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Part Seven Special Topics and Perspectives
Belch: Advertising and
Promotion, Sixth Edition
Exhibit 20-2 The WD-40
Co. gets much of its sales
growth from foreign
markets such as Australia
VII. Special Topics and
Perspectives
20. International
Advertising and Promotion
© The McGraw−Hill
Companies, 2003
General Electric, Ford, General Motors, Nissan, Nestlé, and Procter & Gamble
have made the world their market and generate much of their sales and profits
from abroad. Gillette sells over 800 products in more than 200 countries.
Colgate-Palmolive generates almost 70 percent of its nearly $10 billion in
sales from outside the United States and Canada. 7 Starbucks sells lattes around
the world as its name and image connect with consumers in Europe and Asia
as well as North America. The company has coffee shops in 28 countries and
operates 1,200 international outlets from Beijing to London. Starbucks plans
to double its number of stores worldwide to over 10,000 by 2005. 8 Coca-Cola,
Pepsi, Nike, KFC, Dell, McDonald’s, and many other U.S. companies and
brands are known all over the world.
Many U.S.-based companies have formed joint ventures or strategic
alliances with foreign companies to market their products internationally. For
example, General Mills and Swiss-based Nestlé entered into a joint venture to
create Cereal Partners Worldwide (CPW), taking advantage of General Mills’
popular product line and Nestlé’s powerful distribution channels in Europe,
Asia, Latin America, and Africa. CPW is now the world’s second-largest
cereal company, operating in 75 international markets, and it generated over
$800 million in sales in 2002. 9 Nestlé also has entered into joint ventures with
Coca-Cola to have the beverage giant distribute its instant coffee and tea throughout
the world. Häagen-Dazs entered into a joint venture in Japan with Suntory Ltd., and its
premium ice cream, frozen yogurt, and other brands are now sold throughout Asia.
International markets are important to small and mid-size companies as well as the
large multinational corporations. Many of these firms can compete more effectively in
foreign markets, where they may face less competition or appeal to specific market
segments or where products have not yet reached the maturity stage of their life cycle.
For example, the WD-40 Co. has saturated the U.S. market with its lubricant product
and now gets much of its sales growth from markets in Europe, Asia, Latin America,
and Australia (Exhibit 20-2).
Another reason it is increasingly important for U.S. companies to adopt an international
marketing orientation is that imports are taking a larger and larger share of the
domestic market for many products. The United States has been running a continuing
balance-of-trade deficit; the monetary value of our imports exceeds that of our
exports. American companies are realizing that we are shifting from being an isolated,
self-sufficient, national economy to being part of an interdependent global economy.
This means U.S. corporations must defend against foreign inroads into the domestic
market as well as learn how to market their products and services to other countries.
While many U.S. companies are becoming more aggressive in their pursuit of international
markets, they face stiff competition from large multinational corporations
from other countries. Some of the world’s most formidable marketers are European
companies such as Unilever, Nestlé, Siemens, Philips, and Renault, as well as the various
Japanese car and electronic manufacturers and packaged-goods companies such as
Suntory, Shiseido, and Kao.
Advertising and promotion are important parts of the marketing
program of firms competing in the global marketplace.
An estimated $236 billion was spent on advertising
in the United States in 2002, with much of this money
being spent by multinational companies headquartered
outside this country. 10 Advertising expenditures outside the United States have
increased by nearly 60 percent since 1990, reaching an estimated $214 million in
2002, as global marketers based in the United States, as well as European and Asian
countries, increase their worldwide advertising. 11 The Role of International
Advertising and Promotion
Figure 20-1 shows the top 10 companies
in terms of advertising spending outside the United States.
In addition, estimates are that another $500 billion is spent on sales promotion
efforts targeted at consumers, retailers, and wholesalers around the world. The United
States is still the world’s major advertising market, accounting for slightly more than
half of the estimated $450 billion in worldwide ad expenditures. Nearly 90 percent of
the money spent on advertising products and services around the world is concentrated