Companies are using new approaches to market internationally, says Professor Julie Hennessy in Nota Bene lecture, and so must Kellogg graduates
While many people shrink away from the unknown, Julie Hennessy dives in headfirst.
“I find it really interesting to market to groups where I know that my personal instincts are terrible, because [that way] I’m forced to learn more,” the Kellogg School clinical professor of marketing recently told an audience at the school. Hennessey, who was the second lecturer in the three-part “Nota Bene” series for graduating Kellogg students, spoke May 9 about “Early Learnings: The Challenges of Marketing in Developing Countries.”
In her remarks, she talked about how firms have often been reticent to enter markets different from their own. But one of the main points she emphasizes to students in her marketing classes, she told the Nota Bene assembly, is that marketers are being challenged to get beyond their familiar contexts and explore new arenas, including those in many developing countries. These markets are likely to be some of the most important growth drivers of the decades ahead, Hennessy said.
“The reality is as we market or drive business on a global basis, we are going to… almost always deal with people, markets and places that are very different from our own personal experiences,” she said.
Along with her curiosity regarding what motivates people, Hennessy said she is also fascinated by rapid changes in the business world. “One of the things that’s most interestingly changing is rules for managing business margins and the interest that developed businesses have in countries, markets and targets that would have in past years been almost called ‘ugly ducklings.’”
The previous rules of managing markets have changed since Hennessy was a brand manager at Kraft in the late 1980s, she said. One former tenet was to never grow a business by adding another brand with lower variable margins, and similarly a brand should never be cannibalized with lower margins unless forced to do so by an apparent risk of competitive loss.
“These rules are really under review in today’s global market,” she said. Going down-market was unheard of before, but this strategy is increasingly part of the growth plan for companies like Unilever, one of those Hennessy noted as an example. The firm figured out how to make detergent — its No. 1 category globally — cheaper and to sell it at less than half the price of Unilever’s leading brand in developing markets to drive both volume and profit growth in developing markets.
For breaking into these new markets, Hennessy offered some advice, most of which requires marketers to think far beyond their individual preferences, lifestyle and experiences.
Category usage is important because often the basic usage is different in a new environment. For example, said Hennessy, McDonald’s has had to redefine its role in fast food in locales where fast is not necessarily better. In Mexico, people visit restaurants less frequently than consumers in the U.S. do, and for Mexican customers doing so is more intentional — something planned. So in this context, McDonald’s has sought to redefine its value proposition to meet the needs of this market. Although food is still served quickly, customers in Mexico visit McDonald’s as a group and they tend to stay longer. In Italy, on the other hand, McDonald’s has taken on the aura of an underage bar, as a place for teenagers to spend time, said the Kellogg professor. In short, a marketing strategy that works well in one place, may not work in another.
Respectful positioning is also important, said Hennessy. “Poor consumers are turned off by products marketed overtly to poor consumers,” she noted. Payless Shoes is successful because it markets its products as “smart” as opposed to “cheap.” “Consumers have to feel good about your product and be able to afford to use it,” Hennessy pointed out.
One of the key points concluding Hennessey’s lecture was reminding students that good marketing is about “getting into [customers’] minds and not just our own.”
The lesson was one that Sze-Meng Soon ’07 took to heart. “The key to marketing effectively internationally is to set aside our own biases and be completely customer-centric by understanding how the customer lives, works, eats and plays in their environment,” he said, adding that the Nota Bene experience “thoroughly engaged” him.
This term’s final Nota Bene lecture is scheduled for 10 a.m. June 15 in the Owen L. Coon Forum with David Besanko, the Alvin J. Huss Distinguished Professor of Management and Strategy.