7BSP1271 Marketing Across Cultures
7BSP1271 Marketing Across Cultures
Q1: Marketing environmental analysis
In order to anlayse the international marketing and business operations of Tesco, the country that has been selected is India.
Customer
In order to analyse the behavior of consumers within the Indian retailing sector, the Engel Kollat Blackwell Model is selected. In the opinion of Hole et al. (2019), the EKB model is based on analysis of the factors that influence decision-making of the consumers including recognition, information search, evaluation of options, purchase decisions and outcomes. Competition in the Indian retailing sector is a key factor contributing to identification of brands in the sector. The key competitors of Tesco in India are Aditya Birla Retail, Reliance Trends, Amazon, Flipkart, and D-mart. The recognition of brands in the sector is done through searching websites, social media and feedback and reviews of the customers. The customers also have a perception of low switching cost to different retail brands and for that, the choice of alternative options is much for them. As stated by Chauhan and Shah ( 2020), the availability of information is also a key factor influencing the buying decisions and behavior of the customers. As such, the digital and social media channels and platforms are opted for by the customers in order to search for adequate information. In this regard, they also make an evaluation related to the provision of information related to brands, their products and labeling of the products. As such, the feedback of consumers provided on different products and services is an influential factor in driving the customer decision-making procedure.
The Indian retail sector is identified in terms of diverse shops and businesses including small and medium enterprises, large organizations and ecommerce platforms. As studied by Gawankar et al. (2020), 88% of the retail shops in India are kirana stores and they constitute primarily the buying behavior of the customers due to long standing relationships between the customers and the retailers. Thus, the evaluation of alternatives is done by Indian customers in terms of relationships, trust and reliability of the brands. The cost-effectiveness of products and ease of doing payments are also influential factors in decision-making of the customers. However, the study of Garg et al. (2020) highlights that e-commerce is a significant factor in impacting customer buying behavior in the Indian retail industry. This is because of the aggressive marketing strategies of the big ecommerce brands such as Amazon East. The mode of payment options provided to the customers is also key in this regard. As such, despite the increase in digital transaction payments in the country, 50% of the orders placed on online retail shops have cash on delivery option in them. The factor influencing decision-making and outcomes of buying decision is quality of the products as well cost, time and convenience of the delivery procedure. The Indian customers have always been inclined towards buying from brands that are fast, cost-effective and highly convenient.
Competition
Competition in the Indian retail sector is intense and organized and unorganized retailers make up the market. The typical Indian retail shops have been identified to be small with more than 19 million outlets operating in the country as of 2020. As mentioned by Patil and Patil (2020), only 4% of the Indian retail organizations have been categorized in the large category constituting 500 sq ft size ships in one or more locations in India. However, the neighborhood or the local retail stores form the crux of the Indian retail sector and 11 small or ‘kirana’ stores could be found for every 1000 people. As studied by Chawla et al. (2019), kirana stores are unorganized stores and amount to 13 million stores in the neighborhood or locality. Additionally, the number of organized stores in the Indian retail sector amounts to more than 12000. Some of the leading players in the sector include Future Group, Aditya Birla Fashion, Shoppers Stop and Avenue Supermarts. Based on data and statistics, the leading retail company identified is Reliance Retail with 45 subsidiaries. The market share of Reliance Retail in India is approximately 4% and in 2023, the total revenue generated by the firm has been 2,60,000 crore.
Q2 – Market entry strategies
The country that has been selected for expansion of CN is India. This is because of the potential opportunities and benefits available in the Indian market. As reported by Gregorič et al. (2021), the instant noodle sector of India is projected to grow USD 1.88 billion in 2023 to USD 3.83 billion by 2028 with CAGR of 15.31%. This provides plenty of opportunities for CN in India. The three entry modes considered for the company are wholly owned subsidiary, joint venture, and licensing and franchising.
Wholly owned subsidiary
The first chosen form of entry mode for CN is a wholly owned subsidiary and as part of that, 100% shares of a company are held by the parent company. As influenced by Jin et al. (2020), if CN opts for a wholly owned subsidiary as a form of entry strategy in the Indian market, 51% to 99% of its stake would be held by the parent company. This entails that Maggi gain CN as a subsidiary to enter into the Indian market. The benefits to be enjoyed by CN for entering the Indian market include reduction in costs, tax benefits and reduction in risk. Maggi is the leading noodle brand in India and through wholly owned subsidiary; CN would be able to trade off competition in the Indian retail sector. However, the risks include multiple taxation and lack of decision-making powers of CN.
Joint venture
The second entry mode recommended for the company is joint venture and it is a combination of two or more parties seeking development of a single enterprise for raising profit. As inspired by Ko (2019), adopting joint venture by CN shall influence the company to form joint ventures with Maggi, Yippie or Knorr that are some of the leading companies in the Indian instant noodle sector. CN would be able to gain access to newer markets of India and the distribution channels and networks to gain betterment in supply chain and operations. The reduction of risks and costs is also one of the key benefits of joint venture for CN as part of which, it would be able to operate seamlessly and have access to the customer base in the sector.
Licensing and franchising
Licensing involves granting rights to use intellectual properties of an organisation and franchising is associated with replicating and adopting a business model. As mentioned by Sestu and Majocchi (2020), the benefits of licensing and franchising for CN in the Indian market lies in gaining rights to intellectual properties of some leading instant noodle brands such as Knorr, or Maggi as part of which, in-depth information shall be gained about their customers, business model and strategies. The reduction of risks for both the parties is a beneficial factor in impacting the foreign entry strategy of CN. There could also be expansion of business opportunities due to gaining insights into customer base, marketing tactics, supply chain and operations, and business model into the company.
Recommended entry strategy
Based on analysis of three entry strategies for CN in India, the chosen entry strategy for the company is a joint venture. As influenced by Gregorič et al. (2021), the reason for which joint venture is recommended for the company is because it would help in reducing business risks and costs. On the other hand, wholly owned subsidiaries have been excluded as it would result in lack of business control and decision-making of CN and licensing and franchising has not been recommended due to reveal of key business formula and facts.
Q3 – Consumer behaviour and Cultural considerations
The two theories of cross-culture that have been considered in the current section are Hofstede cross-cultural dimensions and GLOBE. The two countries selected are the UK and Germany.
Hofstede cross cultural dimensions
Through considering the Hofstede cross-cultural theory, the power distance index of UK and Germany could be identified to be the same with a score of 35. As studied by Bošnjak et al. (2019), this entails that B&B hotels could provide uniform services in both the countries due to low segregation between the people. Similar to that, individualism scores are also high in both countries. However, the UK consumers are slightly more individualistic as compared to Germans that instills the lack of influence of others on their decision-making behavior. Additionally, motivation towards achievement has also been similar in both the countries with a score of 66. This entails that consumer behavior is identified in terms of opting for high priced and high quality products and services to get motivation. Quality is an essential factor motivating consumers in both the countries as opposed to price of products and services.
On the other hand, as mentioned by Gierusz et al. (2022), uncertainty avoidance score is high in UK at 65, whereas it is low in Germany at 35. This fosters the fact that consumers in UK tend to be less accepting towards new products and services. On the contrary, B&B would be benefitted from the introduction of new services and business chains in Germany due to low uncertainty avoidance scores. In addition to that, the UK is identified to be a retraining country with control over the desires of the people. On the other hand, Germany is identified to be an indulgent country with a score of 69. This entails that UK consumers are less prone towards impulse buying behavior and in contrast to that, the German people indulge highly on impulsive buying behavior. This instills the fact that B&B shall implement more aggressive marketing strategies in UK and social and digital marketing strategies in Germany to influence the buying behavior of the customers.
GLOBE
Based on the GLOBE framework, the primary difference identified in relation to consumer behavior and culture in UK and Germany is assertiveness. The score of UK in this factor is medium, whereas it is relatively high in Germany. As influenced by García-García (2021), the impact of this on consumer culture and behavior shall be witnessed through direct communication tactics and confrontation in Germany as compared to the UK that would help B&B to identify the needs and issues of the customers. The difference is also witnessed in terms of gender egalitarianism which is low to medium in Germany, however, extremely low in UK. This establishes relatively high gender inequality in the UK as compared to Germany. As influenced by Hart et al. (2020), on the basis of this, it could be stated that the implementation of gender neutral marketing strategies by B&B is important to be implemented in the German market.
However, the institutional collectivism score is highly distinctive in the German market ranging between relatively low and relatively low. On the other hand, it is medium in UK, thus, entailing the factor that collectivism is moderate in the country. Henceforth, people take their own needs and desires into consideration, prior to making buying decisions. On the other hand, there are diverse customers in Germany where one group of people is individualistic whereas the other group of people is collective. Henceforth, the implementation of adaptive marketing and promotional strategies is important for B&B to focus on in the German market (Lu and Wang, 2021).
Q4 – Standardisation or adaptation of marketing mix
The country that has been selected for expansion of B&B in the current section is Italy. According to Lee and Griffith (2019), Italy is one of the fastest growing tourism markets in the world in the post covid19 situation where the tourists visiting the country in 2022 have amounted to 75 million. The demographic analysis of the tourism rate in the country showcased that people in the age group of 45 and 54 years have recorded the highest number of trips. Additionally, forecasts show that there would be an increase in the visit of tourists in age group of 25 and 35 years. Henceforth, since B&B provides budget hotels to the customers, it would be benefitted from an increase in young aged customers in the country.
The marketing mix recommendations are as follows:
Products
The product strategy of B&B would follow an adaptive approach as the targeted customer base of the hotel in Italy includes the young aged tourists. As studied by Xie (2020), the existing products and services offered by the hotel include smart lunch and dinner, snacks and drinks, travel kits for pets and others. However, there would be the introduction of new products such as small and cozy rooms for solo or young travelers, honeymoon suites for couples. The reason for which adaptive product strategy has been recommended for the hotel is because of the need for introduction of new services by targeting the young tourists specifically.
Place
The place strategy recommended for B&B in Italy is standardized. At present, the hotel implements a place strategy to be present across multiple places and regions in different European countries. Henceforth, as influenced by Ali and Anwar (2021), a similar approach would be followed by B&B in Italy as well where it would place itself in different locations of Italy to make the hotel accessible to different travelers. It would also establish new branches in the outskirts of the city to make it more attractive to the young or solo travelers.
Price
The current price strategy of B&B is to provide budget hotels to the customers. Therefore, the recommended price strategy for the hotel in Italy is to follow an adaptive approach as part of which, its price strategy would include a competitive pricing strategy. As influenced by Abedian et al. (2022), the reason for which competitive pricing policy and adaptive pricing strategy has been recommended for the hotel is because it targets the young aged customers who most often look for cost-effective accommodation options.
Promotions
The promotional strategy of B&B would adopt an adaptive policy. As studied by Xie (2020), the existing promotional strategy of the hotel chain is largely based on offline options including discounts and promos. There is limited presence of the hotel on digital and social media channels as part of which, the recommended strategy is to adopt social media and digital marketing channels. This is recommended to increase customer engagement with the hotel and help in easy recognition.
Reference List
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