An Analysis of Canons International Market - Essay Example

? An analysis of Canon’s international market BY YOU YOUR SCHOOL INFO HERE HERE Canon is very adept in creating customised promotion and positioning strategies to meet with market characteristics that are diverse across the world. Chinese citizens are hedonistic and swayed strongly by group sentiment in the social environment whilst Japanese consumers, the home country, are attracted to Canon through years of perception of quality built with longevity as a brand in this country. In the United States, consumers markets are attracted to lifestyle-centric promotion and brand expansion opportunities provided by Canon, changing promotional strategy to better position the brand as an exciting brand. There are no opportunities for standardisation with such varying social and perceptive characteristics of diverse international markets. Research identifies, further, little to no influence in the country of origin effect for this brand. 1.0 Introduction Canon, founded in 1937, is a Japanese multinational brand that focuses on several different markets. The brand specialises in the production of photocopiers, digital and movie production cameras, printers and household camcorders. In 2012, Canon maintained nearly 21 percent market share among competition for sale of copiers and computer printers (Tonerfabrik 2013). It is through innovation, rather than standardisation, that Canon is able to capture such high market share in computer hardware and peripherals, consistently making improvements to product design and functionality in order to achieve target market interest. Canon operates in a very competitive international market, with major brand-recognised names such as Nikon, Hewlett-Packard, and Samsung maintaining the most prominent competitive forces. Furthermore, Canon provides products to Japanese, Chinese, European and North American consumers, with each market maintaining different needs for functional camera and computer peripheral equipment. Additionally, the businesses’ medical equipment customer segments are drawn to Canon’s recent innovations in providing pioneering medical imaging products which is changing the scope of Canon’s production systems and emphasis on product output. In order to compete successfully in a dynamic and very saturated international market, Canon must identify opportunities to better serve diverse consumers and business customers and consistently innovate as part of multinational strategy. 2.0 Canon 4P marketing analysis This section describes Canon’s approach to the marketing mix that determines its market position among competing brands. 2.1 Product Canon cannot adopt a standardised marketing philosophy as the lifestyles and needs of consumers vary according to cultural characteristics, usage patterns for the products provided by Canon, and their level of price sensitivity. Japanese consumers, according to Geert Hofstede, a famous and respected cultural researcher, score very highly in uncertainty avoidance on Hofstede’s Cultural Dimensions scale (Hofstede 2010; Fernandez et al. 1997). As such, consumers purchasing Canon’s computer hardware and cameras will want to be ensured of quality, a proven product superiority that will justify the majority of their decision-making when comparing other technology brands. In Japan, Canon produces products for consumer markets that are largely undifferentiated, meaning that competition continues to replicate existing innovations that make products, competitive, rather homogenous. It is necessary for Canon to position the business as a quality leader for this consumer market, consistently reinforcing that the company continues to produce superior output. Figure 1: Illustrative example of Canon product advertising in Japan Source: Laman, T. (2013). Tim Laman – Wildlife journalist. [online] Available at: http://timlaman.com/#/published-work/commercial/11Canon_Ad-Female_Ibis_2 (accessed 18 May 2013). As illustrated by Figure 1, Canon illustrates the image quality that will be attained by its camera products, emphasising the appropriate proof required for uncertainty avoiding consumers that are homogenous in the country. Canon does not put a great deal of marketing emphasis directly on the product since graphic quality, memory capacity, and functionality of cameras and computer hardware is replicable by competitors. The business maintains a brand ideology in Japan as being valuable through quality and excellence in the output superiority provided by the company’s branded product line. In China, Canon utilises lifestyle communications when attempting to gain consumer attention and interest in purchasing the same products that are provided to Japanese consumers. China, however, maintains radically different cultural characteristics than the Japanese market. Chinese markets are collectivist, meaning that they are strongly tied to their group membership and value loyalty among their reference groups whilst concerning themselves with potential loss of face among important in-group acquaintances (Cheung et al. 2008). Chinese consumers are also very hedonistic as a cultural dimension, meaning that they value seeking personal gratification and self-pleasure as primary goals once establishing a group-oriented affiliation (Lemos 2004). Wen (2007) states that male Chinese consumers believe that what makes a quality Chinese gentleman is nice skin and a stylish dress, dreaming of having facial creams that have been rendered from expensive pearls. Why does this matter for Canon brand positioning in China? Unlike Japan, consumers are driven toward making product purchases based on the sentiment attained from their collective reference groups, their role in society through social affiliation, and also want to satisfy their hedonistic desires that are lifestyle-oriented. Canon, again in a market that is saturated with major competition ranging from Nikon to Samsung, cannot emphasise product benefits and features as part of positioning since there are really no differentiated product characteristics. The life cycle of digital cameras (as one example) is relatively small with constant competitive upgrades being made to these products in terms of memory capacity and functionality. To gain Chinese consumer interest, the business takes a different approach to branding that is also aligned, as in Japan, with their cultural dimensions. This lifestyle-centric approach to brand positioning has given Canon considerable market share, over 27 percent, in this market by staying consistent to collectivist cultural values rather than emphasising product characteristics in the same quality-minded brand philosophy that is effective in Japan. Figure 2: Canon lifestyle marketing for hedonistic buyer segments Source: DSLR Photo. (2013). Top 10 most popular digital camera brands in China - #1 Canon at 27.7% [online] Available at: http://www.dslrphoto.com/dslr/top-10-most-popular-digital-camera-brands-in-china---1-canon-at-277,5392.html (accessed 17 May 2013). In North America and Europe, however, these cultures are generally very individualistic, with less emphasis on considering the sentiment of collective reference groups when making product decisions. Again, as with other international markets, North America and Europe are even more saturated with large and small-scale competitors offering similar digital camera and computer hardware products with like features difficult to differentiate. Canon has found much success in these markets by changing from its Japanese and Chinese brand positioning strategies, engaging consumers under a thrill-seeking methodology aligned with a more active consumer lifestyle. Such catch phrases in promotion as “Awe. Captured by Canon” and “Breakthrough. Captured by Canon” highlight the brand ideology in the United States in order to gain market attention with non-differentiated product features. Figure 3: U.S.-based product emphasis in advertising for Canon Source: Stableford, T. (2008). Canon 50D National Ad Campaign. [online] Available at: http://tylerstableford.com/blog/2008/09/canon-50d-ad-campaign/ (accessed 17 May 2013). It is necessary to illustrate how promotional strategy is directly tied with Canon’s product emphasis in the marketing mix since competitors such as Nikon and Epson continuously scan the external environment and recognise opportunities to emulate innovations in product. Brand positioning must take on different methodologies in order to gain target market attention, which in most countries are mass market consumers, especially for computer hardware and peripherals as well as camera and other associated imaging technologies. 2.2 Price Chinese consumers are extremely price-sensitive (Yangpeng 2013; Graham 2013). As such, in this market, Canon must maintain competitive pricing structures in order to ensure that brand defection does not occur with Chinese consumers. In the United States and Europe, Canon utilises a sales promotion strategy with discounting opportunities on a variety of its camera and computer hardware lines. Because in China, Europe and North America a great deal of revenue is provided to the company in relation to the supplementary services provided with product sales (Canon 2012), it is more lucrative to utilise periodic sales promotions and discounting in these markets that are saturated with competitive products. Canon utilises what is referred to as market-oriented pricing which sets prices based on findings from market research (Gregson 2008). The only market where premium pricing is possible is the Japanese market, one that is avoidant of uncertainty and where Canon has established a quality positioning. Consumers in one multi-national market willing to pay higher prices due to perceived higher quality and exclusivity assists in offsetting some losses that occur through periodic discounting in other sales markets across the world. 2.3 Place The majority of actual production for Canon occurs in Southeast Asia, sustaining 14 different production facilities in this region responsible for manufacture of all product lines ranging from digital cameras to medical equipment (Canon 2012). However, Canon has realised that it can reduce the costs of distribution by establishing one toner cartridge production facility in the United States and two European production centres in computer peripherals and imaging technologies. This gives several advantages unrelated to simply cost controls: first, it provides for a home country advantage to consumers sensitive to products produced domestically and retailed domestically and also taxation systems associated with country-level risks. India is a new region that now contributes strongly to improving distribution as Canon attempts to gain new markets in developing countries. Not only are labour expenditures reduced in a production environment where labour costs are considerably lower than other regions, but it allows Canon to establish a brand presence in new sales markets where the Canon brand is not as strong. Market research has indicated that Brazil is the largest market for compact digital cameras (Canon 2012), however significantly high import taxes have made it not cost efficient for exporting Asian-produced products. Canon, therefore, will be opening a new production facility and distribution centre in the city of Manaus to facilitate cost controls and also enter the market with other Canon-branded products besides compact digital cameras. Local production, according to the business, increases the appeal of the Canon brand for local consumers (Canon 2012). 2.4 Promotion This report highlighted many examples of lifestyle-centric (psychographics) marketing in North America, compared to the collectivist and uncertainty avoiding cultures in Japan that change branding philosophy in promotional function. It would be impossible for Canon to gain the type of brand loyalty (and generic brand preference) it has established in many international markets without creating an adaptable strategy for each sales territory. Canon has maintained a very standardised presence in social media, but in recent months has attempted to improve its customer relationship management strategies and improve its brand image by creating a more potent social media presence on sites such as Facebook. However, Canon failed to create U.S.-centric or European-centric lifestyle characteristics in this effort which left the business with much less consumer traffic than the business had originally hoped for by improving its public relations image using social media. Metrics indicated that over a four month social media campaign, interest quickly waned due to the approach utilised by Canon (Charles 2012). Canon, rather than creating localised online promotion in social media, instead attempted to create a singular presence that was not regularly upgraded with content and commentaries from Canon staff and associated representatives of the brand. It does, however, illustrate that Canon is attempting to modernise the brand by using lifestyle-centric promotions, rather than relying on solely magazine and billboard print advertisements, in an effort to adapt to changing market preferences and cultural characteristics. 2.5 Summary Canon, though lacking in knowledge of utilising the potent opportunities of online viral marketing and public relations, does seem to recognise that customised promotions are more viable for the longevity of this brand that is operating against competent and long-standing competitors. By focusing less on product benefits and features, as well as price, and instead using positioning methodologies to give the business a unique brand personality internationally, it shows that Canon understands its markets. It is benchmarking against the successes found by Apple that has decided to utilise online social media as a means to regularly and consistently engage with its important target markets (Goodson 2011). Apple creates culturally-sensitive content for its many online websites in the technology sector that strikes a proverbial chord with different consumer segments. Through this forum online, Apple is able to stream video of product demonstrations, provide opportunities for blogging and loyal customer interactions, and also take periodic questions about upcoming innovations. Canon cannot, as a multinational company, rely solely on traditional promotional efforts, therefore there should be accolades given to Canon for its ability to modernise in order to capture the attention of a new generation of potential consumer target markets with different lifestyle characteristics. Through this effort, Canon has opportunities to connect with consumer values, which according to Tam (2004) are enduring beliefs that strongly influence consumption behaviours and perceptions of quality. Though the business needs adjustment in this strategy, by offering competitive pricing aligned with tangible market research and venturing into social media to promote not only recognises cost controls, but also gives Canon the ability to customise its messaging in relevant social forums. 3.0 Internationalisation process theory The Uppsala model is highly relevant to what is bringing Canon success in its international markets. The basic premise along this model is that business must be adaptable and begin making incremental changes to the business model in order to build the necessary competencies, talents and knowledge necessary to compete in international markets, especially when the characteristics of foreign markets differ from the home market (Nordstrom 1991). Learning, as provided by this model, occurs through the social environment, experience in organisational structure, technology and revenue performance which allows a multinational company to make consistent small-scale changes to improve knowledge management to be a more effective competitor. This is what Canon is accomplishing by now having a more focused emphasis on conducting market research and expanding its promotional strategies into more relevant and contemporary networks (e.g. social media). Simply through experience and recognising that cultural characteristics unique for each international market dictate consumption behaviour, Canon is able to make the appropriate changes to be adaptable and relevant in different international markets. Schiffman and Kanuk (2010) indicate that consumers rely heavily on stereotypes, first impressions and the halo effect when making consumption decisions. Therefore, there are many psychological influences that determine how a market will assess and perceive a brand. The usage patterns and needs for Canon products are determined by these characteristics and lifestyles in which there is some dimension of psychological fulfilment by the consumer segments attracted to Canon products. Canon was not born global nor does the company fit under this model of internationalisation since it has gleaned so much of its business strategies through direct involvement with diverse international markets. Farbrot (2007) states that it is no longer a fact that companies must find success in their home market before taking the brand global. Canon seeks market entry incrementally, more aligned with the Uppsala model, once the business feels confident that it understands its local markets and can serve local needs more efficiently. This is even apparent in Canon’s localised human resources strategy to build better human capital and dedication to the brand (Canon 2012). 4.0 Country of Origin effect The country of origin effect involves having a better sense of belongingness with the brand and assists in justifying one’s domestic identity (Cateora, Gilly and Graham 2009). Only certain markets for Canon are concerned with the buy local phenomenon that dictates consumption behaviours. According to the firm, Brazil is a market where local production will enhance its brand image and quality perceptions which defined the intention to build a manufacturing facility in the country (Canon 2012). Japan and China, as two major markets, are often interested in purchasing Western product brands as they are perceived as being quality and/or exclusive in the mindset of these markets. With this in mind, there is little influence in the country of origin effect for Canon which is likely why the business has established the majority of its production facilities in Asia (where the business is headquartered) rather than expanding manufacturing all across the globe. Though empirical studies indicate that the COO effect influences consumption, there is no evidence that Canon is largely concerned with this phenomenon when considering production, distribution and promotional strategy. Hayden and Edwards (2001) found in a case study involving Swedish multinationals that the country of origin effect significantly minimises when Anglo-Saxon (Western) internal policies and human resources structures are developed. As these policies and structures are implemented, it changes the mindset of the organisational culture and also product philosophy to meet with competitive forces from Western companies. Canon, though it must utilise customised promotions in order to gain attention from important markets in Japan, the United States, Europe and China, will not achieve a negative brand sentiment from consumers associated with the point of manufacture. For instance, Chinese consumers are largely concerned with the opinion of important reference groups, thus if there is loyalty in the group for a particular brand, they will theoretically adopt the same sentiment even though the product may or may not have been produced in the home country. In France, as another example, reality is constructed according to orderly social hierarchies, another element indicating that the social condition will dictate consumer sentiment and not the brand origin. Canon has been adept in establishing a quality-centric positioning in part of Asia whilst focusing on lifestyle in the United States to gain promotional presence. If the business were concerned about country of origin phenomenon, it is likely the business would have much more than just a singular production facility in this North American market where there is considerable market share achieved by Canon. 5.0 Conclusion As illustrated, Canon understands the characteristics of multinational markets and adopts strategy to better fit these lifestyle and social needs that vary distinctly between one market and another. The company, by focusing less on pricing and product when establishing a brand image in many foreign and domestic markets, is able to maintain promotion as its most viable brand-building and market attention-grabbing strategies. Country of origin is simply not relevant for this brand, likely because the business has been operating since 1937 and has built a reputation for quality in Japan, social relevance in China and lifestyle relevance in North America that is difficult to undo without considerable product failures or lack of innovation provided by the firm. Canon uses its brand reputation to justify its pricing strategies and also aligning this with competitive analysis and knowledge of the price-sensitivity characteristics of multinational markets. However, it is clear that focus on brand-building in its most profitable markets has somewhat hindered the strategy for new market entry in developing countries where the brand has little competitive or social presence. In more traditionalist developing markets, such as the Middle East, the country of origin effect might have more impact on business strategy, but according to Uppsala’s model, this will be learned through experiential knowledge operating in this market. Overall, Canon is very proficient in creating customised and adaptable strategies in different foreign markets rather than seeking a standardisation strategy. References Canon. (2012). Canon Annual Report 2012. [online] Available at: http://www.canon.com/ir/annual/2012/report2012.pdf (accessed 16 May 2013). Cateora, P., Gilly, M.C. and Graham, J.L. (2009). International marketing, 14th edn. McGraw-Hill. Charles, G. (2012). Brand barometer: social media performance of Canon, Brand Republic. [online] Available at: http://www.brandrepublic.com/analysis/1137542/Brand-Barometer-Social-media-performance-Canon/ (accessed 16 May 2013). Cheung, F.M., Cheung, S.F., Zhang, J., Leung, K., Leong, F. and Yeh, K. H. (2008). 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(2013). Pricing retail right to win Chinese consumers: it’s complicated, Minyanville. [online] Available at: http://www.minyanville.com/sectors/global-markets/articles/Pricing-Right-to-Win-Chinese-Consumers/3/27/2013/id/48956 (accessed 18 May 2013). Gregson, A. (2008). Pricing strategies for small business. Self-Counsel Press. Hayden, A. and Edwards, T. (2001). The erosion of the country of origin effect: a case study of a Swedish multinational company, Industrial Relations, 56, pp.116-140. Hofstede, G., Hofstede, G.J. and Minkov, M. (2010). Cultures and organisations: software of the mind, 3rd edn. New York: McGraw Hill. Laman, T. (2013). Tim Laman – Wildlife journalist. [online] Available at: http://timlaman.com/#/published-work/commercial/11Canon_Ad-Female_Ibis_2 (accessed 18 May 2013). Lemos, J. (2004). Psychological hedonism, evolutionary biology, and the experience machine, Philosophy of the Social Sciences, 34(4), pp.506-526. Nordstrom K.A. (1991), The Internationalization Process of the Firm – searching for new patterns and explanations. Stockholm: Stockholm School of Economics Schiffman, L.G. and Kanuk, L.L. (2010). Consumer behaviour, 10th edn. Prentice-Hall International. Stableford, T. (2008). Canon 50D National Ad Campaign. [online] Available at: http://tylerstableford.com/blog/2008/09/canon-50d-ad-campaign/ (accessed 17 May 2013). Tam, J.L.M. (2004). Customer satisfaction, service quality and perceived value: an integrative model, Journal of Marketing Management, 20, pp.897-917. Tonerfabrik. (2013). Multi-function units out-compete printers. [online] Available at: http://www.tonerfabrik.com/refill-toner-news/multi-function-units-out-compete-printers.php (accessed 17 May 2013). Wen, C. (2007). The red mirror: children of China’s cultural revolution. Oxford: Westview Press. Yangpeng, Z. (2013). Opportunity looms for premium Chinese water brands, China Daily. [online] Available at: http://www.chinadaily.com.cn/cndy/2012-08/13/content_15669053.htm (accessed 17 May 2013). Appendix A: Social media performance of Canon in 2011 Source: Charles, G. (2012). Brand barometer: social media performance of Canon, Brand Republic. [online] Available at: http://www.brandrepublic.com/analysis/1137542/Brand-Barometer-Social-media-performance-Canon/ (accessed 16 May 2013). As shown by the performance chart, Canon gained immediate consumer interest on its social media website as an attempt to create more customisable CRM presence. However, interest quickly waned with lack of market-centric web presence development and lack of engagement with consumers. The rankings on the left indicate consumer sentiment toward the brand at the start of its new February 2011 social media campaign through May of the same year where sentiment dropped six percentage points with much less user involvement in the brand after launching this PR campaign. Read More