Cross-Cultural Administration, Mattel Inc Fall - Essay Example

Case-study Global marketing requires marketers to behave in a way that is global and local at the same time by responding to similarities and differences in world markets. As the Coca Cola Company has demonstrated, the ability to think globally and act locally can be a source of competitive advantage. Greater deal of time and money spending is sometimes necessary to become an insider (Lipman, 1988). In the similar way Mattel's marketing strategy has been executed. Mattel's has high quality standardized world product (Levitt, 1983) but it has adopted different advertising practices, changes appearance of the product, spend lot of time and money especially in Japanese market to have its own distribution channels and structure to become successful in its Barbie's marketing does not mean widening business horizons to encompass the world scanning the opportunity and treat (Morrison, 1991; Kenichi, 1995). The decision to enter markets outside the home country depends on a company's resources, managerial mindset and the nature of opportunity and threat. Mattel's best-known brand Barbie and its enviable global position has resulted in part from the company's willingness and ability to back its flag ship product with a strong local marketing effort. Mattel has positioned its brand 'Barbie' as a global brand, independent of any country of origin link. Barbie is a Barbie wherever it is made. Mattel has adopted a geocentric orientation i. e., it is adopting a worldview that sees similarity and differences in markets and countries and seeks to create a global strategy that is fully responsive to local needs and wants. Mattel's global marketing strategies for Barbie converges to market needs and wants, technologies advancements and socio-culture integration. A global marketing strategy is built on an information system that scans the world business environment to identify opportunities, trends, threats and resources. A truly global company leverages its skills and focuses its resource to create superior perceived value for customers and achieve competitive advantage. Mattel has adopted the above strategies to become successful in global market. 2. As Theodore Levitt (1983) in his article" the globalization of markets" in the Harvard Business review argued that around the globe using standardized high quality world products and market then around the global using standardized advertising, pricing and distribution. But most of the organization found it, just a bunk. However success is not solely based on a standardization of marketing elements. To be successful in different market could be achieved only by spending a great deal of time and money to become an insider. That is, the company built a complete local infrastructure with its sales force. Now exactly the same path Mattel has adopted to become successful in Japanese market. Initially Mettle's Barbie has failed is John W. Amerman former CEO of Mattel state 'they did not know what that product was, and it didn't work" (Golab, 1994). Even availing the services of the consultant and modification of product looks do not have sufficient effect. Even the second partnership with Bandai didn't worked property. Finally in 1991, Mattel's own sales and marketing staff and office plays the trick and after spending more time and money, in 1994, Mattel has achieved some success and made profit in Japan with sales almost doubling since reintroduction (Golab, 1994). Mattel introduced its own American Barbie with long hair " Star princess Barbie" which becomes one of the top selling dolls in Japan (Thornton, 1994). Apart from time and marketing infrastructure development Mattel has conducted a consumer research in the Japanese market to understand the actual likings of the target customers. To survive in this new globally competitive world we had to modernize. Information technology is the glue for everything we do. For global marketer, information is one of the most essential requirements for decision-making (Reid, 1995; Green and Eric, 1975; Mullen, 1995). So market research to find out information about buyer behavior and preferences and the overall business environment is vital for effective managerial decision-making. Now when Mattel Inc, conducted the consumer research they found that their customer's have different preferences to what has been perceived earlier (Broegger, 2003). Mattel has appointed Japanese native to look after the Japanese operations, which also helps them to integrate with the native country. Japanese leadership is vastly different from American style of leadership. Japanese leadership must have different qualities such as generalist, group oriented, cooperative with long tern perspectives (Punnett and Jain, 1989). So developing local sales and marketing structure, appointing a native head, conducting an extensive research proved that these special tactics plays significant role to becoming successful in Japanese Market by Mattel. Mattel's efforts to expand its product range and successfully collaborated with Bandai to form a marketing, sales and product development alliance. To achieve success in Japanese market, Mattel has adopted an altogether different approach. It has created its own sales and marketing team and structure, conducted market research to know the customers behavior and preferences, appoint native Japanese as in charge and therefore developed a new distribution system. 3. Barbie is facing problems with pricing in Latin America. Currency fluctuation and massive changes in exchange rate created a new type of problem. American values and it significantly decreased the buying power of natives in higher cost of Barbie and lower income of people, customers turned towards locally made dolls called "Susi". Basically it's a cheap, local made doll, manufactured by Estrela. Even looks and features have been changed according to aesthetics of the customers. Lower prices and local looks posed a real threat to Barbie. One thing more to mention that promoter of 'Susi' is one of the company's erstwhile distributor. So finally Mattel has to solve this low cost problem. Now if we view broadly, the pricing policy should be of three types. The first type can be called / extension / Ethnocentric (Malnight, 1995). This pricing policy requires that the price of an item be the same around the world. But this type of pricing does not respond to the competitive and market conditions of local national market (Samli, A. Coskun, and Laurence Jacobs, 1994; Simon, Hermann, 1992). The second pricing policy can be termed as adaptation / polycentric. This policy permits subsidiary or affiliate to establish whatever price they feel is most desirable in their circumstances. The third approach to international pricing can be termed as invention / geocentric using this approach, a company neither fixes a single price worldwide nor remains aloof from subsidiary pricing decision but instead strike an intermediate position. These situations include local costs income levels, competition and the local marketing strategy. Local costs plus a return on invested capital and personnel fix the price floor for the long-term. However In the short term, a company might decide to pursue a market penetration objectives and price is less than the cost-plus return figure using export sourcing to establish a market. Another short-term objective might be to estimate the size of the market at a price that would be profitable given local sourcing and a certain scale of output. If the market accepts the prices and product, the Mattel should build a local manufacturing facility to further develop the identified market opportunity in a profitable way. The final factor bearing on the price decision is the local marketing strategy and mix. Price must fit the other elements of the marketing program. 4. Mattel has a product "Barbie" exclusively for children. As we know that children are the consumers/customers, influence of national culture on them is more visible. At the initial phase of their life, their personality and thought process is bound to influence by their family, mass media, peer group as well as teachers (Rose et al., 2002). So nationalistic influences on children behaviour is more visible. Children of each region/nation have different likings and orientations. They always want to identify the objects especially dolls with their cultural settings. Children of Middle East, Japan, India and number of nations have different aesthetic sense and the products, which could relate them to common national culture, must have greater acceptability. But some studies find differences among its young people to be subsiding as their taste in music, sports and cultural-social activities become more similar (Bigot, 2000; Belch, 1985; Jenkins, 1979; McNeal, 1998). They tend to value autonomy, reject consumer stereotypes and appreciate exclusive products ("When fragmenting works better than segmenting", 1986). A product being considered for marketing in a foreign country should be assessed for its fits with the country's value system. Sometimes the 'fits' may be with physiques rather than values. In case of Mattel's Barbie, it is the physique, which needs to be changed according to national preferences especially social and cultural. One study indicates that 80% of imported products require some adaptation (Alice Rudolph, 1986). Even the product looks package design, colours, and package symbols etc. plays crucial role in product selection. In case of Mattel's Barbie, it has changed the looks of the doll according to national preferences. Through due to integration of world order, explosion of information technologies and Internet national preferences have been merged but in more traditional societies like middle east, Asia still the children's toy preferences are governed by national culture. 5. Global marketers must recognize and deal with the differences in the social and cultural environments of the world markets. Hofstede (1980) defined culture as " the collective programming of the mind that distinguishes the member of one category of people from those of another". Through increasing travel and improving communication means that many national attitudes towards style in clothing, colour, music, food and drink are converging but even then in more traditional society this adaptation /assimilation process is a bit slow. As in the case of Mattel's failure in Middle East attributed more to misread of cultural aspects. Population of Middle East is predominantly Muslims and having more traditional and conservative outlook, So Barbie's dressing outfits could not be acceptable to the children as well as their parents because it directly opposes to their conventional style. So failure in Middle East is attributed more to cultural differences. In order to explain the cultural differences Edward T. Hall (1976) has suggested the concept of high and low context as a way of understanding different cultural orientation. In a low context culture messages are explicit, word carry most of the information in communication. In a high context culture less information is contained in verbal part of the message. Japan, Middle-East in general and other such traditional societies are high-context cultures place a great deal of emphasis on a person's values and position and place in society. In case of Mattel's launch of Barbie in Middle East with western outfits and values was not that much successful because family values, cultural differences and modesty etc. have more importance in their society and consumer preferences takes shape accordingly. The other key factor is that the country history and how people perceive another nation's culture motivations and behaviours. It has clearly seen that American culture encountered great difficulties in the Middle East due to its political and economic angle. People in the Middle East saw it as invasion that malign their culture and so they are more opposed to American culture. It could be very much seen in Arab league steps to counter Barbie affects on their culture. Douglas Jehl (2002) of Cairo Journal states' to put it plainly the plastic icon of western girlhood is seen in the Middle East where modesty matters, as something of a tramp. In both Egypt and Iran their government agencies set on reducing the impact Barbie in their nation (Masoumeh Rahimi). "I think that Barbie is more harmful than the American Missile" is enough to depict the attitude of Middle East towards American products, which have potential to affect values and culture. So if we want to do business across cultures, we must learn the attitudes, social behaviours and cultural variations. One must have proper understanding of cross-cultural aspects. Every global marketer should strive to suspend judgments and simply listen, observe, perceive and take in the facts of other culture. 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