Global Marketing Article 5

Comparative Advertising

Comparative advertising, while common in some countries, is illegal in French in France. In the US this is a common practice; individualistic America has a tradition of overtly competing products. In contrast comparative advertising is seen as humiliating by the communitarian French. Under paragraph 1382 of the French civil code it is forbidden to compare products publicly, even in cases where there is only a slight bias or where the comparison is correct.

The Public Regulation of Distribution

In marketing products in German on German market, companies have to deal with a set of public regulations that may often seem rather restrictive. First, there is a law against unfair competition (Gesetz gegen den unlauteren Wettbewerb). This prohibits some of the more aggressive strategies to gain market entry and increase market share and sprang out of the strong tradition of cartels and "interest communities" that were active in Germany up until the Second World War. These groups were set up to hinder cutthroat competition with its potentially negative effect on the economy as a whole.

Although cartels and similar practices are now prohibited and tightly watched by the monopoly commission in Berlin, the notion that competition should not be too fierce and the push to avoid destabilizing effects on the economy are still rather strong and permeate public regulation. In general, public regulation is geared to pursuing public goals and not to fostering the free working of market forces. Planning restrictions are often used to channel behavior towards such goals. It may, for example, be rather difficult for a company to get a planning permit for a large out-of-town retail development as authorities are trying to protect shopping facilities in city centers. Retailers often have a tough time dealing with these kinds of constraints in Germany. After unification, the situation was different for a while in East Germany, and planning permits were generously granted. However, the situation there is now becoming more like that in the former West Germany.

Another frequently discussed restriction in Germany concerns the relatively short official shopping hours. Recently, these restrictions have been somewhat liberalized as a result of increased pressure.

"Uneconomic" Levels of Service in Japan

In Japanese business, good service can be taken to what westerners sometimes consider "uneconomic" levels. For example, a woman asks for a shade of lipstick that is out of stock in a drugstore. She is invited to sit down, offered tea perhaps, and a dispatch rider is sent from the wholesaler with the particular color she wants. Western economists would tell you that such high levels of service are not economically justified; the cost of delivery would lose the druggist at least 500 yen.

A communitarian system calculates on a different basis. What is the customer's continued loyal patronage worth? Might she not feel an obligation to that particular druggist and spend more money later? Communitarians ask what the relationship is worth, not the cost of the lipstick itself.