The European Union rivals the United States in terms of total market size, making it an attractive marketing alternative for companies around the world. As with any international marketing undertaking, companies need to thoroughly understand the unique environment of their destination markets, including the European Union. Depending on the specific company and industry, there may be restrictions or considerations that could prove challenging, or companies may recognize excellent potential for their goods or services. This research considers four key factors that companies may want to take into account when contemplating marketing to the European Union.
Product safety is a key concern for any company. It is a problem when a product does not perform as consumers think it should; it can be a disaster when a product poses a safety risk. Some product safety issues generate considerable media attention because of the level of injury or death associated with them. Other product safety issues receive less media attention, but can be costly to manufacturers who must decide how to address the issue. Increasingly, governments have established product safety agencies that are tasked with overseeing safety issues. This is the case in the United States, and also in many of the European Union countries (Hodge, 2005/2006).
The European Union issued a general product safety directive in 2001 that provides guidance regarding product safety. Member states are then mandated to impose penalties as well as take a more active role with regard to safety. Unfortunately for companies, each member state is given significant latitude with regard to the actual specific regulations that are eventually enacted. This can result in a single company facing different requirements under the same directive when the company sells its product in more than one European Union country. This is confusing for manufacturers, and has the potential to be very costly, as well (Hodge, 2005/2006).
The products that are covered by the broad European Union directive as well as by narrower country-specific regulations cover a wide range of items. Clothing, cars, electrical goods and even novelty items have all come under scrutiny under the new product safety guidelines. The challenge to companies is identifying the guidelines that are appropriate to their products, and then ensuring that they stay within the guidelines (Hodge, 2005/2006).
Increasingly, governments are also interested in how companies handle a situation where their products are found to be unsafe, whether by consumers, regulators or the companies themselves. This may result in a product recall, issuing corrective measures, or some other action. This can also prove problematic and costly, and can also create a public relations problem if the media becomes aware of the problem. Fines, sometimes severe, can be imposed as can jail sentences for executives (Hodge, 2005/2006).
Not surprisingly, there has been an increase in insurance policies that cover product recall and liability. While some companies may be reluctant to take on the cost of such policies, others recognize that this can be an important precaution that should be taken to avoid unforeseen product issues. Insurance companies are willing to work with companies selling to the European Union, and taking out such policies may well help protect manufacturers avoid costly consequences later on (Hodge, 2005/2006).
Cultural Diversity in the European Union
When the European Union first came together, it consisted of primarily Western European countries such as France and Spain. While the united community was recognized as a significant market, and the European Union eliminated barriers to trade within that market, it was generally recognized by marketers that there were distinct cultural differences among the various countries that made up the European Union at that time; that is, there was not a single “European” marketing strategy that would be effective in France and Spain and Germany.
As the European Union continue to expand, the concept of homogeneity within the European Union became more common, particularly among various blocs. Western Europe was seen as having common characteristics—if not languages—compared to Eastern Europe. When the European Union reached 27 member nations with nearly 500 million citizens in 2007, it became increasingly easy for companies seeking to do business in the European Union to consider Eastern and Central Europe as being largely homogenous (Skinner, et al, 2008).
This approach can prove problematic, however, as recent research reveals. Language is one barrier that separates peoples of the European Union, but there are also national identities beyond language that extend to cultural differences which can exert considerable influence on the purchasing decisions of consumers. Ignoring these differences, or not recognizing their importance in the marketing of new products and service sis done at a company’s own peril.
In some cases, the marketing adjustments that need to be made are subtle and relatively inexpensive. For example, a company might use classical music on a television commercial, but find that Chopin is appropriate for Poland and Liszt for Hungary rather than Beethoven for both. In other cases, the cultural diversity runs considerably deeper and companies may well find that they need to make significant adjustments in their marketing strategies in order to be successful in several different European Union nations (Skinner, et al, 2008).
Altering the marketing mix and marketing strategy for different destination countries is not a new concept, but companies have sometimes overlooked this aspect when dealing with the European Union. This is because the European Union has positioned itself as a single market with 500 million consumers. Companies seeking to be successful at selling their products and services would do well to remember that national identity and regional cultures continue to be strong influencers in the European Union, and to construct their marketing plans accordingly (Skinner, et al, 2008).
Many Nations, Many Misconceptions
There are conflicts and contradictions within the European Union and even among Europeans about what it means to be part of the European Union. This is another consideration for marketers to take into account as they seek to balance the goal of marketing to a single European market with the recognition that there is no such thing as a common “European.” While the euro has become the common currency for most of the European Union, for instance, Britain has retained use of the British pound. Similarly, media coverage of the benefits and disadvantages of the European Union varies greatly within the European Union with the result that public opinion is not itself unified (Paliwoda & Marinova, 2007).
These are important considerations for companies that are marketing to the European Union because they want to avoid the pitfall not only of believing that there is a single European “type,” but that all Europeans are universally happy with the European Union itself. Press reports can play up the disruptive consequences of the European Union, such as migration resulting in labor force confusion, and individual consumers may prefer to think of themselves as French or Czech rather than as “European” even as they reap the benefits of the trading bloc. Recognizing how the European Union is itself perceived not only in various regions and countries but also within submarkets within those countries can help companies develop an effective marketing message (Paliwoda & Marinova, 2007).
Intellectual property rights are a key consideration for nations seeking to protect their industry, and for companies seeking to ensure their market advantage. To that end, most countries have laws and regulations regarding intellectual property that vary from very lenient to very strict. In addition to outright infringement that hurts competition, countries and companies are also concerned that counterfeit products can be imported into markets that are cheaper, but also of lower quality, than the legitimate item. When this happens, there can also be product safety issues and consumer safety issues. Thus intellectual property enforcement is an important consideration for international marketers.
The European Union and the United States are both recognized for their efforts to prevent counterfeit products from entering their markets. The Chinese, in particular, have been identified as regularly violating intellectual property regulations by exporting counterfeit goods; pirate computer software and DVDs are prime examples of this. Of more concern are products that are counterfeit and whose counterfeiting could cause a public safety issue. This is the case with prescription drugs that are manufactured outside the European Union and then imported for sale within the European Union (Mirandah, 2009).
The problem is not just with actual counterfeit (fake) pharmaceuticals, however. Because laws regarding when patents are valid can vary from country to country, drugs that might be patent-only in one country might be allowed to be manufactured in a generic (lower cost) form in another country. This recently happened with some drugs manufactured in India which were compliant with Indian law, but which violated European Union law regarding patent drugs (Mirandah, 2009).
Controversy arose not because the pharmaceuticals in question were going to be sold within the European Union, but because they were in transit to Brazil. They were held up in the European Union because they were not legal to sell there, although they were legal in their country of manufacture (India) and their destination market (Brazil). Eventually, the drugs were allowed to pass on their way, but this illustrates the challenges of ensuring that companies abide by intellectual property laws, even when those laws are convoluted and complex (Mirandah, 2009).
With approximately 500 million people and more than 25 member countries, the European Union is an attractive market for companies based in other countries. The creation of the European Union eliminated many barriers to trade, and theoretically simplified the many commercial codes under the separate independent nations into single European directives.
However, companies that choose to compete in this market need to be aware of unique characteristics which could prove costly in time and resources if overlooked. These include the need to make sure that the company abides by diverse regulations that govern product safety and intellectual property, and understand the ramifications of conflicting regulations at the country level and the larger European Union level. Moreover, companies should not make the mistake of assuming that all consumers in the European Union have similar tastes and differentiators. Instead, it is still necessary to understand individual markets, and while there may be common characteristics across countries among some demographic groups, companies are best served when they recognize the considerable cultural diversity that exists within the European Union.