Marketing Across Cultures - Expansion of Food Brand into Turkey - Essay Example

? Feasibility Report: Expansion of food brand into Turkey BY YOU YOUR SCHOOL INFO HERE HERE TABLE OF CONTENTS Section Page Number 0 Introduction 2.0 Expansion strategy 3.0 Recommended marketing strategy 4.0 Ethical issues in Turkey 5.0 Cross-cultural marketing recommendations 6.0 Conclusion References Appendices 3 3 5 6 7 8 9 11 Expansion of food brand into Turkey 1.0 Introduction This feasibility report highlights the opportunities and challenges with expanding the company’s food brands into Turkey. Though it has been recognised that the food products produced contain certain ingredients that are forbidden for consumption with Turkish consumers, Turkey still represents a viable market for entry if certain operational components of the business model are altered. The company, prior to Turkish entry, must be considerate of religious practices of Turkish consumers, the available infrastructure for distribution, the prevalence of competing food producers, the cultural characteristics of the society, economic conditions in the state, and available mediums in the country for promotion. 2.0 Expansion strategy In current Turkish society, 98 percent of consumers are Muslim, representing 73.6 million consumers in the country (Pew Forum 2009). This is a very large market and adherents to the Muslim religion have extremely strict food consumption expectations that are aligned with the divine teachings of the Quran. Muslim consumers consider certain foods to be najis, which means an inability to purify and make suitable for consumption against religious doctrine (Bearman, Banquis, Bosworth, Donzel and Heinrichs 2005). An example of banned foods in the Muslim diet include pork, as this animal is considered a scavenger and harbours known pathogens that, when consumed, would defile the body with its lack of cleanliness (Riaz and Chaudry 2004). It does not matter in the case of pork-containing products whether the animal has been slaughtered according to religious doctrine or processed as a secondary ingredient in any food product, it will not be consumed by Muslim adherents, which in the case of Turkey is nearly the entire available market. Alcohol is also banned from the Muslim diet, including any products that contain small volumes of alcohol in production or as an ingredient to produce a final food product. Muslim consumers also will reject products that use gelatine as a stabilizer or a main ingredient, which has implications for preserving or ensuring the integrity of a complex food product. Because of the dietary restrictions identified in Turkey, the most viable expansion strategy for this new market is vertical expansion. Under this strategy, the business will seek out companies that produce the intermediate goods that assist the company in distributing and marketing its finished products and acquire them. There is a pre-existing commercial infrastructure in Turkey and many surrounding nations that support large volumes of Muslim consumers that assist in distribution of halal products (those that are considered clean and appropriate for consumption) as well as manufacture of suitable food products under religious doctrine. Through acquisition, the business will gain the knowledge and expertise of existing staff and management post-purchase and will not have to incur the high costs of asset development by constructing its own, wholly-managed production and distribution centres from the ground up. The business should also consider lateral expansion, which is the acquisition of smaller firms that produce like products. This allows the business to achieve the necessary economies of scale that will bring the business model more cost efficiency whilst also establishing the framework for production, distribution and allow the business to capitalise on the potential brand strength of these smaller acquired firms. Since this company does not have an established brand presence in this mostly Muslim market, there would be considerable time investment and expenditure to utilise appropriate promotions and build a recognised and respected brand in Turkey. A lateral expansion strategy would ensure that the business is equipped with the operational tools (e.g. production line and research and development) necessary to satisfy consumers that adhere to the Muslim dietary restrictions. There are certain processes and animal slaughtering techniques that must be part of the production process and the purchase of existing firms with specialized knowledge and operational capacity in this area would be significantly beneficial to the food brand. The only recognised disadvantage to lateral expansion and vertical expansion is cost. Though there is high probability that many small food producers specialising in halal products would be interested in becoming a part of a larger, consolidated food brand, the purchasing prices must be properly financed. The business may have to take the company public in order to utilise common stock to build the necessary capital required for the expansion strategy, which would place a new type of investor and regulatory pressure on the business. Furthermore, markets which provide capital for businesses (e.g. the banking sector) have established new credit restrictions on businesses that make credit and loans more difficult to procure and, in some markets, with much higher interest rates offered as a means of ensuring risk management of the lender. 3.0 Recommended marketing strategy One of the most fundamental assets of a business that are nearly impossible to replicate is the company’s brand image (Bennett and Rundle-Thiele 2004). Since the food brand does not have a reputation or has even achieved brand recognition in Turkey, the company should be producing an aggressive campaign to familiarise Turkish consumers with the business. There is a very well-developed technology infrastructure in Turkey with millions of consumers having access to the Internet and mobile smartphone technologies. A series of integrated marketing communications should be developed, including billboards, social media and viral marketing. This should occur both pre-acquisition and post-acquisition, with co-branding strategies after the business had identified its appropriate partners that are willing to divest their businesses to become a part of a larger brand. The company brand should be promoted with a special emphasis on the business’ intention to abide by Muslim food consumption guidelines, thus creating a sense of trust in the business’ respect for religious doctrine and removing uncertainty from consumers about this particular halal-abiding food brand. Turkey is a culture that scores very highly in Hofstede’s Cultural Dimensions model associated with uncertainty avoidance (Hofstede Centre 2012). In cultural research, uncertainty avoidance is associated with the propensity of a society to want risk and ambiguity removed before making a decision (Hofstede 1993). Turkish consumers, who are unfamiliar with this company’s food brand, will be more loyal toward companies that have already established their dedication to providing halal-abiding products and those that they are familiar with and have had quality experiences. By introducing the business, its products, and its strategic intentions to service Muslim consumers in a pre-market entry integrated campaign, it will quickly establish consumer conviction and faith in the food brand that will be advantageous after launching the first product line. The business should also be producing short promotional videos that would be deemed appropriate for QTV, a Muslim network that focuses on the Quran, in which some viewers tune into the network up to five times a day to participate in prayer activities (Story 2007). With such high and recurring viewership by very dedicated religious adherents, it will be an excellent forum by which to build brand recognition, especially when being presented on a trusted network that fulfils the needs of devoted Muslim consumers. Additionally, inflation has been a very large problem in Turkey. In the mid to late 1990s, annual inflation was 85 percent (Library of Congress 2008). By 2007, inflation was still much higher than most developing nations at 8.5 percent (Library of Congress 2008). Hence, the business should be considering penetration pricing, which is introducing a product at a lower-than-competitor price during a specific period to incentivize purchasing recurrence until consumers have been familiarised with the brand. Penetration pricing strategies are aligned with the religious beliefs about commercial activities described in the next section. Turkey is surrounded by water, with the country sustaining approximately 180 different ports (Tanyas, Serdar, Asan and Yilmaz 2004). This provides opportunities for improving distribution costs via bulk sea transport for ingredients needed in the supply chain. Additionally, many European businesspersons now have the capability to market and produce halal products for Muslim consumers (Ameur 2011) and the Turkish waterways provide less-expensive access to this expanded supply network. 4.0 Ethical issues in Turkey The culture of Turkey is collectivist, meaning that group membership, loyalty and preserving one’s face (a reputational issue) are very important social values (Cheung, Cheung, Zhang, Leung, Leong and Yeh 2008). Collectivist consumers often refer to those that they believe to be important reference groups (e.g. family members, acquaintances or celebrities) when making consumption decisions. In theory, the collectivist values enduring within a social group will be adopted by all consumers within this group dynamic. Having identified this phenomenon of the market characteristics, there are beliefs about the role of the buyer and seller as aligned with the teachings of the Quran. Both the buyer and seller are to be fearful of the God Allah and should be engaging in fair pricing which, according to Muslim religious values, should have products priced at a minimum above the marginal cost. There is a general belief in the Muslim community that water, people and earth all belong to Allah, thus should not be exploited for seller gain at the expense of the buyer (Siddiqi 1996). The business, therefore, should be treating Turkish Muslim consumers as price-sensitive buyers and ensure that pricing is aligned with the marginal cost of goods sold as well as competitively. If consumers in the collectivist state believe that the business is not adhering to the principles of divine-approved commercialism, the business will get a negative reputation for being unethical and, perhaps, even unclean which will erode consumer intention to purchase the company’s branded products. These ethical issues can be overcome by establishing relevant pricing without a significant profit mark-up and ensuring that the business establishes an ethical code of conduct that is promoted online and in print literature with direct reference to the business’ role in fulfilling the obligations of Allah the Divine. 5.0 Cross-cultural marketing recommendations As the nation is a culture in which uncertainty is not tolerated and influences consumption behaviour, as well as the collectivist values in Turkey, recommendations for building a trusting relationship with the culture can be provided. A recent survey of 1,000 Muslims indicated that 89 percent of consumers were influenced by the halal certification logo that is becoming commonplace for marketers that produce food products adhering to the Muslim religion (Shafi and Othman 2007). With such a high prevalence of consumption behaviour being dictated by the halal certification on Muslim-centric food products, it is likely that collectivist values associated with the Turkish culture will share this same ideology. Trust in the sanctity of food products is expressed through the use of this halal logo which also reduces uncertainty about the potential implications of accidentally consuming najis food that would essentially stain the divinity of the human body according to Allah. The business should be utilising lifestyle promotion using a psychographic model illustrating consumption of the halal products whilst highlighting the influence of the halal certification logo. By illustrating actors with similar characteristics, dress and social mannerisms to the Turkish environment, the business can gain a brand identity with collectivist consumers that are influenced by reference groups and also companies that remove ambiguities from their foods consumption. In Turkey, static and homogenous collectivist groups are now seeking what is referred to as networks of shared meaning in their social networks (Bayat 2005). These cultural characteristics provide the business with ample opportunities to promote the line of branded, halal food products by focusing on the trust already established with the halal certificate and translating its influence amidst a collectivist ideology aligned with consumer lifestyle. 6.0 Conclusion If the business wants to satisfy and service the Turkish Muslim population, it will have to change operational strategy to ensure that all najis ingredients are removed from the production process. The company will have to take a more publicised stance on ethical behaviour and values to illustrate the company’s focus on adhering to the law of Allah and providing consumers with trustworthy and clean finished products. In a market with ample profit opportunity, following the aforementioned doctrine of business and operations will provide the brand with positive word-of-mouth and respect that will provide better revenue growth. References Ameur, A.A. (2011). The lifestyle halal in European marketing, Review of Economics & Finance, pp.83-90. [online] Available at: http://www.bapress.ca/Journal-2/The%20Lifestyle%20Halal%20in%20European%20Marketing.pdf (accessed 21 May 2013). Bayat, A. (2005). Islamism and social movement theory, Third World Quarterly, 26(6), pp.891-907. Bearman, P.J., Banquis, T., Bosworth, C.E., Donzel, E.V. and Heinrichs, W.P. (2005). The encyclopaedia of Islam. Brill Academic Publishers. Bennett, R. and Rundle-Thiele, S. (2004). Customer satisfaction should not be the only goal, Journal of Service Marketing, 18(7), pp.514-523. Cheung, F.M, Cheung, S.F., Zhang, J., Leung, K., Leong, F. and Yeh, K.H. (2008). Relevance for openness as a personality dimension in Chinese culture, Journal of Cross-Cultural Psychology, 39(1), pp.81-108. Hawkins, D.I., Best, R.J. and Coney, K.A. (1998). Consumer behaviour: building marketing strategy, 7th edn. McGraw Hill. Hofstede, G. (1993). Cultural constraints in management theories, The Executive Management Journal, 7(1), pp.81-94. Hofstede Centre. (2012). What about Turkey? [online] Available at: http://geert-hofstede.com/turkey.html (accessed 19 May 2013). Library of Congress. (2008). Country profile: Turkey, Federal Research Division, p.12. [online] Available at: http://lcweb2.loc.gov/frd/cs/profiles/Turkey.pdf (accessed 20 May 2013). Pew Forum. (2009). Mapping the global Muslim population: a report on the size and distribution of the world’s Muslim population, The Pew Research Center. [online] Available at: http://www.pewforum.org/uploadedfiles/Topics/Demographics/Muslimpopulation.pdf (accessed 19 May 2013). Riaz, M.N. and Chaudry, M.M. (2004). Halal food production. CRC Press LLC. Shafi, S. and Othman, M.N. (2007). Halal certification: an international marketing issues and challenges. [online] Available at: http://halalrc.org/images/Research%20Material/Report/Halal%20Certification%20an%20international%20marketing%20issues%20and%20challenges.pdf (accessed 22 May 2013). Siddiqi, M.N. (1996). Teaching economics in Islamic perspective. Jeddah: Scientific Publishing Center King Abdulaziz University. Story, L. (2007). Rewriting the ad rules for Muslim-Americans. [online] Available at: http://www.scribd.com/doc/53175833/Islamic-branding (accessed 19 May 2013). Tanyas, M., Serdar, S., Asan, U. and Yilmaz, I.O. (2004). Comparison of transport infrastructure in between Turkey and European countries, International Logistics Conference. [online] Available at: http://www.akademi.itu.edu.tr/serdars/DosyaGetir/5365/TSAY_Fullpaper.pdf (accessed 21 May 2013). Appendix A: Halal Certification Logo Read More