So, how can chief executives prepare for this wide-open opportunity? Let’s focus on the true nature of competition in
THE NATURE OF COMPETITION IN
The 12 European Community (EC) countries have a total gross domestic product of approximately $4.4 trillion and about 320 million potential customers. To put this into perspective, the
Certainly, most trade barriers will be lifted, but trade barriers are really not inhibitors to consumer product sales. Of course, 1992 is going to be a very important year for banks, interest companies, airlines and similar organizations to which different monetary systems and trade laws are the real barriers. But in a practical sense, consumer product companies are not held back by these barriers. On the other hand, these companies will encounter country-by-country cultural barriers that will not be “lifted” so easily even in
Therefore, the competitive environment will not alter dramatically in 1992. Competitively, each country in
Government restrictions also play a part in the competitive environment in certain countries. Both
The failure to reach agreement on farm subsidies echoes this protectionist mentality. Many
Despite rhetoric of the single European market opening in 1992, European businessmen seem to want more protection than the EC ministers originally bargained for. European businessmen are banding together in a flurry of alliances and cross-shareholding pacts to shield them from outside competition. As
One method is to establish your operation in
According to another KPMG Peat Marwick survey of 800
BUILDING BRAND LOYALTY WITHIN CULTURAL BARRIERS
If you want to compete successfully in the pan-European market, it is vitally important to remember that you cannot regard Western Europeans as a single entity. There are Italians, Frenchmen, Spaniards, and so on. Think of
The true Western European market comprises separate, distinct markets within each country because of barriers stronger than any physical obstacle. These untraversable barriers include language and social/cultural differences. For example, try marketing a widely successful
Understanding cultural differences is the greatest challenge facing
How can we market products to obtain brand loyalty within such a divergent market? First, we must remember that just as there are no Western Europeans, there are no pan-European products. Instead, there are 12 tailored versions of the same product. Building brand loyalty must be done country by country. Some of my competitors are tackling
Begin by targeting
Marketing techniques in the Western European countries are virtually the same as in the
Consider developing a universal message that can be translated into 11 languages and adapted to attract attention in each country. Take care to avoid language-based jokes, puns, double meanings and any visuals that might be considered market-specific. Then take the universal message and tailor it in each country to consumers in the specific markets. This may mean changing the look of the packaging, advertising, or changes in the product itself. Remember that some languages, such as German, require a lengthier, more formal style and thus additional space for copy in their advertisements or direct mail pieces. From a purely practical point of view, you can construct a generic message that is less creative but that can be adapted to each country with minimal changes. This may save time and costs. Flexibility is the key-being able to mix the corporate message with on-the-ground expertise.
If you are fortunate to have a strong following in the
STRATEGY FOR MARKETING IN
What will make American businesses shine in
As an extension to business practices, one also must research and understand the unique details of each country, especially cultural differences. Then, each marketing plan and its elements must be evaluated within the context of this research. The Japanese call it “dochakuka”-becoming a native or “part of the woodwork.”
A classic example of not doing this research is Chevrolet’s attempt to market the Nova overseas. Because -no va” means “it does not go” in some languages, European sales were slow due to customers’ lack of confidence in the product’s name.
In addition to language differences, be sure to research the popular home industries, local laws and customs, transportation options, and local politics. For example, if you are marketing a product that is in direct competition with a home industry, you may not receive local cooperation. Also, the environmental lobby is very strong in
It is also a good idea to hire native countrymen to manage or at least advise operations in each country. Give them as much flexibility and latitude as possible.
This is possibly the single most successful strategy I have seen. It is vital to trust the subsidiary managers completely and allow them a high degree of autonomy. In essence, develop the corporate goals and messages and provide those to them. Like fine bakery chefs, subsidiary managers choose how to “frost the cake” so that it appears the most appetizing to consumers in their target market.
For example, our Italian subsidiary is less stringent about terms and conditions, discounts and so on-concurrent with Italian business practices. If it operated more strictly, as we do in the
Expect to expend a financial investment for
Finally, remember that our relationship with
Philippe Kahn is chairman and chief executive of Scotts Valley, CA-based Borland International, a developer of high-performance software products with annual revenues of $226 million.