UK vs China: Implications in the Marketing Strategies - Case Study Example

Task For a foreign (from the perspective of the UK) country market of your choice, define a suitable segmentation, targeting, positioning and branding strategy. Consistent with this strategy, and taking into account environmental differences, suggest what adaptations to the marketing mix might be needed compared to the UK Subject: UK vs China: implications in the marketing strategies appropriate for companies that choose to entry the Chinese marketplace; comparison with the British market I. Introduction In order to understand the role of marketing in the performance of a company within a foreign market it is necessary primarily to refer to the principles and the role of marketing as they can be observed in modern commercial markets internationally. In this context, Dobie et al. (2003, 289) came to the conclusion that “marketing communications are an important element of any marketing strategy as it is essential to inform potential and existing customers regarding product/service availability and application, and to persuade potential users to investigate, examine, and/or try the proffered product/ service”. In other words, any company that should be interested in entering a new market, it should examine carefully all the parameters related with the entrepreneurial activity in the particular market taking into account its own potentials and, mainly, its financial strength. On the other hand, it has been noticed by Laforet et al. (1999, 51) that “intense competition, emerging markets, brand extension, acquisitions, and many other activities have left companies with a confusion of products to make and brands to manage; more important than understanding how to manage "a brand" is how to manage the bundle of brand identities in a firms portfolio”. The above study refer mostly to the value of branding as part of the marketing strategy followed by a firm which is interested in activating within a new market (or it is just interested in expanding its activities within its current market). Towards the same direction, Blair et al. (2000, 43) mentioned that “brands should be the main elements of a marketing plan’. Specifically regarding the entrepreneurial activities in China Mcdonnell (2004, 953) noticed that ‘China has been one of the great successes in the developing world over the last two decades’. The above study is mentioned because current paper refers to the marketing strategies indicated for a firm that wants to enter the Chinese market. The particular firm needs to take into consideration not only the characteristics and the turbulences of the specific market but also its potentials to be developed far from its operational centre. II. Marketing strategies for firms in the international market In order to understand the initiatives that are necessary for the specific firm, we should refer primarily to the marketing strategies that are used most commonly in the international marketplace. In this context, Calof (1993) found that ‘intensity (international sales/total sales) is positively correlated with firms size; On the other hand, other studies have found ‘either no relationship or a negative relationship, with small firms having a greater level of international intensity than large firms’ (Calof, 1993, 60, 67). Towards the same direction, a report published by the World Economic Outlook (2002, 82) mentions that ‘trends and cross-county differences in corporate indicators reflect a variety of country-specific institutional and macroeconomic factors, as well as industrial specialization and firm size, with the following key policy implications’. In other words, the development of a foreign firm within the international marketplace is not an issue related only with the global commerce or the interest of the specific entrepreneur but also an issue of national interest (of the host country). Generally, marketing suggested to the firms that are interested in activating in the international market is formulated in accordance with specific principles. In an indicative study of such kind made by Cravens (1989, 18) it was revealed that the marketing strategies appropriate for most firms in the global commercial market are mainly the following four: ‘a) market domination in the firm that tries to achieve or hold the dominant competitive position in an industry: b) a market development strategy seeks to expand market boundaries to generate enhanced performance: c) a market selectivity strategy is defined as trying to dominate one or a few market segments in heterogeneous markets. Finally, a firm may employ a differential d) advantage strategy where it seeks to develop and exploit a competitive advantage in a homogeneous market’. In accordance with the above every firm that wants to enter a foreign market should adapt its strategies (regarding all its activities) to the characteristics of the particular market taking into account its ability to respond to the needs of the specific market. III. Chinese market – appropriate marketing strategies for foreign firms Chinese market has been extensively examined by researchers in terms of its importance for the international commercial activities. We could refer at this point to the study of Ahlstrom et al. (2003, 15) who noticed that ‘Chinas economic reforms and recent accession to the World Trade Organization (WTO) have provided significant opportunities for foreign firms to establish marketing and manufacturing operations there’. In other words, the above market could be an ideal one for foreign firms that want to activate in the international marketplace. The only problem in this case is the choice of the appropriate form of marketing that the firm into examination should follow. Regarding this issue, it could be stated that branding would be an ideal solution. The particular marketing strategy should be ‘divided’ into four parts (in order for its effectiveness to be increased):‘a) Identifying and establishing brand positioning and values; b) Planning and implementing brand marketing programs; c) Measuring and interpreting brand performance and d) Growing and sustaining brand equity’ [1]. Regarding the appropriateness of the above strategy for the Chinese market, it is mentioned by Busenitz et al. (2001) that this strategy could be appropriate for specific type of firms and not for firms of all sizes and structures. More specifically, the study of the above researcher showed that ‘younger business owners with a higher need for achievement, greater commitment, and perceived limitations in physical facilities were more likely to expand’. In a similar study made by Radig et al. (1998, 22) it was found that leaders ‘who are interested in the vast China market should note that the Peoples Republic of China has agreed to participate in the meetings of the International Accounting Standards Committee (IASC) for the first time’. The second of the above studies, i.e. this of Radig et al., does not exclude firms of particular size from the Chinese market. In fact, it can be used in order to ensure the ‘safety’ of commercial transactions related with China. Moreover, it should be noticed that the study of Busenitz et al. presented above cannot be totally accepted because there are no differentiations found in the performance of firms operated in the Chinese marketplace. Rather, it seems that multinational firms have the advantage of the increased ‘security’ of their transactions because of their ‘power of opinion’ towards the Chinese authorities related with the commercial activities. Regarding this issue, it is noticed by Ahlstrom et al. (2003, 12) that ‘foreign firms while trying to enter China they find that laws and regulations were less in evidence than they expected; one problem that emerged is that local government officials and influential individuals could interfere with foreign firms at a variety of levels; although the central government does not approve, it has few mechanisms for stopping them’. Because of the above conditions, it is important for every firm that wants to expand its activities within the Chinese market to apply a particular network of marketing strategies using a specific mode of entrepreneurial activity. For this reason, it is highlighted by French (1997, 10) that ‘a traditional route for private capital moving into the developing world is as "foreign direct investment" (FDI) of corporations setting up local plants’. The above study involves only in the structure of the firm and less to the marketing strategy that could be suggested to this firm if interested in operating in the Chinese market. It seems that the four steps proposed above regarding the marketing plan that could be followed by the particular firm, are valuable also in the case of Chinese market. IV. Chinese market v. British market: differences and similarities regarding the marketing strategies followed by firms operating in the above two markets Chinese market presents a series of differences - regarding the marketing strategies that would be appropriate for foreign firms – if compared to the British market. A common point of both the above markets could be only the branding strategy (as a form of marketing strategy) which would be appropriate for foreign firms that would be interested in entering either the British or the Chinese market. Towards this direction, it has been suggested by Crimmins (2000, 136) that ‘because brand names enhance the value of products and are difficult for competitors to copy, brand names play a critical role in marketplace competition’. However, it seems that the differences – related with the marketing strategies that are more effective for foreign firms – between the British and the Chinese market are more than their similarities. We could indicatively refer to a research made by Yin (1999, 28) who used an extended sample (approximately 873 firms) in order to identify the marketing strategies that would be appropriate for foreign advertising firms that are operating in China. Table 1 – Entrepreneurship and marketing – interaction and limitation (Hills, 1994, 43) The results of the above study are really interested. More specifically, in accordance with the particular research: ‘Out of a total of 186 usable responses, the predominant majority, 140 companies, use the combination strategy, that is, partly localized and partly standardized. That makes up 77 percent of the total. Some 22 international companies, about 12 percent--a significantly lower number--use the specialized or localized strategy in China; while 19 companies, 10 percent, use the standardized strategy’ (Yin, 1999, 28). From a different point of view Brouthers et al. (2002) tried to locate the products and the services that are more ‘known’ (in terms of the sales achieved) in the Chinese market. Their study proved that Chinese market is characterized by the expansion of the stereotype of the ‘commodity product’ (2002, 667). Moreover, it has been found that ‘any differentiation strategy, like branding (and consequentially charging a premium for the branded product), may be very difficult for Chinese exporters to successfully implement because it operates against their stereotype’. On the other hand, in accordance with the study of Reid et al. (2004, 245) ‘despite the liberalization policies that have been championed by the government has a long way to go before it approaches deregulation as this is understood in western market economies’. The findings of this study support the opinion already stated previously that any foreign firm that is interested in operating in the Chinese market should adapt their strategies (and particularly its marketing strategy which is the issue under examination) in the local ethics and culture trying to avoid any opposition with local authorities or local entrepreneurs because such an outcome could adversely affect the firm’s performance in the long term (even in the short term). V. Conclusion Entrepreneurial activities in the global marketplace are a common phenomenon in modern commercial markets. However, the risks related with the activities of this kind can be many. Regarding this issue, it is stated by Wooldridge et al. (2001, 17) that ‘the main challenge for companies in a global economy is to situate themselves in various centers of excellence and weave together different centers of excellence into a global production network’. Under these terms, entrepreneurs that operate in the global market should focus their efforts in the development of the appropriate marketing strategies taking into account the culture of the country involved, the corporate values but also the financial strength of the specific firm in order to achieve the targets set by the particular marketing strategy. Towards this direction, it is highlighted by Aufreiter et al. (2000, 53) that “when traditional marketers think of organization, they mean structure: distinct product, channel, and customer groups focusing on specific functional tasks, such as brand management, customer segment management, and market research’. The above statements are similar with those of Kline (2005, 141) who referring to the valuable elements of marketing, noticed that stated that marketing ‘shapes the relationship between sellers and buyers, generally companies and consumers, in a process that can be both cooperative and competitive’. In any case, the value of Chinese market is accepted by all researchers and entrepreneurs around the world. Regarding this issue, it has been supported in a report published by the ‘Mail’ (28/4/1996) that ‘we still remain pretty ignorant about what makes China tick, and that knowledge vacuum naturally breeds endless speculation - about which group has the upper hand in Beijing, about the armys role, about the balance between economic progressives and political conservatives, about the power of the centre over the provinces’. In other words, even if the future for the foreign firms operating in the Chinese market seems to be positive, it seems that there are many issues that need to take into consideration by every firm that is planning to enter the specific market. The design of an appropriate marketing plan is a prerequisite for the success within the particular market; however the possible outcome of the whole effort cannot be precisely evaluated in advance. We should also take into consideration the fact that any marketing strategy (either in the local or the international market) can hide many risks especially if not structured in accordance with the plan designed by the firm’s marketers. Regarding this issue it has been found by Hills (1994, 44) that a series of marketing mistakes can involve in any relevant initiative: ‘a) Inadequate market assessment resulting in defining the market too narrowly or too broadly; b) Failure to practice segmentation as the market grows; c) Pricing that ignores competing technology and needs of the potential market; d) Failure to understand purchasing requirements of the potential market; e) Failure to understand distribution channel requirements; f) And countless other mistakes’. Moreover, marketers should take into account that all parts of marketing plan should be in accordance with the rules and the ethics that govern the global commercial market - also with the local ethics and culture. This fact involves also in the case of marketing strategies developed for foreign firms operating (or interested in entering) in the Chinese market. The structure and the terms of application of these strategies are going to be examined in any case by the local authorities who have the power to support or decline a marketing strategy which is attempted to be applied in the relevant market. References Ahlstrom, D., Nair, A., Young, M.N. (2003). Navigating Chinas Feudal Governance Structures: Some Guidelines for Foreign Enterprises. SAM Advanced Management Journal, 68(1), 4-15 Aufreiter, N., Lawyer, T., Lun, C. (2000) A New Way to Market The McKinsey Quarterly, 53-58 Blair, E., Dacin, P., Gelb, B., Oakenfull, G. (2000) Measuring Brand Meaning Journal of Advertising Research, 40(5):43-50 Brouthers, L.E., Xu, K. (2002). Product stereotypes, strategy and performance satisfaction: the case of Chinese exporters. Journal of International Business Studies, 33(4), 657-673 Busenizt, L.W., Lau, C.M. (2001). Growth Intentions of Entrepreneurs in a Transitional Economy: The Peoples Republic of China. Entrepreneurship: Theory and Practice, 26(1), 5-20 Calof, J.L. (1993). The Impact of Size on Internationalization. Journal of Small Business Management, 31(4), 60-69 Cravens D. W., Hills, G. E., LaForge, R., Lunsford, D. (1989). Toward a Theory of Marketing Strategy for New Ventures: Some Preliminary Propositions. In Proceedings of the Winter Educators Conference. Chicago: American Marketing Association Crimmins, J. (2000) Better measurement and management of brand value Journal of Advertising Research, 40(6): 136-144 Dobie, K., Grant, J., Megehee, C. (2003). Time versus Pause Manipulation in Communications Directed to the Young Adult Population: Does It Matter? Journal of Advertising Research, 43(3): 281-295 French, H. (1997). When foreign investors pay for development. World Watch. 10(3), 8-18 Hall, B. (2002). ‘A New Model for Measuring Advertising Effectiveness’ Journal of Advertising Research, 42(2): 23-33 Hills, G. (1994). Marketing and Entrepreneurship: Research Ideas and Opportunities. Quorum Books. Westport, CT Kline, J. (2005). Ethics for International Business: Decision Making in a Global Political Economy. Routledge. London Laforet, S., Saunders, J. (1999) Managing Brand Portfolios: Why Leaders Do What They Do Journal of Advertising Research, 39(1): 51-59 McDonnell, B.H. (2004). Lessons from the Rise and (Possible) Fall of Chinese Township-Village Enterprises. William and Mary Law Review, 45(3), 953-986 Reid, D.M., Zyglidopoulos, S.C. (2004). Causes and Consequences of the Lack of Strategic Foresight in the Decisions of Multinational Enterprises to Enter China. Futures, 36(2), 237-248 Wooldridge, A., Micklethwait, J. (2001). The Globalization Backlash. Foreign Policy, September 2001, 16 World Economic Outlook. Essays on Trade and Finance, 2002, 65-107 Yin, J. (1999). International Advertising Strategies in China: A Worldwide Survey of Foreign Advertisers. Journal of Advertising Research, 39(6), 25-36 http://www.1000ventures.com/business_guide/marketing_brands.html [1] Read More