Market Entry Strategies
A cultural assessment will reveal a modal pattern, but a truly useful evaluation will also expose considerable variations within a group or a subset group. In fact, for some cultural characteristics, there may be a wider range within a given society than between societies. For example, young professional 25-30 year olds in Spain, France and Italy may have more in common, in terms of values, tastes and aspirations, than with their non-professional compatriots of the same age group.
A cultural evaluation can be either static or dynamic. A static assessment serves only to identify the differences in variables between cultures, whereas a dynamic appraisal seeks to indicate which variables will change in the future, in what order and with what speed. For the international retailer, the identification of which changes would be readily accepted or rejected can mean the difference between success or failure.
The analysis of a culture to ascertain the peculiarities of the population can be extremely expensive, time-consuming and unwieldy. Therefore, having conducted a rapid survey of key cultural elements of a nation, the international retailer with limited resources may choose to carry out a Partial Cultural Assessment which focuses on key elements fundamental to the success of its operations in any country.
Table 2 shows several cultural factors, which could frustrate the progress of the operations in the event of a retailer failing to obtain accurate data from the assessment of the foreign markets; if a single element is incorrectly assessed, the effectiveness of the strategies will be diminished. Retailers entering a foreign market, whether by direct investment, or through alliances or acquisitions (Wallmart buying Asda in UK and Woolco in Canada) must have a format which has proved competitive in other markets.
This format should include • merchandising and assortments • a pricing pledge • display • location • service quality • Building a consumer database. Cultural Implications for New merchandise The problems many UK retailers have, when they open up outlets abroad, is due to their very success in the UK. Formats and products have been developed specifically for UK consumer types, which do not necessarily suit other markets.
Although fashion at the branded and medium/upper levels is quite international, at mass merchandise levels, national tastes are more diverse. One might also cite the failure of C&A in UK in 2000 (controlled from the Netherlands). The nature of merchandise desired in a particular country or community is governed by local tastes, values and government regulations. Industrial goods such as steel, chemicals, computer and agricultural equipment tend not to be culturally bounded.
However, consumer goods such as food and drinks, cosmetics and pharmaceuticals tend to be culturally centred and, therefore, require marketing adaptation for foreign markets, even if the product is a standardized brand. The degree of marketing adaptation will depend on the dichotomy between the home and host culture and the host country’s economic circumstances. When designing merchandise for a particular market, manufacturers have two essential tasks to perform.
Firstly, they must analyze consumers in foreign markets. Secondly, they need to tailor the company’s products, packages and promotions to local consumers and the actual environment. When doing this, the research team must take into account the availability of indigenous raw materials, national legal requirements (for example, standard unit measurements) and any other factor of local relevance.
Peculiarities of national tastes, values and traditions, imply that a retailer cannot standardize many product ranges; for example a UK retailer of television sets, hoping to supply the French consumer has to be aware that the receiving system in France is Secam, therefore, those manufactured for the widely used Pal system would be unsuitable for its continental neighbours. Also, a furniture retailer must realize that a standard bed size in Germany has to be longer than those for France due to the difference in the average height of the population.
Other factors such as national health and safety regulations will prevent food retailers selling the same type of beef in the US and France and so forth. A retailer attempting to export an un-adapted formula is likely to run into difficulties as has indeed been the experience of many international retailers. Much of the failure of Marks and Spencer to conquer the Canadian market has been attributed to the company’s failure to recognize the fact that the St Michael image and product, so loved by its domestic consumers, was not appealing to the Canadians.
And even when consumer goods are standardized, the retailer has to pay special attention to the quantities stocked in each size, colours etc. , as these will differ from country to country. As a result of the power of advertising, many luxury consumer goods are standardized and sold internationally. Hence, a Hermes scarf bought in London will be the same as those acquired in Paris, Milan or New York because the customers are purchasing a specific value which transcends national boundaries and tastes.
Pond’s Cold Cream, Coca Cola and Colgate toothpaste have been cited as evidence that a universal product and marketing strategy for consumer goods can win worldwide success (Levitt, 1983). But it would seem that these products all possess the following common characteristics: • Universal brand-name recognition (usually achieved by huge financial outlays)/as a result of decades of intensive promotion. • Minimal product knowledge requirements for consumer use
• Effective Merchandising that demands low information content However, a successful universal strategy for consumer goods is the exception and not the rule. The markets are, in reality, not as globalised as the existence of the high profile international brands might suggest; for example international retailers have to contend with foreign regulations rejecting many goods to be sold in their domestic markets.