Internation Marketing: The Involvement of Ethnocentrism in the International Marketing Scenario - Term Paper Example

Introduction According to the American Marketing Association, marketing is the processes, set of s, and activities for creating, delivering, communicating and exchanging valuable offerings with clients, partners, customers and the wider society (Robert & Ross, 2003). The term “Marketing” is also used to refer to the act of going to market or shopping. Marketing activities include selling, distribution and advertising, and is as well concerned with developing expectations for future customer wants and needs through market research. Marketing is influenced by subjects such as economics, sociology, psychology, social sciences and anthropology among others. While retail stores and other associated channels provide arenas where final transactions take place and consumption begin, the impact of retailing activities on customer demand has largely been ignored in the theory of marketing, with few exceptions such as the late Hollander whose research has continuously proved to be of great contribution to market researchers. Hollander argued that the fundamental of market theory was aimed at understanding how retailers have acted (and still act) as consumption modifiers and gatekeepers. Likewise, Hunt noted in 1983 that marketing study involves the study of exchange behavior and institutional frameworks through which exchange occur. Hunt’s view was that the study should be a fundamental marketing explanda. Within the marketing arena, slow knowledge change on retailing has been achieved. This however should be the case considering the numerous technological and socio-cultural advancements the world continues to witness every passing moment. One exception for the slowness is the historic nature of most marketing research activities. Hollander noted that much study was a historical or highly “anecdotal”. The call for response to Hollanders challenge was echoed by Alexander in 1997. In Alexanda’s perspective, the importance of retailing and marketing to modern business development cannot be underestimated. Much action needs to be taken in ensuring that theories and frameworks that are developed are beneficial to the growing business world. One area that is of great concern is the issue of ethnocentricity in business and especially in international marketing although it has not been incorporated in previously formulated theories. From the facts discussed above, it is noted that marketing managers and market researchers often fail to take into consideration ethnocentrism in their conceptual frameworks, practice and when developing theories. This has often resulted in problems especially during the implementation of these frameworks and theories. The following sections are dedicated to describing market theory, ethnocentrism and seeks to critically assess the involvement of ethnocentrism in the international marketing scenario. Standardization and Differentiation To a great extent the adaptation/standardization dilemma depends on the organization’s dimensional perspective of its international markets, and the level to which it is committed to meeting needs of its potential international clients. Three main approaches taken in international marketing include ethnocentrism, polycentrism and geocentrism (Robert & Ross, 2003). Different marketing approaches are taken with the aim of penetrating a market; Standardization involves marketing, manufacturing or applying processes in a standardized way. This simply means that the organization carries out its business activities throughout using a pre-determined set of guidelines or processes. Differentiation involves applying different market mixes with the intention of appealing to diverse markets. During differentiation, new products can be produced after research and tested in the regional market in order to counter ethnocentrism. Adapting marketing mix to meet needs of locals in the international market has been successfully done to capture and retain markets. Marketing Mix – 4P Approach Professor N. Borden during the 1960s identified that some company performance actions influenced consumer decisions on whether or not to buy services and goods. He suggested that these actions represented what he called a “market mix”. Later on in the 1960s, Professor E. J. McCarthy suggested that Market Mix comprised of four elements - product, promotion, place and price (Robert & Ross, 2003). The product aspect deals with specifications of actual services and goods, and how it is related to the consumer’s wants and needs. The scope of product aspect of marketing generally includes elements like support, warranties, and guarantees. Pricing is the process of establishing the price of a product which need not be in the form of money. It can be whatever is exchanged for the service or product such as attention, energy or time. Under pricing is also the aspect of product discounting. Distribution or placement refers to the means by which the product reaches the client. This includes retailing and point-of-sale placement. It also refers to the channel through which a service or product is sold (such as retail or online), the industry or geographic region, the segment (families, young adults, business people), and how the environment affects sales of services and goods. Promotion includes sales promotion, personal selling, advertising, branding, publicity and various methods of brand, product or company promotion. These four elements (commonly known as the four Ps) are known to be extremely important when marketers are engaged in formulating a marketing plan. B2B or industrial marketing accounts for the long-term contracts typical in supply chain dealings. Relationship marketing on the other hand attempts to accomplish this goal by viewing marketing as a long term relationship and not just individual transactions. Many companies throughout the world have applied the 4P approach when venturing into new international markets. Drawbacks of 4P Approach One of the greatest drawbacks of the 4Ps as noted by Morgan is that the approach unconsciously emphasizes an inside-out view in which case the marketer looks from the company’s perspective outside. This counter aligns with the essence of marketing which requires that marketing should take the outside-in approach. While this is true, another limitation emerges – the various aspects of ethnocentricity are not at all considered. International Marketing International marketing involves marketing carried out by companies across national borderlines or overseas. International marketing is primarily an extension of techniques that an organization uses in its home country. In other words, it is an extension of exporting where the market mix is adapted simply to take into account the existing differences in segments and consumers. Firms venture into international markets with four key objectives in mind: to reap higher profits, prolong product lifecycles, to reach a bigger market and to keep pace with vigorous competition. International marketing can takes different levels including polycentric or regiocentric, geocentric, focus on individual regions or countries, substantial international commitment and focus on segments among others. International marketing in practice is much more challenging than simply marketing a business product to neighboring countries. While domestic marketing approaches may be applied during international marketing, they are not guaranteed to succeed simply because they work in the domestic market. The company involved must consider customs, ideals and language barriers in the market it is encroaching. The macro-environment which includes legal, political, financial, economic, technological and social-cultural environment must well be analyzed before coming up with an approach to cut a niche in the market. This requires tailoring strategic marketing strategies with an aim of attracting the target client. This is done in recognition of the fact that people across the world are in need of different products, and may or may not be ethnocentric. Failure to do this can easily lead to business failure that may result from among other reasons ethnocentrism. Companies such as Coca-Cola, Cadbury, Gillette, Schweppes and BIC have brands which are internationally recognized. While these companies produce goods that are targeted at an international audience by using an effective marketing mix, there is need for the companies to understand differences that result from regional changes. These companies have managed to penetrate markets despite the challenges that are commonly seen in international markets. It is this underlying fact that forms the basis of international marketing. Organizations must accept differences in customs, values, currencies and cultures. Just like marketing environment is assessed at home, the potential of markets overseas must be carefully scrutinized. The market size, type and degree of competition, product differences, promotional differences, price and barriers of trade need to be analyzed on top of the cost-effectiveness of using various modes/types of transport. Further the organization needs to asses the investment scale considering both long-term and short-term targets for adequate returns. Ethnocentrism Ethnocentrism refers to the tendency to view the world primarily from one’s own cultural perspective. Ethnocentrism in most occasions entails the belief that a person’s ethnic group or race is the best, most important or the group’s culture is superior to those of other groups. Ethnocentrism has for long been a universal syndrome of behaviors and attitudes (McArthur 2005). Not even the business platform is spared by ethnocentrism and its effects. Behaviors that are associated with ethnocentrism are displayed in form of cooperation with in-group members while being non-cooperative with out-groups. Membership in the ethnic group is usually evaluated by considering one or more characteristics that are observable. Having an ethnocentric ideology makes people judge other groups in comparison to their individual culture or ethnic group, especially in respect to customs, language, behavior and religion. The out-group is treated as inferior and contemptible with the individual seeing his/her own value standards as universal. Ethnocentrism has in many occasions been implicated in ethnic conflict, war, in voting and customer choice with its characteristic display of out-group hostility or in-group favoritism. Both out-group hostility and in-group favoritism tend to grow stronger in competitive situations and in cases where external threats are witnessed (McArthur 2005). In marketing, ethnocentrism may take two forms; customer ethnocentrism and marketing ethnocentrism. Consumer Ethnocentrism Consumer ethnocentrism refers specifically to views of ethnocentricity held by consumers in a country towards products from another. Consumers may also believe that it is immoral and in appropriate to buy products that are manufactured or produced in another country. This of course translates to reduced sale of products from a foreign producer or manufacturer Purchasing products from foreign countries may be seen as improper by the in-group as it costs domestic jobs and possibly hurts the economy. Sometimes this goes to an extent where purchasing foreign products is seen as utterly unpatriotic. Customer ethnocentrism makes members of the in-group have feelings of belonging and a sense of identity. The influence of ethnocentricity is usually strong where the in group is somehow cohesively united. People who are not ethnocentric (polycentric people) tend to evaluate products on the basis of their merit and exclusive of country of origin, and sometimes even prefer foreign products to those that are locally produced. According to surveys, young people tend to be less ethnocentric compared to their older counterparts. Also, males, the better educated and those with relatively high incomes tend to be less ethnocentric. It is also known that determinants of consumer ethnocentrism vary from culture to culture and from one country to another, with patriotism being one of the important motives behind it. Measuring Consumer Ethnocentrism With the realization of the strong influence of ethnocentrism, there arose need to find a way of evaluating its presence and strength. Sharma and Shimp in 1987 developed customer ethnocentrism into a construct that is measurable through the use of CETSCALE (Consumer ethnocentric tendencies scale) which was later validated in the United States. Numerous versions of the CETSCALE have been developed and used successfully. Both the 10-item and the 17-item versions have been tested and found reliable across different cultures. Practical Cases of Customer Ethnocentricity Brodowsky in 1998 studied consumer ethnocentrism in the US among car buyers. He found a strong positive correlation between country-based bias and high ethnocentrism as he evaluated automobiles. Brodowsky suggested that understanding consumer ethnocentrism plays a critical role in understanding effects of country of origin. A study conducted by Susan and Dina in an Australian international airport found that consumer ethnocentrism was much at play in determining even intangible product offerings such as airline services. During the study, three main objectives were set; to identify a number of attributes on customer preference for international air services, to identify any tendencies towards ethnocentricity and to identify the influences of cultural similarity and dissimilarity on customer air service preferences. What this study and other like studies have revealed is that ethnocentricity is not restricted to geographical regions but crosses over lands and seas to global levels. Minor adaptation to the conceptual framework applied in various other industries would also give similar results. Also, the level of ethnocentricity varies depending on a number of factors. Marketing ethnocentrism Ethnocentrism may also take a different form in which marketers or organizations consider overseas operations of little importance. In this case, international marketing plans are developed at home with little or no market research. In such cases, the marketing mix takes a standardized form and no real attention is assigned to different customer needs or market requirements (Susan & Dina, 2005). An ethnocentric orientation is guided by a concept of seeking to expand the domestic market. It this orientation, domestic techniques, personnel and strategies are regarded as superior with international customers being considered to be secondary. The ethnocentric view also regards international markets primarily as useful outlets for domestic overproduction (Susan & Dina, 2005). When an organization is ethnocentric in its marketing strategy, its marketing plans will be developed by the international division in-house. Conclusion Designing retrospective studies which can be used for developing theory demands a theoretical starting point first of all. Likewise, international marketing requires a thorough analysis of the macro-environment of the international market. Application of traditional concepts, frameworks and marketing tools may not work in some international markets. During international marketing, there is need to consider all aspects of the market and the different forms of ethnocentrism that may be at play and seek ways of dealing with it. Consumer ethnocentrism, for example, may be countered through blending strategic marketing options such as differentiation and adaptation. References McArthur E 2005 Using Historical Research to Advance Marketing Theory and Practice University of Canberra Dale Miller Robert A and Ross A 2003 The evolution of ethnocentric behavior http://74.125.47.132/search?q=cache:-WXESM5OBrMJ:www-personal.umich.edu/~axe/research/AxHamm_Ethno.pdf+ethnocentrism&cd=8&hl=en&ct=clnk Scope concepts and drivers of international marketing 2002 http://74.125.47.132/search?q=cache:W_6UelyiKCcJ:faculty.washington.edu/giambatt/mktg470/Lascu_Chapter_01.ppt+countering+ethnocentrism+in+international+marketing&cd=5&hl=en&ct=clnk Susan F and Dina J 2005 Country of origin and ethnocentrism influences on consumer preference for a service provider http://conferences.anzmac.org/ANZMAC2001/anzmac/AUTHORS/pdfs/Freeman.pdf Vink J 1992 Historical perspective in marketing management explicating experience. Journal of Marketing Management 8 Read More