Colgate launched its Colgate Max Fresh toothpastes in China in 2005. To roll out the first launching of its new products, Colgate invested a huge amount of capital in a localized commercial to appeal more desirable customers in China. Within the company’s budget, Colgate spent $1 million to invite a celebrity-Jay Chow-a rocker star in China to express CMF’s concept to its targeted consumers which are young people aged from 18 to 34 and purse a cool lifestyle.
Apparently this investment brought up disputes in class when we talked about this. Also, Colgate was operating its CMF at a loss of 51% for the first year and 6% for the second year after the launching of CMF China in 2005. The corresponding financial performance made it even more doubtful of the necessity to pay Jay Chow $1 million for the latest commercial in China. Some comments of this profound investment were even ironical. However I always agreed with Colgate’s global group’s decision with respect to this “crazy” commercial investment.
From the attached exhibits in the case, you can see there are so many brand choices for customers ranging from extremely low price to over 30RMB in the market. At the same time, CMF were targeting at a premium price (approximately 15 to 20RMB). Accordingly, Colgate has to find effective and efficient marketing and advertising to increase the product recognition among rivals. The local group did know Chinese culture better according to the decision of Jay Chow. In China, prime time advertising and celebrity effects have great impact on the consuming behavior of the customer groups.
For the most of time, customers don’t have the ability to tell the difference and distinctiveness among product categories in China. Celebrities are more convincible and easy for emotional followers. Even though the commercial looks stupid for Americans, it did work in China which indicated companies who want to do international business have to respect local culture and customers’ consuming behavior. Do in Rome as Rome does. If not, the company would have to pay for the shortsighted decisions. On the other hand, if you revise your mind from the other culture’s standpoint, it will be easier to understand it. Some humorous American commercials would make no sense in China or some other countries, but we have to do our business in American way once we are here. Therefore, it is the same theory.
Culture differences play an extremely important role in impacting on consuming behaviors. Some people suggested that inviting a global celebrity and making a standardized commercial for all the countries which Colgate were planning to launching CMF would lower the advertising and marketing costs. However what about the “real impact” on consuming behaviors of the “standardized” commercial? Could anyone remember a global celebrity from China or Mexico that will have the same influential power over you as the American celebrity? I am afraid not. AND VICE VERSA! It probably won’t work in other countries.
As we can see that international business and international marketing become extremely complex connecting to culture difference. Respect and Localization is prominently necessary with the local working groups!