined

with free mail-ins, cash off purchases, free drawings,

free gifts with purchase, and so on are either forbid-

den or strictly regulated.

In Sweden, the authorities ordered TV4 to stop its

broadcast of a Swedish version of a popular quiz

show,

Who Wants to Be a Millionaire

. The govern-

ment’s Lottery Inspection Agency concluded that

the program was not a real contest but more of a

lottery. The TV station director begged to differ. He

denied that contestants relied on guesses rather than

knowledge.

IT’S THE LAW 14.1 ILLEGAL LOTTERY

in the form of cash or a bond.The deposit is a collat-

eral and will be drawn upon to reimburse the USCIB

if it incurs a liability or loss in connection with the

carnet.When the original carnet is returned, assum-

ing no anticipation of claims, the cash deposits will

be returned in full, and the bonds are terminated.

The value of shipment and type of application (paper

or electronic) determine the carnet fees.

For countries that do not accept carnets, a

company has two other alternatives. It may apply for

a Temporary Importation Under Bond (TIB).This is

a document sold by a customs broker at the time

of entry. Or it can rely on the duty drawback for

temporary imports. This process requires an

importer to register the goods at the time of entry

into a foreign country and deposit the applicable

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Figure 14.3 Carnet

duties and taxes. Later, at the time of departure, the

foreign customs authority inspects and collects

the appropriate paperwork for the product in ques-

tion. A full refund follows.

Overseas exhibits are a costly form of promotion.

There are costs related to the design and construc-

tion of a booth. There are also the transportation

costs of the booth and products for display. Labor is

required to set up and dismantle the booth. In addi-

tion,there are the rental costs of space and furniture,

other costs include stafﬁng and transportation, and

accommodation of representatives.

There are a few suggestions that exhibitors at

trade fairs should keep in mind. Space cost is only

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PROMOTION STRATEGIES

Figure 14.4 Carnet application

a small portion of the total cost.Thus it is better to

rent adequate space, since overcrowding discour-

ages prospects from visiting the exhibit. Exhibit

contents should be kept simple, and only the most

important items are displayed.To avoid having to set

up the booth late and dismantle it early, a company

may want to locate its booth away from the freight

entrance area. Mailing lists of prospects should be

obtained, and letters are sent to them well before

the opening day. It is also important to have a qual-

iﬁed representative at the booth who can make sales

decisions. This representative should arrive early

and leave late. Early arrival also gives the represen-

tative time to become acclimated. Plenty of business

cards and brochures should be kept on hand. Finally,

the local trafﬁc patterns should be taken into

account. Unlike in the USA, where people are used

to turning right and walking on the right-hand side,

some countries drive on the left-hand side of the

street and people thus walk on the left-hand side of

an aisle. An exhibitor may gain an advantage if it

locates the exhibit on the left-hand side of an aisle,

since visitors will walk on that side.

An exhibitor should notice and respect cultural

differences in dress formality and the exchange of

business cards. Overseas trade shows are serious

affairs, and only businesspeople and buyers (not the

general public) are admitted. Because most buyers

want time to think about products, some serious

follow-up after the show should be carried out. It

may be worthwhile to spend a few extra days

making calls to the most promising prospects.

Later, the exhibitor should send letters with addi-

tional material or have a local representative call the

visitors who stopped at the booth.

A trade show is not the only means of exhibiting

products overseas. Companies may also rent space

in trade centers to display merchandise on a more

permanent basis. Vienna (Austria) and Taipei

(Taiwan) are examples of two such trade centers

located in two different parts of the world.

Because of the high cost of overseas exhibition,

exporters should consult with their governments

concerning their assistance and other related pro-

motional activities. It is not unusual for govern-

ments to sponsor ofﬁcial participation in certain

major international exhibitions. In the case of the

USA, the Department of Commerce additionally

organizes a trade mission from time to time. It may,

for example, send a boat full of merchandise to

an overseas port. Based on the belief that foreign

sales of US consumer products are best developed

through in-store promotion, its sponsored events are

designed to promote sales of consumer merchandise

directly to consumers in major department stores

and mail order houses from Finland to Hong Kong.

CONCLUSION

A product, no matter how superior, should not be

expected to sell itself. It must be promoted so that

prospects can learn about the beneﬁts provided by

the product.The state of Pennsylvania, for example,

had only one overseas ofﬁce before 1980 but it now

has several to promote its exports.The state of Ohio

has determined that, for each $1 spent to promote

its exports, it derives $260 in export sales.

A product may be promoted in several ways –

advertising, personal selling, publicity, and sales

promotion.Although advertising is the most promi-

nent technique, the other three methods are no less

important. For promotion to be most effective,

however, all four of the promotional techniques

should be used and coordinated. Two chapters are

devoted to a discussion of the various aspects of pro-

motion.This chapter has concentrated on the treat-

ment of personal selling, publicity, and sales

promotion.The next chapter is concerned primar-

ily with international advertising.

Personal selling usually commands a major share

of promotional expenditure. It is used internation-

ally as well as locally at every distribution level and

for all kinds of products. When expatriate sales

personnel are to be employed, these personnel and

their families should be screened for suitability

before being given overseas assignments. For a

variety of good reasons, qualiﬁed local nationals

should be used whenever possible. If MNCs do not

hire these qualiﬁed individuals, local progressive

competitors are likely to employ them.

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With limited media time and space available in

many countries, it is necessary to develop some

rapport with media people in order to try to gain

free publicity. Finally, efforts in advertising, per-

sonal selling, and publicity activities should be

supplemented and supported by sales promotion.

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CASE 14.1 SELLING IN THE EU

Antonis C. Simintiras, University of Wales

It was a nice, warm, Sunday afternoon when Michael had to rethink his selling strategies for his region. Michael

was born in England and after studying for four years at a major UK University he joined a leading British phar-

maceutical company. Following a successful career in sales within the UK, he was promoted to sales representa-

tive for Southeast Europe. Based in Thessaloniki, Greece, he was made responsible for selling the entire range of

products for the company’s division to pharmacists, doctors and hospitals. Michael went through a rigorous and

intensive training program for three months and learned a lot about cultural differences between the British

and Southern Europeans. Although he was responsible for covering three countries in the Balkan region (Greece,

Bulgaria, and Yugoslavia), Michael had recently come to the conclusion that his selling strategies in Greece were

somewhat inappropriate.

After six months of hard work, Michael was happy with the progress that he made. He had managed to open

several accounts with hospitals in all three countries and had built up a network of pharmacists and doctors,

many of whom had either bought or agreed to buy his company’s products. Recently, however, he noticed a change

in the attitude of some of his most important customers, especially in Greece, which, in terms of priority, was the

ﬁrst market for development. Until a few months before, almost all of his customers showed a strong interest in

his products and were happy to place orders. During the past two months, Michael noticed that the level of inter-

est and willingness to buy deteriorated, to the extent that some of his customers were delaying reordering, despite

the fact that their safety stocks were not allowing them such a relaxed attitude toward stock replenishment.

Constant feedback from customers indicated that there was nothing wrong with either the products or his selling

approach. Both his customers and their patients were very pleased with the products and a lot of positive

publicity in the relevant press was generated throughout the region since Michael went there.

Sitting in his rocking-chair overlooking the Aegean Sea from his balcony, Michael was trying to ﬁnd out what

might have gone wrong. He thought he was consistent with his selling approach. He made professional presenta-

tions, used a problem-solving approach, followed up his sales, made sure that products were delivered on time.The

service level that he offered was exceptional, and above all his strong interest in helping his customers by providing

suggestions for growing their business was the best he could do to win the minds and hearts of all his customers.

His selling experience in the UK helped him immensely with the above approach. He scrutinized his behavior but did

not ﬁnd any shortcomings or reasons for the apparent customer loyalty problem that he saw as forthcoming.

He played back mentally many of his encounters with his customers and was convinced that he always deliv-

ered a personalized and value-added solution to all of them. He could not recall any instance of not keeping his

promises or not making an effort to see and discuss things from his customers’ point of view. Being the only inter-

face between the customers and the company in that region, his name became synonymous with the ﬁrm and this

was something that his customers seemed to value. He believed that this approach was the most appropriate for

establishing strong and lasting relationships with his customers that, in turn, could prove to be a signiﬁcant barrier

for competitors entering the market.

Michael remembered his training times and the interesting lectures about cultural differences between the

North and South. He nodded his head in an afﬁrmative way as if he wanted to say categorically that this was

absolutely true. Then he recalled that proﬁts come from repeat customers and customer retention can produce a

disproportional return on his investment. He could afford no more time thinking! He had to take some sort of

action. He realized that the solution (if there was one) to this problem was hidden somewhere in the cultural

make-up of the customers with whom he was dealing. He decided to ring one of his customers (a Greek whom

he had met in England during his university years) and invite him over to his house for dinner. This was the

ﬁrst time that Michael decided to socialize with a customer. His customer accepted the invitation and the fol-

lowing is an extract from their conversation after they had ﬁnished their dinner and Michael’s problem had been

discussed.

Customer

Michael, I do not think that you fully understand our culture.

Michael

I do not claim I do, but what do I miss or do wrong?

Customer

I think there is nothing that you do wrong. The issue perhaps is “what you do not do right.”

Michael

What is it that I am not doing right then?

Customer

A salesperson interested in developing long-term relationships with his customers has to do certain

things. Other than being professional in his dealings with the customers, a salesperson is expected to

interact frequently with doctors, pharmacists and hospital ofﬁcials in a social context in order to

build trust. Frequent social interaction (i.e., in a non-stressful environment) indicates commitment

over and above what is required by the protocol, enhances the feelings of trust, contributes to sat-

isfaction of the customer and facilitates conditions for building attitudinal loyalty. This is something

that we used to call “relationship selling” in England, as far as I remember.

Michael

I think I understand what you are trying to tell me. Much of the relationship-building activity takes

place in social as opposed to work environments. Very much like the meeting we have here. I have

got it, and I am ever so grateful to you for your help.

Customer

You are, as I remember you from the university years, “a fast learner”!

Points to consider

1 What is relationship selling and how does its application vary among different cultures?

2 Are business relationships that are enhanced by social interaction better for global selling?

3 Would you agree that commitment and trust are qualities that can be sold in a similar way to that of prod-

ucts and services? If so, is “relationship selling” a selling from a relationship-building point of view, or is it

simply a traditional selling activity?

CASE 14.2 ALLWORLD CORPORATION

Ann-Marie Miller, Providence College

Introduction

Due to the events of September 11, 2001, the travel industry has experienced a major decline. In addition, the

eagerness for and convenience of travel, especially foreign travel, has recently faded away. A potential corollary

to this apprehension would be a reduced desire to engage in foreign business and foreign living. While many

travel and business concerns are warranted, there still remains a world of endless possibilities, cultural interests

and experiences in international living. It is imperative that Americans continue to live a life of freedom and

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