Some brand names are recognized the world over. Overseas expansion is the dream for many brands that are looking for new opportunities outside their traditional markets. There are several approaches brands can take when doing this: export their existing marketing strategies wholesale to a new audience, make subtle changes to appeal to new customers without losing their original unique selling points or to attempt to translate their product entirely to appeal to a very different culture. There is no one method that works, as the following examples show: sometimes success or failure can come down to some very basic market research.
Ford sells the Focus back to the US
In 2012, Ford launched their first global car, a version of the re-engineered Ford Focus. While the Focus had enjoyed huge popularity in Europe, sales had not been strong in North America, partly because the stylish second generation model that had taken Europe by storm had never been launched in the US. The new model integrated many of the European aesthetics, plus several high-spec, high-tech features.
In North America, Ford had a bigger challenge than in Europe, where the style was already familiar. With little public awareness of the new look, Ford launched a more American-friendly sedan model alongside the more revolutionary European-style hatchback. Advertising concentrated on the aerodynamic features of the new design and fuel efficiency as a way of winning over the middle-American demographic. They also tried to attract a younger, more tech-savvy customer with a social media campaign featuring Doug, a sock puppet, which attracted 45,000 Likes on Facebook and around 2 million You Tube views (the campaign has since been pulled).
Did the marketing campaigns work?
In Europe, where the launch challenge wasn’t so great, sales have been strong, with the new Focus passing the 250,000 sales milestone
In the US Ford says that “February [is] on track to be best sales month in more than a decade [and the] share of high-end SEL and Titanium Focus models are up to 26 percent.” The move towards a more luxurious, high-tech spec seems to be paying off.
Nissan Micra Star of India Campaign
While Ford opted to move towards integration of their European and North American styles, Nissan’s Star of India campaign embraced Indian culture in a hugely successful social media campaign to raise awareness of their Micra model, which has sold over 6 million units worldwide but had only recently been introduced to India.
The campaign teamed up with Bollywood star Ranbir Kapoor to offer fans the chance to star alongside him in a 3-minute film, the Star of India, (featuring an epic Nissan Micra car chase) if they uploaded a clip of them dancing, voted for by Facebook users. The Facebook page gained over 500,000 Likes, more than any other car company in India.
Foster’s Gold
While some brands change their advertising to reflect cultural differences in their marketing, others go further and change their entire product. Foster’s lager is not popular in its native Australia, where it has only been infrequently promoted in ten years, and its premium Foster’s Gold line isn’t even available there (it is made in Europe under rights owned by Heineken International). However, that doesn’t stop the $12 million celebrity-endorsed overseas marketing campaign from focusing on a mix of Australian down-to-earth humor and modern glamor, and the lager continues to be popular in Europe, coming second only to Carling in the UK by sales.
Coca-Cola’s regional ads
The Coca-Cola brand is instantly recognizable around the world. Part of the secret to their success is exporting their product as a concentrate; overseas bottling companies then add sweeteners and filtered water, which gives it a distinct flavor in each country. Some regions even have their own products based on local tastes, such as the lemon-and-lime drink Limca in India. Marketing is also very region-specific, for example having a Diwali-themed holiday commercial in India, or commercials that reflect local music tastes in Europe. Coca-Cola’s strong 6% global increase in 2011, boosted by developing market sales, helped it to remain as the leader in soft drinks in the world.
Dassani’s abandoned European expansion
On paper, Coca-Cola’s bottled water brand Dasani should have had a trouble-free European launch, given Coke’s experience with overseas markets. In 2004, the plan was to use the UK as a launch pad for the rest of Europe.
Early advertising used the same taglines ‘Bottled spunk’ and ‘Can’t live without spunk’ that had been used in the US to highlight Dasani’s youthful, healthy image.
Except that in the UK, ‘spunk’ has entirely different connotations, being slang for ‘semen’. The ads were quickly pulled.
The differences in US and European cultures became even more problematic. In the UK, 88% of bottled water sold comes from natural mineral or spring sources, and Dasani’s labeling stated that it was from ‘pure’ sources. When the UK press discovered that Dasani was not from a spring or glacier, but purified mains water from Sidcup, a suburb of London, there was a public outcry, with the tabloid press running headlines like ‘The Real Sting’, a play on Coke’s slogan, or pointing out that Thames Water, who serve the area, sell 500ml of tap water for 0.03p, as opposed to Dasani’s 95p for 550ml. The Food Standards Agency began an investigation into Dasani’s labeling.
Things went from bad to worse as it emerged that water production had become contaminated by a potentially carcinogenic bromate. Coke took all 500,000 bottles off the shelves and abandoned the European launch, which has not as yet been rescheduled.
What can we learn from this?
• There is no one ‘right’ way to advertise a product in a new market.
• Often, brands will make changes to the products themselves to appeal to variations in taste or lifestyle.
• Successful marketing will take into account local customs, interests or sensitivities.
• Market research into local cultural differences is key to success, even for large brands used to dealing with overseas markets.
• Marketing campaigns can be exported wholesale, but often local voice-overs or slight changes may make them more familiar to audiences. For example, in the identical European Ford Focus television ads, shots are edited to make the car appear to be driving on the left in the UK.
• Failure to take regional differences into account can be highly damaging to a product.
U.S. wholesale stockpiles grew in April - Crescent-News
WASHINGTON (AP) -- U.S. wholesale businesses restocked faster in April, responding to a strong gain in sales. The increase could be a good sign for economic growth in the April-June quarter.
The Commerce Department says stockpiles grew 0.6 percent at the wholesale level in April, double the March gain. Sales by wholesale businesses jumped 1.1 percent in April, nearly three times the March sales gain.
Stockpiles at the wholesale level stood at $483.5 billion in April. That's 25.6 percent above the post-recession low of $384.9 billion in September 2009.
It would take roughly five weeks to exhaust all wholesale stockpiles at the April sales pace. That's considered a healthy time frame and suggests businesses will keep restocking to meet demand.
When businesses step up restocking, they order more goods. That generally leads to increased factory production and higher economic growth.
Slower growth in inventories held back growth in the January-March quarter. In the first three months of this year, the economy grew at an annual rate of 1.9 percent.
The increase in wholesale inventories was bigger than economists had forecast. That could signal that inventory growth will pick up and boost economic growth in the April-June quarter.
But stockpile growth largely depends on the spending habits of U.S. consumers and businesses.
Weaker job creation in April and May could force some to scale back spending. And pay has risen just 1.7 percent over the past 12 months. That's slower than the rate of inflation for that period.
Sluggish job growth and weak pay raises threaten to drag on consumer spending, which would weaken growth.
Consumer spending accounts for 70 percent of economic activity.
One positive change: Gas prices have tumbled since early April. That could give Americans more money to spend on appliances, vacations and other discretionary purchases.
Many businesses cut back on restocking last summer fearing that the economy was on the verge of another recession.
When it became clear that it wasn't, they raced to rebuild stockpiles and keep pace with consumer demand.
Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total. Manufacturing inventories represent about 40 percent of the total.
New Orleans is beginning to attract national retailers - nola.com
With a few recent retail wins, economic development officials and real estate professionals say that the prospect for getting more national stores into New Orleans is looking up. In May, after months of speculation that the shopping club Costco Wholesale Corp. would come to New Orleans, the city officially announced the retailer's plans to open at the former Carrollton Shopping Center in 2013. On Wednesday, the New Orleans Business Alliance and the Downtown Development District announced that Major League Baseball hat retailer New Era Cap Co. Inc. will open a flagship store on Canal Street before the 2013 Super Bowl, adding New Orleans to an impressive list of cities around the globe.
After years of begging retailers to come to New Orleans, the city's fortunes suddenly appear to be turning. Next year's Super Bowl and the anticipated 2015 opening of University Medical Center are creating incentives for retailers to get in and get settled. The reopening of the Hyatt and construction along the Loyola Avenue corridor are proof that the city has been able to garner investment. And more apartments downtown and the return of tourism has put more bodies downtown.
"It's getting easier. People can come here and see the results for themselves," said Matt Schwartz, a principal in the Domain Cos., which is working on a mixed residential-retail development downtown called South Market District. Schwartz hopes to announce the retail line-up for his project by the end of the summer and complete the financing by the end of the year.
In May, representatives of Schwartz's company, real estate leasing and development companies such as Corporate Realty and Stirling Properties, and development agencies such as the Downtown Development District and the New Orleans Business Alliance all trekked to Las Vegas for the International Council of Shopping Centers' global real estate convention.
For the first time, New Orleans had its own booth at the event. Rod Miller, chief executive of the New Orleans Business Alliance, which lists retail attraction as part of its mission, said that having the booth helped give credibility to their efforts, and demonstrated that the public and private sectors are working together.
"I think historically, people did not have a clear understanding of the right contact," Miller said. "What I found is that some of them had been interested in New Orleans for a while, but they didn't know how to navigate New Orleans."
The city met with some existing prospects, drummed up a few new leads, and expects several site visits to result from their efforts at the convention. Miller said that's important because if people haven't seen the city since Hurricane Katrina, particularly in the past few years, they're unlikely to believe that it's doing well and is worth their business consideration.
Kurt Weigle, president and chief executive of the Downtown Development District, said his people came back from ICSC with an appreciation that New Orleans is finally on the retail map. "The most important information that I received is that there has been a sea change in the perception of the New Orleans market. It used to be that downtown New Orleans wasn't on anybody's list. Now it's the buzz," Weigle said.
The Costco announcement immediately before the trip gave a lift to their efforts, and they believe that New Era will help, too.
Miller said that the announcements by two quality international retailers will prompt others to take a look. "They're a leading international retailer. What do they know that I don't know?" he said.
Weigle said that New Era will help Canal Street. The company builds beautiful stores, and it plans to lift the facade and re-do the building at 838 Canal St., near the corner of Baronne. "We not only get a great retailer, but we get a building brought back to its former glory. It's a lot of small pieces like that that add up to a big win for us," Weigle said.
Although Costco and New Era saw opportunity in the city, the fact that the city is "under-retailed" doesn't always work in its favor. Even when the city's demographics fit the bill, some retailers get nervous when they learn that their competitors aren't there, either. The dearth of national retailers in the city also raises the red flag that perhaps it means the city is hostile to outsiders.
Miller said the New Orleans Business Alliance tries to sell the opportunity that will exist for any company that comes here, and let companies know that while New Orleans loves its small independent retailers, it also wants and needs national competitors.
Real estate brokers say that public support and planning efforts make a difference in whether New Orleans can attract retailers.
Commercial real estate broker Don Randon says that it helps when the city works with retailers who are coming to the city and keeps any potential opposition in check by remembering that protests often come from a vocal minority.
Schaeffer Mickal, a commercial real estate broker with Latter & Blum, said that right now, it's hard to find any open retail spaces along Canal Street and in the French Quarter. In addition, it can be difficult to lure national retailers because sometimes high-volume local retailers in a touristy area are willing to pay more in rent.
Rebecca Mowbray can be reached at rmowbray@timespicayune.com or 504.826.3417.
China Auto Glut Builds as Plant Shipments Outstrip Sales - Bloomberg
Carmakers are giving Chinese dealers no relief in their effort to reduce a glut of unsold automobiles in a slowing economy, as factories pump passenger vehicles into showrooms faster than distributors can sell them.
Wholesale deliveries, including multipurpose and sport- utility vehicles, climbed 23 percent from a year earlier to 1.28 million units in May, the China Association of Automobile Manufacturers said June 9 in Beijing. That beat the 1.2 million average estimate of seven analysts in a Bloomberg survey, the third straight month shipments exceeded forecasts.
The surge, led by Toyota Motor Corp. (7203) and Honda Motor Co. (7267) as they recover from last year’s natural disasters, may raise pressure on distributors to deepen discounts and sell cars at a loss to meet mandatory targets set by automakers. Factory managers may have to slow production unless the discounts and potential government policies to encourage sales ease the glut.
“If there’s a bottleneck out the retail channel, obviously that at some point comes back and you have to cut production,” said Kevin Tynan, an automotive analyst at Bloomberg Industries. “Something has to give. Either you’re going to incentivize the consumer to buy, whether that’s the government or the manufacturers, or you’re going to have to pull back on production somewhere, and it doesn’t sound like the manufacturers are in a big hurry to do that.”
The carmakers and state-backed CAAM say they’re confident demand is picking up. Automakers such as General Motors Co. only disclose the number of vehicles sold to Chinese dealers -- instead of consumers. Most carmakers use sales to dealerships to calculate revenue, according to Gao Song, an analyst with Citic Securities Co. (6030) in Beijing.
‘More Stable’
“There are clear signs indicating the industry is becoming more stable,” Deputy Secretary General Yao Jie said in Beijing. “For the first time this year, accumulative sales and production have exceeded that of a year earlier.”
For the first five months, passenger-vehicle sales increased 5.5 percent to 6.33 million units, according to CAAM.
Sport-utility vehicles registered the biggest wholesale delivery growth by category, rising 58 percent to 162,600 units in May as sedan sales rose 20 percent, according to CAAM. Minivans, which are used as passenger and commercial vehicles, rose 16 percent to 185,700 units, the association said.
Toyota’s China sales in May more than doubled to 78,700 units. Honda reported a 92 percent surge and Nissan Motor Co. (7201)’s sales increased 20 percent. Last year, production at the Japanese automakers was hurt by the earthquake and tsunami in Japan and floods in Thailand.
May Recovery
“Last May was pretty bad in terms of the passenger-car sales tally,” Harry Chen, a Shenzhen-based analyst with Guotai Junan Securities Co., said before the release.
GM (GM), the world’s biggest automaker, said June 5 that vehicle sales in China rose 21 percent in May, led by demand for its Wuling minivan and Chevrolet models. Ford Motor Co. (F) saw its passenger-vehicle deliveries gain 23 percent.
“We expect sales growth to remain strong in June,” UBS AG (UBSN) analysts Hou Yankun, Xu Ming and Zou Tianlong, wrote in a note on June 6. Government stimulus policies “could boost consumer sentiment in the short term,” they wrote.
Karen Hampton, a Ford spokeswoman in Dearborn, Michigan, yesterday deferred market-specific questions to representatives in Asia.
Kevin Wale, head of GM’s China operations, said in a May 31 interview that he’s “pretty optimistic” Chinese consumers return to dealerships. “I can’t see anything in the Chinese environment that’s leading to an unusual decline in consumer confidence,” he said.
Inventories Rise
Dealers aren’t as optimistic. Average inventory carried at Chinese showrooms bloated to a level exceeding two months of sales by the end of May, compared with more than 45 days at the end of April, Luo Lei, deputy secretary general of the state- backed China Automobile Dealers Association, said in an interview last week. The glut at the dealerships, which is leading to price cuts, is unsustainable, he said.
“The picture we have is very different from what the automakers are painting,” Luo said. “The sales increases they’re reporting are achieved by loading dealers with stock.”
China on June 7 announced its first interest rate cut since 2008 as policy makers seek to bolster growth. Economic data over the weekend may add pressure on the government to introduce such buying incentives. Chinese consumer prices in May rose the least in two years, while industrial output and retail sales trailed economists’ estimates, according to data released by the Beijing-based National Bureau of Statistics on June 9.
Car Incentives
China’s cabinet agreed last month to revive financial incentives for consumers to trade in their cars to help increase demand, a government official said last month. Separately, the finance ministry said on May 29 that the government will spend as much as 2 billion yuan a year to develop alternative-energy vehicles to reduce fuel consumption.
CAAM deputy secretary general Dong Yang said at the briefing he was unaware of stimulus policies for the automotive industry “anytime soon.”
One of the first steps may come as a government program to encourage sales of smaller, fuel-efficient cars, Tynan at Bloomberg Industries said.
“You will get some clear signals, some yellow lights, before you get to production cuts,” he said.
To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net; Liza Lin in Shanghai at llin15@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
China Auto Glut Builds as Factory Shipments Outstrip Sales
Nelson Ching/Bloomberg.
Cars move through traffic in Shanghai, China.
Cars move through traffic in Shanghai, China. Photographer: Nelson Ching/Bloomberg.
June 7 (Bloomberg) -- Bloomberg's Stephen Engle reports from Beijing on Great Wall Motor Co.'s business outlook and plans for international expansion. The China automaker aims to triple its exports by 2015 and enter the U.S. market within 3-5 years. (Source: Bloomberg)
June 1 (Bloomberg) -- Kevin Wale, president of General Motors Co.'s China operations, talks about China's auto industry and the company's business outlook in the country. Wale spoke with Bloomberg's Liza Lin in Shanghai yesterday. (Excerpts. Source: Bloomberg)
May 24 (Bloomberg) -- Ian Robertson, global head of sales and marketing at Bayerische Motoren Werke AG, unveils the BMW 335Li, a long-wheelbase version of the company's 3-Series sedan, at the Beijing auto show on April 19. The stretched 3-Series, made uniquely for the Chinese market, is 11 centimeters (4.3 inches) longer than the regular model and is part of a broader effort by German luxury-car makers to sell more cars targeted toward first-time buyers in China. (Video is courtesy of BMW AG. Source: Bloomberg)
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