How company culture influences Promotion Mix in P&G

Company:

P&G

Aspect:

how the company culture influence Promotion Mix in P&G

Structure:

Promotion Mix can be divided into four parts, which are the advertising, publicity, personal selling and sales promotion activities.

Over the past three decades, multinational corporations (MNCs) have become the most important factor in the field of world trade and investment. Moreover, the crucial feature of an international operation is in pursuit of a global strategy of investment, production and distribution (Gilligan and Hird, 1986). In addition, culture can be a direct effect upon the nature of the global marketing programme (Gilligan and Hird, 1986). Therefore, in order to find out the relationship between culture and a certain strategy, a critical analysis of how the culture environment influences promotion mix in the successful global company P&G would be the main discussion of this essay.

For what concerns my final decision about the company to be analyzed, I've chosen to dedicate the main part of the following essay to P&G, which is a leader of global fast developing consumer goods company, marketing one of the largest and strongest portfolios of trusted quality brands, including SK-II, Olay, Vidal Sassoon, Rejoice, Pantene, Head & Shoulders, Pampers, Whisper, Oral-B, Gillette, Pringles and etc. Their unique organizational strategies provide the international scale benefits of a global company and the local focus to be relevant for consumers in roughly 180 countries where their brands are sold (see P&G website).

In order to properly point out how the culture affects promotion mix in P&G, the first step should be to provide the reader with a clear and concise definition of each and the elements included by promotion mix. Moreover, brief business cases will also be provided with the purpose of examining how these promotional strategies influence organizational behavior and profits relating to culture environment in P&G. Furthermore, according to the four elements of promotion mix, which include the advertising, personal selling, sales promotion activities and marketing public relations (Chee and Harris, 1998), this essay can be divided into these four parts and described respectively.

Culture can be defined as inherently conservative, resisting change and fostering continuity (Czinkota and Ronkainen, 1996). Meanwhile, the cultural environment of the country includes demands and tastes of consumers, fashions in thought and behaviour, and trends in demography (Blythe, 2003).

When it comes to the analysis of promotion mix, the main elements of it should be introduced at the very beginning. Company must know how to communicate with present and potential stakeholders, and the general public (Kotler, 2003). Also, for most companies, the main question is not whether to communicate but rather what to say, to whom, and how often (Kotler, 2003). Moreover, there are number of activities which can belong to the promotion mix, for instance, advertising, personal selling, sales promotion and public relations (Chee and Harris,1998). These four elements of the promotion mix can be used to improve the company's image and affect the attitudes and buying behaviour of the individuals, companies, institutions that make up a targeted market (Chee and Harris, 1998). Therefore, these four elements would be discussed respectively as below with brief cases according to P&G.

To begin with, advertising is a main tool in international communications. Meanwhile, “advertising is any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor.” (Kotler, 2003, p 590). Although advertising principles do not vary from country to country, the purposes and methods employed will differ in national markets (Chee and Harris, 1998). Thus, it is obvious that the company and country's culture can be one factor to affect the methods of advertisement in every company which owns a great number of global customers.

When a new product comes out of the product development stage, P&G needs to pick a simple, distinctive name that will become the brand of the product, instead of other ways. Next step for this is the package design as used in television and print advertising. Moreover, the consumer benefit is at the heart of every P&G commercial, so the TV advertisement must jump-start to engage viewers you want to reach (Decker, 2002).

Therefore, when it comes to customers in various countries with different taste in their products, culture factor should be taken into account when they suppose to design successful ads. For P&G, they try to keep the advertisement short and sweet by sticking to a single message. Furthermore, in order to enhance the brand's strategic positioning, products warp it up with a tag line like “Pamper the skin they're in” (Decker, 2002).

However, although the Pamper products are sold very well in US market, it faced difficulties when P&G decided to enter the Japanese market. And the main reason for that loss is culture difference and lack of research before they decide to enter a new market.

Japan, as the second largest consumer market in the world, the Japanese customer is the most critical group in terms of product quality. Therefore, P&G Company faced many difficult issues when they sold their products in Japan at the first time. For example, in the early 80s of the 20th century, the Japanese housewives preferred to use phone advertisements to buy diapers. P&G chose to use dubbing of pure American-style Japanese in commercial advertising; at the same time, baby diaper itself was designed according to American preferences (Dongguan Institute of Technology website).

P&G mistakenly believed that the use of its marketing strategy in the United States is also able to succeed in Japan. However, the fact is that they lose millions of dollars by this wrong way of advertising. P&G conducted extensive market research activities to learn some information on the Japanese market as a simple but fundamental lesson. For instance, parents in Japan replace baby's diaper more frequently than parents in United States, so they invented more absorbent disposable diapers to adapt the Japanese market for obtaining more benefits. Meanwhile, P&G Company also ensured to mark Japanese on their packaging and advertising to match the Japanese customers' taste. As a result, P&G become the leader in Japan's disposable diaper market with annual sales nearly of 10 billion U.S. dollars (Dongguan Institute of Technology website).

According to this case, it can be shown clearly that cultures determine that the products' promotion will turn out failure if the Ad succeed inland is translated literally (WangXuena, 2001). Severeresearchmustbedoneontheculturaldifferences before the company gets a plan to entering a new market with different culture. And the most important one can be the communication-effect research, which seeks to determine whether an ad is communicating effectively. “It is called copy testing, which can be done before an ad is put into media and after it is printed or broadcast.”(Kotler, 2003, p606)

Thus, when P&G decides to enter Japanese market, they should study the differences between Japanese culture and western culture for finding out potential effect on awareness, knowledge, or preference. They would also like to measure the ad's sales effect (Kotler, 2003, p606).

Finally, a significant decision area for global markets is to decide whether an advertising campaign developed in the domestic market can be transferred to foreign markets with only minor modifications (Chee and Harris, 1998). In accordance with this case, it means the advertiser of P&G Company should evaluate whether the US-style commercial ad can be accepted in Japan market. Thus they can make some useful modifications for the certain taste of Japanese customers. Anyway, as a result, P&G did a right measure to get back their huge loss of a wrong decision.

Furthermore, the second element, personal selling, is “an oral presentation in a conversational form with one or more prospective purchasers for the purpose of market sales.” (Kitchen, 1999, pp24) In other words, Personal Selling involves personal contact between company representatives and their consumers to gain personal information on the type of product they are looking for (Christ, 2008). To be effective, marketing managers should learn how to incorporate personal selling with other promotional elements, organizational functions, for instance, distribution and production and with the customers (Kitchen, 1999, pp 327). Thus, it is obvious that the most important factor in personal selling which relating to culture can be the communications between salesperson and customers in different countries.

In addition, personal selling has several interrelated roles within the communication mix, such as information, persuasion and relationship building (Kitchen, 1999, pp327).

(As the P&G experience suggests, the importance of the “lone-wolf” salesperson winning and losing on the strength of his or her own efforts and skills is likely to diminish in the future. In the case of relationship selling, no one person possesses the necessary knowledge and resources to address the bigger opportunities to create value that go beyond selling the product. Under the traditional buyer-seller interface model, all of P&G's capabilities and communications with the retailer were funneled through one salesperson whose customer contact was a purchasing agent. With sales teams, the model is reversed, with multiple contacts being established between P&G and retailers. This model allows for a broader transfer of capabilities and communications. Notice also that both the seller and buyer must change, so the degree and extent of interaction expand dramatically. Obviously, not all buyers and sellers are prepared to make these adjustments. The switch to sales teams incorporating a relational sales orientation produces a number of critical consequences in a firm's sales program and management processes. Certainly, teams will require changes in the organization, selection, training, compensation, supervision, and evaluation of the sales force. Even with strong top management commitment and support, it took P&G 5 years to transition relationship selling and sales teams, and there is still a commitment to constantly revisit progress and make further adoptions. In recognition of its importance, we will discuss team building later in this chapter as an important competency for sales managers.)

Moreover, sales promotion can be defined as short-term incentives with the purpose of encouraging purchase ability (Kitchen, 1999, pp10). Then, the most frequently used of sales promotion may include price cuts, coupons, displays and feature advertising or a combination of them (Kitchen, 1999, pp 293). According to these sales patterns, it is obvious to find out that “what people of a particular country buy, why they buy, when they buy, where they buy and how they buy are largely culturally determined.” (Jain, 2000, pp528). In short, when marketers decide to make a sales promotion plan, the cultural factors can affect on the success of overseas marketing strategies (Jain, 2000, pp528).

When it comes to the last element, Public relations, is concerned with images, for example, the activity of public relations is to build good relations and enhance understanding between a company and all with whom it comes into contact, which means both internal and external communication (Chee and Harris, 1998, pp539). Then, a brief introduction of ‘public' would be indicated as following. The ‘public' is any group which can affect the company's activities actually or potentially, such as Customers, Media, Home government, Stockholders, Suppliers (Chee and Harris, 1998, pp539).

Unlike advertising focused on “burning” a brand into the mind of the consumer, PR (public relations) chooses to focus on building relationships and consumer trust by tapping into what was going on in communities and the culture. On the other hand, it is rather than just being a persuader for product messages, PR has traditionally grown deeper on the way of being a participant in consumers' lives (DiStaso, 2006, pp84).

Moreover, PR has naturally paid more attention to what is going on in the consumer's culture, for instance, how they live their lives, raise their kids, form their views, cooperate with their communities, latch onto trends and exchange information. In other words, “PR has taken a ‘cultural' approach to brand building, by interacting with consumer's lives on a variety of levels beyond just media relations” (DiStaso, 2006, pp77).

Then the typical case should be pointed out as following to support the discussion above. During a legendary speech at the 2004 convention of the American Association of Advertising Agencies, Jim Stengel, chief marketing officer of Procter & Gamble, decried that today's marketing models are “obsolete” and “broken”, and gave the industry a C- for its lack of innovation. When P&G was facing this complicated environment, it had prepared “Buzzpoint,” an internal branding meeting to “rethink” how P&G changes to any new forms of marketing communication in 2003 (DiStaso, 2006, pp76).

Also, PR practitioner Mark Weiner reports that Miller Brewing Co. supposed to transfer some of its budget from TV advertising to public relations in December of 2003, finding that public relations generated a high level of base and incremental product sales. While consumers may be tuning out advertising, there is evidence that they are also tuning out “publicity” as well. In the book Tuned Out: Why Americans Under 40 Don't Follow the News, David Mindich shows the reducing in news consumption for people under 40 (DiStaso, 2006, pp76). This change of certain group consumption must be taken into account by marketers, which can be included to the cultural extension.

Furthermore, “It would be less troubling if the 80 percent of young people who do not read newspapers every day watched TV news or logged on to news Web sites,” Mindich says. “Most don't.” (DiStaso, 2006, pp76) According to this point, customer's culture is extremely important for the company who wants to change their strategy in case of huge loss caused by changing of consumers' views. That's why P&G Company wants to give more budgets to PR at that time.

In conclusion,

Reference:

Jack & Neff. (2005, November 7). Bottom line on public relations: It works, says P&G. Advertising Age, 76(45), 1-3.

Graser, Marc. (2005, July 18). “P&G, GM lead parade to Mad & Vine.” Advertising Age, p. 8.

Marcia Watson DiStaso, (2006, March 12-19), International Public Relations Research Conference Proceedings, Best Western South Miami.

http://www.pg.com/en_US/company/global_structure_operations/index.shtml

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