Marketing and Promotional Tactics of Multi National Companies :
Issues, Challenges and Strategies for the Indigenous Firm
Abstract
Emerging Markets of Asia offer major
growth opportunities in the evolving economic
order. In the post WTO era large markets
like China, India and some other South Asian
countries have attracted the multinationals of
all hues and colors to this part of the world.
Almost all big names in the global business
have either setup their fully owned subsidiaries
in India or increased their stakes in the joint
ventures with the local partners. Quite a few
of them have also attempted to grow
inorganically through mergers and acquisitions.
Harping on better technology and rich
experience of marketing across the globe most
multinational companies (MNC) have been
successful in increasing their market shares.
As a result of battle for the consumer's mind
many indigenous firms have been displaced
from their leadership positions. In India, the
color TV market, for example was dominated
by three national brands, BPL, Onida and
Videocon. Collectively they commanded more
than 65 percent market share with BPL being
the market leader. Now their collective market
share is less than 32 percent and LG is leading
the market (www.ciionline.org).
For the purpose of this paper 'marketing
tactics' is defined as: 'Marketing activities and
programmes designed for achieving some
specific, short term objectives in pursuance
of the marketing strategy of the firm (Batra
et al, 1996). The marketing tactics of the
MNCs’ have also raised certain economic and
socio-cultural issues such as creation of
monopolies, promoting unnecessary or
potentially harmful products through
manipulation of consumers' mind and
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DR. J.S. PANWAR
advertising to children. To cover these relevant
aspects the paper is divided into three units.
The first unit contains discussion on aforesaid
economic and socio-cultural issues arising out
of debatable marketing practices of
multinationals. The second unit attempts to
identify the challenges being faced by the
indigenous firms due to the uneven competition
with multinationals. The third unit is aimed at
identifying the options and strategies for the
indigenous firms not only to survive but also
to grow and prosper in the competitive
environment. All the data and relevant
information for the paper are obtained from
the published secondary sources. Some useful
information is also collected from the authentic
websites of business firms and other research
organizations.
Issues Pertaining to the Marketing
and Promotional Tactices of
Multinationals
The various issues pertaining to dubious
marketing and promotional tactics of business
firms can broadly be divided into four
categories: ethics, manipulation, taste and
advertising to children (Batra, op cit). Though
multinationals can't be singled out for being
engaged in unethical business practices, they
are under more stringent public scrutiny
because the magnitude and intensity of ill
effects of their misdeeds is much higher than
any such thing being done by a smaller firm.
As unethical practices can encompass several
different aspects related to a business, for
brevity and focus the issues related to
unethical marketing and promotional practices
have only been discussed in this paper. Some
glaring examples of unethical marketing
practices of multinationals operating in the Products; and PepsiCo buying out the Mumbai
third world countries are sighted in the based Mangola and also the Cadbury's
following paragraphs. Canada Dry brands in India, the entire
Rs.54,000 million soft drink market is now
When residues of pesticides were found
controlled by just two multinationals (Business
in soft drink bottles and worms were detected
Today, 2006). Suzuki motors acquiring the
in chocolates in India, rather than remedying
majority stake in the country's largest car
the situation, unfortunately, both the
manufacturing company, HLL (now Unilever
multinational firms tried to contain the damage
India) buying out Modern Foods, Colgate
by resorting to intensive counter advertising
acquiring the rival Cibaca brand and Gillette
and launching of aggressive promotional
pocketing the dry cell battery brand Geep to
schemes. Consumers in the developing
gain a foothold in the rural market are the
countries certainly deserve an explanation and
examples of weakening the competition.
a much better treatment from the multinationals
operating in the country. Likewise, when Another way of controlling the market
General Motors makes a sales pitch for its is through persuasive communication and
cars by claiming superiority of German clever use of promotional tactics. A unique
technology, the firm must ensure that the imagery is created for the brand, which
engine of the car is also made from the same personifies all the benefits of the product
superior technology and not outsourced from category. When "Thanda matlab Coca-Cola"
any other country (Patrika, 2003). is itched on to the minds of consumers who
will buy any other drink? It is the power of
LG Electronics, a leading Korean
communication, which has created virtual
multinational's ad on LG Plasma gold air-
monopolies for the brands like Colgate
conditioners said "When you can give them
(toothpaste), Cadbury (chocolates), Maggi
the healthiest air in the world, why take
(noodles) and Dettol (antiseptic lotion) in their
chances?" and the Philips ad for its Slimlite
respective product categories. The large
tubes claimed "compared to ordinary tube-
promotional budgets of multinationals help
lights, Philips Slimlite lasts 30 percent longer
them create a unique positioning for their
and saves 10 percent electricity"(Business
brands, which generates substantial demand
Standard, 2004). Both the firms had to
even at a higher price. Johnson & Johnson's
withdraw their ads subsequently because they
Savlon soap with a total fatty material (TFM)
couldn't substantiate the claims with any
content of 61 percent sells for Rs.27 as
scientific data or lab- testing reports. Such
compared to many local brands with higher
irresponsible ads are not only unethical in
TFM contents and priced much less than
every sense of the term they also mislead
Johnson's soap.
and cheat the consumer.
Promoting unnecessary or potentially
The strategies of multinationals have
harmful products through manipulation of
resulted in weakening the competition in two
consumers' mind is another charge often
different ways, first by controlling the market
leveled against multinationals (Clow et al,
through acquisitions; second by using the
2003). Motivational research helps firms
power of advertising to persuade people to
identifying the buying motives and designing
buy only a specific brand. With Coca-Cola
appropriate marketing strategies to lure them
acquiring the soft drink brands of Parle
into buying. Mostly firms use emotional

) 05 (
appeals to make people believe things and
behave in ways that are not, in their own or
in the society's best interest. One such ad
that kicked up a row was Hindustan Lever's
'Fair and Lovely' commercial aired on Sony
TV, which implied that a dark girl's husband
was unlucky.
Little wonder that parents unable to buy
a pouch of milk for their children take pride
in buying a bottle of Pepsi for them. Women
from lower middle class families might cut on
the food expenses of their families to buy a
tube of 'Fair and Lovely' cream. Pizza Hut
and McDonald's are thriving at the cost of
homemade proper nutritious food. Little
wonder that despite 26 percent population
living below the poverty line, India is the
largest consumer of Maggi noodles in the
world (www.nestle.com). An earlier study by
us (2003) revealed that most school children
in Gujarat spend major parts of their pocket
money on chewing gums, junk food, soft
drinks and comics.
Multinational Companies often
aggressively promote their credit cards ignoring
the financial status and ownership of other
cards by an individual. Invariably it results in
indebt-ness and miseries for the card owner
and his family. Inspired by the affluent lifestyle
promoted by the marketing firms many young
man and women unable to find money for
such things through legitimate means often drift
into dark alleys of crime inadvertently.
Irrespective of the social and religious
norms of the people in the host countries
multinationals generally exhibit a profound
tendency of promoting a materialistic culture
and consumption oriented lifestyle akin to the
Western societies (Usunier, 1996). Such
cultural aggression might hurt the sentiments
of people causing a backlash against them.
Benetton is known for racking up such
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controversies very often. Recently a print ad
for Jockey briefs showing people lined up in
their under wears had to be withdrawn on
the directives of Advertising Standards Council
for being indecent and in bad taste.
Advertising to children is another issue
of concern. In the USA a Fair Trade Council
(FTC) report recommended that all TV
advertising be banned to children who are
too young to understand the selling purpose
of advertising. The report (1996)) pointed that
most pre-school children cannot differentiate
between, commercial and programming and
don't distinguish between fantasy and reality.
Much of the children's advertising is deceptive
in that it omits significant information on safety
and health hazards (Agnihotri, 2004).
Multinationals would not go for such
advertising in the countries of their origin
where the law and the public policy are
opposed to it but they don't hesitate in doing
so in the third world countries where laws
are lax, implementation is poor and consumer
movement is weak. The ads like 'my Colgate
my strength' and 'why take chance if the
healthiest air is available' are all out to exploit
the emotional vulnerability of children.
Challenges for the Local Firms
Competition is all about outsmarting and
out maneuvering the competitor, and product
quality is how it is perceived by the consumer.
With the opening up of economy and
availability of almost all major brands in the
domestic market the most stringent challenge
for the local firms now is to offer a quality
that is acceptable to the consumer and charge
a price considered as reasonable. Even the
meaning of 'value for money' has changed. A
poor quality cheap product is no longer
considered as 'value for money'. The term
'value' encompasses the performance of the
product, image and service in comparison to
the price charged by the marketer.
 The consumer is to be convinced about
quality and price through communication to
make him buy the product. Marketing helps
only if the product is comparable if not better
than the competitors. The firms must therefore
invest in R&D and training of manpower, not
only to invent newer technologies but also to
refine, improve and consistently upgrade the
existing ones acquired earlier at huge costs.
In the absence of an R&D backup a firm
might end up paying for the technology after
every few years. The manufacturing firms in
India can learn some useful lessons from the
Japanese and the Korean firms in this regard.
Brand building is another challenge for
firms in the developing countries. In todays
over communicated, post- industrial societies
people don't buy 'products' they buy brands.
Firms create values for their brands through
product quality, packaging, distribution, service
and effective communication. Brand equity
provides value to the customers by enhancing
their confidence in purchase decisions. It
simplifies the process of perceptual
organization and categorization, as also
interpretation and storage of information about
brands and products. The perceived quality
of a brand and its associations enhance the
level of customer satisfaction (Panwar, 1997).
The firms must also identify the core elements
of their brands, such as logos, symbols, colour
schemes, signage and packaging that need to
be strengthened for brand building.
The return on investment (ROI) of most
multinationals is much higher than the
indigenous firms because they invest less in
plant and machines and more on brand
building through advertising and other
promotional measures. In many FMCG
categories multinationals get their brands
manufactured by small scale industrial (SSI)
units or other local firms having spare capacity
on contract basis. The product sells in the
) 25 (
market due to the brand name. Consumer is
usually unconcerned about who manufactured
it. Nirma Ltd. For example, manufactures the
Camay soap for P&G in India. Camay priced
at rupees sixteen for a 75 gram cake sells
better than many local brands containing the
same amount of TFM and priced at rupees
twelve for the same weight.
Marketing challenges are to be met with
suitable marketing strategies but there are some
other managerial issues as well that need to
be addressed before handing over the batten
to the marketing people. In the battle for the
consumer's mind it is difficult to defend a poor
quality product in the market therefore the
first priority of the firm should be to adopt
total quality management, not only in
production but is all aspects of business. The
quality of the product consists of a number
of elements, each of which has a definite
function that contributes to making the product
fit for its intended use. However, like any
other change introduction of TQM in an
organization may face some resistance mostly
from within the organization. The technical
problems encountered in the introduction of
TQM are relatively easy to solve, but human
problems are more complex and require
considerable tact and persuasive power on
the part of the quality manager (Lal, 1990).
To hold their turfs in the wake of
aggressive marketing strategies of multinationals
the indigenous firms need to strengthen their
distribution networks. Because of its strategic
importance in marketing decisions, pricing is
another important element of the marketing
mix which needs to be taken care of.
Intelligent pricing can always provide a cutting
edge to a firm vis-à-vis its rivals. People in
India are more value conscious and generally
unwilling to pay a higher psychological price
for the imagery of a brand. They appreciate
quality but at a reasonable and affordable
price. The indigenous firms because of their
better knowledge about the market and the
consumer behaviour can easily outwit the
multinational rivals on this count.
Consumers need to be educated about
the benefits of the brand, price, availability,
what it can do for the consumer and how it
is better than other products in the market
Strategies for the
Domestic Firm
In India firms like Tata Steels, Maruti,
Bharat Heavy Electricals, ONGC, Bajaj, Tata
Motors, Reliance Industries, Raymonds, Sanghi
Cement, TVS group, Dr. Reddy's Lab,
Ranbaxi, Mahindra & Mahindra and several
others have spent huge sums of money to
upgrade their facilities on par with the global
standards. Resourceful indigenous firms have
acquired overseas businesses to increase their
global competitiveness and gain access to new
technologies as well as markets. In the recent
past, several pharmaceutical, automobiles,
computer software and designing firms have
acquired running businesses in the Europe and
America. Tata tea acquired Tetley in UK, Tata
Motors bought out Daewoo Motor's plant in
Korea as well as Ford's luxury brands in
Europe; and Reliance in eying some refineries
in South America. In the era of global
competition the size does matter. It enhances
the image and capability of the firm.
Mahindra & Mahindra's Farm Equipment
division was awarded the coveted Deming
Prize for achieving distinctive performance
improvement through the application of TQM
in 2003. Until a few years ago the firm's
tractor division had a hostile work force, for
whom productivity, quality and efficiency were
taboo. Though M&M was market leader in
tractors the position was fragile. TQM was
being applied, quality circles were formed and
vendors and employees were routinely spoken
to about the importance of quality but it wasn't
) 35 (
making any headway. Ultimately the
management of the firm told the workers there
was no way they would keep their jobs. The
day a multinational came and bought it over,
they would all be thrown out. This opened
up the doors for communication. With little
bit more persuasion the workers agreed to
adopt the TQM procedures. There was no
looking back beyond this point. The TQM
payoff for M&M is clear: costs are down 15
percent, market share has grown to 27.3
percent, and there is 100 percent jump in
productivity levels (Indian Management, 2004).
The workers are getting better financial
rewards and their working conditions have
also improved substantially.
Lean and smaller firms can compete with
multinationals on cost basis. Brands like Moov
(pain reliever), Chik (shampoo), Anchor
(toothpaste), Sefola (salt), Khadims (leather
shoes), Vadilal (icecream) and such like have
already given a run for money even to the
most potent multinationals in their respective
fields. In spite of presence of P&G and HLL
in the domestic market Nirma is still the
largest selling (in terms of volumes) detergent
brand in the country. Regional brands like
Chik shampoo, Ghari detergent, Anchor
toothpaste, Bhaskar salt, Top 'n town ice
cream and the like have been successful in
maintaining the regional leadership mainly
because of their better knowledge of the
market, good local insight and a short
distribution chain to respond quickly to the
needs of the customer. Ensuring dealer push
by offering better margins to retailers helped
Bhaskar salt to achieve regional leadership in
MP, Rajasthan and some parts of Haryana.
Customer relationship management (CRM) is
another marketing tool, which can help big
and small firms alike in building lasting
relationships with customers, vendors and
intermediaries. If multinationals can benefit from
it why the local firms should be left behind?
Sports shoes, for example, are generally
costly. In the countries like India not many
people can really afford to buy Nike, Lotto developing their strengths in distribution. ICICI
or Adidas. So when a firm like Action shoes took the franchisee route to distribute its home
launched reasonably good quality sports shoes loans so is doing SBI to enroll membership
in one- third the price of MNC firms it really for its credit cards.
helped in expanding the market. For smaller
Firms like Paras Pharmaceuticals have
regional brands, pricing has to be such that it
been successful by creating new product
is unimaginable for the giants to follow suit
categories such as Krack (healing ointment),
immediately. Brand like Nirma detergent, Hero
Livon (hair potion) and Moov (pain killer)
bicycles, T-series cassettes, Maharaja mixer-
and promoting them aggressively. Similarly
grinders, Videocon washing-machines, Amul ice
Pioma Industry created a new category of
cream and many more priced their products
soft drink concentrates by launching their
on the basis of perceived value to penetrate
Rasana brand in the market (Indian
the market and acquire a distinct position
Management, op cit). Chik was successful for
there.
pioneering the sachet packing of shampoos.
Firms lacking financial resources to Ayur and Himalaya brands of herbal
upgrade technology may take the collaborative cosmetics, Godrej 'Penta cool' refrigerators,
route to gain access to better technologies. ICICI home loans, Nirma detergent power
Foreign firms entering the markets of and many other brands gained because they
developing countries would prefer to succeeded in educating and convincing the
collaborate with such firms which have a good people about the unique benefits of their
distribution network, a better understanding brands. It helped them reducing the marketing
and experience of operating in the market or cost by generating pull selling.
a good corporate image in the host country.
Communication and Promotional
Hero group's collaboration with Honda of
Strategies
Japan in the eighties helped the firm emerge
as number one producer in the motorcycle In addition to educating the consumer
market. communication must also help the brand in
positioning itself properly in the minds of
A good distribution network can always
potential buyers. Hero Honda, for example,
help in gaining a dominant position in the
is positioned on the benefits of fuel economy
domestic market. Even before the re-entry of
and environmental friendliness, Dettol is
Coke in the Indian market in 1992, Pepsi
positioned on the benefits of protection from
was already present in the market but harping
germs and Titan is considered as stylish and
on the better distribution network Parle
accurate. In the absence of any specific
Products, with their flagship brand Thumsup
benefit brands can also be positioned on
never allowed PepsiCo to gain a lead in the
certain associations and imageries, which lend
market. Firms like Godrej (Consumer Products
them a distinct identity. Firms can also use
Division), Merico, Nirma, Amul, Titan watches,
their corporate identities for positioning.
Action Shoes, Asian Paints, Parle Food
Nirma's positioning as 'value for money', Tata
Products, Haldiram, ICICI home loans and
Indica's positioning as 'offering more for less'
the like have been successful in facing the
and Park Avenue's positioning as 'stylish and
competition from the multinational firms mainly
upwardly mobile' established these firms in the
on the strengths of their distribution networks.
market against all odds.
Firms need to be flexible and innovative in

) 45 (
 The most important function of all
marketing communications is to contribute to
brand equity. In addition to forming the desired
brand knowledge structure, communication
should also elicit the differential response,
which makes up this intangible asset. Brand
equity is a broad term comprising of several
factors such as customer familiarity with the
brand, perceived quality, brand associations,
loyalty and other proprietary assets such as
patents, trademark and distribution network.
Broadly it represents all assets and liabilities
linked to a brand (Keller Kevin, 2003). The
communication strategies should therefore
include the following objectives:
l Educating the customer and
creating awareness about the brand.
l Developing proper positioning of
the brand in the consumers' mind
by creating and communicating
desirable associations, benefits and
imagery.
l Creating demand by creating
favorable predisposition about the
brand
l Eliciting the desired purchase
response from the buyer.
Tactics differ from the strategies in the
sense they are short terms moves to achieve
some specific objectives. Tactics may or may
not help in brand building. Local firms facing
competition from multinationals must use
promotional tactics selectively and intelligently
to achieve the following objectives:
* Countering the moves of competitors
* Attracting new buyers through
promotional measures
* Encouraging trial among nonusers; and
* Boost the sales on special occasions
such as festivals or cultural events.
Multinationals have a vast experience of
marketing in diverse markets. The local firms
) 55 (
lack that advantage but they have better
knowledge of local culture, consumption
patterns, buying power of the people and
buying motives. They can understand the needs
and wants of the people more clearly and
offer them a suitable product to satisfy those
needs. Understanding the strengths and
weaknesses of their products vis-à-vis
competitors helps countering the competitors'
moves effectively. When LG reduced the price
of its split AC models this summer to grab a
larger share of the air conditioner market,
Voltas was quick on its feet not only to match
its prices with the comparable LG models but
also to offer free installation of AC for the
buyers. When Samsonite launched an
exchange scheme for its molded luggage VIP
didn't lost a day in offering a more attractive
promotional scheme for the potential buyers.
In order to increase their customer base
firms should consistently try to attract new
customers. Indian two-wheeler market is
dominated by homegrown firms like Bajaj,
Hero Honda, TVS and Kinetic Engineering.
Though some of them have technical
collaborations with multinational for selective
range of vehicles, many locally developed
models have been highly successful not only
in the domestic market but also on the export
front. These firms keep offering new incentives
and promotional schemes to their customers
almost on a regular basis. This has helped
increasing their customer base and created
entry barriers for new entrants. Due to the
low product development cost they are in a
position to offer feature packed products at a
price that couldn't be matched by any
multinational.
Promotional tactics should be
programmed to make the best possible use
of a cultural event or the festival season to
generate sales for the brand. In India about
70 percent sale of the durable products takes
place between October and April. It is
therefore a right time to launch new products
and introduce promotional schemes for the
existing product offers. Any promotional
scheme launched by the firm should be in
sync with the brand image. A promotional
scheme not in tune with the perceived value
of the brand may not do any good to the
brand. In a crowded market, like the one for
washing machines or colour TVs, firms should
spend more on 'push' promotion, because
dealer support is necessary in such a situation.
Firms like Videocon have been successful in
the past mainly due to the value positioning
and active dealer support in the market.
To conclude, marketing strategies
should be built around the core competence
of the firm with due care for the needs and
wants of the targeted consumers. The firm
should also look into the opportunities for
value addition. From its less profitable business
of collection, processing and distribution of
fluid milk Gujarat Cooperative Milk Marketing
Federation (GCMMF), better known for its
Amul brand of dairy products, has now grown
into a Rs 45,000 million turnover firm, mainly
because it studied the market demand,
identified its core strength in dairy products
and then didn't look back after taking the
plunge. Simultaneously the firm also spent
generously on communication and brand
building.
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