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Marketing Challenges in the Global Economy Essay

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Abstract

This article discusses some challenges faced with product development in the global economy.

Brief case studies of Apple, eBay, and Levi Strauss & Co., provide real-world examples of the challenges – competition, reach of influences, infringement, etc. Embracing technological advances, such as social media, is essential for leveraging a competitive edge, provide the company can operate ethically.

Marketing Challenges in the Global Economy
Introduction

The world is getting smaller, figuratively speaking, and companies must continually reinvent themselves to remain competitive in the global economy. A constant introduction of seemingly ever-changing variables create challenges for big businesses and start-ups alike, and while technology creates its own set of challenges, leveraging its benefits in marketing can propel a company to the leader’s board. But while technology has created new marketing opportunities – especially in engaging with consumers – companies need to be ever cautious about maintaining an ethical marketing strategy.

Challenges in New Product Launches

Companies face various challenges when developing products in the global economy. Some of these challenges are more distinct to specific industries, while others are universal. Twenty years ago, the biggest challenges with product development in the global economy were communication with manufacturers, especially when dealing with manufacturers halfway around the world, and the speed of production. Rapidly evolving technology has on one hand eased these, but also created new sets of challenges. The same technology that brought the world 24-hour news service also meant greater access for scrutiny, as well as a greater consumer expectation for full disclosure of business practices. Increasingly, people want to know that companies are running ethical production operations (Pelsmacker, Driesen & Rayp, 2005). Environmental sustainability, fair trade and wages, and safe and healthy work conditions are issues that companies have to consider more than ever.

While technological advancement has granted easier interaction with manufacturers around the world, it has not changed the fact that reach of influence is still a challenge. Independent start-ups now have virtually the same global market access as multinational corporations. Big businesses can no longer assume the competitive edge. And all of these companies, big and small, operating internationally, have to compete with local businesses. This is why operating across a spectrum of socioeconomic and cultural consumer bases requires an understanding of the psychographics for each target audience. Another challenge in product development, especially for technology-based companies, is the risk of patent infringement. More tech dollars are spent in the courtroom than on the research and development (Duhigg & Lohr, 2012). Technology firms make money suing each other back and forth.

Case Study 1: Apple

Under the direction of Steve Jobs, Apple seemed to have no problem delivering products to the global market that transcended cultural boundaries – iPod, iPhone, iPad, Macbook. The key was simple, user-friendly products. Are Macbooks worth their price tags? Was the first iPhone worth $500? Product valuation has been a question largely irrelevant For Apple. It was able to defy the odds by creating a demand for the products, a key to pricing a product line (Guiltinan, 2011). Still, Apple, as with any tech firm, is at risk of being overshadowed by the next greatest innovation, as seen in the latest battle of the smartphone wars (Reuters, 2012).

It is a back-and-forth war that extends beyond the front line that is the retail floor. Behind the scenes, Apple and every other tech device and software developer are engaged in costly patent litigation. Apple recently won more than $1 billion from Samsung (Pepitone & Goldman, 2012). Likewise, Samsung is taking legal action against Apple for patent infringement on the iPhone 5 (Musil, 2012). Other challenge that Apple provides a prime example is ethical oversight of offshore production. Apple’s Chinese factories, run by Foxconn, have received a lot of heat for work conditions and unfair wages that have resulted in mass suicide of employees, brawls, and halting production (Garside, 2012).

Case Study 2: eBay

Since 1995, the internet auction giant has been providing a consumer-to-consumer (C2C) service that revolutionized e-commerce, but its success has not been without challenges. Acting essentially as nothing more than an internet moderator between C2C transaction, eBay has not had to deal with all of the same issues as Apple, such as the controversy of sub-par factory conditions. But it has faced some of the other challenges synonymous with technology firms. Patent infringement has haunted eBay. For example, MercExchange sued eBay for unlawfully using its patented software to create the eBay “Buy It Now” feature (Larson, 2010). Likewise, eBay has had to compete with other e-commerce auctions around the world.

It is the standard in most western markets, but could not win in China against TaoBao (Ou & Davison, 2009). After battling for market dominance eBay conceded to TaoBao, showing that even corporate giants are sometimes challenged in reach of influence. But eBay celebrates its failures just the same as its successes. With rapidly advancing technology, the minds behind eBay have sometimes had to make decision quickly, without conclusive research, and adjust later. If the decision resulted in a failure, they at least knew what direction not to evolve in (Ignatius, 2011).

Case Study 3: Levi Strauss & Co

The apparel industry is probably most notoriously associated with running factories in sub-par conditions (Brown, Deardorff, & Stern). Even iconic American denim brand Levi’s is not innocent of this. Competition in the 1990s forced the company to move much of it’s production offshore, where it was soon implicated along with dozens of other brands in sweatshop operations (Shenon, 1993). More recently, ease of access into the market has created a lot of competition for Levi’s. Furthermore, emerging fashion markets have been turning their focus to local designers, further challenging Levi’s reach of influence (Grail Research, 2009). To ensure survival, Levi’s has taken steps to reinvent its image through fresh marketing campaigns to match its fresh designs (Frey, n.d.), like its recent “Go Forth” campaign.

Technology and New Product Development

Social media has radically changed the marketing landscape. Advertising used to be a one-directional conversation – television, radio, and magazines told consumers what to buy, and consumers were limited in their ability to denounce these sales pitches. Now marketing is most certainly dialog that requires input from consumers.

Technology: Facebook

MySpace might have introduced the world to the concept of social media, but Facebook took it beyond peer-to-peer and created an environment where businesses and consumers can engage in meaningful dialog (Wilkinson & Thelwall, 2010). This has allowed companies to get direct feedback from consumers, while making consumers feel like they are part of the company. Companies of varying sizes have staged successful Facebook campaigns. Even anti-Facebook campaigns have found success on the virtual playground. As a tribute to Facebook’s IPO, the magazine Fast Company published what it considered to be the five all-time best Facebook campaigns (Iezzi, 2012).

Technology: YouTube

Celebrities like Justin Bieber and Soulja Boy have defined a new paradigm of stardom, achieving fame through the use of viral video. Social media users are always looking for their 15 minutes of fame, and companies have picked up on this. Numerous brands have launched user-generated content campaigns. This has allowed fresh vision to emerge, while build brand evangelism. One successful campaign of this nature was the Doritos Superbowl ad contest, in which the best user-submitted video was aired during the Superbowl.

Technology: Google AdSense

The ever-innovative Google developed a method for posting advertisements based on the user’s browsing habits – that, is ads related to page content. Logging onto Gmail, it is no coincidence that the right-column ads share subject matter with the inbox emails. Even the Facebook ads reflect browsing history. While web ads, especially pop-ups, generally invoke negative connotations, they have a certain subliminal effect on consumers.

Legal and Ethical Implications in New Product Development

As previously stated, advances in technology have allowed easier access for consumers to see the skeletons in the closet, so to speak, of companies. This means companies should be on their best behavior, or expect to have their dirty little secrets discovered. Still, companies continue to engage in unethical, and even illegal marketing. This questionable activity can come in such forms as misrepresentation and misinformation, slander against competition, omission of facts, or outright lying. It can even involve deliberate manipulation of emotions to achieve a desired effect.

Legal and ethical implications: Dannon Activia

Despite inconclusive evidence in studies (Walker & Buckley, 2006) regarding the benefits of probiotics, Dannon chose to market implied digestive benefits of Activia and DanActive. In turn, the yogurt company found itself engaged in a lawsuit. This is a clear example of why companies should not mislead consumers for profit.

Legal and ethical implications: Feed the Children

The Feed the Children campaign releases videos that use techniques to deliberately elicit guilt, thus “inspiring” the the viewer to donate. What they fail to include in the commercials is the fact that the majority of donations goes to administrative costs, that is, salaries (Defoor, n.d.)

Legal and ethical implications: Techie trash talk

If it isn’t enough to sue each other back and forth over patent infringement, smartphone companies have taken to slandering each other for the competitive edge. Samsung accused Nokia of this with its recent “Blown Away by Lumina” campaign, in which it allegedly misrepresents the capabilities of the Nokia Lumina against other smartphones (Mukherjee, 2012).

Conclusion

The examples presented here provide discourse for the challenges of product development in the global economy, and the benefits of technology in marketing. While technological advancement brings along new sets of challenges, the benefits vastly amount to more. Leveraging these benefits in marketing is key for companies to succeed in an increasingly competitive global market. However, under the looming microscope of public scrutiny, companies need to be ever cautious about maintaining ethical marketing strategies.

References
Brown, D., Deardorff, A., & Stern, R. NATIONAL BUREAU OF ECONOMIC RESEARCH, (2003).The effects of multinational production on wages and working conditions in developing countries(Working Paper 9669). Retrieved from website: http://www.nber.org/papers/w9669 Defoor, A. (n.d.). Who do they feed?. Retrieved from http://www.themarketingscene.com/index.php/site/topic/who_do_they_feed Duhigg, C., & Lohr, S. (2012, October 07). The patent, used as a sword. Retrieved from http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-giants-can-stifle-competition.html?pagewanted=all&_r=0 Frey, U. (n.d.). Reinventing levi strauss & co. CalBusiness, Retrieved from http://www.haas.berkeley.edu/groups/pubs/calbusiness/stories/levi1.html Garside, J. (2012, March 29). Apple’s factories in china are breaking employment laws, audit finds. Retrieved from http://www.guardian.co.uk/technology/2012/mar/30/apple-factories-china-foxconn-audit Grail Research. Integreon, Grail Research. (2009). The global fashion industry – growth in emerging markets. Retrieved from website http://www.grailresearch.com/pdf/ ContenPodsPdf/Global_Fashion_Industry_Growth_in_Emerging_Markets.pdf Iezzi, T. (2012). The 5 all-time best facebook campaigns. Retrieved from http://www.fastcocreate.com/1680811/the-5-all-time-best-facebook-campaigns Ignatius, A. (2011). How eBay Developed A Culture of Experimentation. Harvard Business Review, 89(3), 92-97. Mukherjee, W. (2012, April 11). Samsung: Nokia lumia campaign unethical. Retrieved from http://timesofindia.indiatimes.com/tech/enterprise-it/strategy/Samsung-Nokia-Lumia-campaign-unethical/articleshow/12620894.cms Musil, S. (2012, September 10). Samsung will reportedly sue apple over lte use on iphone 5. Retrieved from http://news.cnet.com/8301-13579_3-57510080-37/samsung-will-reportedly-sue-a

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