Sunday, May 11, 2008

International Advertising Blog Summary: Industry Trends

A primary trend I have discovered through execution of this blog involves companies taking their business abroad in order to help the declining sales of their domestic brands. For instance, Starbuck’s, due to its recent struggle with attracting new customers in US stores, decided to use this strategy of building its brand internationally to counter its weakening domestic sales. Similarly, Triar Co., the parent company of Arby’s, bought out Wendy’s International in hopes of saving its failing business. Triar sought to recreate the International fast food chain’s brand image through a new international advertising campaign that would increase sales abroad. Both Starbuck’s and Triar were able to capitalize on the development of international advertising strategies that provided greater opportunities in foreign markets. This trend stems from the belief that it is more valuable to place a brand in a new market and test its success abroad rather than to reposition an existing brand within an already established market in hopes of gaining market share as a result of the new brand image.

Other companies choose to expand in international markets to boost their sales in general. The Wall Street Journal took its business to Great Britain to jump at the opportunity of benefiting from the London market. London readers represent a great potential market for the newspaper, as well as presenting an additional opportunity for the already established market to receive their news several hours earlier online. GlaxoSmithKline, a leading pharmaceutical company, has also been capitalizing on this idea of expanding internationally to increase market share potential. Glaxo, like the Wall Street Journal, focused advertising efforts on foreign markets, particularly new emerging markets in Asia and the Middle East.

Existing within the desire to expand business to international countries, companies seek to penetrate one foreign market in particular: China. The Chinese market has become extremely attractive to international businesses, resulting in a multitude of advertising efforts focusing directly on this new emerging top market. Many American advertising efforts have migrated towards the Chinese market since it is the largest, and therefore the most appealing for prospective businesses. From Kraft to Reebok, companies are discovering the advantages of marketing towards this massive and diverse group of consumers. Kraft realized that its Oreo cookie, while remaining popular in the United States, was becoming more successful in the Chinese market, due to the slight variations made in the formulation of the cookie itself. Reebok realized that more direct advertisements, with less symbolic aspects, generated the most success when working with the Chinese markets.

With the growing trend of targeting the Chinese market, companies have increasingly been performing market research in order to define the proper market on which to concentrate. With the size of the China being so great, the individual target markets throughout the country are very diverse, and not all brands can benefit to the same degree when advertising to this vast market as a whole. While businesses have realized the need to invent separate advertising campaigns for varying Chinese markets within the country, these companies have also realized the need for culturally tailored advertisements, differing from the strategies used to target western cultures. The trend has been to create more direct advertisements that focus on the brand name and the visual of the product. Western cultures appreciate advertisements with symbolic meaning and underlying themes, an advertising strategy that does not prove successful among Eastern cultures. Overall, whether practicing global marketing tactics or developing specifically tailored campaigns for the varying Chinese markets, companies are seeking to increase brand exposure through product diffusion within the largest and most successful international market.

Another trend existing among international advetisers is to target brands specifically towards a female audience. Reebok, with the launching of their new global campaign, targeted a new line of sneakers directly at the female market. Also taking up this strategy, a Russian vodka producer, Damskaya, positions its alcoholic beverage directly towards women, hoping to gain the business of the neglected female market. This trend represents a change in the way cultures are defining and accepting gender roles, internationally. Campaigns with such as a focus on women will continue to grow as cultures continue to grow and redefine their stereotypes of female and male gender roles.

A recent surge of advertising efforts have been employed that position products as environmentally sustainable, through tactics of green marketing. SunChips made use of this advertising strategy in their campaign, similar to those efforts of many domestic and global brands alike. This intrigue with protecting the environment, works to present companies as socially responsible, which will continue to be an increasingly popular marketing strategy among advertisers.

International advertising efforts are becoming more and more prevalent as businesses continue to realize the opportunities that exist abroad in new emerging markets. China will grow to become the largest market on the map, soon overcoming the success and power that the United States has established and maintained for so long. The themes of advertising campaigns will continue to become more accepting of targeting female audiences with more than household products, as women in many cultures show growth in becoming more dominant consumers. In addition to these international advertising trends, the global efforts being put forth to save the environment are gaining increasing support all over the world, and advertisers will continue to capitalize on this concept. In understanding the views and roles of international audiences, advertising campaigns can more successfully target particular cultures, sexes, and issues. These trends in international advertising are in no threat of declining, showing the importance of recognizing them so that one can properly reign success in this rapidly growing industry.

Tuesday, May 6, 2008

Print Adverting Industry Experiences Surprising International Growth

While the print advertising industry continues to decline in the US market, it has been gaining speed in the Persian Gulf market. Newspaper readership is extremely high in this market, compared to the steady decline which has been occurring in the United States.

The six countries that make up the Persian Gulf spent $2.96 billion on advertisements in newspapers and magazines. While this is only a small percentage of what advertisers spend in the US market, this number is 21% higher than it was the previous year, and 44% higher than in 2005.

This growth in the print-ad industry can be attributed to the increase in government spending, due to the soaring revenue resulting from the success of the oil industry. Businesses that appear to be taking advantage of this successful print-ad industry include property developers, telecommunications, and the banking industry.

Even with a growth of internet advertising in the Persian Gulf, a large percentage of this market maintains the tradition of reading the morning and afternoon newspapers. Recent polls have shown that 87% of Kuwait reads the newspaper daily, along with 67% of Saudi Arabia reporting to read the newspaper daily.

Compared to the US market, where multiple newspapers have suffered financial difficulties that result in reversing marketing objectives and staff lay-offs, the Persian Gulf continues to launch new newspaper companies. It appears that the tradition of reading the newspaper in this market has a greater significance within the culture, and has allowed for print advertisements to continue to thrive.

[Fam, Mariam. "Print-Ad Business Booms in Persian Golf." The Wall Street Journal. 1 May 2008: B7.]

Monday, May 5, 2008

Citigroup Revives an Old Campaign Slogan

Citigroup Inc. recently decided to bring back an old advertising slogan first launched in the 70s, "Citi Never Sleeps." Citi hopes that the nostalgic approach will help generate trust and confidence among its target markets during a particularly uncertain economic time. On Friday May 9th, the company will debut its global campaign, which will include television, print, and online advertisements in the United States, Hong Kong, the United Kingdom, and two additional markets.

The campaign is estimated to cost roughly $20 million over the next two months, compared the the $451 million that Citigroup spent last year on their advertising campaign. The campaign is, however, supposed to be part of a cost-cutting effort, which included the reuse of old footage and included music already owned by the company.

Citi decided that the old campaign, which included the slogan "Let's Get it Done." should be dropped since it proved ineffective at helping the company pull out of the financial service industry crisis. The revival of the old campaign appears to be viewed optimistically, since it did receive great success in the late 70s, success that was repeated with occasional uses of the slogan up until 1996.

Although some doubt is cast over the reuse of this campaign slogan, past use doesn't seem to indicate any threats. Market conditions are different now from how they have been in the past, but an old, familiar advertising approach may be what consumers require to make them feel secure in an uncertain market situation. Also,the statement "Citi Never Sleeps" suggests that this company is always looking out for the consumer's best interest-an important message to convey when consumers are feeling uncertain and unsafe.

[Vranica, Suzanne. "Citi Awakens an Old Campaign." The Wall Street Journal. 5 May 2008: B9.]

Saturday, May 3, 2008

Problems At Home for Starbucks Lead to Wandering Eyes

While deemed a successful, well-established business, Starbucks, the Seattle-founded coffee chain, reports a decline in net income-28%. Starbucks appears to be losing attention from new customers, while brand loyal customers remain consistent.

A decrease in the company's ability to attract future clientele results in weaker sales. In response to this business threat, Starbucks, over the next three years, plans to reduce the number of stores they open in the US. The corporation's reaction to this decline in customers halts the long-running trend Starbucks had created for covering the US in new Starbucks' stores.

Starbucks plans to open 1,020 locations for this year, a sizable decrease compared to the 1,800 stores that were opened in 2007. Following this years decrease, the corporation plans to cut this number by more than half in the next three years-meaning that less than 400 would open per year. To offset this decline in the domestic market, Starbucks will increase the expansion of international markets. While this includes building 1,050 new locations overseas for 2009, the corporation plans to increase that number to 1,300 by 2011.

The launching of these new locations is key to Starbucks business. However, a new strategy is necessary for existing locations to counter the decline in customers. Starbucks plans to place a stronger focus on the coffee in addition to store renovations in hopes of improving the look and feel of the in-store experience. But, would refocusing customer attention on coffee seems like a weak resolution for reviving customer visits. Perhaps the existing domestic market is sick of the commercialized cafe experience propelled by Starbucks- not to mention the overpriced beverages. The US market appears completely saturated with shop locations, rendering customers unable to appreciate the brand's intangible qualities.

Hopefully, international markets will welcome new locations with an influx of customer visits-but how long before foreign markets react the same way as the US? It seems only inevitable for the massive coffee chain, and when it happens, will a plan to refocus attention on coffee be able to save the company then?

[Adamy, Janet. "Starbucks Slows U.S. Growth Plans as Sales Weaken." The Wall Street Journal. 1 May 2008: B3.]

Friday, May 2, 2008

New Markets Inspire New Marketing Strategies

GlaxoSmithKline establishes a new strategy to potentially increase sales in emerging international markets. Andrew Witty, the future CEO of Glaxo as of May 22nd, plans to develop a new marketing team that will provide assistance in creating new marketing strategies. Such marketing strategies would be employed in upcoming international markets, including Brazil, Russia, India, China, and the Middle East.

In order to gain market share, it appears essential for Glaxo to penetrate these new markets. These markets do represent roughly 25% of today's pharmaceutical market growth and are predicted to grow at an even raster rate in the future. Emerging markets present great opportunities for a powerhouse such as Glaxo, the second largest pharmaceutical company in the world, just under the market leader, Pfizer.

Witty seems prepared to attach these developing markets with creative and novel tactics of corporate operations. Making structural adjustments may prove beneficial for Glaxo in the future. With an increasing demand for innovative medicines and health care products, Glaxo exhibits potential to dominate these fresh markets.

[Whalen, Jeanne. "Glaxo's New Chief Shuffles Ranks." The Wall Street Journal. 1 May 2008: B10.]

Saturday, April 26, 2008

Kraft Takes A Big Bite Out Of The China Market

By redesigning and repositioning the Oreo cookie among other cookies in the China market,Kraft has effectively managed to make the Oreo a top-selling product within the foreign market, in addition to its already established reputation in the US market. The oreo sold in China appears longer, thinner, and four-layered, compared to the Orea design made and sold in the US. The transformation of the Orea design is what allowed Kraft to successfully sell the cookie in China, the world's largest market.

International Business makes up 40% of Krafts revenue, even though Chinese oreo sales represent only a small portion of the corporation's annual revenue. Kraft has used it's success in the Chinese market to further capitalize on the concept of redesigning of its food products to more properly target foreign markets. Profits of the corporation rose 48% within the European Union for example, in part due to Kraft's introduction of dark chocolate, a marketing strategy used to response to the strong preference for dark chocolate in countries such as Germany.

Kraft has acheived global success as an international brand, demonstrated with its ranking as the second largest food company in the world. Kraft has experienced an increase in profits based on the positioning their instant coffee product within the Russian market. The coffee is positioned as a high-end, upscale product, distributed for sale among operas, film festivals, and fashion shows throughout the country.

Kraft has maximized profits in developing markets by 54%. The effectiveness of tits new marketing strategies are profound. Kraft, reacting to the Phillipines's particular fondness of iced tea, released a new iced tea beverage, tailored specifically to the culture of the market.

While Kraft continues to build itself as an international brand, it is still able to maintain a dominating presense within its domestic market of the US, indicating incredible talent at developing brands within multiple differing markets.

[Jargon, Julie. "Kraft Reformulates Oreo, Scores in China." The Wall Street Journal. 25 April 2008: B1]

Friday, April 25, 2008

Arby's Has New Sister-Wendy

Triar Co., parent company of fast food chain Arby's, bought mega-chain Wendy's International, the hamburger chain which was founded by Dave Thomas. The new management has big plans for expansion which includes increasing Wendy's international exposure, as well as broadening the menu selection to include breakfast at US locations. Also, new marketing plans are in the works to position the Wendy's brand towards a new target market of older clientele. Marketing to this new audienc would certainly be a novel approach to gaining market share in the fast food industry compared to strategies of heavyweight McDonalds, which dominates the children market, along with Burger King targeting a young-adult audience.

While Triar seems confident that implementing these few marketing changes will fix the corporation's problems, shareholders remain skeptical. In fact, shareholdrs claim that these same marketing proposals have been suggested in the past, but proved ineffective in saving the company, leaving one to ask: Why would this time be different?

New CEO, Ronald Smith, acknowledges that the restaurant industry is currently a difficult playing field and asserts that Wendy's needs to focus on differentiating itself from top dogs, like McDonalds and Burger King. How would adding a breakfast menu help distinguish Wendy's from other fast food restaurants? Such a change would resemble competitor business, making it less likely for Wendy's to stand out amongst the crowd. Smith's goal is to emphasize the quality and freshness of the food, but is this really enough to turn the company around?

[Adamy, Janet. "After Two Years, Peltz Finally Makes A Deal For Wendy's." The Wall Street Journal 25 Apr. 2008: B1. 25 May 2008 . ]