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Lovemarks or SafeBets?
What drives consumers in emerging versus mature markets
Professor Koen Pauwels Ozyegin University, Istanbul
1
My background: merging academics with business
• From Belgium to UCLA to Tuck @ Dartmouth to Istanbul
• Most publications & Awards in my academic cohort
• Editorial board IJRM, JM, JMR, Marketing Science
• Founded the Marketing Productivity Group
• AIMark: Advisory Board & Coordinator Digital Marketing
• #1 expert on Research/Metrics @marketingprofs.com
• EU reintegration project: Return on Marketing Investment in Mature vs. Emerging Markets
across countries and industries
• Fast moving consumer goods : e.g. Unilever
• Durable goods : e.g. Nissan, Sony Eurasia
• Retailing : e.g. Old Navy, Marks & Spencer Russia
• Online services : e.g. Groupon, Kayak
• Business-to-business: Inofec Dutch Furniture
• Pharmaceuticals: eg. cholesterol reducers
• Banking: North-Eastern US banks, Credit Europe
Search Engine Opt. Paid online ads New Products
Price Promotions New Channels
Brand advertising • •
Click throughs? Awareness ? Sales leads ? Satisfaction? Loyalty? Social media
• •
Sales? Profits?
Stock Price?
?
? ROI?
Marketing Performance: Measuring & Improving ROI
Developed Markets Emerging Markets
Emerging markets needed for growth
But: institutional, cultural & economic differences between countries (ICE)
Imply ≠ response • What your research
words mean • How much they trust
and react to ads • How they respond to
marketing
Problem: smarter marketing in emerging markets
Overview
• What do your market research words mean ?
• How do consumers trust and share advertising?
• How do consumers’ hearts, minds, wallets react?
• Case study: Personal care in Brazil vs the U.K.
• Conclusion
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What do your market research words mean ?
• Even the best translation leaves true meaning ambiguous
Case: what does ‘environment’ mean in Germany & Turkey?
Leading multinational of cleaning products was surprised to find out that Turkish consumers had similar enthusiasm and willingness to pay for environment-friendly product
When probed what they meant by ‘environment’, many Turkish respondents said: “My home, my family”
To the follow-up question “What about streets, rivers, lakes?” they responded: “That is the government’s task, not mine”
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How much do consumers trust and share advertising?
• “Consumers in emerging vs. mature markets are more likely to talk about any kind of online advert” Mindshare 2011
• Studies show higher trust in offline and online advertising in emerging markets
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2,35
2,4
2,45
2,5
2,55
2,6
2,65
2,7
2,75
0 50 100
Tru
st in
gen
eral
adv
erti
sing
Individualism
Brazil
India
China
US
UK
Netherlands
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
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Which Route should your ads focus on?
Experiential Route
• Evoke Sensations, Feelings, Imaginations
Has higher impact on ad affect, which lifts purchase intent in mature markets
Germany, France, U.K, Italy, the Netherlands
Functional Route
• Focus on product features and benefits
Drives ad affect + cognition, which both lift intent in Emerging Markets
BRIC, MIST, Argentina, Mexico, Chile, Poland, Morocco, Saudi Arabia, Pakistan, Thailand, Vietnam, Indonesia, Philippines
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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.”
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Customer Attitude Dynamics (Srinivasan et al. 2010)
What marketers do • Advertising • Price • Distribution
What customers think & feel
Awareness Consideration Liking
What customers do
Brand purchases
Marketing
builds
Attitudes
which convert
to brand sales
How does this differ in emerging markets ?
• Pauwels, Erguncu and Yildirim, just published in IJRM
• Explain marketing impact by 2 criteria of attitude
dynamics
– Responsiveness to Marketing
– Conversion to Sales
• We show that attitude dynamics (and thus marketing effects) differ for emerging vs. mature markets
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1) Responsiveness: can marketers move the attitude?
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2) Conversion: does it translate into sales/profits ?
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Cultural Differences - Individualism
- Uncertainty av - Power Distance
Economic Differences
- Income - Legal Protection
- Competition
Attitude Dynamics: Stickiness, Conversion
- Ad Awareness - Consideration
- Liking
Marketing Response of each attitude to:
- Advertising - Distribution
- Price
Marketing Effectiveness -Sales
Case study: FMCG in Brazil vs U.K.
• Recent Data for 3 brands x 2 personal care FMCGs
• Econometric model of marketing, attitude, sales
Controls for other potential differences:
1) Brands: same brands in emerging/mature market 2) Market (share) position: similar positioning, share
3) Similar potential: for attitude metrics
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Advertising Response in Emerging vs Mature Market
AD AWARE Emg > Mature
CONSIDER Emg << Mature
LIKING
Emg << Mature 18
0,000
0,005
0,010
0,015
0,020
category 1 category 2 TOTAL
0,000
0,002
0,004
0,006
0,008
0,000
0,002
0,004
0,006
0,008
0,010
0,012
Sales Conversion in Emerging vs Mature Market
AD AWARE Similar
CONSIDER Emg > Mature
LIKING Emg << Mature
19
0,00
0,01
0,02
0,03
0,04
0,05 category 1 category 2 TOTAL
0,00
0,05
0,10
0,15
0,20
0,00
0,05
0,10
0,15
0,20
0,25
‘Cost More’ Sales Conversion: + Emg, - Mature Market
20
-0,12
-0,10
-0,08
-0,06
-0,04
-0,02
0,00
0,02
0,04
category 1 category 2 TOTAL
Love Marks or Safe Bets ?
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Low sales conversion
High sales conversion
Low response to marketing
Liking Emerging
Awareness Mature
Consideration Emg
Cost More Mat (-)
High response to marketing
Consideration Mat
Awareness Emg
Liking Mature
Cost More Emerging
As illustrated in US-China debates on what a brand is
• “Qualitative research reveals that the Chinese consumers feel 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.” 22
KEY TAKE AWAYS
• You should probe for what words mean exactly
• You should use higher trust in marketing & research • You should check which attitudes (cognition, affect)
translate most into behavior in emerging markets
• You should probe for the attitude response to advertising (higher-lower), price (good-bad),…
• You should verify how consideration is driven by (online or offline) word-of-mouth
• Quant needs to be validated by Qualitative Research
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Want to learn more ?
• It’s not the size of your data, it is how you use it: how to market smarter with analytic dashboards
• Your free copy at: koen.pauwels@ozyegin.edu.tr
• Website: www.marketdashboards.com • LinkedIn/Twitter: koenhpauwels • Facebook: http://www.facebook.com/pages/
marketdashboardscom/207532115957700
The rise of the middle class
• Even in countries with high income inequality (e.g. Brazil, Turkey), we see a strong rise of the middle class since 2001
• Buying in food, cleaning, personal care much more equal • Narrow focus on top quarter of consumers would leave
more than half of the market to competition! • From ‘high ground’ expensive products in mature markets
to ‘good enough’ less expensive in emerging markets • But for travel, recreation, culture: top covers 60% of market
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