Marketing Strategies For Targeting Emerging Markets – Case Study On Gillette

Advantages of emerging economies

Discuss about the Marketing strategy adopted by Gillette to target the emerging markets of the developing countries.

Marketing is the promotion of the products of a company; it involves in building a relationship between a brand and its customers. There are several factors to consider while marketing a product, especially when it comes to global marketing, it involves providing the solutions, services and promoting the products assessing the social and cultural scenarios in local as well as in international markets. In this assignment, a case study has been provided on Gillette Company and its strategies involving targeting emerging markets in various countries. In the following paragraphs, the reasons behind the marketing strategies adopted by Gillette will be discussed and the questions pertaining to the case study will be answered.

The developing countries like India, Russia, China, and Poland provide lucrative market opportunities for the popular companies like Gillette who are waiting to grab the chances that these budding economies provide (Cavusgil et al. 2014). There are certain advantages, which the emerging economies have:

• First Moving Advantage- The emerging economies provide a fresh market for the products, if the company can provide product which no other company has launched in the market, then that company will have a certain advantage in the market and will gain loyalty of the customers (Nailer, Stening and Zhang 2015). The company will be a leader in that particular product market. In similar ways, Gillette and its products will bring a new approach in the razor blade market in the emerging economies (Sinkovics et al. 2014). The new products will immediately grab the attention of the buyers and chances of the popularity of the company will increase.
• Growth- The emerging markets provide many growth opportunities for already established companies like Gillette. Being a part of a growing economy will provide the company to expand their business (Meyer and Peng 2016.). This is another major reason behind Gillette choosing an emerging economy.
• Diversification- Diversifying the product market among various economies can prove to be beneficial for the company’s financial prospect, if one economy suffers the other branches can make up for the losses (Cerutti, Claessens and Puy 2015). This can be another reason for Gillette expanding its business in the emerging markets.
• Brand image- Gillette’s strategy of grabbing the growing markets in various countries will also positively influence its brand image and will promote its brand name in both the local as well as global image.

In order to attain growth in business a company needs to have business expansion strategies, so it can be said that the strategy adopted by Gillette to target emerging markets can be agreed upon, but there will be certain risks faced by the company as the expansion strategies are quite progressive(Natalicchio, Petruzzelli and Garavelli 2014).

Targeting the emerging markets for business investment is attractive no doubt but along with the positive factors, there are several threats, which the emerging markets can pose to a business (Vertakova 2016).

• Cultural Risks- One of the main difficulties faced by the companies while promoting their products in a new country is cultural problems (Marquis and Raynard 2015). Gillette may face certain difficulties when it will introduce its products in a completely different country, the requirements of the people may differ over there, and their social and cultural perspectives might influence their preferences.
• Legal and Political Problems- the political and legal infrastructures of all the countries differ from time to time and these changing policies can be harmful for the companies investing in these economies (Bekaert and Harvey 2014.). The laws pertaining to businesses, import, exports and other laws influencing the economies of these developing countries are weak and no well developed, thus Gillette may face certain obstacles in the way of their business expansion.
• Customer Loyalty- Although the economies are emerging but there might some existing companies who sell the same products and then it becomes difficult to gain the loyalty of the customers (Elg et al. 2017). Gillette may face other local competitors who hold the loyalty of the customers, to ascertain their position in the market Gillette has to present something new and better to the customers. The consumers may support the local products more than the new ones and that will prove negative for Gillette.
• Unpredictable Economy- As the economies are still developing, the framework of accounts and audit in the companies set in the developing countries are weak and this can lead to bankruptcy. Gillette will have to take such risks if it wants to expand its business in the emerging economies, as mentioned in the case study due to a financial crisis, which began in Thailand and spread quickly over Asia Gillette faced a huge financial loss (Grinblatt and Titman 2016). To make up for the loss Gillette had to lay off its employees. This is one of the serious dangers, which Gillette faces for targeting the emerging economies.

The marketing strategies, which can be adopted by Gillette to gain popularity in the emerging economies, are as follows:

• Word of mouth- In emerging economies the brand name promoted through recommendations of people has deeper impact in establishing the brand image of the companies (Cuervo-Cazurra and Ramamurti 2014). This is not the scenario of developed countries, thus to build a market for the company in the emerging markets Gillette has to establish their brand image in such a way that the common people are aware of the name of the brand and they can recommend their friends and relatives to use the products of the company.
• Brand Value- Building brand value will be the most important thing, which Gillette will have to do if the company wants to expand its business in an emerging economy (Sivaprakasam and Srinivasan 2015). In order to do this Gillette will have to promote their brand name through series of advertisements in television channels and in local as well as in national newspapers, so that the name becomes a household one. The focus of the advertisements should be geographic, the general population of the emerging economies tends watch the local news channels and read local newspapers, and thus the advertisements should be made accordingly.
• In Store Competition- This is another important factor that influences the market in emerging economies that the developed ones. The people of the emerging economies tend to consider many options while buying a product. Gillette will have to get its products into the local stores so that they get a better exposure in front of the customers. Small brand promotions can also be hold in local supermarkets to familiarize the products to the consumers. Winning the in store battle will ensure that how long a brand will survive and hold its position in the market.

The privately owned local brands like Astra often sell out to the bigger companies like Gillette, merge with them, and adopt their brand identity. This happens due to the following reasons:

• Financial Gain- The privately owned local companies are smaller in size and in financial stature thus when a bigger multinational company makes an offer to them, they sell out their business to the bigger corporate (Zhu, Zou and Xu 2017). In this way, they smaller companies like Astra make a huge financial profit by selling out to bigger companies like Gillette.
• Global Exposure- The bigger companies have their brand name already established in the market and are internationally known names, similarly Gillette is a well-known brand in the international market. Astra, by merging its assets with Gillette will gain an exposure in the global market and will become a popular household name in no time.

The scenario is quite common where multinational companies like Gillette acquire local brands like Astra. The following reasons can be the motivation behind such action:

• Fast Expansion in local markets- One of the chief reasons for the bigger firms to acquire a small company is fast expansion of the company in the local market. The local brands like Astra have established themselves in the local market and have gained popularity among the locals, thus Gillette by acquiring Astra will promote their brand name among the local population.
• Eliminate Competition- The products of the local companies maybe better in quality or have a loyal consumer niche thus it will be tough for new companies to gain popularity among the local people, thus buying out a local company will eliminate the chance of any such competition. This can be another reason why Gillette decided to buy Astra.

• Product Diversification- Gillette is a well-known brand in the worldwide market, thus if the company wants to expand its business it has to provide different types of products in the market to attract various customers and to gain popularity.
• Pricing- Different countries have different types of economies and per capita income, so to meet the price expectations of the consumers of each of the countries it is very important to keep in mind the economic factors. Keeping the price range in parity with the economic condition of the country will help in gaining popularity.
• Promotion- To introduce new products into the market proper promotional campaigns are required. Advertisements should be given in the local channels; free products can also be distributed along with other products to pique the interest of the consumers. The advertisements and promotions should reach the particular target audience.

Conclusion

To conclude provided the situation given in the case study, Gillette needs to continue with its expansion in the emerging markets, although Gillette faced a certain financial loss in Russia and in other Asian countries, yet it has the capability to bear such loss as Gillette is a big company both in the terms of brand name and financial position. In this financial crisis, it will be easy for Gillette to acquire the local companies who have been hit hard by the crisis. Thus, by adopting the correct marketing strategies and continuing with their business expansion in the emerging economic markets Gillette can easily gain considerable profits and uphold their multinational brand image

Reference List:

Bekaert, G. and Harvey, C.R., 2014. Emerging equity markets in a globalizing world. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2344817

Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business, 2^nd edn, pp. 234-256. Pearson Australia. https://books.google.co.in/books?hl=en&lr=&id=KcSaBQAAQBAJ&oi=fnd&pg=PP1&dq=Cavusgil,+S.T.,+Knight,+G.,+Riesenberger,+J.R.,+Rammal,+H.G.+and+Rose,+E.L.,+2014.+International+business.+Pearson+Australia&ots=mzNhR-ESRy&sig=9ALMTfP1Z9VZM2d2E9HG5MiyN4M

Cerutti, E., Claessens, S. and Puy, M.D., 2015. Push factors and capital flows to emerging markets: why knowing your lender matters more than fundamentals (No. 15-127). International Monetary Fund. https://books.google.co.in/books?hl=en&lr=&id=28cfCgAAQBAJ&oi=fnd&pg=PP1&(No.+15-127).+International+Monetary+Fund.&ots=w9OKzAN8BW&sig=4uz-8IlDVzf1g1LX_mxfto7fPS4

Cuervo-Cazurra, A. and Ramamurti, 2014. Understanding multinationals from emerging markets, 1^st edn, Cambridge University Press, pp. 128-145. https://books.google.co.in/books?hl=en&lr=&id=LjizAwAAQBAJ&oi=fnd&pg=PR11&dq=Cuervo-Cazurra,+A.+and+Ramamurti,+R.+eds.,+2014.+Understanding+multinationals+from+emerging+markets.+Cambridge+University+Press.&ots=iXxydGw6ZM&sig=mqEuWXx3r5RjuZQK5wiRZ5QOqVo#v=onepage&q&f=false

Elg, U., Ghauri, P.N., Child, J. and Collinson, S., 2017. MNE microfoundations and routines for building a legitimate and sustainable position in emerging markets. Journal of Organizational Behavior, 38(9), pp.1320-1337.

Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy. https://s3.amazonaws.com/academia.edu.documents/36251752/Financia_Markets_and_Corporate_Strategy_Grinblatt__Titman.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1515558851&Signature=0eCUyToxijQwq0qdt7OeOmtKNz0%3D&response-content-disposition=inline%3B%20filename%3DFinancial_Markets_and_Corporate_Strategy.pdf

Marquis, C. and Raynard, M., 2015. Institutional strategies in emerging markets. Academy of Management Annals, 9(1), pp.291-335.

Meyer, K.E. and Peng, M.W., 2016. Theoretical foundations of emerging economy business research. Journal of International Business Studies, 47(1), pp.3-22.

Nailer, C.H.F., Stening, B.W. and Zhang, M.Y., 2015. In researching emerging markets, anthropology often trumps statistics. International Journal of Market Research, 57(6), pp.855-876.

Natalicchio, A., Petruzzelli, A.M. and Garavelli, A.C., 2014. A literature review on markets for ideas: Emerging characteristics and unanswered questions. Technovation, 34(2), pp.65-76.

Sinkovics, R.R., Yamin, M., Nadvi, K. and Zhang Zhang, Y., 2014. Rising powers from emerging markets? The changing face of international business. 0969-5931, 23(4), pp.675-679.

Sivaprakasam, S. and Srinivasan, R., 2015. Frugal Services Innovation—Lessons from the Emerging Markets and an Adoption Framework for First-World Corporations and Governments. In The Handbook of Service Innovation (pp. 683-702). Springer London.

Vertakova, Y.V., Rudakova, O.V., Shadrina, V.V., Kobersy, I.S. and Belova, I.N., 2016. Strategy of Disruptive Innovation in Emerging Regional Markets: Factors of Success and Failure. International Journal of Economics and Financial Issues, 6(8S). https://search.proquest.com/openview/b616d3b173ef0ee9fab212792fdbaf91/1?pq-origsite=gscholar&cbl=816338

Zhu, F., Zou, S. and Xu, H., 2017. Launching reverse-innovated product from emerging markets to MNC’s home market: A theoretical framework for MNC’s decisions. International Business Review, 26(1), pp.156-163.