International and Cross-Cultural Marketing - Essay Example

? International and Cross-Cultural Marketing Table of Contents Introduction 3 Reasons making the transfer of practices attractive to the parent company 4 Analysis (Findings) 4 Factors influence the transfer of such practices 4 PESTLE Analysis 7 SWOT Analysis 10 Target Market Segment 11 Positioning 11 Marketing Mix 12 Conclusion 13 Recommendations 14 References 16 Appendices 17 Introduction International marketing can be defined as the process through which a firm looks to enter the international market. Through internationalization firms looks to make the products available to the target customers beyond the local boundaries. On the other hand cross cultural marketing can be defined as the difference between different communication styles among members belonging to different cultures. In the modern business environment companies are looking to global not only to gain competitive advantages but also to combat the ever fluctuating global economy. Although there is much debate about the similarities or differences between cross cultural and international marketing it needs to be said that cross cultural marketing is an integral part of the overall intern marketing process (Browaeys and Price, 2008, p. 121) The concept of cross cultural marketing suggests that it is important for the marketers to know that there is very little room for ethnocentrism in the modem 21st century and there is no culture that is superior to the other. Globalization is inevitable and so is ‘cross-culturalization’. Hence one of the key parameters of success for global firms would be the ability to distinguish and understand the cultural aspects of the host nations. The present context of the study has been conducted to analyze the international and cross cultural marketing strategy of Al- Jumeirah a UAE based luxury hotel chain. The host or target country has been selected as China. The reason for such choice is due to the fact that china is one of the fastest growing economies in the world and since the entry of china in to WTO various major companies are looking to enter the prospective Chinese market. During the course of the study the probable major factors influenced the entry of Jumeirah in to China; The business environment of China; probable target market segment; positioning; cultural; educational; demographic issues of China has been analyzed along a set of recommendations for Jumeirah for the future has been provided (Deresky, 2011, p. 231). Reasons making the transfer of practices attractive to the parent company Presence in Saturated Markets Prior to the entry to China Jumeirah has had presence in the saturated and matured economies like UAE (the home country), U.K., Germany. Such economies provide very few opportunities of growth. Also the economic downturn possessed additional threat to the luxury hotel chain. Hence in order to gain the competitive advantage and cope up with the volatile economy the hotel chain decided to enter China . (Doole and Lowe, 2008, p. 391) High amount capital gain from local market Another probable factor could be the relative strong position of the hotel chain that may have prompted the hotel chain to enter in China. Analysis (Findings) Factors influence the transfer of such practices Market Attractiveness Entry of China to WTO In an attempt to welcome foreign companies invest in China after several years of negotiation the country became a member of WTO in September 2001. This opened up the economy of China as the trade related barriers went down. This was the beginning of the economic developments in China. Today China is regarded as one o the most emerging economies in the world (Appendix1). Educational Developments in China As foreign companies started to come to China; the demand for the skilled labours went up. Over the years the Chinese education system has gone through several reforms. The government has made considerable amount of investment to develop the colleges and universities. The focus of the government has shifted from quantity based education system to quality based system. Through such policies the governments have tried to ensure that the universities f the China can meet global standards. (Kotabe and Helsen, 2008, p. 331). As a result the country has seen rise in the number of graduates and undergraduates in the country (Appendix 2). Rise of Personal Wealth and Development of Life Style According to a report by McKinsey China may have more than four million wealthy households by 2013. This has been a by product of the educational reforms in the country. Due to the rise in education systems there has been considerable amount of improvements in the life style of the people of China. Most importantly the gap between the life style of the urban and rural population has gone down (Appendix 3). Growth in Tourism China has seen growth in tourism. Due to the economic reforms the China started getting a lot more traffic from abroad. This acted as major catalysts for the hotel and tourism industry. Since the last five years Chinese hotel industry witnessed a 13% CAGR. As on 2010 there were 15,713 hotels in China (Appendix 4). From the perspective of the luxury hotels, the foreign hotels are looking to bring in the top brands to the country and develop luxury properties. This is primarily due to the probable high margins gains for operating in luxury properties in the country. The tourism industry saw a huge boost during the 2008 Beijing Olympics and 2010 World Expo held in Shanghai. However, that is not all. The tourism saw a growth in china internally also mainly due to the increase in the disposable income of the people. The rise in personal wealth has also been complemented by the brand appreciation factor. Shanghai and Beijing get a lot of visitors both native and foreign. As result various domestic and foreign hotels have opened in China successfully. Economies of Scale Another major actor that may have motivated Jumeirah to invest in China was to attain economies of scale. Through investments in China the total production cost of Jumeirah might have increased bit die tot the increase in production the per unit production cost of the hotel chain would have went down this phenomenon is known as economies of scale. Economies of scale can provide competitive advantage to a company and can also act as a barrier to entry against new firms. PESTLE Analysis It will determine the impact of political, economical, social, technological, legal and environmental factors on the Al Jumeirah in China. Political Factors Due to the immense population and large size of country, it is very much difficult to rule the entire country from Beijing. On the other hand, the hotel is situated in Shanghai. In China, after the economic reformation, the communist party still has the dominance over the Chinese people. Slowly and gradually, it has evidenced that the government of the country has introduced privatization after the death of Mao Tse-tung. The government has influenced several foreign firms to invest in China. The economic reform and decentralization of the decision making of government in the early 1980s has motivated several foreign organizations. Due to huge availability of resources, such as land, labour and capital in low costs; Al Jumeirah has decided to enter in the potential Chinese market. Now-a-days, the political scenario has become favourable for the foreign companies. Therefore, it is feasible that the organization may avail political advantages in Chinese market. Economical Factors Presently China is one of the developed and strong economies around the globe. Though the global recession and financial crisis has affected the Chinese economy, but slowly and gradually the nation is overcoming those problem effects. The per capita income of people and disposable income of the higher middle class people is increasing. Moreover, the GDP growth of the country is recovering from the effect of the recession. As the Chinese economy is strongly developing and per capita income of people is increasing, therefore, it can be said that, Al Jumeirah can avail the advantage of economies of scale. Social Factors The social factor can be categorized into two parts, such as demographic and cultural. Cultural Shanghai is one of the unique cultural places in China. Major of the people belong to upper-middle class. These people love to take traditional food items and tend to attain the traditional events and functions. Moreover, the hotel has also implemented customer services basis on the Chinese cultural factors (Jumeirah, 2013, p.1). Therefore, it can be state that, Al Jumeirah has the cultural benefits. Demographic Shanghai is known for the education and business hub of China. The maximum people of shanghai are well-educated and it is one of the crowded cities in china. As it is known to all that, china is the leading country in terms of population, therefore, it can be state that, the hotel can target the high standard educated Chinese people. Moreover, high population number can create huge customer base around china. Moreover, several national and international tourists can choose Al Jumeirah as their destination for staying as the traditional Chinese culture can reflect through the services of this hotel. Technological Technologically china is the developed country. Technology has played a major role in the GDP growth of the country. Moreover, several domestic and international business firms are also trying to implement advanced technology in their business operation. Al Jumeirah has implemented advanced information technology in their business process. Self-service check-in and check-out kiosks with advanced technology has eased the customer service practices. Moreover, the organization has effectively implemented in-room technology in order to satisfy the comfort level of their guests. The advanced technology in china has eased the business process of this hotel. Legal Factor The Chinese employment system is based on the Northern European and Asian Socialist model. It is necessary for all the domestic and foreign business players to follow several laws and regulation related to organization ethics. Moreover, it is required to maintain and control effective corporate governance practice. According to the employee laws and regulation, every employee should be provided their salary appropriately and timely. Moreover, in-work mental or physical violation is very much prohibited in China (Usunier and Lee,2009, p. 291). Therefore, it is feasible that, Al Jumeirah should follow all the rules and regulation in order to overcome several legal issues. Environmental Factor According to the environmental laws and regulations in China, the business firms should implement sustainability in their business practices. The government is looking to reduce the pollution and emission level of carbon in the atmosphere. Therefore, the government has implemented these laws. In order to do business practices smoothly in China, the organizations have to obey these rules and regulations. Moreover, they should focus on the business sustainability, such as, organizing CSR activities, concentration on the carbon emission reduction and recycling of water and solid waste. These strategies will help the hotel to increase its brand reputation. SWOT Analysis Strengths High opportunities for growth specifically in the hotel and tourism industry Growth is likely to be fully industrialized by 2020. The commitment of government towards growth. Availability of Rich reserves natural resources. Growth as a tourism destinations Weakness Relatively low infrastructure than European or American countries. Employees need a lot of customer training. Despite of availability of natural resources most of the energy is generated through coal. Despite the educational reforms still over 100 million are illiterate over the age of 15. High level of income in-equality. Opportunities Opportunity for joint ventures and direct investments. Increase in internal and external tourism The gap in the urban and rural life style has decreased. Threats Lack of protection of intellectual property. Differences in work and human rights. Ambiguity and lack of transparency in the reporting standards may lead to misunderstanding. Government still controls media and censorship. Sudden increase in the educational level leading to a burst of increase in the un-employment level. Target Market Segment Al- Jumeirah is a primarily a luxury hotel which provides services at a premier price. This strategy is consistent in all the host countries. Hence China would not be any exception. The al- Jumeirah in shanghai would mainly target the wealthy people or the people belonging to the higher income group. From a marketing perspective the company would adopt concentrated marketing strategy via targeting one premium customer segment only. The income group to be targeted is likely to earn more than 17100 Yuan. Here is also needs to be mentioned that in less than 15 years could very well be more than that of US (Appendix 5). Positioning The hotel should position itself as a business entity that provides luxury and quality services at a premium price. From a cultural perspective the hotel should be positioned as a hotel that reflects the rich history of the country; shanghai to be more specific. The main reason to do so is because the consumers both foreign and native would love to do business with a brand that is local and reflects the heritage of China .( Gillespie, Jeannet And Hennessey, 2010, p. 251). Marketing Mix Marketing Mix is a strategic analysis that includes product, price, place and promotional marketing strategies. 4Ps of marketing mix framework for Al Jumeirah in China has been implemented. Product High quality in-room services and amenities accompanied by the excellent personal guest service is one of the key strength of Al Jumeirah. Moreover, the self-service option for the individual guests with the help of advanced technology has eased the business operation of the hotel. The effective differentiation strategy has increased the core competency of the hotel within the Chinese luxurious hotel industry. The effective product and brand strategy are the successful approach that has generated high level of revenue and maximized business profit (Hofstede and Minkov, 2010, p. 421). Price The pricing strategy of Al Jumeirah has been consistent. They have very much differentiation objective in order to offer added value for a reasonable price range. The hotel has implemented premium pricing strategy. They used to provide premium services to their guests. Reasonable conference hall charge can significantly attract the MNC managers in order to organize a conference in Al Jumeirah Songhai. Place Service and product information used to sell to the guests through personal selling and advertising through internet. The delivery channel of Al Jumeirah includes international reservation system and travel agents. Promotion The hotel has focused on the mass communication through the print ads and the website marketing, in which they have described the culture and tradition of the city. Moreover, they have implemented direct mailing strategy for the existing customers in order to aware them about the new offers. Long-term effective relationship with the corporate houses has increased the potential customer base in China. The PR activities are key elements of the hotel’s promotional activity. Participating in the local events and presenting as the supportive member of the community has increased their brand reputation in China. Conclusion Al Jumeirah is one of the leading and popular hotel chains around the globe. This luxurious hotel chain has implemented premium pricing strategy due to its superior quality customer service around the globe. The organization is successfully doing business practices in Shanghai. It is one of the most cultural and developed cities within the country. They have always targeted people of higher income group in china. They have positioned themselves as the high price-quality product. The favourable external environmental factor has supported the organization to grow within the Chinese market. They have implemented traditional promotional strategy for their target audience. Implementation of advanced technology has eased their business operation and at the same point of time it has able to satisfy their potential guests in the hotel. Increasing economic condition, preference of standard income level’s people for luxurious hotel has increased the potential opportunity for Al Jumeirah in Shanghai. Recommendations Several recommendation plans can be implemented in order to increase the core competency of Al Jumeirah. The hotel is located only in one city. Therefore, it is recommended that, an effective PR tem should be appointed for other potential cities like Beijing. Beijing is the potential business hub of China. If the hotel try to map, cap and tap other potential cities, then they can effectively create huge potential customer base around the globe. People always prefer the local products and services because traditionally people are biased and familiar with the local and traditional things. Therefore, it is recommended that, Al Jumeirah should bring more traditional things into products and services. It will increase the customer loyalty. Effective CRM tools need to be implemented in order to retain the old and existing customers. Moreover, CRM will help them to acquire new customers. They need to promote their offers and services through digital and social media. As the people of present generation are getting biased to the social media network, therefore, promoting through Facebook and twitter would be effective enough. This strategy will help them to cover broad range of domestic and international client base. The hotel should target, the domestic tourists too. This market is not that much tapped. Therefore, targeting both domestic and international tourists will help them to create huge customer base. Last but not the least; effective employee retention strategy will be helpful for the organization. They need to provide training programmes in order to increase the skills and efficiency of the employees. Al Jumeirah should motivate the employees as employees are the strong assets of any organization. References Jumeirah, 2013. About Shanghai. [Online]. Available at: . [Accessed on May 1, 2013]. Browaeys, M-J. & Price, R. 2008. Understanding Cross-Cultural Management, Essex: Prentice Hal Deresky, H. 2011. International Management Managing Across Borders and Cultures (7th ed.), Boston: Prentice Hall. Doole, I. And Lowe, R. 2008. International Marketing Strategy: analysis, development and implementation. London: Cengage Learning. Hofstede, G And Minkov, M. 2010. Cultures and Organizations: Software for the Mind (3rd ed.), London: McGraw-Hill. Keegan, W.J. Green, M.C. 2011. Global Marketing (6th ed.). London: Prentice Hall. (Keegan and Green, 2011, p. 121) Kotabe, M. And Helsen, K. 2008. Global Marketing Management. (4th ed.). New Jersey: John Wiley and Sons. Gillespie, K. Jeannet J. And Hennessey H.D. 2010. Global Marketing. London: Cengage Learning. Usunier, J.C. and Lee, J.A. 2009. Marketing Across Cultures (5th ed.). London: Prentice Hall. Appendices Appendix 1: Entry of China to WTO Appendix 2: Education Development in China Appendix 3: Rise of Personal Wealth and Development of Life Style Appendix 4: Growth in Tourism Appendix 5: Target Market Segment Read More