Case Study of International marketing PDF

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Table of Contents 1-2 Nestle: The Infant Formula Controversy ............................................................................................................... 2 1-3 Coke & Pepsi Learn to compete in India .................................................................................

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Table of Contents 1-2 Nestle: The Infant Formula Controversy ............................................................................................................... 2 1-3 Coke & Pepsi Learn to compete in India ................................................................................................................ 8 1-4 Marketing Microwave Ovens to a New Market Segment .............................................................................. 17 2-1 The Not-So-Wonderful world of Euro Disney- Things are better now at Disneyland resort Paris. ....................................................................................................................................................................................................... 26 CASE 2-2: Cultural Norms, Fair & Lovely, and Advertising .................................................................................. 34 2-3 Starnes-Brenner Machine Tool Company: to Bribe or Not to Bribe? ....................................................... 43 2-4 Ethics and Airbus ........................................................................................................................................................... 47 CASE 2-7 McDonald’s and Obesity.................................................................................................................................. 51

3-3 Easycar.com ..................................................................................................................................................................... 55 4-4 national Office Machine Motivating Japanese Sales People: Straight Salary or compensation? ... 64

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1-2 Nestle: The Infant Formula Controversy

Summary and Highlights The Charges: Nestle (MNO) is marketing infant formula to developing countries in which misuse is leading to unhealthy results. Most of the charges against infant formulas focus on the issue of discouraged breast feeding among Third World mothers and have led to misuse of the products, thus contributing to infant malnutrition and death.  In northern Peru where water come from a highly contaminated river.

 Throughout the Third World, many parents dilute the formula to stretch their supply. The children had never been breast fed, and since birth their diets were basically bottle feeding.

 In rural Mexico, the Philippines, Central America, and the whole of Africa, there has been a dramatic decrease in the incidence of breast feeding. For over 20 years, Nestlé has been directly and indirectly charged with involvement in the death of Third World Infants in 1974, A report with a pamphlet entitled “Nestlé kills babies” is published

The Defense: After some criticism, Nestle still said that they believe breast feeding is still the best for infant. However, for some reason, mothers can’t feed their baby with their own milk so they should use nutrition milk or mixed food instead. However, in third world countries, material and water are really contaminated so it might be harmful for infants. Nestle is just simply offering an alternative for those mothers that can’t provide adequate nutrition.

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The Resolution: Nestle started educating consumers. WHO got involved and the INBC made their points of difference. In 1974, Nestle, aware of changing social patterns in the developing world and the increased access to radio and television there, reviewed its marketing practices on a region-by-region basis. In 1977, the Interfaith Center on Corporate Responsibility in New York compiled a case against formula feeding in developing nations, and the 3rd World Institute launched a boycott against many Nestle products. The INFACT (The Infant Formula Action Coalition) lobbied the WHO to draft a code to regulate the advertising and marketing of infant formula in the 3rd world. In May 1982, Nestle formed the Nestle Infant Formula Audit Commission (NIFAC) NIFAC recommended several clarifications for the instructions of the code. In October 1982, Nestle accepted those recommendations. Other issues within the code, such as the question of a warning statement, were still open to debate.

Nestle supports WHO codes: Nestlé implements WHO codes:  Immediately support the WHO codes

 Issue instructions to employees, agents, distributors  Establish an audit commission

 Consult with WHO, UNICEF, and NIFAC etc.

Nestlé policies:  Adopting articles of the WHO code as Nestlé Policy

 Nestlé and other manufacturers are accused of violating WHO codes.  Nestlé rejected the accusations

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The new twist: NO Sampling, NO mother craft workers, NO Point-of-sale advertising, & NO infant pictures on labels. The mothers may continue breast feeding to avoid being stigmatized once bottle feeding becomes a badge of HIV infection. • In Thailand, pregnant women are given free milk powder after founding HIV positive. • Demand for infant formula in South Africa grew 20% in 2004, and the Government investigated the shortages as Nestlé scrambled to catch up with demand.

The Issues: In 2001, it was believed that some 3.8m children around the world has contracted the HIV virus at their mother’s breasts. • Majority of women in developing countries don’t know whether they are HIV infected or not. Healthy mothers make their child safer by bottle feeding.

Question #1: What are the responsibilities of companies in this or similar situations?

Find a way to become involved with the Baby-Friendly Hospital Initiative, like sending in donations or even working with the organization to help. Remain a member of Infant Food Manufactures (IFM). Keep its internal Nestlé instructions to Nestlé employees updated and up to standards to avoid any more problems.

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Continue their efforts on social responsibility by sponsoring events at international medical and nutrition conferences, and events like celebrating the Vietnam Year of the Family, and funding research on infant feeding. Be careful with their pricing strategy and make sure they are selling their products in third world countries for reasonable and affordable prices for the people, and they should maybe consider selling the products for even less in these places. Nestlé also needs to learn from its mistakes and not be so neglectful and they should respond to issues in a reasonable amount of time, because when they do not, they look irresponsible and careless. Do whatever it can to reposition itself as a force of good.

Question #2: What could Nestlé have done to have avoided the accusations of “killing Third World babies” and still market its product?

They are Give out free services to teach the new markets on how to use the product, instead of free samples

 Specifically market the product, and not “down selling” the effects of generally breastfeeding.

 Avoiding the accusations

 Learning about countries‟ culture they market  Supporting breastfeeding and its benefits

 Encouraging using formula for special situations  Offering testing HIV.

 Starting a women educational based program rather than a hard sale tactic.

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Question #3: After Nestlé’s experience, how do you suggest it, or any other company, can protect itself in the future? Suggesting to protect company on the future Before nestle or any enterprise enter to the new market, they have to understand well about the tradition, life style, economic status, natural condition, they should do more study about medical effects of their product and services because they provide such an important for human beings. When they do business, they should not only care about making profit but also their consumer. For people in third country, this company should do promoting in healthy eating habit for mothers during her pregnancy and then baby. Doctors is really needed for some urgent situations. Companies that produce, market, and sell infant formula should be more proactive when it comes to researching where their products will be distributed and marketed They should study the social and medical effects of their products and services. Companies should also provide education of the importance of proper infant feeding and the use of their products and services.

Question #4: Assume you are the one who had to make the final decision on whether or not to promote and market Nestlé’s baby formula in Third World countries. Read the section titled “Ethical and Socially Responsible Decisions” in Chapter 5 as a guide to examine the social responsibility and ethical issues regarding the marketing approach and the promotion used. Were the decisions socially responsible? Were they ethical? Ethical and Socially responsible decisions Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas   

Employment practices and policies Consumer protection Environmental protection –

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 

Political payments and involvement in political affairs of the country Basic human rights and fundamental freedoms.

 Laws are the markers of past behavior that society has deemed unethical or socially irresponsible.

 Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions   

Utilitarian Ethics Rights of the Parties Justice or Fairness

 Unqualified sales girls

 The distribution of free samples

 Marketed to people who were incapable to fulfill the minimum requirements for giving formula safely to the baby.

 The association of bottle-feeding with healthy babies to promote the use of infant formula to mothers who would have been better off breast-feeding their babies.

Question #5: What advice would you give to Nestlé now in light of the new problem of HIV infection being spread via mothers’ milk?

Promote breastfeeding as the healthy thing to do Encourage HIV testing. Try to get mothers to make sure there are no wounds in baby’s mouth and the mother’s breasts to cut down the transmission rate of HIV. Getting the other countries to do what Thailand is doing, showing that getting baby powder is the right and responsible thing to do if you have HIV. Continue to show support towards breast feeding.

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Contribute towards programs that provide education and empowerment for women, especially in Third World countries. Contribute towards research on how to reduce the risk of mother-to-child transmission.

Conclusion Nestle should always try to do social help to gain people’s trust. Baby food is a very sensitive issue. Competitors may take advantage of this issue and trust. So they have to be aware of the quality of the baby food. Nestle have to use different marketing strategy to gain their lost market and consumers.

1-3 Coke & Pepsi Learn to compete in India

Case Summary Coke and Pepsi had a tough time getting into the beverage market in India. However, the venture seemed to be well worth it, since in 1993 about 45 percent of the soft drinks industry consisted of small manufacturers and the business was worth 3.2 million dollars. Coke had previously been in India, but in 1977, it was forced to leave because of a dispute with the Indian government. PepsiCo entered India in 1986 as “Pepsi Foods Ltd.” in a joint venture with local partners. In order to be able to sell their products, they had to follow many new rules, including changing the name of the Pepsi cola because it is a foreign product. But PepsiCo was willing to appease the government to stay in the market. Pepsi was forced only to compete with local brands until Coca Cola re-entered the market in 1990. It joined with Godrej, an Indian company, and was turned down, so Coke joined forces with snack food company Britannia Industries India, Ltd. and the two became “Britco Foods.” In July 1993, Parle,

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the leading soft drink manufacturer decided to sell its leading brands (Coke and Pepsi’s major competitors) and its main bottling plants in four key cities to Coke. Both Coke and Pepsi chose to advertise and run promotions during important events and times in India. For instance, they both advertise heavily in summer, when the most softdrinks are consumed, and they also advertise heavily during the Indian festival of Navrati. They both also run big television campaigns during cricket and football games, and they also employ big Bollywood celebrities to endorse their products. Pepsi does especially well by sponsoring the cricket, and Coke does well marketing a lifestyle towards India’s youth. Both companies were accused by an environmental organization of having pesticide residue in their products. The companies ran tests that proved their products were safe but it was too late; people were banning and protesting their products. Because neither company came forward to reassure the people, their silence was interpreted by customers as guilt. This hurt their image even more, including in the U.S. The contaminated groundwater incident only expanded further for Coke, and people began accusing the company of using sparse groundwater in its products and taking the water supplies away from the locals and from farming uses. Coke decided to stay in an attempt to help find a solution to the increasing problem of groundwater quantity and quality. Questions and Answers

1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca-Cola India. What specific aspects of the political environment have played key roles? Could these effects have been anticipated prior to market entry? If not, could developments in the political arena have been handled better by each company?

Principle of "indigenous availability” difficult trade policies, rules and regulations. 9

 prohibited usage of foreign brand name in India.  sales of soft drinks concentrate to local bottlers could not exceed 25% sales of the venture.  required to process & distribute local fruits and vegetables.  market was very small in size.

2. Timing of entry into the Indian market brought different results for PepsiCo and Coca-Cola India. What benefits or disadvantages accrued as a result of earlier or later market entry?

Coca Cola Benefits •

Parle offered its bottling plants in 4 major cities.

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Made its return to India with Britannia Industries India Ltd.

Disadvantages •

Rigid Rules and Regulations

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Buying of bottling plants leads to 49% disinvestment.

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Local demand of carbonated drinks is as very low.

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Harder to establish themselves

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Pepsi Benefits •

Own set up green filled bottling plants.

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First Mover Advantage

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Government policies favored the company

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Joint venture with Volta's and Punjab Agro.

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Gained 26% share by 1993.

Disadvantages •

Pepsi approached Parle but it was rejected.

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Launched 7up and there is stiff competition in the market for lemon drinks

3. The Indian market is enormous in terms of population and geography. How have the two companies responded to the sheer scale of operations in India in terms of product policies, promotional activities, pricing policies, and distribution arrangements?

Product Policies

Pepsi •

Formulated under the name ‘Lehar Pepsi’

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Marketing and distribution are focused in north west cities of India like Delhi

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Pepsi launched 7UP in clear lemon category.

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Introduced Aquafina and fruit drinks.

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Coca Cola •

Joint Venture with Britannia and enter as ‘Britco Foods’

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Introduced Kinley and fruit drinks.

Promotional Activities

Pepsi •

Navratri Campaign

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Tied up Gujarati TV Channels, Zee Alpha

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Refill offers after purchasing 300ml bottle and Basmati Rice scheme.

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TV campaigns

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Sponsorships for cricket and football

Coca Cola •

Events like -Thumps up Toofani Ramjhat

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Buy one get one free

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Lucky draws for Free trip to Goa

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TV Campaigns ad like Bombay Dreams, Chennai Dreams

Pricing Policies Coca Cola •

Reduced prices by 15-25% nationwide

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Prices slashed to Rs.5 for 200ml , and Rs.8 for 300ml Bottle.

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•

Introduction of new size the “Mini”.

Pepsi •

Forced to match these price reductions

4. “Global localization” (glocalization) is a policy that both companies have implemented successfully. Give examples for each company from the case.

Glocalizatiuon •

Coca cola joined force with Britannia industries under the name of “Britco Foods” in 1993.

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Later Coke took over Parle’s four bottling plants and brands including Thums up, limca, Citra and Mazaa.

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Pepsi entered India in 1986 with two local partners, Volta's and Punjab Agro under the name of “Pepsi Foods Ltd”, which later turned to “lehar Pepsi.”

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Both the companies worked hard to dominate the Indian market by changing the taste and preferences according to the Indian need and to have a local expertise. Coke also tried to increase the sale of their product by launching small size bottles.

5. How can Pepsi and Coke confront the issues of water use in the manufacture of their products? How can they defuse further boycotts or demonstrations against their products? How effective are activist groups like the one that launched the 13

campaign in California? Should Coke address the group directly or just let the furor subside?

Yes, we agree that Coca-Cola India made mistakes in plannig and managing its return to India. •

They wrongly forecasted Indian political environment due to which they had to dilute their stakes later (49% disinvestment).

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They rejected the plan to put up green fields bottling plants as they took over Parle’s existing bottling plants.

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Coca cola tried to get extensions twice.

6. Which of the two companies do you think has better long term prospects for success in India?

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Pepsi and Coke can confront the issue of water use in the manufacturing of their products by the use of canal irrigation & rainwater harvesting. Then they can also put water recycling plant to treat the discharged water from their factories and then they can provide that water to farmers for their agricultural use. This way the ground water problem can also be solved and managed.

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Coke can further defuse boycotts or demonstrations against their products in California by doing Ad-campaigns in which they can ask the experts from the ministry of health to convey the message to the public that their products are safe and healthy. They can also hire celebrities to do the Ads for their products because the public follows them.

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Coke should address the group directly because their company was not wrong and they should justify themselves.

7. What lessons can each company draw from its Indian experience as it contemplates entry into other Big Emerging Markets? According to us Pepsi has better long...