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Research Proposal 1 Exploring the Transition of Marketing and the Influence of Culture from Executives Making 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 previously explored. As consumers depend on sale professionals and marketing managers to know and provide all the 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 thought leaders emphasize a customer-oriented, servicedominated concept of marketing as the definition , development , and delivery of 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 , along with competition across the world . Marketing has become increasingly important in the past few decades . The field of business now recognizes marketing as the main force in successfully influencing the customer to purchase products and services. Marketing was seen as an economic activity during the 1980 ’s, with no technology or competition between markets . Most recently, however, marketing decisions are dependent on assumptions and knowledge of consumer behavior (Hawkins and Mothersbaugh , 2007). Research now is 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. 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 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 marketers carry out now . Marketing at that time was going through an evolution of marketing 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 Research Proposal 4 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, effectively, and internationally. Users can hear and express thought leadership, broadcast their messages , connect to the influencers both on their desktop and through their mobile units , among other things . As of 2012, international marketing as a whole has made a complete turn and change from just being considered an economic activity to a customer-oriented, service-dominated, development , and delivery of customer value that focuses on marketing as a set of business processes rather than as a separate management function through the evolution technology and internet changes . Internet search engines, online video and audio , website technology, and the fact that the majority of people online now have access to high speed Internet , means that people have more ways than ever to research and purchase products and services. There are many ways culture influences in international marketing such as the way we present ourselves , how we express opinions , assumptions based on the Research Proposal 5 environment and context , as well as perceptions of voice and other personal physical details. When working inside an international company, these cultural differences become adaptable and will stop interfering with communication . Cross-cultural studies are becoming increasingly important for research inquiry , teaching, and practice in functional business disciplines . However, theses studies cannot be contributed to international marketing without challenges being overcome . One key challenge is that because of cultural differences , elements of research designs 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 predict strategies moves and responses of competitors and hence to design effective competitive strategies . This understanding is also salient to international sales negotiations (Pye ,1983). Culture is the link between individuals (Zaltman, 1965) living in the same society. As such, understanding a society’s behavior or communication processes is all related to studying the future . 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 the additional impact of culture, there is a gap in studies that need to reveal if a marketing managers home culture Research Proposal 6 significantly influences his or her marketing decisions, whether it is positi vely or negatively. To investigate further, studies have found that a manager’s home culture significantly influences his or her international marketing decisions . “Examinations whether the impact of home culture diminishes in an open economy with intens e exposure to international markets , giving way to a process of “globalization ” has also been an area that marketers have explored. Decision-making in four 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 of the executives from the peoples Republic of China and Canada. Chinese executives from Hong Kong were influenced by a combination of western and Chinese cultural norms “(Tse, Lee, I Vertinsky and . Wehrung, 1988). III. Purpose This study will explore the transition between two major developments in marketing in order to grasp a better understanding of 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. Research Proposal 7 However, this study will not only explore the transition and meaning of marketing , but will mainly focus on how executives make international marketing decisions by paying attention to cross-cultural considerations and country-of-origin effect on international marketing strategies . IV. Research Question: Does culture affect executives making international marketing decisions? V. Proposed Research Method Definition of key terms Market Research: Marketing research is the function that links the consumer , customer, and public to the marketer through information--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 Research Proposal 8 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, 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. Also, 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 each country will be chosen, totaling to 435 executives. The countries chosen are China, Hong Kong, and Canada. Each executive will be asked to respond to a memorandum presenting the decision situations without consulting others . Once the subjects had read a memorandum they Research Proposal 9 will be asked to write a memorandum in response , describing what they would do and the reasons for their actions . In order for this research to be conducted, a lecture hall in each of the chosen countries must be rented out for one hour. In order for this research to be carried out correctly and efficiently, the purpose is to see how quick marketing managers from different cultures make marketing decisions, hence why executives will only be given one hour to read the memorandum with a risky scenario and use the remaining time to write a response about what marketing decision they will carry out. The only equipment needed would be blue books for the written responses. The total budget for 435 blue books costing at $.50 cents will total to around $218 USD. The rent for lecture halls in a randomly chosen university will be free. Other fees just as transportation of executives are not 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 Research Proposal 10 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 the 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). Figure 2: Hofstede, G. (1997). Cultures and Organizations: Software of the mind. New York: McGraw Hill. Research Proposal 11 VI. Hypothesis The basic hypothesis of this study is that general cultural differences drastically affect marketing decision-making. Differences are expected to be seen in choice, determination , and adjustment of decision environment . Method of Evaluation To experiment if culture impacts international marketing decisions , one must take executives from different countries and study their responses and decisions after being presented with memorandums discussing certain risky issues . The countries chosen were China , Hong Kong, and Canada, 145 executives from each 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 Research Proposal 12 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 ass 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). 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 Research Proposal 13 VII. Expectations What is expected to be revealed is that culture has predictable, significant effects on the decision of executives based on their influence by western norms and/or other norms. This study will attempt to provide confirmation from the answered memorandums from marketing executives that are from different countries having different approaches on marketing decisions. The study will confirm the purpose of this study, whether or not culture has an influence on executives making international marketing decisions. Limitations A limitation to this study is inappropriate training of marketing executives, which can lead to misapprehension of the memorandum asked for data collection. Time also is a limitation in this study. Some executives are used to making quick and risky decisions where others prefer to research further more and are extra careful. 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 strategies 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 Research Proposal 14 the customer to purchase products and services. Marketing has evolved throughout history, it seen as an economic activity during the 1980’s, with no technology or competition between markets. Most recently, however, marketing decisions are dependent on assumptions and knowledge of consumer behavior (Hawkins and Mothersbaugh, 2007). Research now is concerned with other issues in international marketing such as cross-cultural considerations and country-of-origin as they affect international marketing strategies, with this research being an important contribution to cross-cultural considerations in international marketing. Taking marketing executives from different countries such as in this study, will provide researches information about how culture based decision is seen differently throughout countries. Limitations such as inappropriate training of marketing executives, which can lead to misapprehension of the memorandum asked for data collection will be taken into account. Time being constrained will also be considered regarding the fact some executives are used to making quick and risky decisions where others prefer to research further more and are extra careful. Also, the limitation of marketing executives chosen have no specific age group, answers might differ according to past experience and knowledge will be taken into consideration. The limitations to this research will be considered and revised but will not be the main determinate of the outcome. 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 headquarterssubsidiary 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. Shaw, EH (2012) Marketing strategy: From the origin of the concept to the development of a conceptual framework, Journal of Historical Research in Marketing, 4(1) 20-55. Jain, S. (1982). The evolution of strategic marketing. Journal of Business Research , 11(4), 409-425. Duffy, LD. (2005) The evolution of customer loyalty strategy. Journal of Consumer Marketing, 22(5)284-286. Webster, FE. (2005) A Perspective on the Evolution of Marketing Management. Journal of Public Policy & Marketing, 24(1)121-126. Firat, FA Shultz, CJ, (1997) "From segmentation to fragmentation: Markets and marketing strategy in the postmodern era", European Journal of Marketing,. 31(4)183-207. Srivastava, RK, Shervani, T, Fahey, L, (2001) “Marketing, Business Processes, and Shareholder Value: An Organizationally Embedded View of Marketing Activities and the Discipline of Marketing” Journal of Marketing. 63(Special Issue), 168-179. Cateora, P.R., and Ghauri, P.N. (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.