Dominos Pizza Adaptation of the International Marketing Mix Strategy in China Market - Case Study Example

International and global marketing Report on Domino’s Pizza adaptation of the international marketing mix strategy in China working adult foreign market Introduction Domino’s Pizza Inc operates in more than 60 countries and is one of the popular Pizza delivery companies in the USA. The main products include classic hand tossed pizzas, deep fish and crunchy thin crust. The main competitors in the US domestic market include Wendy’s and McDonald’s and thus foreign market expansion is necessary due to stiff competition in the domestic market. The company has built a reputable brand image due to its integrity principle and efficient supply chain management. The company has expanded the menu portfolio and can gain competitive advantage through expanding the China’s working adult market that offers critical opportunity. The company uses high advertising and marketing campaigns that aim at informing and persuading the customers to undertake the consumption of Domino’s pizza and other foods from the company. Before an international marketing manager can launch products in an international marketing, extensive market research is usually conducted to understand the nature of the target market and the preferred international marketing mix strategy that will facilitate market penetration (Jain, 1989). Companies can either use the standard marketing mix or adapt the marketing mix depending on the cultural variables of the foreign market. Business organisations must be aware of the differences in languages, customs and values that influence the purchase decisions of the consumers in the foreign markets (Powers & Loyka, 2010). Friedman (1999) asserts that globalization has led to integration of the nation states, and spread of free-market capitalism that has facilitated faster movement of goods and people across the world (Powers & Loyka, 2010). Globalisation has presented international marketing managers with ethical issues due to differing ethical norms and values of the national markets (Sandhusen, 2008). The business environment, market variables, customer variables, cultural diversity and competition will influence the degree of either standardisation or adaptation of the international marketing mix strategy (Jain, 1989). The cultural distance between the domestic market and foreign market will determine the consumer preferences, modes of communication and the distribution channels of the product. There are numerous cultural stereotypes that impact on the cultural identity of the foreign market (Powers & Loyka, 2010). For instance, Chinese are less argumentative and aggressive compared to British consumers. Chinese are more formal and less risk-taking compared to British entrepreneurs. Certain products are culture-bound such as the food, bevarages and clothing products. In this case, Muslims and Arabic culture prefer conservative dresses for women and men (Sandhusen, 2008). The culture will also influence the promotional messages and advertising styles such as the need to observe the cultural taboos when selecting the messages and advertising colour (Jain, 1989). Cultural frameworks Herskovits defines culture as both the subjective and objective elements that differentiate one culture from the other (Sandhusen, 2008). The objective elements include architecture, physical artifact and infrastructure while the subjective elements include the customs, ideas, values and other meaningful symbols (Powers & Loyka, 2010). High-context versus low-context cultures Edward T. Hall differentiated the global cultures as either high or low context cultures. The high-context cultures like China emphasise on non-verbal messages and promote cordial relationships (Sandhusen, 2008). The Chinese are soft-spoken and more sensitive to body language and business deals are preceded by an established social trust (Jain, 1989). The low-context cultures emphasise on performance, legal contracts and efficient negotiations through elaborate verbal explanations (Yip, 1997). Low-context cultures are common in Europe and North America and the purpose of the speech or messages is to express individual ideas in a clear and logical manner (Powers & Loyka, 2010). The waiters and customer service staff of Domino’s Pizza should be trained on Chinese cultural values such as avoidance of irritation while dealing with difficult customers and showing respect to the elderly customers (Yip, 1997). Hofstede cultural framework According to Geert Hofstede, culture is the collective programming of the human mind that will differentiate members of two cultural groups. Culture has conscious and unconscious ideas, attitudes and values (Powers & Loyka, 2010). Hofstede outlined a cross-cultural communication framework distinguishes the national cultures according to five variables that include the power distance, masculinity/femininity, degree of uncertainty avoidance, individualism/masculinity and finally the long-term or short-term orientation of the national culture (Powers & Loyka, 2010). Power distance index The power distance index refers to the extend the powerful members of the society and institutions control power or accept that power is distributed equally (Sandhusen, 2008). The Chinese market has a high power distance since power is not distributed equally in the society. This is demonstrated by the respect that is accorded to senior members of the society and government institutions (Yip, 1997). Domino’s Pizza should comply with Chinese laws on product safety and employment law in order to gain high acceptance and brand recognition. Individualistic versus collectivism orientation The second dimension of culture according to Hofstede framework is individualism or collectivism degree. The societal collectivism is the degree to which societal institutional practices encourage collective distribution of resources while the in-group collectivism refers to the degree to which members of the society express their loyalty, pride and cohesiveness in the families (Powers & Loyka, 2010). Individualism is the degree to which a member of the society is able to express self-decisions without influence by the close members in the society (Powers & Loyka, 2010). For individualistic culture, the marketing mix should emphasis on the benefits of the products and product attributes to the individuals unlike collectivism cultures where the marketing mix must focus on the wider society (Yip, 1997). In this case, Chinese national culture is collectivism oriented since the members of the society value shared decision making. Domino’s Pizza promotional messages should aim at attracting unity and friendly conversations in a relaxed environment especially in the evenings. Uncertainty avoidance index The third national cultural dimension according to Hofstede framework is the uncertainty avoidance index which refers to the degree of tolerance to ambiguity and uncertainty in the society (Powers & Loyka, 2010). On the other hand, people in low uncertainty avoidance cultures are comfortable in changing business environment strong uncertainty avoidance is demonstrated by resistance to innovation, high stress, fear of unfamiliar risk and aggression. In this case, the Chinese national culture is oriented towards high uncertainty avoidance (Powers & Loyka, 2010). Domino’s Pizza should no implement an aggressive expansion strategy in China and should set up few restaurants and wait until the company attains high brand awareness and identity among the population in order to expand to other cities within the country. Masculinity versus femininity index This refers to the tendency of the society to emphasise on the traditional gender roles at the family level and national level (Powers & Loyka, 2010). Markets that have high masculinity culture will differentiate between the gender roles unlike markets that have feminine culture whereby the equality of men and women is appreciated and accepted by all members of the society (Yip, 1997). The masculine culture is assertive, competitive and materialistic while the feminine culture is caring and sociable. In this case, Chinese national culture is masculine since the gender roles are highly differentiated and women are supposed to show respect to men. The pricing strategy should consider the actions of competitors since Chinese people prefer ‘what is made for China’ and will be willing to switch to competitors in order to benefit from low prices, gifts and discounts. Long-term versus short-term orientation This refers to the degree that the people will defer gratification in order to attain long-term successes. Chinese culture is long-term oriented as evidenced by the Confucius culture of hard work, loyalty, and esteem for the family, group harmony, discipline and control of emotions (Powers & Loyka, 2010). Domino’s Pizza should aim at maintaining customer loyalty and long-term business profitability rather than short-term profitable business that is not sustainable in the future. Evaluation of a sustainable marketing mix strategy for international/global product or service in China Domino’s Pizza global marketing director should consider the subjective dimensions of culture such as the attitudes, customs, religion, values, perceptions of time, perceptions of space and the relationships orientation (Sandhusen, 2008). For instance, the American citizens prefer material success unlike Chinese people who prefer good life that is based on moral values of discipline and respect. Status symbol is highly appreciated in China and the people will buy products that display their status in the society. Domino’s Pizza should offer high quality and locally flavored pizzas and other menus for the working adults in China in accordance with their high status in the society (Powers & Loyka, 2010). The home delivery pizzas should be properly packaged in quality packing in order to demonstrate respect for customers and appreciation for the purchase. Domino’s Pizza promotional mix strategy should use local Chinese slogans that are easy to understand and messages that are aligned with Chinese traditional cultural values. Local promotional channels such as local television channels and radio stations should be selected as the appropriate marketing communication channels (Powers & Loyka, 2010). Manners and customs determine how people behave and conduct themselves in public places. In some countries, the people are formal and respect is important. The customs influence the eating and drinking habits, gifts, and role of women in the society (Sandhusen, 2008). In China and other Asian countries, the handshakes involve placing the palms in front of the chest and bowing in order to show respect. Domino’s Pizza should provide separate eating halls for men and women in order to comply with the traditional values of China. Religion is the common beliefs, scared divine and highest truth that is commonly held by members of a particular society or cultural group. The religion influences the consumer behaviour and culture while some religions form the basis of the legal systems. For instance, Islam forbids alcoholic beverages, indecent exposure in advertisements and gambling. Different cultural groups attach different meanings to colours depending on the unique taboos and customs of the cultural group (Powers & Loyka, 2010). Accordingly, culture influences the aesthetics and sensory emotional values such as the art of the advertising labels. The promotional messages should also be aligned with the dominant Chinese religion on aspects such as color and texture of the advertisement messages (Powers & Loyka, 2010). Recommendations and justifications for adaptation of international marketing mix strategy Some benefits of standardisation Standardisation will entail using identical international marketing mix strategy across all markets while adaptation entails localising the marketing strategies to suit the unique cultural and social variables of the target country market. Standardisation or adaptation entails all components of the marketing mix such as the product, promotion, price and distribution channels (Sandhusen, 2008). The main argument for standardisation is that advances in technology has led to cultural convergence as the global consumers are sharing same needs, desires, tastes and preferences thus making it possible for multinational companies to implemented standardised marketing programs and standardised products (Powers & Loyka, 2010). Standardisation is based on the increased globalisation of culture, world-wide communications and homogeneity of the tastes and preferences across the market. For instance, the company should apply the same high standards in the food processing and procurement of the ingredients in order to maintain its global image and reputation for tasty and high quality food that maintains the original aroma. However, it is advisable for the Domino’s Pizza to integrate the local flavor in order to gain higher market share in the unique foreign market. Some of the advantages that Domino’s will accrue from using standardisation approach in China include reduced marketing mix costs and maintenance of the existing brand image and identity across the world (Powers & Loyka, 2010). Domino’s will be capable of using single advertising programs across the world thus leading to savings in the advertisement production costs. Standardisation enables the company to attain economies of scale in the production, research and development and marketing activities. Accordingly, standardised approach involves simplification and enables the company to have greater control of the international marketing mix and brand identity. Standardisation will enable the company to transfer the proven ideas to the foreign market thus enabling the company to learn from previous experiences (Powers & Loyka, 2010). Advantages of adaptation Adaptation of the international marketing mix strategy offers several advantages since it enables a company to address the unique customer tastes and preferences. The strategy considers the legal, social, cultural and economic issues that exist in the foreign market thus enabling the company to meet the unique needs of the target foreign market. The company should satisfy the local purchasing habits, price the products according to the perceived local position of the brand and consider the prices charged by the local competitors (Powers & Loyka, 2010). The company should also harmonise its prices and promotional strategies according to the local government laws. The adaptation in marketing mix strategy is ideal when the cultural differences are highly pronounced and this requires changes in the product design, packaging, pricing and distribution. Dominos should adapt the brand design, labels, product line and quality in to cater for the unique consumer behaviour and cultural differences that exist in China (Sandhusen, 2008). The company should consider the Chinese national identity, tastes, preferences, language and education in their international marketing mix strategy. Domino’s pricing strategy should consider the Chinese market structure, the transportation costs, price controls and taxes. The promotional channels should be linked with the budget, media channels and influence on the consumer behaviour of the Chinese market (Sandhusen, 2008). Conclusion The cultural environment includes all the institutions and forces that influence the societal preferences, values, perceptions and behaviour. An understanding of the culture enables global marketing directors to build and sustain close working relationships with the consumers. The visible daily behaviour that is influenced by the culture includes the body language, the lifestyles, drinking and eating habits and the clothing styles. The values that are impacted by the culture include the sex roles, friendship patterns and family values. Accordingly, the culture influences the religion. The international marketing manager must adapt the international marketing mix strategy to the local conditions and cultural differences of the Chinese market. The product design, packaging and product attributes should reflect the attitudes and values of the Chinese people. The promotional mix such as the advertising messages, marketing communication channels and labeling colors should reflect the customs and religion of the local consumers. The selection of distribution channels should be aligned with the infrastructure component of Chinese culture such as the roads and preferred places of shopping such as retail outlets or shopping malls. The pricing strategy should reflect the attitudes towards costs of products and social status. Domino’s Pizza should adapt its international marketing mix strategy with the unique cultural variables of Chinese working adult market segment in order to attain high market penetration and high sales volumes. References: Jain, S. (1989). “standardisation of international marketing research: some research hypothesis”, Journal of marketing, 53, PP 70-79. Kumar, A. (2009). Marketing management. London: Vikas Publishing. Powers, T.L & Loyka, J.J. (2010). “Adaptation of marketing mix elements in international markets”, Journal of global marketing, Volume 23, Issue 1, 2010. Sandhusen, R.L. (2008). Marketing. London: Barron’s Educational Series. Yip, G. (1997). “Patterns and determinants of global marketing”, Journal of marketing management. 13, pp 153- 164. Read More