Academic journal article Revue Canadienne des Sciences de l'Administration

Determinants of the Control of International Advertising by Headquarters of Mulitnational Corporations

Academic journal article Revue Canadienne des Sciences de l'Administration

Determinants of the Control of International Advertising by Headquarters of Mulitnational Corporations

Article excerpt

Abstract

The arguments for and against the standardization of international advertising are numerous and varied. However the organizational and control variables related to international advertising are not well understood. This paper attempts to identify the factors influencing multinational headquarters' degree of control over their international advertising and their standardization strategy. Significant differences exist between home countries on the degree of control but not based on the nature of the product. Certain decision-making factors that affect the degree of control over advertising, as well as standardization strategies, have been identified. Finally, an original decision-making model is proposed for further testing.

Resume

Les arguments en faveur ou non de la standardisation de la publicite internationale sont nombreux et varies. Cependant, les variables organisationnelles et de controle lies a la publicite internationale ne sont pas bien comprises. Cette recherche essaie d'identifier les facteurs qui influencent le degre de contrble par la maison mere des multinationales sur leur publicite internationale et leur strategie de standardisation. Les differences entre les pays d'origine sur le degre de controle sont importantes, mais non selon la nature du produit. L'article identifie certains facteurs decisionnels affectant le degre de controle sur la publicite et la strategie de standardisation. Enfin, il propose un nouveau module de decision pour guider les recherches a venir.

Literature Review

Problem Statement

Advertising strategy is one element of the global marketing strategy of multinationals that can impact market share and business profits (Szymanski, Bharadwaj, & Varadarajan, 1993). Within the marketing strategy an important issue is whether all or part of the advertising strategy can be standardized.

The first question that comes to mind is: To what extent is standardization truly applied by practitioners? In a major study looking at 40 years of debate in international advertising, Agrawal (1995) showed that practitioners have alternated between adaptation and standardization: In the 1950s, preference was for a localized approach; as knowledge of international markets increased, more standardized ads were used in the 1960s; in the 1970s, the pendulum swung toward more adaptation due to the rise of nationalisms; in the 1980s, the pendulum swung back toward standardization because of the rise in the number of multinational ad agencies and companies and the spate of mergers and acquisitions. This trend should continue because of increased global competition, global brands and global markets (De Mooij, 1994; Keegan & Green, 1996). For a good recent example, see McCullough (1996).

This raises the next question: How much autonomy do subsidiaries have to determine different aspects of the marketing strategy? Wiechmann (1974) observed that the most centralized aspects of decision-making are product quality, the physical characteristics of products, packaging, product line, and brands, while the least centralized elements are price, distribution, advertising, and promotion. On these latter four domains, subsidiaries were given more autonomy, in order to ensure more responsiveness towards competitors' actions. However, the level of spending was centralized. As for promotion, the types of products were another factor: Food companies were very centralized, nonalcoholic beverage companies were further centralized, and cosmetic companies generally aiming for uniformity were most centralized. Aylmer (1970) also remarked that autonomy was greater for advertising decisions than for any other type of marketing decision, and that the two variables best determining the degree of autonomy were the importance of the international market compared to the home market and the prestige of the local subsidiaries.

The next question that comes to mind is what variables are truly considered in the formulation of an international advertising strategy? …

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