Peculiarities of Formulating Marketing Strategies in Overseas Countries - Research Paper Example

 International Marketing Introduction Globalization and Liberalization has revolutionised the whole concept of international business and marketing activities. Corporate companies and other big organizations are looking for overseas opportunities at present. Big business tycoons have already experienced saturation in their domestic countries and they were waiting for an opportunity to internationalise their business. Globalization has come at the right time for them. Liberalized rules and regulations for the entry of foreign direct investments (FDI) by many of the countries made the path easy for the multinational companies to exploit the possibilities of Globalization. Offshoring and outsourcing are common business practices at present and adopted by MNC’s to cut down their expenses and to increase their profit by exploiting cheap labour and possibilities from other countries. International marketing is not easy compared to domestic marketing because of the social, political, environmental, legal, cultural and communal differences of the target country. Careful planning and analysis of the target market is essential before entering in to the foreign market. The organization planning for internationalization must custom made their strategies for the smooth operations of their marketing in the target country based on the differences mentioned above. Even for the same product different marketing strategies are required for each country because of the above differences. Only those entrepreneurs, who are willing to study these differences and make adequate changes, will succeed in their overseas endeavours. . “Globalization requires many internal modifications like changes in philosophy concerning local autonomy, concern for local operating results rather than corporate performance, local strategies designed for local rather than global competitors etc.” (Marketing across cultures, p.194, n.d) International Marketing strategies need to be custom made not only for each country, but even for each states or regions based on the cultural, communal, political social and economical differences. China and UK are two totally different countries. China is situated in Asia and ruled by the communist regime whereas UK is situated in Europe, ruled by the democratic regime. Moreover, most of the UK population are Christians whereas in China religion and religious activities are restricted even though majority are Buddhists. China and UK have many differences, socially, politically and culturally. This paper is divided into two parts. In the first part possible marketing strategies of running coffee shop business in these countries are explored. For convenience, the American coffee business company Starbucks has been taken as a reference point in order to compare their probable marketing strategies in UK and China with respect to that in America. In the second part marketing strategies for running of theatre business has been explored. Marketing environments for coffee shops in UK and China Coffee is an international drink and in most of the countries it is accepted as an energy booster. Caffeine which contains in the coffee has the quality of revitalising the energy which was lost during a day’s hard work. Even though of variety of coffee drinks are available in different countries, the hot coffee seems to be the most popular one. Coffee is popular both in UK and China, but the functioning of the coffee shops may be slightly different in these countries. Suppose, Starbucks, the world famous American coffee business group, is planning to establish their networks in China and UK. It is not possible for them to use the same marketing strategies in these countries even though they are marketing the same product, the coffee in these countries. Product may be the same, but the markets are different. Starbucks must focus on the market difference in these countries before entering into these overseas markets. Economic stability is the first thing Starbucks needs to analyse before entering to Chinese and UK markets. China has started its economic slightly later compared to UK. The reforms in China have started in the 70s and 80s only. Initially, China focussed mainly on agricultural sector for the economic development, but later they realized the need for industrialization for economic development and started to concentrate on mass production of goods in order to cut down the prices in order to compete in the international market. Chinese products are at present challenging all the other competing products from different countries in international market with respect to the price. Chinese products are the cheapest in the market and many other international manufacturers found it extremely difficult to compete with the Chinese products. Thus Chinese economy has developed a lot and as per the article, China’s Economic Rise—Fact and Fiction, written by Albert Keidel, China’s economy will surpass that of the United States by 2035 and be twice its size by midcentury. (Keidel, 2008) Even amidst the global economic recess Chinese economy has stood upright. The growth of a nation towards an economic power can be analysed based on whether the state in question is much more economically and politically present in more places around the globe than before. “China’s increasing economic activities in Africa and Latin America proves beyond doubt that China is actively participating in global issues more than ever “(Johnston, 2008, p.6) On the other hand, same thing cannot be said about the UK economy. UK has suffered major setback along with United States as far as the current economic crisis is concerned. Lot of UK firms were destroyed and some of them on the verge of destruction. Even though, the UK economy has started to show the signs of a revival, many economists believe that it will take at least couple of years more before the economy will back on the right track of growth. Starbucks has already faced saturation in America and their scope for further expansion in American market is limited. American economy and UK economy are almost similar and hence Starbucks can think of utilizing the similar marketing strategies in UK, which was succeeded in America. But Chinese economy is on the verge of a boom and Starbucks can think of establishing more coffee shops in China compared to UK. Moreover, China has the number one place in the world as far as the population size is concerned which is a critical factor to be considered especially when we analyse the coffee drinking habits of global public in general. China’s banking sector was able to support the financing of infrastructure development and other public utility segments necessary for sustained rapid growth even amidst the current crisis. (Keidel, 2008) On the other hand, even big financial institutions like Lloyd TSB, is struggling hard for survival as per the reports from England. Thus the Chinese economy and financial institutions were seem to be in better shape compared to that in UK. Starbucks must consider these aspects also while formulating their marketing strategies in these countries. Political problems are less in China compared to UK because of the tight communist regime. Political agitations will be tackled with iron fist at the beginning itself in China where as in UK because of democracy it is not possible to suppress the political agitations if it happens. Freedom of expression is controlled in China by law in order to sustain the political interests of the communist regime. Even the internet contents were censored in China. On the other hand, freedom of expression is lavishly allowed in UK because of the secular democracy it follows. So Starbucks must take extreme care formulating their marketing strategies in China. Any content in their advertisements or marketing campaign, which has direct or indirect negative reference of the country’s communist regime will be tackled severely by China. On the other hand, UK has no such problems and almost every marketing campaign Starbucks used in America can be used in UK as well without going for in depth analysis. Dr. Xu Cheng Gang, a lecturer at the London School of Economics, argues that, with China in the midst of economic upheaval, the government continues to allocate resources, placing officials at the center of the market and enabling them to channel profits into their own pockets.” (Yao, 2002) “The root causes for China’s rampant corruption are due to, partial economic reforms, lax enforcement efforts, and reluctance by the Communist Party to adopt political reforms” (Pei, 2002) Corruption seems to be the biggest factor which separates China and UK apart from the difference in political administration. Even though, China is supposed to be one of the most disciplined countries in the world, corruption seems to be happened in China at higher rate than in other countries like UK. Starbucks must remember that in order to get green signals for their marketing campaigns in China they have to approach the bureaucrats through the back door. But in UK, the case is entirely different; Starbucks can use the front door itself. Income distribution in Chinese society is not adequate even under the communist regime compared to UK. “The per capita income of China is only about 2,000 US dollars, which is fairly poor when judged against global standards. In per capita income terms, China stands at a lowly 107th out of 179 countries.” (Economy watch, n.d) Per capita income is a strong factor when we consider the life styles of people. Peoples staying countries like US and UK where per capita income is more compared to China, their life styles and drinking habits will also be on the higher sides compared to China. Because of the political and ideological differences between China and UK, the business concepts are entirely different in these countries. Chinese people have lot of differences compared to the UK public. Chinese people are more disciplined whereas the British people always enjoy lavish freedom in every aspect of their life. Because of the cultural and communal differences, the eating and drinking habits of both the Chinese people and the British people may have lot of differences. The cultural dimensions of international marketing or business are well formulated by former professor of Eastern Michigan University, David A. Victor. He has developed a model called LESCANT model for tackling the problems arises due to the cultural variables while engage in international marketing activities. These variables are Language, Environment, Social organization, Contexting, Authority, Nonverbal behaviour, and Temporal conception. (The cultural variables for development of models of culture, n.d) Advertising is another marketing function which might be different in China and UK. Most of the organizations select some celebrities as their brand ambassadors for advertising campaigns. For example, David Beckham might be a better choice in UK whereas he might be a bad choice in China. In china, Jackie Chan might be a better choice. Thus the advertising activities must be customized for each country in order to conduct the marketing activities successfully. LESCANT model and international marketing Language is an important segment in every communication process, especially in international marketing. English is the language in UK while Chinese is the language in China. So Starbucks’ marketing professionals may not face language problems in UK whereas in China, most of the people are unaware of English language and hence they must learn the Chinese language in order to communicate properly with the Chinese people. The suggestions and opinions of each party in marketing negotiation process could be effective only if both the parties don’t have a language barrier. China and UK have different environments compared to America though UK environment might have lot of similarities with that of the US environment. So the marketing professionals going to these countries from America must know the environmental differences well in order to succeed in their mission. The working culture, environment, population size, technology and natural resources etc will be different in China, UK and America. “Whenever two parties negotiate, the entire process occurs under two umbrella contexts, environmental and immediate” (Phatak & Habib, 1996) Most of the social organizations in China have limited freedom. The social activities in Chinese society will be scrutinised by the governmental agencies in order to find out whether anything wrong in it against the Chinese communist party. The marketing gurus must always remember those aspects while formulating their marketing strategies for China. “Communication can be seen as being high or low in contexting.” (Victor, 2009) It is difficult to have two parties with different cultures have identical level of knowledge or contexting in a conversation between them. It depends on the level of information or knowledge possessed by the two parties in conversation. One party will act as the higher contexted and the other, the lower contexted, in a communication process. Americans, British and Chinese have different levels of contexting and the knowledge of these differences is essential for the marketing professionals going on deputation to UK or China from America. Authority seems to be a critical factor in a communication process. The level of authority will be different for different cultures. Authority and power seems to be two sides of the same coin. Leadership definitely needs power to execute their functions. Leadership styles and functioning will be different in England, America and China. Here also because of the cultural similarities England and America might have lot of similarities compared to China. “Much of nonverbal communication may be broken down into six areas: dress; kinesics, or body language; oculesics, or eye contact; haptics, or touching behaviour; proxemics, or the use of body space; and paralanguage. Any one of these areas communicates significant information nonverbally in any given culture” (Victor, 2009) Non-verbal communication methods like the eye contacts, gestures etc will be different in China and UK. In fact, in international marketing, the amount of nonverbal communication may exceed the verbal communication. Gestures, facial expressions and body languages can communicate many things which were not uttered. Temporal conception is all about the understanding of time. Time may not be considered as a critical factor in Chinese culture whereas in UK time has significant role in marketing or business activities. British people are so particular about the time and the timely delivery of services. “The concept of time can be classified into two categories; Monochronic time (M-time) and Polychronic time (P-time)” (Victor, 2009). M-time is emphacise one thing at a time while P-time looks for several things happening at the same time. P-time put more emphasize on human relationship rather than a task or job alone. Also P- time concentrate more on long term relationship. Local adaptation or Global standardization strategies for theatres in UK and China Global standardization is a process of unification of business standards on a global perspective. In such standardization process the global customers will be targeted. But in local adaptation the business is focussing entirely for the customization standards flexible to the local standards and peculiarities. After the principles of the traditional international marketing concept, a pronounced global marketing program standardization-- understood as using a common product, price, distribution and promotion program on a worldwide basis--does not seem adequate. Given these differences in market conditions, a standardized strategy would not seem to be an effective strategy. By employing a more responsive international differentiation strategy, the different levels of market development and the differences in household income, customer expectations and usage patterns could be better addressed. The key to a better understanding of the standardization issue lies in a broader perspective. An exclusive market-oriented perspective in which success in a foreign market is attributed to a high responsiveness to the local business environment and market situation does not suffice to explain strategic decisions of international firms. (Schuh, 2000) Because of the disparities associated in each country and culture, a standardized business strategy seems to be impossible in the global market. The leading writing equipment manufacturing company Parker Pen has suffered a lot because of their effort to standardize marketing strategy on a global perspective. They though same product needs same marketing strategy all over the world and tried to use the same marketing strategies everywhere and failed miserably. They failed to analyse the differences in global markets, politically economically and culturally. “In early 1984, the parker company has launched a global marketing campaign in which everything was to have one look, one voice, and with all planning to take place at headquarters. Everything was connected with the selling effort was to be standardized. This was a grand experiment of a widely debated concept.” ((Marketing across cultures, p.194, n.d) Parker Pen Company has misread the possibilities of globalization. They interpreted globalization as a process of standardization. Even among rich countries sometimes the same product may not move equally well. “Globalization requires many internal modifications like changes in philosophy concerning local autonomy, concern for local operating results rather than corporate performance, local strategies designed for local rather than global competitors etc.” (Marketing across cultures, p.194, n.d) In a globalized business environment the local features must be given prominence in order to sell the product well. In some countries or communities, the purchasing attitudes of consumers may be different. For example, in a country like India, which consists of 25 states of different cultures, language and identity, the same selling strategies may not work equally well everywhere. The northern regions of India consist of cricket crazy illiterate people mostly. So any marketing campaign with the help of cricketers may get a big response in these areas. On the other hand on the southern region, football is a favorite game the footballers are superstars there along with film personalities. So any advertising campaign using the above celebrities will work well in the southern region compared to the campaign using the cricketers. Parker pen failed to consider such regional or cultural aspects in their marketing strategy and they used the same strategy everywhere which resulted in a big failure. So theatre business either in China or in UK should address the local standards rather than the international standards. China is a country which has limited access to the international visitors or tourists. The tight control of human rights prevents foreigners from visiting this country or staying in this country for a longer period. Moreover, most of the Chinese people don’t have enough international awareness and their knowledge about the outside culture is limited. So theatre business entrepreneurs who are planning to enter China for business expansion should think about local adaptation rather than a global standardization. The content of the films will be tightly scrutinised by the Chinese authorities and hence the theatre business entrepreneurs must ensure that the content of the films exhibiting in China are in line with the interests of the Chinese political administration. On the other hand, UK is a country which has no such restriction on the content of the films exhibiting in the British theatres. UK is a country where lot of foreigners are staying in harmony. Lot of Indians, Pakistanis, and Srilankans like people are staying in England and any entrepreneur who is ready to establish theatre business in UK can keep an eye on the interests of this expatriate community. Moreover, even the British people are keen in watching foreign films because of their increased awareness about international culture. But even amidst the above facts, still local adaptation is better even in UK as far as theatre business is concerned. Lot of international film festivals are being conducted in UK because of the UK people’s interest in knowing what the new trends are in international community as far as films are concerned. On the other hand, I never heard about any international film festivals happened in a Chinese territory. China looks suspiciously at the events happening around them. They see dangers or the involvement of westerners in most of the unhealthy incidents happening in and around their country against the socialist regime. Chinese film personalities like Jackie Chan have lot of admirers in international world whereas same thing cannot be said about Brad Pitt or Amitabh Bachchan in China. In short, local adaptation seems to be the better choice not only for theatre business but for any other business endeavours in foreign countries. Conclusions International business is different from doing a domestic business irrespective of whether it is a coffee shop business or theatre business. Local peculiarities must be considered while formulating marketing strategies in overseas countries rather than the domestic marketing strategies. No two individuals are alike; same way no two countries are alike either, politically, economically, culturally or communally. The buying habits of consumers are different because of the above differences and hence any marketing campaigns in foreign countries must address the cultural differences like language, environment, social organizations, contexting, authority, nonverbal communications and temporal concepts. In short, local adaptation seems to be the better marketing strategy than global standardization as far as international businesses are concerned. References 1. Economy watch, (n.d), China Economy, Retrieved on August 20, 2009 from http://www.economywatch.com/world_economy/china/ 2. Johnston Alastair Iain, (2008), Is China Rising? Retrieved on August 20, 2009 from http://www.mtholyoke.edu/global/assets/CGI/Johnston_paper.pdf 3. Keidel Albert (2008), China’s Economic Rise—Fact and Fiction, Retrieved on August 20, 2009 from http://carnegieendowment.org/publications/index.cfm?fa=view&id=20279&prog=zch 4. Marketing across cultures,(n.d) Retrieved on August 20, 2009 from http://www.sam.sdu.dk/undervis/90434.E04/Spoergsmaal_til_Case_Tekst_Parker_Pen.pdf 5. Pei Minxin , (2007), Corruption Threatens China’s Future, Retrieved on August 20, 2009 from http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=19628&prog=zch 6. Phatak Arvind V. , Habib Mohammed M. (1996), The Dynamics of Iinternational Business Negotiations, Retrieved on August 20, 2009 from http://findarticles.com/p/articles/mi_m1038/is_n3_v39/ai_18348264 7. Schuh, Arnold, (2000), Global Standardization as a Success Formula for Marketing in Central Eastern Europe, Retrieved on August 20, 2009 from http://www.accessmylibrary.com/coms2/summary_0286-28092441_ITM 8. The Cultural Variables for Development of Models of Culture,(n.d) Retrieved on August 20, 2009 from http://72.14.235.132/search?q=cache:sXmyWj1jutoJ:www.tulips.tsukuba.ac.jp/limedio/dlam/B16/B1698740/5.pdf+7+cultural+variables+from+Lescant&hl=en&ct=clnk&cd=3 9. Victor David A. (2009) Cross-Cultural/International Communication Retrieved on August 20, 2009 from http://www.enotes.com/biz-encyclopedia/cross-cultural-international-communication 10. Yao Shuntian , (2002), Privilege and Corruption: The Problems of China's Socialist Market Economy - New Perspectives on Transition Economics: Asia, Retrieved on August 20, 2009 from http://findarticles.com/p/articles/mi_m0254/is_1_61/ai_84426602/ Read More