DENISE KATRINA S.

PEREZ
MBA 111 — Strategy and International Business

MARKETING MANAGEMENT

The New Marketing Realities

The marketplace is dramatically different from even 10 years ago, with new marketing
behaviors, opportunities, and challenges emerging. In this book we focus on three transformative
forces: technology, globalization, and social responsibility.

The Digital Age

The recent technology boom has created a digital age. The explosive growth in computer,
communications, information, and other digital technologies has had a major impact on the ways
companies bring value to their customers. Now, more than ever before, we are all connected to
each other and to information anywhere in the world. Where it once took days or weeks to
receive news about important world events, we now learn about them as they are occurring via
live satellite broadcasts and news Web sites. Where it once took weeks to correspond with others
in distant places, they are now only moments away by cell phone, e-mail, or Web cam. For better
or worse, technology has become an indispensable part of our lives

The digital age has provided marketers with exciting new ways to learn about and track
customers and create products and services tailored to individual customer needs. It is helping
marketers communicate with customers in large groups or one-to-one. Through Web
videoconferencing, marketing researchers at a company’s headquarters in New York can look in
on focus groups in Chicago or Paris without ever stepping onto a plane. With only a few clicks
of a mouse button, a direct marketer can tap into online data services to learn anything from what
car you drive to what you read to what flavor of ice cream you prefer. Or, using today’s powerful
computers, marketers can create their own detailed customer databases and use them to target
individual customers with offers designed to meet their specific needs.

Digital technology has also brought a new wave of communication, advertising, and relationship
building tools—ranging from online advertising, video-sharing tools, and cell phones to Web
apps and online social networks. The digital shift means that marketers can no longer expect
consumers to always seek them out nor can they always control conversations about their brands.
The new digital world makes it easy for consumers to take marketing content that once lived
only in advertising or on a brand Web site with them wherever they go and share it with friends.
More than just add-ons to traditional marketing channels, the new digital media must be fully
integrated into the marketer’s customer-relationship-building efforts.

The most dramatic digital technology is the Internet. The number of Internet users worldwide
now stands at more than 1.8 billion and will reach an estimated 3.4 billion by 2015. On a typical
day, 58 percent of American adults check their e-mail, 50 percent use Google or another search
engine to find information, 38 percent get the news, 27 percent keep in touch with friends on
social networking sites such as Facebook and LinkedIn, and 19 percent watch a video on a
video-sharing site such as YouTube. And by 2020, many experts believe, the Internet will be
accessed primarily via a mobile device operated by voice, touch, and even thought or “mind-
controlled human-computer interaction.”
Whereas Web 1.0 connected people with information, the next generation Web 2.0 has
connected people with people, employing a fast-growing set of new Web technologies such as
blogs, social networking sites, and video-sharing sites. Web 3.0, starting now, puts all these
information and people connections together in ways that will make our Internet experience
more relevant, useful, and enjoyable.

In Web 3.0, small, fast, customizable Internet applications, accessed through multifunction
mobile devices, “will bring you a virtual world you can carry in your pocket. We will be carrying
our amusements with us—best music collections, video collections, instant news access—all
tailored to our preferences and perpetually updatable. And as this cooler stuff [evolves], we
won’t be connecting to this new Web so much as walking around inside it.” The interactive,
community-building nature of these new Web technologies makes them ideal for relating with
customers.

Online marketing is now the fastest-growing form of marketing. These days, it is hard to find a
company that doesn’t use the Web in a significant way. In addition to the click-only dot-coms,
most traditional brick-and-mortar companies have now become “click-and-mortar” companies.
They have ventured online to attract new customers and build stronger relationships with
existing ones. Today, more than 75 percent of American online users use the Internet to shop.
Business-to-business (B-to-B) online commerce is also booming. It seems that almost every
business has created shops on the Web. Thus, the technology boom is providing exciting new
opportunities for marketers.

Rapid Globalization

As they are redefining their customer relationships, marketers are also taking a fresh look at the
ways in which they relate with the broader world around them. In an increasingly smaller world,
companies are now connected globally with their customers and marketing partners. New
transportation, shipping, and communication technologies have made it easier for us to know the
rest of the world, to travel, to buy and sell anywhere. By 2025, annual consumption in emerging
markets will total $30 trillion and contribute more than 70 percent of global GDP growth. A
staggering 56 percent of global financial services consumption is forecast to come from
emerging markets by 2050, up from 18 percent in 2010.

Today, almost every company, large or small, is touched in some way by global competition. A
neighborhood florist buys its flowers from Mexican nurseries, and a large U.S. electronics
manufacturer competes in its home markets with giant Korean rivals. A fledgling Internet retailer
finds itself receiving orders from all over the world at the same time that an American consumer-
goods producer introduces new products into emerging markets abroad.

American firms have been challenged at home by the skillful marketing of European and Asian
multinationals. Companies such as Toyota, Nestlé, and Samsung have often outperformed their
U.S. competitors in American markets. Similarly, U.S. companies in a wide range of industries
have developed truly global operations, making and selling their products worldwide.
Quintessentially, American McDonald’s now serves 60 million customers daily in more than
32,000 local restaurants in 100 countries worldwide—65 percent of its corporate revenues come
from outside the United States. Similarly, Nike markets in more than 180 countries, with non-
U.S. sales accounting for 66 percent of its worldwide sales. Today, companies are not only
selling more of their locally produced goods in international markets but also buying more
supplies and components abroad.
Thus, managers in countries around the world are increasingly taking a global, not just local,
view of the company’s industry, competitors, and opportunities.

Glocalization

Today, building a global brand requires a lot more than simply translating your website into
different languages. The most successful companies understand that consistent and universally
appealing messaging has to be combined with an understanding of local culture and tastes—a
tactic that’s known as a ‘glocal’ strategy.

Here are some examples of powerful global branding in action.

1. Airbnb

When Airbnb was first launched, the brand faced a big challenge: convincing people around the
globe that staying in a stranger’s home isn’t weird or scary. However, under the guidance of
CMO Jonathan Mildenhall, the company has experienced remarkable global success – it now has
listings in over 190 countries.

Key to Airbnb’s global strategy is localization, with a dedicated localization department

responsible for making the site accessible around the globe, as well as local storytelling –
essential for developing trust and a sense of community between hosts and travellers.

The brand has also introduced a universal symbol as its logo – the Belo – which symbolizes
‘belonging’ no matter where you are in the world.

2. Apple

Arguably the most successful global brand of our time, we can all learn a thing or two from
Apple. When it comes to its products, the company has opted for a one-size-fits-all strategy, with
iPhone design identical regardless of region. And, whilst this can be a dangerous tactic, Apple’s
minimalist and intuitive approach has resulted in products with global appeal.

However, the brand knows where this standardization needs to end. The customer service
protocol of each of its worldwide stores is tailored to suit local tastes and, despite having the
same look and feel regardless of location, the content on the Apple site is carefully translated and
localized for international audiences.

3. Starbucks

It’s impossible to talk about powerful global branding without mentioning Starbucks. With
around 20,000 stores in 63 countries, the world’s most popular coffee house has made its mark
from Brazil to China, where many thought it would fail to take off due to the cultural importance
of tea drinking.

But what is it about the Starbucks brand that gives it such global appeal? The company has gone
to great lengths to make sure that every Starbucks feels like a local coffee house, without losing
brand consistency. For example, in China, a regional dislike for coffee was combatted with
coffee-free drinks, whilst stores in Asia feature more adaptable seating arrangements to cater for
larger groups.

The company was also a pioneer of consumer-centric digital strategy, with personalized perks on
the Starbuck’s app including free birthday coffee. As a result, no matter where you are in the
world, the brand never feels like an impersonal American corporate giant.
4. Coca-Cola

Coca-Cola is an old-hat when it comes to operating on a global level. However, the company has
had to adapt to create a global brand that resonates with international audiences.

In the 1980s and ‘90s, when the company first emerged onto the global stage, standardised
products and messaging resulted in a backlash against American imperialism. In response, Coca-
Cola introduced its ‘think local, act local’ marketing strategy in 2000, with an aim to increase
local sensitivity.

Since then, Coca-Cola has gone from strength to strength and is still one of the world’s most
recognizable brands. Key to this success has been the company’s focus on enduring and
universal values such as ‘sharing’ and ‘happiness’, as well as product and messaging
localization. For example, during the FIFA World Cup, each of the company’s international
homepages featured local celebrities and cultural references, alongside the instantly recognizable
Coca-Cola branding.

Building a global brand is anything but simple – but with it being easier than ever before to enter
international markets, it is something that an increasing number of companies can achieve. The
key is to find the right balance between global messaging and localized strategies.

Sustainable Marketing—The Call for More Social Responsibility

Marketers are reexamining their relationships with social values and responsibilities and with the
very Earth that sustains us. As the worldwide consumerism and environmentalism movements
mature, today’s marketers are being called to develop sustainable marketing practices. Corporate
ethics and social responsibility have become hot topics for almost every business. And few
companies can ignore the renewed and very demanding environmental movement. Every
company action can affect customer relationships. Today’s customers expect companies to
deliver value in a socially and environmentally responsible way.

The social responsibility and environmental movements will place even stricter demands on
companies in the future. Some companies resist these movements, budging only when forced by
legislation or organized consumer outcries. More forward-looking companies, however, readily
accept their responsibilities to the world around them. They view sustainable marketing as an
opportunity to do well by doing good. They seek ways to profit by serving immediate needs and
the best long-run interests of their customers and communities.

Philip Kotler, Hermawan Kartayaya, and Iwan Setiawan believe today’s customers want
marketers to treat them as whole human beings and acknowledge that their needs extend beyond
pure consumerism. Successful marketing is thus distinguished by its human or emotional
element. A third wave of thinking, values-driven and heralded as “Marketing 3.0,” has moved us
beyond the product-centric and consumer-centric models of the past, these authors say. Its three
central trends are increased consumer participation and collaborative marketing, globalization,
and the rise of a creative society.

• We live with sustained technological development—low-cost Internet, cheap computers and

mobile phones, open source services and systems. Expressive and collaborative social media,
such as Facebook and Wikipedia, have changed the way marketers operate and interact with
consumers.
• Culturally relevant brands can have far-reaching effects. A cultural brand might position itself
as a national or local alternative to a global brand with poor environmental standards, for
instance.

• Creative people are increasingly the backbone of developed economies. Marketing can now
help companies tap into creativity and spirituality by instilling marketing values in corporate
culture, vision, and mission.

These authors believe the future of marketing will be horizontal: consumer-to-consumer. They
feel the recent economic downturn has not fostered trust in the marketplace and that customers
now increasingly turn to one another for credible advice and information when selecting
products.

The organization’s task is thus to determine the needs, wants, and interests of target markets and
satisfy them more effectively and efficiently than competitors while preserving or enhancing
consumers’ and society’s long-term well-being.

A Dramatically Changed Marketplace

The three forces—technology, globalization, and social responsibility—have dramatically

changed the marketplace, bringing consumers and companies new capabilities. The marketplace
is also being transformed by changes in channel structure and heightened competition.

New Consumer Capabilities

Social media is an explosive worldwide phenomenon. Empowerment is not just about

technology, though. Consumers are willing to move to another brand if they think they are not
being treated right or do not like what they are seeing. Expanded information, communication,
and mobility enable customers to make better choices and share their preferences and opinions
with others around the world. Here are some of the new consumer capabilities:

• Consumers can use the Internet as a powerful information and purchasing aid. From the home,
office, or mobile phone, they can compare product prices and features, consult user reviews, and
order goods online from anywhere in the world 24 hours a day, seven days a week, by-passing
limited local offerings and realizing significant price savings. They can also engage in
“showrooming”: comparing products in stores but buying online. Because consumers and other
constituents can in fact track down virtually any kind of company information, firms now realize
that transparency in corporate words and actions is of paramount importance.

• Consumers can search, communicate, and purchase on the move. Consumers increasingly
integrate smart phones and tablets into their daily lives. One study found the majority of
European smart phone owners use their devices to research products and make purchases. There
is one cell phone for every two people on the planet—and 10 times more cell phones are
produced globally each day than babies are born. Telecommunications is one of the world’s
trillion-dollar industries, along with tourism, military, food, and automobiles.

• Consumers can tap into social media to share opinions and express loyalty. Personal
connections and user-generated content thrive on social media such as Facebook, Twitter,
Wikipedia, and YouTube. Sites like TripAdvisor for travelers bring together consumers with a
common interest.
• Consumers can actively interact with companies. Consumers see their favorite companies as
workshops from which to draw out the offerings they want. By opting in or out of lists, they can
receive marketing and sales-related communications, discounts, coupons, and other special deals.
With smart phones, they can scan barcodes and QR (Quick Response) codes to access a brand’s
Web site and other information.

• Consumers can reject marketing they find inappropriate. Some customers today may see fewer
product differences and feel less brand-loyal. Others may become more price-and-quality-
sensitive in their search for value. Almost two-thirds of consumers in one survey reported that
they disliked advertising. For these and other reasons, consumers can be less tolerant about
undesired marketing. They can choose to screen out online messages, skip commercials with
their DVRs, and avoid marketing appeals through the mail or over the phone.

New Company Capabilities

At the same time, globalization, social responsibility, and technology have also generated a new
set of capabilities to help companies cope and respond

• Companies can use the Internet as powerful information and sales channel, including for
individually differentiated goods. A Web site can list products and services, history, business
philosophy, job opportunities, and other information of interest to consumers worldwide. Solo
Cup marketers note that linking their storefronts to their Web site and Facebook page makes it
easier for consumers to buy Solo paper cups and plates while engaging with the brand online.
Thanks to advances in factory customization, computer technology, and database marketing
software, companies can allow customers to buy M&M candies with their names on them, Coca-
Cola with their names on the bottle, and Heinz ketchup bottles with customized messages.

• Companies can collect fuller and richer information about markets, customers, prospects, and
competitors. Marketers can conduct fresh marketing research by using the Internet to arrange
focus groups, send out questionnaires, and gather primary data in several other ways. They can
assemble information about individual customers’ purchases, preferences, demographics, and
profitability. Many companies uses loyalty-card data to better understand what consumers
purchase, the frequency of store visits, and other buying preferences.

• Companies can reach consumers quickly and efficiently via social media and mobile marketing,
sending targeted ads, coupons, and information. GPS technology can pinpoint consumers’ exact
location, letting marketers send those messages at the mall with wish-list reminders and coupons
or offers good only that day. Location-based advertising is attractive because it reaches
consumers closer to the point of sale. Social media and buzz are also powerful. Over a two-year
period, Dell took in more than $2 million in U.S. revenue from coupons provided through
Twitter and another $1 million from people who started at Twitter and bought a new computer
on Dell’s Web site. By mid-2012, the @DellOutlet Twitter account had more than 1.6 million
followers. Word-of-mouth marketing agency BzzAgent recruited 600,000 consumers who
voluntarily join promotional programs for products and services they deem worth talking about.

• Companies can improve purchasing, recruiting, training, and internal and external
communications. Firms can recruit new employees online, and many have Internet training
products for their employees, dealers, and agents. Blogging has waned as companies embrace
social media. “We want to be where our customers are,” said Bank of America after dropping its
blog in favor of Facebook and Twitter. Farmers Insurance uses specialized software to help its
15,000 agents nationwide maintains their own Facebook pages. Via intranets and databases,
employees can query one another, seek advice, and exchange information.
• Companies can improve their cost efficiency. Corporate buyers can achieve substantial savings
by using the Internet to compare sellers’ prices and purchase materials at auction or by posting
their own terms in reverse auctions. Companies can improve logistics and operations to reap
substantial cost savings while improving accuracy and service quality. Small businesses can
especially unleash the power of the Internet. Physicians operating a small practice can use
Facebook-like services such as Doximity to connect with referring physicians and specialists.