Multinational Marketing Management
Question One: Introduction
Culture is termed as a pattern of integrated beliefs, human knowledge, and behavior all of which are dependant upon the capacity for social learning and symbolic thought. A culture consists of a set of abstract elements such as values, attitudes and practices which are associated with a certain group, organization or institution. These elements develop within individuals through assimilation, education and emulation. These elements define various aspects of individuals within a certain culture such as behaviors, relations, mode of association, decision-making and action undertaking-just to mention but a few. The cultural landscape spans across continents, nations, racial and ethnic groups as well as across minor demographically varying spaces.
Nations also have various cultural aspects that are held in common by the citizenry. These nationally held cultural aspects constitute what is termed as the national culture of a nation. National culture widely relates to values deeply held within a nation. The values may regard to rational versus irrational, good versus evil, safe versus dangerous, abnormal versus normal-just to mention but a few. Nationally cultured values are gradually learned from the early stages of life and held very deeply whilst changing slowly with time and through generations. On the other hand, organizational culture may be defined as the attitudes, psychology, experiences, values and beliefs-both cultural and personal values-of any organization.
It constitutes the norms and values shared by members of groups within an organization. These collections of commonly held cultural aspects define the manner in which the members associate with each other and with all other people that they deal with outside their organization. Organizational culture is composed of guidelines that are broad in nature and rooted in organizational practices, and these are learned once incepted into the organization. The organizational culture is usually shaped by the organizations management, and as such the management initiates the actual enculturation of its new members.
According to Hofstede’s cultural dimensions definition, cultures vary across nations depending on various cultural aspects such as collectivism versus individualism, high power versus low power distance, masculinity versus femininity and weak versus strong avoidance of uncertain situations (Hofstede, 2001). For example people in the nations in the Middle East and the oriental world such as China and Japan have a strong avoidance of uncertainty. As such they are likely to go slow in their decision-making process as well as in planning and initiating their strategies. They are also likely to carry out more collective consultation before nay implementation. On the other hand, people in nations in the West such as the United States and Canada have a weak avoidance of uncertainty and they are likely to accept autonomy in decision-making and implementation of plans.
The populations in these cultural zones are likely to accept the taking of risks even in business situations. These are nationally held values that make up the national culture of a nation. These values are held by citizens of these nations, and therefore; they are translated into the workplace or organizational set ups as values to be upheld whilst conducting an organization’s business activities. The management and top officials in such areas of cultural influence are likely to carry the same national values into the work place and enhance their manifestation as organizational values, and thus shaping the organizational culture using the national culture.
The organizational culture in turn plays a big role in influencing the activities of any organization such as decision-making, marketing, making of negotiations and initiation of strategic plans. For example, cross-cultural marketing negotiations may involve organization officials from different cultural backgrounds such as those from the American (West) and those from the orient (East) or the Arabian Middle East. In such circumstances these people happen to have cross-cultural differences greatly engrained in their life, and as such they are directed by the organizational cultural values that they hold. As stated earlier these organizational cultures may be influenced by the national cultures in the locality of the respective organizations. The negotiations in cross-cultural marketing involving parties from these different zones may have to make considerations that take into account the cultural differences that exist among the different parties (Hofstede, 2001).
This is important because the cultural differences are likely to affect the process of negotiation. For example, the Middle Eastern Islamic nations have high masculinity in every aspect of their lives and as such the top leadership in most organizational management is composed of male managers. In such nations decisions made by men are more valued. If managers from such nations were to meet with fellow managers in negotiations from a nation such as the United Kingdom or the United States; they would most likely prefer to deal with fellow men because of their cultural background that affects their organizational cultures. Therefore, for the marketing negotiations to be hold significance, it would be prudent if the organizations from the Western nations sent in a management team composed of more male negotiators. Similarly, according to Hofstede; these two highlighted cultural backgrounds have differences in terms of collectivism versus individualism as well as in terms of low and high levels of acceptance of uncertainty.
Therefore, a marketing negotiation process may take longer because the Middle Eastern organizations value exercising wide consultations (collectivism) to avoid cases of high uncertainty levels as they close their deals. This too means that they may require more time to carry out their decision-making processes. On the other hand, most Western nations accept autonomy (individualism) in decision-making. Their managers can be trusted to individually analyze situations critically and make prudent decisions as well as be ready to take responsibility on the decisions made. As such their decision-making processes may be speedy, and thus; take lesser time to accomplish. A negotiation between these two cultural parties may require that one group adjusts to the other groups cultural orientation so as to attain better marketing negotiation results.
The Middle Eastern party is likely to be rigid because they greatly value upholding their cultures, whereas; their western counterparts are likely to be malleable with regards to the process in relation to culture, Thus, it would be prudent for the Western negotiators to initiate the negotiations early enough and be ready to spare more time as they await for the deliberation of the Middle Eastern negotiators. This scenario shows how cross-cultural marketing negotiations have to be adopted and considered in the process of making negotiations. Conclusively, culture greatly influences the negotiation process (Hofstede, 2001).
The marketing process on a local scale is also greatly affected by the cultures within localities where the marketing is to occur. A local market mix constitutes of the four elements that make up the mix-the product, price, promotion and place. The development of this mix for a product is greatly influenced by the cultural set up of the market. For example vehicles are considered as commodity of convenience and luxury, therefore; designs of products in these markets may add luxurious enhancements on their vehicle products so as to attract more buyers.
However, in third world, poor nations vehicles are often considered as products of convenience with least to no luxury considerations, and as such; putting luxurious enhancements adds no value to the people in such cultures. Therefore; a manufacturer may need to make products befitting to each section of the market whilst doing the product design. The price element of the mix may also be compared to these two groups, whereas, the first cultural group may be willing to pay for a higher price to obtain a luxurious vehicle, the second lot may opt to pay the least price to simply obtain a vehicle simply meant for transport convenience. The third element in the marketing mix is perhaps the most influenced by culture. Any portrayal by an advertiser that an item is indeed meant for a certain class of people-classy, poor, middle level income-may imply that the product is exclusive to the group, and thus; restrict purchases from other groups (Johansson, 2003).
Conservative cultures such as those found in the Middle East, may not accept promotional advertisements connoted with sexually explicit tones and implications, and as a result any product with such promotions may achieve the least of sales. Therefore, any designer of a promotional program should look into the cultural values before making a promotional plan. The last element-place-is largely affected by the designation of places where the target market can access the products. Cultures in the west are well known for their classy shopping experience in malls and supermarkets, a rare feature in most other middle level to low level income nations, where shopping is done in retail within small business holdings. In considering these cultural differences products should be distributed through the channels that are most appropriate for the locals (Johansson, 2003).
Conclusively, the effects of culture on marketing aspects such as negotiation and decision-making are very profound. The influence becomes especially important when doing marketing activities across a multi-cultural landscape. In such instances it becomes a necessity for the management to conduct preliminary surveys of markets to determine cultural orientations and preferences so as to make a strategic marketing mix that befits the market of choice.
Question Two: Introduction
Marketing uses various marketing tactics that are used to define the market as well as implement the actual marketing plan. Market segmentation and product positioning are examples of some of the tactics applied by marketers in various business organizations. A market segment denotes a sub-set or group of clientele consisting of people or business organizations with a common need and similar characteristics that pushes them towards having similar demands in products/services. Their demand is also based on common preferences on qualities of the products demanded such as the function of the product or price. Market segments should show distinctiveness from the rest of the market and they should be homogenous with the niche of the market at large through exhibiting common needs. The response to any market stimulus within these niches should also be uniform and reachable by a common intervention. Market segmentation may also involve the division of consumers with similar needs into groups so as to be able to charge them differently.
The concept basically lies in the creation of differences in goods and services that are at times very subtle. Segmentation of markets may be done along various lines such as age, gender, price or interest. On the other hand, product positioning can be termed as the process used by marketers to create an identity or mental picture of a brand, product or company in the minds of the target market. Positioning influences what the customers believe about a producer’s product in terms of features, value, and benefits compared to other options in the market offered by competitors. These customer perceptions are influenced more by consumer evidence and experience rather than through advertisements. Positioning is a dynamic strategy that changes with competition and it is based on what the clients believe rather than what the marketer wants them to believe.
These two tactical marketing strategies may influence various markets in a different manner. There are three identified market categorizations based on the consideration of the length of time within which they have been in operation since initiation. These include mature markets, emerging markets and new growth markets. Firstly, the paper highlights the mature markets and how the use of the two marketing strategies differs in these markets (Johansson, 2003).
According to Johansson, (2003) tactics used in market segmentation may be categorized into product policies, pricing, distribution, and promotion all aimed consumer satisfaction. In mature markets, market segmentation can be applied through a producer’s maintenance of a full range of products with a full product line consisting of various models and variations of one common product. These product lines has various models that are intended for various segments of the market either categorized by price (affordability), luxuriousness or any other segmenting criterion. Mature markets may also use the tactic of imitating products that are expensive, and thus; producing cheaper versions known as “me too products” meant for the low end segment of the product. The “me too products” form part of the pricing strategy meant to reach a niche locked out due to high product prices. Distribution strategies of marketing in niche marketing attempt to use distribution channels that can access the niche that is targeted. For example a new car manufacturer may decide to select an already existing distribution channel held by a competitor or a seller that reaches a common niche (Johansson, 2003).
In new growth markets the market segmentation uses similarly categorized marketing tactics defined by product policies, pricing, distribution, and promotion all aimed consumer satisfaction. In these markets clients are beginning to demand more variety. The major product tactic involves the localization of the product for example by changing electric currency adaptation to local standards and changing packaging as well as making translation-exemplified by mobile telephony inbuilt menus written in local languages. This segments the market in its immediate locality. The pricing strategy considers the competitive, conditions and demand. These markets are growing and the demand is actually on the rise, therefore; the segmentation strategy should go according the chosen niche. If the strategy was to target a high end niche, then the use of a high price is totally warranted (Johansson, 2003).
However, the prices for growing markets should not be too high because they may be too limiting, and thus; fail to give consumers an experience that will help them build loyalty and appreciate the value of the product. The distribution strategy is similar to that of mature markets, because it is tailored to reach the target with specificity. However, the only difference being that there are no already defined channels for distribution and their design is flexible and left to the discretion of the marketer. There should be intense promotional activities to increase awareness as well as high investment into expansion of branches of distribution.
In emerging markets the strategies of segmentation follow the same outline. However, in emerging markets the consideration of income levels offers great insight into the pricing criterion to be used in marketing. This is essential because these countries are characterized with great income disparities. The product consideration is not so significant because of these markets barely have most products, and as such customer preferences have not greatly developed. All a marketer needs more importantly is an extensive research to establish consumer needs. The distribution channels may totally be non-existent and the supplier may need to develop them from scratch and thus a lot of investment has to be put in place.
The tactics applicable to product positioning are mostly based on the functionality of the product. For example Light beer may be given better attributes due to its great taste and less filling nature, and thus positioning it as a quality product. Application and functionality can also be used to differentiate and position products, for example the users of Apple computers have easy access to modification of graphics than UNIX users, thus positioning apple as a superior product. In mature markets this form of product enhance due to innovations and patenting of new additional features can be used to position and re-position a product in the market. In emerging markets the enhancements may add no value because the products are already new, and thus; need no enhancements to offer them a new position.
However, pricing may play a role in determining what position the product will take in the market. If introduced as a high end market, then the product is likely to be positioned as that for times to come, unless competitiveness determines otherwise. The channels of distribution may also greatly influence a products positioning, products distributed through high end outlets are likely to take a different market position compared to those distributed through low end retail channels. In new growth markets the trends and tactics are almost similar to those applied in the mature markets (Johansson, 2003). All these tactical marketing strategies applied appear similar, but the distribution strategy greatly differs because in each market it has to be tailored so that it may help reach a specific market section. The pricing strategy is relatively similar across all the three markets with there being no great variations on how it is used to segment a market or position a product in any market.
The two marketing strategies vary slightly in their relation to meeting needs of end consumer marketing and organizational or industrial marketing. The major difference between these strategies is that the distribution channel bears great significance in end consumer marketing compared to organizational marketing. The price and product bear more significance as the main considerations in organizational marketing. Promotion is also not very essential, and neither is it economical because organizational buyers are not many, and they can be easily reached in marketing efforts. At times they place bids which determine their choice of supplier, thus rendering promotions uneconomical to engage in as a marketing effort to organizations. Promotional marketing is however, very essential when marketing to end users because a lot choosing is involved in the implementation of a purchase (Johansson, 2003).
Conclusively, a marketing mix cannot be complete without incorporating both market segmentation and product positioning tactics in its marketing campaign. These tactics have to be applied with localized considerations that look into culture, income levels, local developments levels, governance and many other factor that influence the market dynamics.
Question Three: Introduction
The entry of Levi Strauss in to the Japanese markets presented both positive opportunities and challenges to Levis. Firstly, the company was advantaged because of its globally famous brand, characterized with high quality jeans. The American style and sense of fashion in the 70’s also favored the growth of the jeans market in Japan because jeans were considered fashionable due to their association to the ‘hip’ American culture. The popularity of the casual fashion that followed in the 80’s among Japanese youths also favored the growth of Levi’s market, because its garments got positioned as a high end product with great value, and thus; highly priced.
However, its position was threatened by similar products offered by other competitors presenting similar products with their advertisement themes based on one common aspect-The American Culture. The development of new designs meant for the Japanese market offered competitive advantage because these were introduced back home in America as new product lines that developed a position of their own in the line of products offered by Levis Strauss. They also helped maintain Levis Strauss relevance and position in Japan. The sensitivity of the non-U.S jeans market to fashion also offered a competitive advantage because Levis Strauss was deemed as an icon of fashion, and thus giving it a higher market niche.
The distribution channels and mode used by Levi Strauss did not serve well the company. The company had lesser distribution channels compared to its competitors. This is exemplified by the Edwin stores that had about 10000 stores, whereas; Levis Strauss had only 5000. This great disparity may have accounted for the great competitive advantage that Edwin had against Levis Strauss. The channels were fewer, and thus; not allowing Levis Strauss to perform at its maximum levels of operation in terms of sales. The initial use of specialty stores specializing in jeans distribution may have been an undoing for Levis Strauss because the company was not able to benefit from extensive distribution networks like to those established in super chain stores in America and Europe.
The specialty stores were mainly located in towns and urban centers thus restricting the networks services (Johansson, 2003). However, in later years the emergence of stores such as Marutomi and Chiyoda provided a new resurgence of expansion in the distribution network as a competitive advantage. This presented a chance for Levis to enhance its sales using these stores that closely related to those chains stores in Europe and America. The expansion of these suburban stores provided a competitive advantage that covered up for the earlier shortage of distribution networks.
Levis Strauss had a chance to better its position as well as those of its products through the use of promotional activities as a way of positioning the product. Whilst, all other competitors were trying to match Levis Strauss; the company should have developed a further localized touch of differentiation. The like of fashion associated with America styles worked well, but the company should have introduced a line of products with a Japanese fashion sense in terms of product design. This would have created a market segment that would attract patriots that may be attracted with products having a Japanese local touch. This could have worked well for the un-served market niche that may not have been interested with the American fashion (Johansson, 2003).Additionally, this would have offered Levis Strauss a new product line that would have greatly differentiated its positioning strategy as well as products.
Levis Strauss distribution problems would have greatly been solved through the initiation of specialized Levis Strauss branches in both suburban areas as well as within local towns. A good and popular brand name coupled with a large and expansive network would have offered the company a great competitive advantage in outdoing its competitors. This would have also helped in covering up the costs put into expansion. The exclusive use of specialty stores was also a great undoing for Levis Strauss. The company was greatly limited in terms of distribution by this choice. In order to alleviate the problem the company should have allowed smaller retail stores in various localities not supplied by the specialty stores to have exclusive rights to stock their merchandise as a cheaper alternative for developing distribution centers in localities with limited market demand (Johansson, 2003).
Conclusively, Levis Strauss was operating below its optimal performance because of the lack of a wide network of distribution that is properly structured. The company’s brand name was already popular at its introduction and the market was receptive because of the acceptance of the fashion associated with American jeans. However, Levis was unable to capitalize on this competitive advantage because it took on the market with a slow speed in terms of rolling out its network of supply. As a result, it rolled out its products slowly, allowing competitors to catch up. The only survival element that seems to have kept it alive was the popular brand name, and was it not for that popularity the company would have probably been out competed.
Hofstede, G. (2001).Culture's Consequences: Comparing values, behaviors, institutions, and organizations across nations, 2nd edition. Sage Publications.
Johansson, J.K. (2003).Global marketing: Foreign entry, local marketing & global management, 3rd edition. McGraw-Hill/Irwin Publishers.