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Research Proposal 1 Exploring the Transition of Marketing and the Influence of Culture on International Marketing Decisions Farrah Zak Abigal Heinger Wayne State University December 10, 2012 Research Proposal 2 I. Background/Introduction The cultural influence on consumer behavior and its role in marketing and transitioning of marketing strategies has been modestly explored. As consumers depend on sale professionals and marketing managers to provide them information needed prior to purchase decisions it becomes a mandate that marketing specialists are aware of the different cultural impacts on consumer’s decisions. Investigators and marketing leaders emphasize a customer-oriented and service-dominated concept of marketing to define, develop, and deliver customer value that focuses on marketing as a set of business processes rather than as a separate management function (Srivastava, Shervani, and Fahey 2001 ). Marketing in particular has changed with technology innovations, communication advances , and rising competition between industrial systems across the world . Marketing has become increasingly important in the last few decades . The field of business now recognizes marketing as the main force in successfully influencing consumer decisions to purchase specific products and services. During the 1980s, marketing was seen as a merely economic activity with no consideration to technology or competition between markets . However, during the recent years marketing decisions have become highly dependent on assumptions and knowledge of consumer behavior (Hawkins and Mothersbaugh , 2007). Nowadays marketing research is becoming more concerned with other issues in international marketing such as cross-cultural considerations and country-of-origin as they affect international marketing strategies . Research Proposal 3 II. Purpose This study will primarily focus on the effect of culture on decision making by executives dealing with international marketing. In the course of this study we will review the transition between two major developments in marketing: 1. The perspective of the marketing concept as a management philosophy emphasizing customer orientation. 2. The integration of quantitative methods and behavior science into the marketing discipline by marketing entering competition and technology introduced. III. Literature Review The transition of international marketing is marked by two major developments mentioned: first is the perspective of the marketing concept as a management philosophy emphasizing customer orientation , and the second is the integration of quantitative methods and behavioral science into the marketing discipline (Webster, 2002). Although the concept of market segmentation appeared many years before as a means to improve marketing efficiency and effectiveness , the practice gained widespread acceptance in this hyperactive market environment , stimulated by the publication in the 1900 ’s of Wendell Smith ’s article “Product Differentiation and Market Segmentation as Alternative Marketing Strategies ”. After that publication, marketing strategy came to rely increasingly on statistical analysis of Research Proposal 4 market research data . Market segmentation strategy was entirely consistent with the philosophy of customer orientation (Webster, 2002). Through the 1900 ’s, marketing and segmentation were carried out through the philosophy of consumer orientation and was relying on statistical analysis of market research data. There was not much competition in the 1900 ’s, nor the technology to carry out the tasks that a marketer does nowadays . Marketing was going through an evolution of being just an economic activity to marketing being a discipline . There were many environmental forces that helped the marketing function evolve such as rapid diffusion of computer and telecommunications technology (including the Internet), globalization , and increased competitive pressures (Webster, 2002). From the early 1980 ’s until 1989 , marketing management relied heavily on professional sales until the Internet was introduced , which gave more power to marketing management . In 2006 until now , communication between marketing managers became easier through the next-generation communication tools such as Twitter . Twitter is a tool through which subscribers can further reach their audiences quickly and effectively at a global level. Users can hear and express their thoughts, broadcast their messages, and interact with other over different types of electronic media such as desktops, laptops, tablets, and smart phones. As of 2012, international marketing as a whole has made a complete turn and changed from a simple economic activity to a multifaceted model of customer- Research Proposal 5 oriented and continuously evolving set of business processes utilizing updated technology and communication media. Efficient and smart Internet search engines , online video and audio availability, improved website technology, and fast Internet connections have resulted in a paradigm shift of marketing and giant surge of online sales. There are many ways that culture may influence international marketing decisions such as different ways of presenting ourselves , how different people express opinions, how they make assumptions based on their environment and local knowledge, how people perceive gestures, voice tones, and body language. When working inside an international company , these cultural differences become adaptable with time and should not be a hinderer. Cross-cultural studies are becoming increasingly important for research inquiry, teaching, and practice in functional business disciplines . However, these studies cannot contribute to international marketing knowledge without some challenges being overcome . Cultural differences cannot just be simply exchanged in original form between cultures . An understanding of how cultural differences affect international marketing decisions is important to a firm’s external operation . It can be used to design effective marketing plans and counteract competing strategies from international businesses. This understanding is also salient to international sales negotiations (Pye ,1983). Research Proposal 6 Culture is the link between individuals living in the same society (Zaltman, 1965). In this sense culture is not an end product, which is displayed in museums, but rather a system that is always in motion and that can function and adapt (Chung, 1991). With the development of marketing and acknowledgement of cultural impact there remains a shortage of studies that explore the different variables influencing a manager’s marketing decision. Studies have found that a manager’s home culture significantly influences his or her international marketing decisions . Studies have found that the influence of marketer’s home culture diminishes in an open economy with intense exposure to international markets . Decision-making in three simulated international marketing situations was studied with executives from China, Hong Kong, and Canada. The findings confirm that home culture has predictable significant effects on the decision making by different executives. Executives from China and Canada were mostly influenced by western thought schools while executives from Hong Kong were influenced by a combination of western and Chinese cultural norms (Tse, Lee, I Vertinsky and . Wehrung, 1988). IV. Research Question: Does culture influence executives in making international marketing decisions? V. Proposed Research Method Definition of key terms Market Research: Marketing research is the study that links the consumer , customer, and public to the marketer through collecting and analyzing information. Such as the Research Proposal 7 information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process . Consumer behavior: Actions (that is, behavior) undertaken by people (that is, consumers) that involve the satisfaction of wants and needs . Such actions often , but not always, involve the acquisition (that is, purchase) of goods and services through markets. International Marketing: the performance of business activities that direct the flow of a company' s goods and services to consumers or users in more than one nation for a profit (Ghauri, 1999). Western: referring to the United States culture and marketing decisions Globalization: the closer integration of the countries and peoples of the world brought about by the enormous reduction of costs of transportation and communication , and the breaking down of artificial barriers to the flows of goods , services, capital, knowledge, and people across borders ." (from Globalization and its Discontents) Marketing: the activity set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Culture: refers to the cumulative deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, Research Proposal 8 concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving. Culture is also defined as the systems of knowledge shared by a relatively large group of people. Market segmentation: the process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment (business dictionary). Materials & Tools 145 marketing executive participants from three countries will be chosen, totaling 435 executives. The countries chosen are China, Hong Kong, and Canada. Each executive will be asked to respond to a memorandum presenting a marketing scenario that needs an urgent decision without consulting with others. Once the participants study the issue then they will be asked to respond, describing their decisions and the reasons for their actions . In order for this research to be conducted, a lecture hall in each of the chosen countries will be rented out for one hour. In order for this research to be carried out correctly and efficiently, the time allowed for decision making is intentionally shortened to one hour so the impact of culture may be maximized. The study will explore how fast a problem is analyzed and how a decision is made between different people from different cultures. The only equipment needed would be blue books and some pens for a total of $300. The lecture halls may be rented for free as gifts from Research Proposal 9 select academic institutions. Other fees such as transportation of executives will not be included in this study. Figure 1 below illustrates the stages that must occur if a question (the memorandum given) is to be valid and reliable. The memorandum given must be clear and understandable in order for the marketing executives chosen to provide logical and reliable answers in order to carry out this research efficiently. Figure 1:Foddy (1994) Constructing Questions for interviews and Questionnaires. Reproduced with permission of Cambridge University Press. Figure 2 below illustrates the extent to which a company needs to understand global cultures at different levels of involvement. The further a company moves away from only doing national business, the more it needs to understand cultural differences. “Moving outward on more than one axis simultaneously makes the need for building cultural awareness even more essential. With the companies chosen, they must first understand global culture and their different level of involvement” (Hofstede, G). Research Proposal 10 Figure 2: Hofstede, G. (1997). Cultures and Organizations: Software of the mind. New York: McGraw Hill. VI. Hypothesis The basic hypothesis of this study is that cultural backgrounds drastically affect marketing decision-making. Differences are expected to be seen in choice , determination , and adjustment of decision environment . Method of Evaluation In order to explore if culture impacts international marketing decisions , one must take executives from different countries and cultural backgrounds. The countries Research Proposal 11 chosen were China , Hong Kong, and Canada. 145 executives from each country were randomly chosen . Chinese business executives have been relatively isolated from contacts with international markets for many years (Tse, Lee, I Vertinsky and . Wehrung, 1988). Hence cultural effects on their marketing decision process , if present, would represent a relatively pure form of cultural influence on business behavior (Montgomery and Weinberg , 1979). “The Chinese executives represent an Oriental business community with intense and continuous interactions with the western business world . If globalization of markets has eroded the impact of ethnicity on marketing decision making , one would expect Hong Kong executives to behave similarly to North American executives” (Tse, Lee, I Vertinsky and . Wehrung, 1988). The Canadian executives , whose decision processes in risky situations have been found to be similar to those of U.S executives (MacCrimmon and Wehrung 1986), represent the western managerial culture. Figure 3 below illustrates typical activities in culturally overlapping situations such as decision making (crucial to this study) as well as communication and cultural assessment of situations, by linking it to areas of marketing activities such as market research (also crucial to this study) and connecting it to a culture-sensitive market (main focus of this study). Research Proposal 12 Figure 3: H, Hartmurt (2001). International marketing manager’s cultural sensitivity: relevance, training requirements, and a pragmatic training concept. International Business Review. 10(6)597-614 VII. Expectations We expect that culture has predictable and significant effects on decisionmaking by executives and will vary depending on the cultural background as it is being influenced by western norms and/or other norms. This study will attempt to provide confirmation from the final analysis of the blue books collected from executives from different countries. The study will subsequently confirm the cultural impact on international marketing decisions. Limitations Time is a limitation in this study. Some executives are accustomed to making quick and risky decisions where others may need longer time to study the problem in hand and make informed decisions. Another limitation is the variation in age and Research Proposal 13 experience among the participants. Since the marketing executives chosen have no specific age group, answers might differ according to past experience and knowledge. VIII. Conclusion Conducting this research is important for international marketing. An understanding of how cultural differences affect international marketing decisions is important to a firm’s external operation. It can be used to predict strategy moves and responses of competitors and hence to design effective competitive strategies. This understanding is also salient to international sales negotiations (Pye ,1983). The field of business now recognizes marketing as the main force in successfully influencing customers to purchase products and services. Marketing has evolved throughout history, it was seen as an economic activity during the 1980’s, with no technology or competition between markets. Recently marketing decisions become dependent on assumptions and knowledge of consumer behavior (Hawkins and Mothersbaugh, 2007). Research now is focusing other issues in international marketing such as crosscultural considerations and country-of-origin as they affect international marketing strategies. This research is an important contribution to cross-cultural considerations in international marketing. Sampling marketing executives from different countries will provide invaluable information about culture-driven decisions in different international markets. Limited time allowance for serious decision-making is not practical but remains critical for the purpose of this study. Participants from different age groups may have different experiences but selecting random samples from different countries may alleviate this age bias. The limitations to this research project Research Proposal 14 will be considered and revised but will not be a deterrent from conducting this critical study. Research Proposal 15 IX. Bibliography Yaprak, A. (2008). Culture study in international marketing: A critical review and suggestions for future research. International Marketing Review, 25(2), 215229. Achrol, RS. (1991). Evolution of the Marketing Organization: New Forms for Turbulent Environments. Journal of Marketing, 55(4)77-93. Karademir, B. (2007). How do business groups function and evolve in emerging markets. Advances in International Marketing, 17, 275-294. Tasoluk, B., & Calantone, R. (2006). Conflict and collaboration in headquarters subsidiary relationships: An agency theory perspective on product rollouts in an emerging market. International Journal of Conflict Resolution, 17(4), 332351. Kandermir, D., & Cavusgil, T. (2005). Alliance orientation: Conceptualization, measurement, and impact on market performance. Journal of the Academy of Marketing Science, 34(3), 324-340. Solberg, C., & Stoettinger, B. (2004). A taxonomy of the pricing practices of exporting firms: Evidence from Austria, nNrway, and the United States. Journal of International Marketing, 14(1), 23-48. Emden, Z. (2005). Learning from experience in international alliances: Antecedents and firm performance implications. Journal of Business Research, 58(7), 883892. Deligonul, S., & Cavusgil, S. (2000). International marketing as a field of study: A Research Proposal 16 critical assessment of earlier development and a look forward. Journal of International Marketing, 13(4), 1-27. Varner, I. (2000). The theoretical foundation for intercultural business communication: A conceptual model. Journal of Business Communication, 37(1), 30-55. 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(1999), International Marketing, McGraw-Hill Publishing Company, European Edition. Research Proposal 17 David K. Tse, Kam-hon Lee, Ilan Vertinsky and Donald A. Wehrung Journal of Marketing Vol. 52, No. 4 (Oct., 1988), pp. 81-95. Hartmurt (2001). International marketing manager’s cultural sensitivity: relevance, training requirements, and a pragmatic training concept. International Business Review.10(6)597-614 Hofstede, G. (1997). Cultures and Organizations: Software of the mind. New York: McGraw Hill. Foddy (1994) Constructing Questions for interviews and Questionnaires. Reproduced with permission of Cambridge.