The rapid growth of the Internet and of Computer technology over the past few years has led to the growth of internet related crimes throughout the world. These crimes have no boundaries and may affect an individual, his property, an organization or society at large. Many organizations have been losing their customers, time and money due to their vulnerability to hacking,
Cyber crime may be defined in a general way as an unlawful act wherein the computer is either a tool or a target or both. Cyber crimes can be categorized as follows:
Ø Unauthorized access to computer systems or networks: It means any person who secures access or attempts to secure access to a protected system.
Ø Email bombing: It refers to sending a large amount of emails to the victim resulting in victim’s email account or mail server crashing.
Ø Data didding: This kind of an attack involves altering the raw data just before it is processed by a computer and then changing it back after the processing is completed.
Ø Salami attack: This attack is used for the commission of financial crimes. The key here is to make the alteration so insignificant that in a single case it would go completely unnoticed.
Ø Internet time theft: This connotes the usage by an unauthorized person of the Internet hours paid for by another person.
Ø Logic bomb: This is event dependent program. This implies that this program is created to do something only when a certain event (known as a trigger event) occurs.
Ø Virus / worm attack: Virus is a program that attach it selves to a computer or a file and then circulate it selves to other files and to other computers on a network. They usually affect the data on a computer, either by altering or deleting it.
Implications for public policy makers
United Nations, in its International Economic report, suggested that the government in each country has to establish laws that criminalize cyber attacks and enable police to adequately investigate and prosecute such activities. They should also set up risk management policies, regularly review security regulations for information and communication technology and expand training to ensure that their economies have the human resources needed to establish and maintain effective security programs. International, technical and policy co-operation between industrialized and developing countries should be encouraged and supported since all will benefit from better defenses against cyber crime.
It focuses on the challenges posed for the world’s poorer nations by accelerating use of the internet in the conduct of international business and finance. 89% of the enterprises in the European Union countries are connected to the internet. There are few enterprises in the developing countries, for instances, only 5% of firms in Mauritius and 9% in Thailand. In many other developing countries, governments cannot even provide statistics on the topic.
The United States formulated an Act called “Computer fraud and abuse Act in 1984 to deal specifically with unauthorized use of computers and the alteration and destruction of the records they contain both in the domestic as well as its international businesses. This Act prohibits use of a computer to transmit a program or command which damages a computer system or network or interrupts the use of cyber system, trafficking in passwords to US government computers and the use of computer or internet to transmit passwords with the intent to defraud.
The council of Europe’s convention on cyber crime is a collective response by members of the council of Europe (45 states) and some non-member states to the challenge of cyber crime. The convention aims to lay down common definitions of certain criminal offenses and to define common types of investigative powers better suited to the information technology environments by ensuring that relevant criminal procedures are brought into line between countries. It also aims at determining both traditional and new types of international cooperation, to enable cooperating countries to put in place arrangements for the investigation and prosecution of the offenses set forth by the convention, including the use of a network of permanent contacts.
While cyber security technology may vary in sophistication from country to country, they have to provide effective defenses against cyber crime without eroding individual privacy and other human rights. Government policy makers should exchange experiences and establish international modes of co-operations to help in training police, state prosecutors and the judiciary on cyber crime technology and they should share experiences on educating the public about data security measures. Finally governments need to set up methods of co-operation with the private sector including banks to combat cyber crime. They can create a legislative framework and set a benchmark for the courts to decide what constitutes a cyber crime and how to control or impose punitive action against those who involve in such an act.
Implications for International business practitioners
A three-pronged strategy can be adopted by the international business practitioners to control cyber crimes. The first one is to create user awareness and make them know how vulnerable and exposed they are, especially in the wake of convergence of technologies and the proliferation of Internet. The second one is to deploy an effective technological solution, which many companies treat as top most priority, though it is not so. The third one is that companies should have a security policy of their own, as technology only plays a small role in the overall security scenario. The IT manager in the company should only deploy the policy. There should a liberal sharing of forensic technology for achieving standardization of expert efforts. There should also be more cross-country training exchange programmes. Timely alerts should be provided by affected companies to others regarding new forms of crime and new modus operandi.
There are several other recommendations that need to be considered by the firms in high-tech sector. Disruption, denial of service and website defacements will continue to be problems but exploitation of access to information systems for profit is likely to become more pervasive. The trend towards accessing business highlighting security holes and offering one’s service for a significant fee would reduce the problem to an extent.
Criminal intelligence analysis needs to be integrated fully into business intelligence, risk assessment needs to incorporate criminal threats and cyber security needs to be conceptualized as part of a broader security problem that cannot be understood or dealt with in strictly technical terms. Defending against such contingencies requires that high-tech firms develop broad security programs that incorporate cyber security into a much broader program. An arrangement in which the security officer is responsible for cyber security as part of a comprehensive mandate is likely to be more effective and appropriate than one in which cyber security is seen as a distinct portfolio separate from other components of security.
For the high-tech businesses, it is perhaps even more important to know their partners especially when they are from another country. Questions need to be asked about their financing, their clients and their associates as well as the extent to which there are laws against cyber crimes. Thorough background checks are essential prior to allowing any joints of data and communication systems or to bringing in their representatives to work with one’s own employees.
Companies doing business on the internet and particularly those offering mechanisms to facilitate financial transactions need to take steps to identify opportunities for money laundering. Once this is done, they need to introduce safeguards to close loopholes and prevent money laundering.
Organized crime and cyber crime: implications for business
Phil Williams, CERT Coordination centre
UNCTAD press release, 2005
“Developing countries must take steps to fight cyber crime to benefit form boom in e-business”
Thursday, July 10, 2008
The rapid growth of the Internet and of Computer technology over the past few years has led to the growth of internet related crimes throughout the world. These crimes have no boundaries and may affect an individual, his property, an organization or society at large. Many organizations have been losing their customers, time and money due to their vulnerability to hacking,
South Africa, officially called as the Republic of South Africa has an area of 1.2 million sq km with moderate climate, similar to southern California. It mainly consists of plateau, Savanna, deserts and mountains. Its population according to the 2007 census is 47.9 million. Until 1991 South African law divided the population into four major racial categories: Africans (black), whites, coloreds, and Asians. Although this law has been abolished, many South Africans still view themselves and each other according to these categories. Black Africans comprise about 79% of the population and are divided into a number of different ethnic groups.
Political and Economic Conditions
South Africa is a multiparty parliamentary democracy in which constitutional power is shared between the president and the Parliament. The third arm of the central government is an independent judiciary. The Constitutional Court is the highest court for interpreting and deciding constitutional issues, while the Supreme Court of Appeal is the highest court for non-constitutional matters.
South Africa has a two-tiered economy; one rivaling other developed countries and the other with only the most basic infrastructure. It therefore is a productive and industrialized economy that exhibits many characteristics associated with developing countries, including a division of labor between formal and informal sectors, and uneven distribution of wealth and income. The formal sector, based on mining, manufacturing, services, and agriculture, is well developed.
Monetary and Fiscal Policies
South Africa has a sophisticated financial structure with a large and active stock exchange that ranks 17th in the world in terms of total market capitalization. The South African Reserve Bank (SARB) performs all central banking functions. The SARB is independent and operates in much the same way as Western central banks, influencing interest rates and controlling liquidity through its interest rates on funds provided to private sector banks. Quantitative credit controls and administrative control of deposit and lending rates have largely disappeared. South African banks adhere to the Bank of International Standards core standards. The South African Government has taken steps to gradually reduce remaining foreign exchange controls, which apply only to South African residents. Private citizens are now allowed a one-time investment of up to 750,000 rand (R) in offshore accounts. Since 2001, South African companies may invest up to R750 million in Africa and R500 million elsewhere.
Trade and Investment
South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. Primary agriculture accounts for about 4% of the gross domestic product. Major crops include citrus and deciduous fruits, corn, wheat, dairy products, sugarcane, tobacco, wine, and wool. South Africa's transportation infrastructure is well-developed, supporting both domestic and regional needs. The Johannesburg International Airport serves as a hub for flights to other southern African countries.
Culture and Ethical Conditions
South Africans are by custom polite and circumspect in their speech, although residents of the major urban centers may bemoan the decline of once-common courtesies. Africans strongly mark social categories of age, gender, kinship, and status in their etiquette. Particular honor and pride of place are granted to age, genealogical seniority, male adulthood, and political position. Rural Africans still practice formal and even elaborate forms of social greeting and respect, even though such forms are paralleled by a high incidence of severe interpersonal and social violence. Afrikaners are more direct and sharp in their encounters, more quick to express their thoughts and feelings towards others, and not given to social legerdemain. In general, despite the aggressive rudeness that afflicts stressful modern urban life everywhere; South Africans are by custom hospitable, helpful, sympathetic, and most anxious to avoid verbal conflict or unsociable manners. Even among strangers, one of the strongest criticisms one can make in South Africa of another is that the person is "rude."
Although South Africa's economy is in many areas highly developed, the exclusionary nature of apartheid and distortions caused in part by the country's international isolation until the 1990s have left major weaknesses. The economy is now in a process of transition as the government seeks to address the inequities of apartheid, stimulate growth, and create jobs. Business, meanwhile, is becoming more integrated into the international system, and foreign investment has increased dramatically over the past several years. Still, the economic disparities between population groups are expected to persist for many years, remaining an area of priority attention for the government
Products with Strong Production Potentials in South Africa
Almost all essential commodities, except petroleum products and bauxite are being produced in South Africa. Key Industry includes minerals, mining, motor vehicles and parts, machinery, textiles, chemicals, fertilizer, information technology, electronics, other manufacturing, agro-processing, gold, other minerals and metals. Major markets are U.K., U.S., Germany, Italy, Japan, East Asia, and Sub-Saharan Africa.
South Africa is the biggest supplier of the fuel made out of coal to European electricity companies. It is the key exporter in the thermal coal market. It is the only country in the world that manufactures fuel from coal.
Gold, Platinum and Diamonds
South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. Kimberly is the world’s most renowned city of diamonds
The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. The country's diverse manufacturing industry is a world leader in several specialized sectors, including railway rolling stock, synthetic fuels, and mining equipment and machinery.
Olive oil from cape can compare with the best oils that Spain, Italy and Greece can offer.
Cape Town is one of the great wine capitals of the world. With new wineries opening up at a steady rate, and South African wines attract ting key markets abroad.
Astrum Jewellers Pvt Ltd.
Astrum Jewellers is one of the latest branded jewellery of India started in the year 2003. Astrum has set up production and sourcing bases with thorough research of the jewellery crafts of India. The factory compiles with all labor and environmental standards. We are located in 12 cities in India with its headquarters located in Bangalore. Astrum challenges the age old jewellers like Tanishq and Gili.
A team of 3 people, with a vision and passion to venture in to jewellery market led to the establishment of the brand that you distinguish, discern and devour as Astrum today. What started off as a dream transformed into an organization, a super brand, setting high standards of excellence, with adornments that have left the consumers astounding and asking for more. We are planning to take our business overseas at Kimberly in South Africa. The various aspects of our company reviewed with respect of our new location are given below.
The major drawback of our business is the non availability of gold, platinum and diamonds for making jewellery in India. Therefore, it is better to locate the production facility at Kimberly in South Africa. It has a large, nine-carat gold consumer market. There is also a very strong market for top-end, hand-crafted pieces made from both 18-carat yellow and white gold as well as platinum jewellery. Since all the raw materials are available easily and timely, it is possible to follow the lean manufacturing process.
The manufacturing process begins with the design, which in reality means producing ideas and sketches as per required market trends, the form, functionality and salability, capturing every dot on a piece of paper and giving birth to an art that you would value tomorrow. Several versions are drawn by hand, to achieve the right aesthetic value. The design plays a very important role as it is the designers who lend their creativity to the ornaments and finish them with immense opulence. The design also, should take into consideration the actual manufacturing method and price. The designing of the jewellery is planned to be outsourced to Italian technicians with several future trainers acquiring machinery and equipment training in Italy.
Astrum will pursue a strategy to tightly manage its own supply chain and reduce the chances of supply disruptions and lower cost. Locating the production facility at Kimberly would help us in successfully enforcing this strategy as South Africa has comparative advantage in the availability and supply of gold, diamonds and other gems.
South Africa has a large, nine-carat gold consumer market. There is also a very strong market for top-end, hand-crafted pieces made from both 18-carat yellow and white gold as well as platinum jewellery. The Jewellery Council of South Africa is the umbrella body of jewellery industry and is made up of three constituent bodies - the Jewellery Manufacturers' Association of SA, representing manufacturing jewellers; the Jewellery and Watch Distributors Association, representing wholesale jewellers and importers; and the Jewellers Association of South Africa, representing retail jewellers.
Human Resource Strategy
The company plans to have a geocentric staffing policy in Kimberly, South Africa, where the best people are sought for key jobs like manager, regardless of Nationality. It also plans to follow cultural relativism in which the company adopts the ethics and work culture of South Africa. Our business will strive hard to hire people who have a strong sense of personal ethics and would not engage in unethical or illegal behavior. We would draft a code of ethics, which is a formal statement of the ethical priorities our business adheres to.
South Africa is considered to be an economic powerhouse in the African continent by virtue of its membership in the 13-nation Southern African Development Community. The country is very strong in mining and the gems and jewellery industry forms a major part of its economy. South Africa has always been one of the biggest producers of raw material for gems and jewellery worldwide.
Keeping in view the various advantages that South Africa has over other countries in the jewellery making industry, Astrum jewellers’ have been planning to intelligently place its business at Kimberly, South Africa.
James McDowell, vice president of marketing at BMW North America, Inc. must design Phase II communication strategies for the launch of the new BMW Z3 roadster. The program follows an “out-of-the-box’ pre-launch campaign centered on the placement of the product in the November 1996 James Bond movie, Golden Eye, and including other “non-traditional” elements such as a product appearance on Jay Leno’s Tonight show, an offering of a James Bond Edition Roadster in the Neiman Marcus Christmas Catalog, and large scale public relations activities. McDowell must assess the effectiveness of the pre-launch activities and design marketing tactics that can sustain product excitement until product availability in March.
BMW Z3 is the first BMW car which is being manufactured in North America which has not been a very big market [roughly around 16%] for BMW because of the inability of the American customer to associate with a foreign brand. Therefore the sales and marketing approach of BMW Z3 will lay the foundations of the future of BMW brand in America. Their phase I was a success, and they had two months between the launch and the product availability to further ingrain their brand image in the hearts of the Americans. So how to strengthen their brand campaign for the coming two months was their main concern.
1. BMW is not the biggest but the best car company in the world as it is more into youth targeting.
2. Increase in sales: Their franchise expansion seems to be more promising way to incremental sales to the brand.
3. It influences consumers strongly through Media and film industry.
4. It is Innovative and Impactful.
1. Their corporate image is too serious and tradition-bound
2. Plan Execution was complicated.
3. Z3 was perceived to be German-made car not an American made-car.
1. The cars are not as expensive as German manufactured cars.
2. It is the first Auto plant outside Europe.
1. Competition from Mercedes.
2. People not accepting a German car in US.
3. New players in the market. The partners or sub- partners may turn into rivals.
4. Government regulations
Exhibit 1: BMW Units Sales history (U.S and worldwide)
Ø Perfect for the Z3 launch because people were getting familiar with BMW products.
Ø Unit sales showed up to an upward trend and actually increased during the given period (1984-1985), which showed that BMW had its global strategy.
Ø Comparatively in the US, Sales figures showed an increase as well as decrease for the same period. Between ’84 to ’86 it actually increased by approximately 37%, and from then on till ’91, it was down by approximately 40%, but again the sales picked up from ’92 to ’95 recording almost a 45% jump, perfect for the Z3 launch because people were getting familiar with BMW products.
Exhibit 2: Notable movie product placement Examples.
Ø Gauging from the movie product placement examples, there have been many movies in the past, which have acted as a springboard for launching a new product with responses being mostly favorable at times for the company.
Ø For Example when Tom Cruise sported Ray ban sunglasses in Risky Business, Ray ban’s sales tripled. When Apple laptops were shown as an integral part to solving an intrigue plot in Mission Impossible, Apple’s long terms sales increased.
Exhibit 3: Time line of Key events.
Ø The key events followed pre-launch from 1992 onwards followed BMW ‘s strategy to position and market the z3 appropriately. During the year 1994, they tied up with MGM for the product placement through the movie Golden Eye.
Exhibit 4: Z3 Roadster Neiman Marcus Christmas catalog
Ø A part of BMW’s strategy to pursue the audience to check out the new Z3 roadster while shopping for Christmas. It highlighted the fact that it’s now James Bond’s BMW
Exhibit 5: 1996 Apple Corporate Print Advertising referring BMW Website
Ø It was a positioning that BMW was looking out for. They wanted the American public to know about its superior technology. What better way to showcase it than associating itself with a true blue American tech brand like Apple
Exhibit 9: Comparative Launch advertising Campaign Expenditures and Introductory year sales
Ø It actually analyses figures for all the cars in all segments launched in that period (’90-’95), and they finally come out with figures for the average launch reach goal, which is 75-90% with the average frequency being 2.5, which is exactly what BMW is looking for to promote the Z3.
Exhibit 10: ”007 licensed to sell” dealer promotional kits
Ø Associates BMW with the legend of 007, and these are kits for dealers who are the connect point of the customers, which means the customer will also have the movie in mind while driving.
Exhibit 11: Box office draws for Noteworthy Product Placement Movies
Ø It shows the opening week ticket sales for notable product placement movies and Golden Eye is in the top 5 which is good news for BMW
Exhibit 12: Sample Product Reviews from Major Automotive Magazines
Ø Automotive magazines tend to be the consumer’s guide before buying a car. So, everybody takes them seriously. For the Z3 to receive good reviews from the automotive.
Exhibit 13: 1995 Unit Sales and Advertising Spending within the U.S Luxury/ performance Segment
Ø This was the time when the car was being prepared to be launched, and BMW was doing good to be at No.3 in that list which considered total sales. But BMW shrewdly went about its Media expenditure, far below its capacity
The main issue in this case is that, in the context of a new product launch, how bmw will structure its marketing mix and manage its launch? Dr. Helmut Panke, Chairman and CEO of BMW (U.S.) Holding Corp. were saddled with the responsibility of exporting BMW’s mystique from the Bavarian hills to the fields of South Carolina. Franchise expansion into more youthful targets seemed the most promising way to add incremental sales to the brand. Updating the corporate image and to have a new product development program which was capable of sustaining that image. Positioning Z3 in the American culture and settling into the hearts and minds of American public. Focus on nontraditional marketing methods to leverage the excitement and enthusiasm of the core customer base in a way that would draw broader attention and interest to the brand. Search of unconventional ways to introduce the unique vehicle like selecting Fallon McElligott whose proven experience in integrated and electronic marketing-the key skills for a nontraditional launch. Deal negotiations with MGM/United Artists on the James Bond “Golden Eye” film. The Z3 appeared in the movie for a miniscule amount of time which was considered ironic. Other complimentary elements of the program that would pre-sell the Z3 and generate dealer traffic would be stimulating interest in other models in the BMW product line.
BMW, being a global company decided to open Spartanburg plant in North America. We think it should have had an approach to open few other plants in other top strategic parts of the globe at the same time. If it had done so, it might not have given an opportunity to its competitors in those strategic parts of the globe to open their plants or to develop a similar strategy. Doing so, BMW would have gained the edge over its competitors.
The central goal of the launch was to expand the BMW franchise. But we feel that it was not necessary for BMW to stress so much on the American culture and settling into their minds and hearts because that may have hampered its recognition and success in other parts of the world. Rather, it could have addressed the general public all over the world.
BMW knew it had 345 dealers and their goal was to expand the franchise. It produced only 150 pre-production cars for use in pre-selling promotions which were circulated among the dealers. This gives the public an internal picture of the BMW’s confidence level in the Z3’s success. It may have wanted to pre-produce more cars than the number of dealers for pre-selling promotions.
The BMW/MGM agreement was orally sealed in January 1995 and formally signed in July 1995. This elongated time period of gap may have created opportunities for their counterparts to break or disturb the agreement. Another thing is BMW did not pay anything to MGM to place its product in the movie. This may be because of its reputation in the global automotive market. So, the exchange between BMW and MGM was very simple. We feel that the agreement should have been more complex and strong enough to last long their relations as it was a one time opportunity.
The final pre-launch marketing plan included some complimentary elements of the program. One of them was “Neiman Marcus Catalog Offer”. BMW and Neiman had set a 20-unit sales goal over the three and a half month Christmas selling period. Later they increased it to 100. Neiman’s had received 6000 customer orders or waiting list applications by Christmas. So, we thought BMW should have analyzed the situation and predicted at least a figure that was close to the number of orders it had received by Christmas. Doing so, it would not have disappointed the 5900 customers who might have changed their minds to buy a different car and spread the word-of-mouth. The last element was the Radio DJ program which was decided by the management one and a half weeks before the D-Day. We thought that there should have been more complimentary elements scheduled till last day before the D-Day. The one and a half weeks gap before the launch may have created some opportunities for its competitors to counter their plan.
Heineken has been present in market outside Netherlands, but it started granting license with original formula and gave guidelines as to how the brand should be marketed. It wanted to gain majority equity stakes in its existing and prospective partners to ensure stringent control over production and marketing. In Europe, Price competition was high and markets were segmented to no or low alcohol beers, flavored beers and dry beers. The per capita consumption differed due to consumer preferences and behaviors and varying competition mix from one market to another.
Heineken N.V has all the essential strengths that a brewery company should have to be a global brand, and it is consumed by people across the globe. Though it has a global presence, its image and identity perception is varied across the world. In Netherlands, it is viewed as a mainstream brand, and a market leader. In the United States and Hong Kong it is perceived to be a beer that is used for special occasion rather than for daily consumption. In Latin America it is viewed as just one among many European imported beers. So we see that Heineken does not have a consistent brand image. Sales volume was declining and the brand needed to be regenerated with a uniform identity.
Two projects, Comet and Mosa have been established to address different situation. Project Comet was established to recommend making the brand image consistent and positioning the brand as the world’s leading premium beer, and concluded that the good taste image would be built on the five core values of the brand, taste, premium ness, tradition, winning spirit and friendship. Project Mosa was established to find out which expressions of taste and friendship can be used to brand in its advertising, which intends to draw consumer reactions to both the visual and message claims presented on the taste and the friendship board to promote the brand based on the responses of the focus group.
1. Light beer of superior quality presented in attractive packaging
2. Most heavily advertised premium beer in Europe and worldwide mostly through TV commercials
3. Market leader in Netherlands and is viewed as mainstream brand
4. Good acquisition strategy
1. Sales volume was declining
2. Image of the brand was different in different countries (lack of global branding)
3. Lack of worldwide advertising campaign
4. No production base
1. Growing non-alcoholic market
2. Global expansion
3. Growth in the flavored beer and draught beer market
4. Africa still at the embryonic stage in the beer market
1. Price competition in Europe due to overcapacity and minimal population growth.
2. Presence of no-or-low-alcohol, flavored beers, and dry beers in the market.
3. Variation in market on the basis of per capita consumption, consumer preferences and behaviors, and competition mix.
4. High local consumer loyalty in Africa
- Building a Standardized Global Brand Image
As stated earlier, Heineken N.V. has been present in markets outside Netherlands. According to the Exhibit 1, Heineken is still in the embryonic stage in the countries like Africa, Eastern Europe, Brazil, Argentina, etc. It has to still build its brand in these countries. In other countries like Italy, Spain, Japan and Germany, Heineken has already established itself as a brand and has been trying to enrich its image in these markets. In Netherlands, it is viewed as a mainstream brand, and a market leader. In the United States and Hong Kong it is perceived to be a beer that is used for special occasion rather than for daily consumption. In Latin America it is viewed as just one among many European imported beers. Thus, though the company has a global presence, its image and identity perception is varied across the world. The main issue surrounding the company is to establish a strong global brand which is standardized across all the countries in the world. Heineken, in its Project Comet, has defined five components of Heineken’s global brand identity and has explored how they should be expressed in Heineken brand communicators. Project Mosa has also involved a different team of executives and identified the expressions of taste and friendship that had the most appeal and explored how they should be expressed in Heineken television advertising worldwide. The aim was to make sure that both the projects were mutually consistent and together work towards standardization of Heineken’s brand image and advertising worldwide.
Case Exhibits Analysis
Beer Market Evolution for Selected Countries and Regions:
Stage of Development: EmbryonicMarket: Africa
Ø Africa is still at the embryonic stage, where beer is just introduced in the market
Ø Since the consumers are loyal to local brands the company needs to build a strong portfolio to combine the power of local and itself
Ø The consumers have to be introduced and accustomed to the brand, thereby reaping the market share
Ø Reach and frequency of advertising will have to be higher as the aim is to get the people familiarized with the company and to create brand awareness
Stage of Development: Take-offMarkets: Eastern Europe, Southeast Asia, South America, Greece/Portugal
Ø Eastern Europe is at the take off stage, characterized by shifts in consumer taste and development of standard beer
Ø Most of the people already know the brand exists but not all so the company can create awareness through advertising
Ø There exists shift in consumer taste company needs to communicate to the consumers that Heineken beer has superior taste and high quality.
Ø At this stage the company needs to communicate about the quality of beer they produce and also introduce premium quality to maintain the customers
Stage of Development: GrowingMarket: Italy, Spain, Japan, North & Central Europe, Australia
Ø Italy, Spain, North/Central Europe and Australia are at the growth stage
Ø In Italy, Spain and Japan portray focus on high volume and price competition, and the latter three indicates segmentation and consumer sophistication
Ø The market here is in the process of growth and so it will be very competitive with a lot of players trying to get into the game – the emphasis here will be on frequency and increasing the market share
Ø It needs to increase its distribution coverage and enter new distribution channels or it can enter new market segments and it can offer beer at different sizes and flavors
Stage of Development: MatureMarkets: North Central Europe/Australia
Ø Market that has reached a state of equilibrium is called as a Mature market
Ø A mature market has to be revitalized with quality and premium ness of brand
Ø At this stage of the product, Heineken needs to increase its investment to dominate the market and strengthen its competitive advantage
Stage of Development: DecliningMarket: USA
Ø The United States is at the decline stage revealing brand segment proliferation and product differentiation
Ø Here, the market for the Heineken beer is declining as there is high competition and people are preferring variation in their drinking habits.
Key Heineken Marketing Objectives in Eight Countries:
This exhibit shows the various marketing objectives of Heineken in eight countries in which the company is doing business. These objectives are set according to each country’s stage of market evolution.
Building: In certain markets it has to build its imageMarkets: Brazil, Argentina, and Germany
The German consumer remains fiercely loyal to local German breweries so posing a particular challenge to a newcomer introducing a global brand. The regional administrative control further hinders achievement of an efficient national distribution network.
Enrichment: In other markets it has to enrich its imageMarkets: Hong Kong, JapanThe markets here are highly competitive as far as price is concerned and they are high volume market, the brand has to cut across the clutter and enrich its image by corporate advertisements, and promotions.Confirmation: In others it has to confirm its brand promiseMarkets: USAThis market is characterized by high brand as well as segment proliferation, product differentiation. Confirmation of the brands’ premium quality and its image of being better than standard is needed in this country. The strategy needs to reflect that and communication should probably focus on the core brand value of premium taste, friendship and the winning spiritRestoration: And in some it has to restore its imageMarkets: Italy, NetherlandsIn markets that are characterized by consumer sophistication, segmentation, price competitiveness and high volume focus the objective is restoration of the image. Here also, the company has to provide lot of advertisements to the stand out from the crowd and prove its worth to the consumers.
Comparative Heineken Usage data for Seven European Markets:
There are several insights to be gathered by a market survey namely as to where there is greater brand usage and market share and where the trial/awareness ratio is good and where it needs further push. The relationship between the product-trial rate and the customer awareness level will remain to be the deciding factor on reach, frequency & impact of the advertising campaign. These things help decide on the marketing mix that the company uses.
Ø Ireland and UK rank amongst the highest in beer consumption yet market share position is weak in UK.
Ø The highest percentage of people naming Heineken as their first choice is highest in Greece and lowest in Italy and Spain with UK as the third lowest.
Ø Market share position is weakest in Spain and UK so Heineken needs to build and infiltrate the market
Ø Heineken needs to increase its SOV in UK and Spain
Ø Greece is its best market
Exhibit 4 and 5
Sample Project Mosa Concept Boards: Taste and Friendship Expressions
For Heineken the desired image was 'good taste’ and the key goal was to enhance Heineken’s competitive advantage by more consistently projecting the brand as ‘the world’s premier beer’. According to Project Mosa which conducted focus groups in 8 countries to understand what male drinkers meant by taste and friendship in relation to premium beer drinking and which expressions of taste and friendship could be used by the Heineken brand in advertising
Standard Vs Premium Beer: Summary of Focus Group Responses:
According to the focus group the word ‘premium’ brought certain ideas and images to the mind of the people, these were diametrically opposite to ‘standard'. When you think of both the words different associations come to mind and so Heineken can leverage these associations to promote their premium quality.
Exhibit 8 and 9
Taste and Friendship Expressions: Overall Heineken Suitability:
Markets have different ideas about what they believe and what they respond to.The reason to believe as far as taste is concerned stays relatively the same in most of the markets, whereas the expressions of friendship do change from country to country.
Quality: This remains same in all the markets.
Ø For Netherlands is concerned the ‘pure taste’ is the reason to believe as far as brewing skill is concerned.
Ø For Germany it is 100% malt and smooth taste
Ø For Italy it’s smooth and pure taste
Ø For USA its al three 100% malt and smooth and pure taste
Ø As far as the average of the 8 countries was concerned none of the factors figured in as important or a positive indicator of quality.
Ø For Netherlands ‘Family since 1863’ was not an indicator or an expression of taste but ‘Original Recipe’ and ‘Where the beer was born’ were reasons.
Ø For Germany all three were positive expression of taste
Ø For Italy only ‘where the beer was born’ was a reason to believe in tradition as expression of taste
Ø For USA like Italy all three were reasons to believe in tradition
Ø More bars/more countries
Ø More bar/more countries was a reason to believe in Availability as expression of taste only in Netherlands
Ø For Netherlands ‘Rugby’, True Friends and ‘Always count on Heineken’ were the expressions when they were asked to convey the core value of friendship
Ø For Germany only ‘true friends’ and ‘Always count on Heineken’ were the expressions.
Ø For Italy ‘cat and dog’, ‘Rugby’, and ‘Always count’ on Heineken were the expressions of friendship
Ø For USA like Germany only ‘true friends’ and ‘Always count on Heineken’ were reasons to believe
Ø As far as the average of the 8 countries is concerned only ‘true friends’ and ‘Always count on Heineken’ were reasons to believe
Heineken should create different strategies to meet the different features of each country. For example, Netherlands, Germany and the other four target countries show in exhibit 6 similar indications of beer taste. They are interested in manufacturing and product categories. Nevertheless as shown in exhibit 2, Heineken’s position and objective are different among these countries. This means that each country requires different marketing mix from the other. We have identified the issue that Heineken needs to build a stronger and standardized global brand image. On the basis of this issue, here are few suggestions that can be applied by Heineken N.V. in order to meet the objective.
1. Brand Reinforcement:
Heineken needs to convey the meaning of the brand to consumers in terms of what needs it satisfies; as well as how the brand makes its product superior and which strong, favorable and unique brand associations should exist in the minds of the consumers. Heineken needs to reinforce its brand as a premium light beer that can be drunk anytime irrespective of the occasion. In United States and Hong Kong, Heineken beer is perceived to be a beer that is used for special occasion rather than for daily consumption. The company has to use creative marketing and communication strategies to change this perception of the people. They can do this by coming up with a universal tag-line “Anytime Beer”. They can also include this in a ‘Positioning Statement’ which could be as follows:
“To different ages, stages and lifestyles, Heineken is the premium light beer you can drink and enjoy for any occasion as it tastes better and gives rare pleasure than any other brand since it is brewed from finest quality of malted barley and hops. Thirsty, tired, stressed out or just chilling out? Heineken, anytime beer, is all you need!!”
Sponsorship strategy for the Heineken brand should be to build brand equity through relevant associations with high-impact, high-profile sports and music events, films and the world of Hollywood.
Heineken brand should seek association with ‘blockbuster’ movies with a relevant demographic profile. We find this particularly useful for establishing the brand position in crowded marketplaces.
They should sponsor numerous sports events at local, regional and national level. It can be seen as a core component in strengthening the brand equity, re-enforcing the international, premium positioning and driving spontaneous awareness of the brand.
They can also sponsor musical events where they can bring the worlds leading DJs in a traveling music show. This can be a significant part of the strategy to build presence and credibility in the contemporary music.
3. Mergers and Acquisitions:
The company should think of mergers and acquisitions in countries like Africa and Brazil. As there is high price competitiveness, and people tend to be loyal for local breweries, Heineken should acquire these local breweries in order to cut the competition. Since there are no factories in Africa, they import the beer to this country form Netherlands. This increases the price of the beer as against the local beers. Due to the acquisition, the company can use the factories of these local breweries to produce Heineken beer so that the price of the beer is reduced to a greater extent and thus, it can establish its brand image as one of the price effective beer available in the country. The main disadvantage in this strategy is that it incurs a lot of initial investment to merge and also to set up factories.
4. Intensive Growth (product development) Strategy
In Italy and Netherlands, Heineken should try to restore the brand image and increase the market share. To do this, it should grow intensively by adding more products to its product line. Like, introduction of different flavored beers, dry beer etc so that its current consumers have more variety in their choices and thus encourages them to buy more and remain loyal to the brand, which enhances the brand image. It can also try different packaging and distribution channels for the new products to attract more customers and also non-users.
Advertising plays an important role in building a brand image of a product. Developing and maintaining a brand image is vital to any successful marketing and communication campaign. In order to succeed in the integrated marketing communication, Heineken has to consider the consistent and coordinated messages in their commercials. The messages should also generate positive effects on their customers. Heineken should base their advertisement on communicating a unified image which should be “Anytime beer”. The advertising goal for Heineken should be to enhance its image by means of focusing on the good taste. Heineken should communicate all the five core values (Taste, Premium ness, Tradition, Winning Spirit and Friendship) in every advertisement to establish the unique and differentiated brand in beer market. It should also communicate that it is the brand of people who prefer premium beer which has true value to mass-gathering beer. The casting and tone of voice in their commercials should be chosen carefully because the effective communication of winning spirit and friendship depends on the persons in the commercials who are self confident, warm, winners and also among those who really enjoy their relationships. It should also contain elements such as enjoyment appeal, natural appeal, affiliation appeal, sexuality appeal, information content and the occasion for product usage. Commercials where main characters are at places where they enjoy themselves, a pool party or a pub would be an enjoyment appeal. When the main character enters, he is immediately accepted by others is an indication of use of affiliation appeal. The fact the Heineken beer is brewed from the finest quality of the malted barley and hops addresses the natural appeal. Flirting, seen as form of romance is the characteristic of sexuality appeal. Along with these, information content is also a major part of any commercial which can be about the packaging, the shape, availability, price, etc. Different advertisements showing people drinking in pubs, at home, at parties, after work, dinners, while enjoying baseball game or just while watching television would indicate that Heineken can be drunk anytime, anywhere. To be entertained is a good way to keep a brand name in mind, which they can do by using humor in their commercials.
Friday, July 4, 2008
What is Crisis?
The word Crisis is traced back to a Greek word Krisis which means a decision or to decide. Crisis can be of two types. First kind is a natural disaster like earthquakes, hurricane, etc. The second kind is a type which occurs due to human error, negligence or malicious intent. There are some cases of crisis which occurs due to the fault of the company, like negligence and other types include cases in which the companies become victims like information thefts.
Paul A. Argenti defines the term crisis in his book ‘corporate communication’, as –
“A Crisis is a major catastrophe that may occur either naturally or as a result of human error, intervention or even malicious intent. It can include tangible devastation, such as the destruction of lives or assets, or intangible devastation, such as the loss of an organization’s credibility or other reputational damage. The latter outcomes may be the result of management’s response to tangible devastation or the result of human error.”
The characteristics of a crisis include:
The element of surprise – such as Pepsi learning of reports of a syringe in a Diet Pepsi can
Insufficient information – The company does not have all the facts right away but very quickly finds itself in a position of having to do a lot of explaining
The quick pace of events – Things escalate very rapidly
Intense scrutiny – Executives are often unprepared for the media spotlight which is instantaneous, as answers and results normally take time
Attention shifts from the business as a whole to the crisis alone, forcing all the decision making into the shortest time frame.
Crisis from the past 25 years
Since last 25 years, there have been defining crisis in the history of the world like the assassination of President John F. Kennedy, explosion of the space shuttle Challenger, the terror attacks of September 11, the cable car detaching over the French Alps in 1999, crashing of American airlines flight 587 – such events make us realize how vulnerable we all are and how quickly events can make innocent victims out of ordinary people.
Let us take a look at some of the major events which led to crisis
1982: Johnson and Johnson Tylenol Recall
In early October of 1982, seven people died after taking Tylenol capsules that had been laced with cyanide. Within days of the first report of these poisonings, sales had dropped by close to 90 percent. Johnson and Johnson reacted proactively to what was happening. Instead, it took the offensive and removed the potentially deadly products from shelves. Second, it leveraged the goodwill it had built up over the years with all the constituencies and decided to try to save the brand rather than come out with a new identity for the product. It reacted in a caring and humane way, rather than by simply looking at the incident from a purely legal or financial perspective. The company handled the crisis in an amazing manner.
1993: Pepsi-cola’s syringe Crisis
In June 1993, a man in Washington reported that after drinking half a can of Diet Pepsi the night before, he had discovered a syringe in the can the following morning. This was the beginning of a major crisis for Pepsi-cola. The CEO of PepsiCo did not let the surprise overwhelm him when he heard the news. He first engaged Pepsi-cola’s four person crisis management team to deal with the unfolding situation and then decided to supply the media with a visual response. They invited the reporters to show how it would be virtually impossible to insert a syringe into the cans. Additionally, Pepsi later distributed a grocery store surveillance tape of a woman stealthily dropping a syringe into her Pepsi can. After this, the crisis was solved.
How to prepare for the Crisis
First of all, any company should understand that it can find itself involved any kind of crisis no mater what. The following steps should be taken to prepare for the crisis.
Assess the risk, the organization is in
Plan for the crisis
Determine the effect of crisis on the constituencies
Set the communication objectives for potential crisis
Analyze the communication channel choice
Assign a different team to each crisis
Plan for centralization
What should be included in a formal Crisis plan?
A list of whom to notify in an emergency
An approach to media relations
A strategy for notifying employees
A location to serve as crisis headquarters
A description of the plan
Communicating during the crisis
Every crisis is different which means that managers must adapt various methods to meet their needs, but crisis have enough common elements for this prescription to be a starting point for all crisis management.
Step 1: Get control of the situation
This involves defining the real problem with the use of reliable information and then setting measurable communication objectives for handling it.
Step 2: Gather as much information as possible
The communicators must manage information coming from various sources. They should try to find out what is going on. A company can face harsh treatment if its constituencies think that management is deliberately obstructing the flow of information
Step 3: Set up a centralized crisis management centre
When the managers are getting in touch with the right people and gather information, they should make arrangements for creating a crisis centre which will serve as the platform for all communications during the crisis.
Step 4: Communicate early and often
The organization’s spokesperson should communicate with the concerned constituency as soon as possible. Particularly, if the crisis involves threat to lives and property, the communication should be carefully made. Above all, the company should avoid silence and delayed responses.
Step 5: Understand the media’s mission in the crisis:
The environment in which media works is extremely competitive which is why they want to get the story first. Therefore, it is important to understand the media’s mission.
Step 6: Communicate directly with the affected constituents
The organizations should communicate with the employees, sales staff, organized leadership, etc as these will be the media’s best sources of information in the crisis.
Step 7: Remember that business must continue
To those who are directly or indirectly affected by the crisis, this would be the most important thing. They should also remember that the business must go on. In addition to finding a suitable replacement ahead of time, for those who are on crisis team, managers must try to anticipate the effects of the crisis on the business and take actions accordingly.
Step 8: Make plans to avoid another crisis immediately
The crisis communication executives should work with other managers to ensure that the organization will be even better prepared the next time if it faces with a crisis and also should make sure that they avoid another crisis immediately.
When Coca-cola faced a crisis that its bottles contain pesticides, it gave many advertisements in the television and newspapers with celebrities ensuring that the coke is safe to drink which impacted the thoughts of many people. This shows how coca-cola managed the crisis.
Corporate communication, Paul A Argenti, The Tuck school of business, Dartmount College.
21st century communication trends can also be seen in workplaces. The various Trends of the 21st Century that the organizations today follow are discussed below
The world has become a global economy where national borders do not mean borders for business relationships. This has led to increased sales for corporations since they are not only serving their home country market anymore. But not only have the sales become global. Today, corporations are operating globally. Production is located in the most cost attractive country, companies have offices all around the world, and the labor market is nearly completely global. These trends result from reduced cost and improved quality of transportation and communication, the search for unsaturated markets, and the exploitation of regional cost and expertise differences. Modern communication technologies also play an important role in the globalization trend. The Internet provides the opportunity to easily communicate across country borders and thus operate successfully in other countries. Furthermore, there is an equalization in the tastes and preferences of customers in different countries, which makes it easier for companies to sell standardized products worldwide.
As a result from globalization the diversity in organizations and in the business world in general has increased. The workforce of a company is getting more heterogeneous sexually, racially, culturally, and individually. Though, this is a desired development, organizations also face challenges through this increased diversity. It can be both a source of innovation and a source of conflict and communication problems. Organizations need to deal with different styles of interaction, dress, presentation, and physical appearance. This results from a change in the demographics of the countries and the globalization of the labor market.
The way organizations manage business has changed in the last decades. Organizational systems, processes, and employees can respond differently to different challenges. There is less formalization and employees are more free to develop own approaches to situations. Thus, employees within organizations have greater autonomy and flexibility nowadays. This flexibility is especially important because of differentiated customer needs. Furthermore, the increasing diversity mentioned in the last paragraph is also a source of the need to design the workplace in a flexible way. Employees from different countries and cultures have different ways of thinking and different ideas on how to approach a problem. Also, the increased pace of change in technology and markets makes a standardization of processes and approaches nearly impossible. Organizations must stay flexible in order to survive in a rapidly changing business environment.
Organizations have become more flat in the recent decades. This means fewer levels of middle management and a broader span of control. The decrease of middle and lower level managers also means higher empowerment of lower level employees. Responsibilities are more distributed equally across the levels of hierarchy. Thus, employees have to deal with higher responsibilities in the organization without necessarily higher payment. The higher empowerment of employees results from the increased speed decisions need to be made in today’s business world. Furthermore, advanced communication technologies mean less need of middle managers as intermediaries. Finally, the trend of globalization discussed earlier increased the competition and makes cost cuts necessary.
We are living in a networked world. Organizations communicate across unit and firm boundaries and ignore the chain of command. Many companies are organizing themselves in cross-unit teams, exploiting the strengths of different units working together. Furthermore, opportunities arose in the areas of outsourcing, off-shoring, and the resulting downsizing. This new trends help organizations to decrease their costs. Organizations also recognized the need to work closely with each other and create strategic alliances. Those alliances give the organizations involved more power in the market arena. This also includes forms of cooperation like Just-in-Time (JIT) inventories, Vendor Managed Inventories (VMI), and others. Furthermore, companies have to deal with customization. Even the world’s tastes and preferences are becoming equal; organizations still have to consider differences in countries. Furthermore, there is an increasing trend towards mass-customized products (e.g. Dell). Organizations also need to take advantage of decentralization in order to response to different needs in different countries.
McDonald’s had to adjust its product line when it entered the Indian market. India, with its one billion plus habitants being an attractive market for McDonald’s had a totally different culture than western markets. The cow is a holy animal in India. Therefore, McDonald’s had to change its meat to chicken in order to be successful in India.
Nike faced the negative side of globalization some years ago. It was strongly criticized in the public for being involved in child labor in Asian countries and paying starvation wages. Thus, Nike had to manage this crisis and change its activities in those countries.
First time I got the punch of 21st century tends was when I learnt that the Sony play-station that I have at home is actually manufactured in Japan. That was around 7 years ago. I was amazed at the fact that the game that was manufactured miles and miles far away is right now at my house. When I asked my mom how exactly this happened, she explained to me the trend of globalization. Now when I come across this concept, I tend to remember those words of my mom.
Corporate communication, 4th edition, Paul A. Argenti, The Tuck School of Business, Dartmouth College.
The skill of corporate communications is, therefore, skill in conducting conversations — in opening up areas of interest, and in steering the discussion away from issues that might be damaging. It's not about crafting Teflon coated messages — which, in any case, tend to turn their listeners off.
Why is communication important?
Some people may doubt the relevance of ‘Corporate Communication’ function in an organization. Apparently they might think that all a corporation has to do is communicate efficiently with the employees. So they think that HR function is sufficient for all its communication need. But as we have seen that the business environment has changed dramatically since last couple of decades. Communication function is no longer confined within the organization. Now companies need to address various constituents in order earn their trust and build image and reputation. If Coca-Cola did not have proper Corporate Communication function then it would have cost more for the company during the pesticide controversy in India in 2003.
Organizations must communicate to survive. Continuous, day-to-day interactions with stakeholders are as essential to the functioning of an organization as breathing is to a human being. Indeed, one might say that if the finance function is one of the essential, life-sustaining corporate systems, communication is the other. The two are as interdependent, and as inseparable, as the lungs and the heart. But still a common question is to be noticed that is like appointing a CFO for a company, why a communications directors were not more frequently appointed to the boards of companies.
In the coming decades the corporate communications will be facing more challenges, we can’t just underestimate it. as we are entering a new era where access to information has never been easier, and less controllable. Audiences are more sophisticated at deconstructing – and debunking messages than ever before.
The main key for successful communication will be to successful communication will be to re-connect with its bases in fundamental human activities. By understanding what it is that really makes a message interesting, relevant and credible.
Despite the fact that Coca-Cola was legally constrained to focus on an internal audience, its experience in this crucial area can be instructive. Rarely ever is crisis communication aimed even partially-- at an internal audience, and so even expert practitioners often overlook this decisive factor. Holtz (2002) says bluntly, “You won’t find many public relations professionals who agree with me that your employees are your most important public relations audience” (p. 269). This oversight is unfortunate because, as Fombrun (1996) contends, employee image is one of the four pillars of corporate reputation, which in turn drives almost everything from share price to executive recruiting. Therefore, any activity aimed at rebuilding a tarnished internal corporate image should rate as a first priority, and that apparently is the level of importance that Coca-Cola has attached to communicating its diversity efforts to all employees—however belatedly this campaign was undertaken.
Corporate communication, 4th edition, Paul A. Argenti, The Tuck School of Business, Dartmouth College