Lovemarks or SafeBets?Consumer attitudes

in emerging versus mature markets

Prof Koen Pauwels Ozyegin University, Istanbul

 

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Developed Markets Emerging Markets

Emerging markets needed for growth

But: institutional, cultural & economic differences between countries

GDP RISK

Imply ≠ response •Attention to advertising?

•Attitude response to marketing?

•Sales conversion of attitudes?

Problem: smarter marketing in emerging markets

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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Do consumer behavior & marketing effects differ ?

“Consumers in emerging markets are more likely to talk about any kind of online advert than their counterparts in mature markets” (Mindshare 2011)

“In emerging markets, brands are seen as an

important mark of quality and status. People value the reassurance provided by a well-known brand name, and if they can, they may be willing to pay more for it. They believe it is important to get the right brand even if they have to shop around for it. In mature markets, people are more likely to assume that all brands stocked by mainstream retailers will deliver the same basic quality”

(Nigel Hollis, MillwardBrown 2010)

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Overview

• Differences between emerging and mature markets

• Implications for Customer Attitude Dynamics

• Case study 1: Personal care in Brazil vs the U.K.

• Case study 2: Food & beverage in Spain vs France

• Conclusion and contact information

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Emerging Markets

• are countries that are restructuring their economies along market-oriented lines;

• offer a wealth of opportunities in trade, tech transfers, and foreign direct investment;

• are regional economic powerhouses with large populations, resource bases, and markets;

• will also become more significant buyers of goods and services than industrialized countries.

• Individualist / collectivist• Power distance/egalitarian• Uncertainty Avoidance

Cultural Differences

• Income• Consumer Protection• Technology, Competition,

…

Economic &

Institutional

Differences

Cultural, Economic & Institutional

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Brazil, India, China

USA, UK, Netherlands

Individualism 35 (14,19) 87 (6,08)

Power Distance 75 (5,69) 38 (2,52)

GDP per capita (US$) 4.310 (3.636) 43.313 (6.971)

Technology Level 3,89 (0,30) 5,38 (0,75)

Trust in General Advertising

2,7 (0,12) 2,4 (0,03)

Trust in Traditional Advertising

2,8 (0,15) 2,5 (0,06)

Trust in Online Advertising

2,6 (0,10) 2,3 (0,03)

BIC versus Anglo-Saxon market descriptives (st.dev.)

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10 30 50 70 900

5

10

15

20

25

30

35

40

45

50

Individualism

GD

P p

er

cap

ita (

US

$)

0 20 40 60 80 1002.25

2.3

2.35

2.4

2.45

2.5

2.55

2.6

2.65

2.7

2.75

BrazilLinear (Brazil)IndiaLinear (India)ChinaLinear (China)USLinear (US)UK

Individualism

Tru

st i

n g

en

era

l ad

vert

isin

g

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

Customer Attitude Dynamics Criteria

• Hanssens, Pauwels, Srinivasan and

VanHeule (MSI 2010)

• Explain marketing impact by 4 criteria of

attitude dynamics

– Potential: room to grow ?

– Stickiness: do changes last ?

– Responsiveness to Marketing

– Conversion to Sales • We propose that attitude dynamics (and

thus marketing effects) differ for emerging vs. mature markets

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1) Potential: does attitude have room to grow ?

40%95%

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2) Stickiness: how much carries over ?

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3) Responsiveness: can we move it?

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4) Conversion: does it translate into sales/profits ?

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Differences emerging vs mature markets

Emerging Mature

Potential + -

Stickiness - +

Responsiveness

++ _

Conversion - +

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Our FrameworkCultural

Differences- Individua

lism-

Uncertainty av

- Power Distance

Economic Differences- Income- Legal Protectio

n- Competit

ion

Attitude Dynamics:Stickiness, Conversion

- Ad Awareness

- Consideration- Liking

Marketing Response of

each attitude to:

- Advertising- Distribution

- Price

Marketing Effectiveness

-Sales

Case study 1: FMCG in Brazil vs U.K.

• Data for 3 brands x 2 personal care FMCGs for 2004-2009

Controls for other potential differences:

1) Brands: same brands in emerging/mature market

2) Distribution System: similar in emerging/mature market

3) Market (share) position: similar positioning, market shares

4) Similar potential: for attitude metrics

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Attitude Stickiness in Emerging vs Mature Market

AD AWAREEmg < Mature

CONSIDEREmg > Mature

LIKINGEmg >> Mature

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category 1 category 2 TOTAL

0.00.10.20.30.40.50.60.70.80.91.0

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.70.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Sales Conversion in Emerging vs Mature Market

AD AWARESimilar

CONSIDEREmg > Mature

LIKINGEmg << Mature

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category 1 category 2 TOTAL

0.00

0.01

0.02

0.03

0.04

0.05

0.000.020.040.060.080.100.120.140.160.180.20

0.00

0.05

0.10

0.15

0.20

0.25

‘Cost More’ Sales Conversion: + Emg, - Mature Market

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category 1 category 2 TOTAL

-0.12

-0.10

-0.08

-0.06

-0.04

-0.02

0.00

0.02

0.04

Advertising Response in Emerging vs Mature Market

AD AWAREEmg > Mature

CONSIDEREmg << Mature

LIKINGEmg << Mature

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category 1 category 2 TOTAL

0.0000.0020.0040.0060.0080.0100.0120.0140.0160.0180.020

0.000

0.002

0.004

0.006

0.008

-0.002

0.000

0.002

0.004

0.006

0.008

0.010

0.012

Data 2: France vs. Spain FMCGs (Kantar Worldpanel)

• Spain is NOT an emerging country, but falls right in between France and Brazil on ‘individualism’ & uncertainty avoidance dimensions

• Monthly data for EACH brand in 6 categories (bottled water, bath gel, laundry detergent, dairy, milk, soft drink) 2001-2010 on same marketing mix actions (price, promotion and advertising) and consumer attitude metrics as French analysis of bottled water and shampoo (Hanssens et al. 2010)

• We compare all Spanish to all French categories, and matched category (water, shampoo-bath gel)

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Consistent results of these comparisons

• Spain is similar to France in terms of advertising and price responsiveness for all metrics, and for the sales conversion of awareness

• Compared to France, ad awareness has a lower stickiness in Spain (as in emerging market)

• Compared to France, sales conversion in Spain is higher for consideration and lower for liking. 24

Love Marks or Safe Bets ?

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Low sales conversion

High sales conversion

Low response to marketing , high staying power

Liking Emerging

Awareness Mature

Consideration Emg

Cost More Mat (-)

High response to marketing, low staying power

Consideration Mat

Awareness Emg

Liking Mature

Cost More Emerging

As illustrated in US-China debates on what a brand is

• “A recent study reveals that the average Chinese consumer feels 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.”

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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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CONCLUSIONS

• Different long-term marketing effectiveness in emerging versus mature markets

• Can be explained by differences in stickiness, responsiveness and sales conversion of attitudes

• Emerging markets experience a higher stickiness of consideration & liking (interdependent self)

• But a higher responsiveness of ad awareness to advertising & distribution (more search)

• Consideration converts more than liking

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Want to learn more ?• It’s not the Size of the Data, it is How

You Use It: Smarter Marketing with Analytics & Dashboards

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