Examining the Influence of Uncertainty on Marketing Mix

Uncertainty in Marketing Mix

By

Shashank

Prasidha

Yuyue Jiang

Sachin

• Examining the Influence of Uncertainty

on Marketing Mix Strategy Elements in

Emerging Business to Business

Export-Markets

OBJECTIVE

Uncertainty in Marketing Mix

Marketing mix

WHY GLOBALISATION ?

INCREASE SALES

VOLUME

INCREASE

PROFIT MARGIN

UNCERTAINTY IN MARKETING MIX?

Product? Price? Place? Promotion?

STRATEGY

STANDARDIZATION ADAPTATION

Applying domestic target market

dedicated product standards to

foreign markets and vice versa.Modification of domestic

market dedicated product

standards so as to make the

product suitable for foreign

environmental conditions

and vice versa

MIXED

Partial

standardisation of

domestic market

strategy on

international market

UNCERTAINTY

International

EntrepreneurshipNetworking

REDUCING UNCERTAINTY

• Proactive

• Innovative

• Risk seeking

• Creating links

• Collecting information

• Assessing marketing

environment

STRUCTURE OF PRESENTATION

THEORETICAL

FOUNDATION &

HYPOTHESIS

DEVELOPMENT

DATA ANALYSIS

RESULT

(METHOD USED,

INNER AND OUTER

MODEL RESULTS)

RESULT INTERPRETATION,

MANAGERIAL IMPLICATION,

LIMITATIONS AND FUTURE

RESEARCH

YUYUE

PRASIDHA

SACHIN

Literature Review &Theoretical

Foundation

• Marketing Mix in Export Markets

• Project Business Markets

• Emerging Markets

• The Role of Uncertainty

• Co-ordinate different generic Marketing Mix

Element- Across National Boundaries

• Standardization- Homogenisation of World Market

• Adaptation – reacting to 4c's (Risks)

• What is an appropriate Marketing Mix Strategy for

B2B- in emerging export market?

Environmental Fit

Backhaus and Muehlfeld (2005)

Product Business

Project Business

Relation Business

• Idiosyncratic, complex, non continuous

• Individual customer and customised actions

• Seller:

Environmental contingencies

Resulting consequences

Secure controlling (payments and time)

• Increased uncertainty

• Greater risk

• Rapid growth

• Greater market potential with 75% of world

population

• Need of effective marketing Strategy

Situation in which cannot make specific previsions

Milliken (1987):

• Environment Uncertainty

• Effect Uncertainty

• Response Uncertainty

Sousa and Bradley (2005)- Psychic Distance on

the International Market

Standardisation

Adaptation

Managerial Perceptions in Decision Making

Effective Strategy – Analysing Uncertainty

Risk – When Uncertainty Prevails

Uncertainty & Marketing Mix Strategy

International Entrepreneurship

Network Capabilities

International

Entrepreneurship

Network

Capabilities

↓ Uncertainty

H1

H2

↑ Marketing Mix

Strategy

17

↓ Marketing

Mix Strategy

Uncertainty

Environment

↑Product

Adaptation

Sales and

Distribution

System

↑ Promotion

Adaptation

↑ Price

Adaptation

H3a

H3b

H3c

H3d

H1. The better a firm’s international entrepreneurship abilities, the greater the likelihood of the

reduction of uncertainty and, therefore, the better the assessment of marketing mix strategy.

H2. The better a firm’s use of networks, the greater the likelihood of the reduction of uncertainty and, therefore, the better

the assessment of marketing mix strategy

H3a. The better the assessment of environment and, therefore, the lower the marketing mix strategy uncertainty,

the greater the likelihood of product adaptation by a firm

H3b. The better the assessment of environment and, therefore, the lower the marketing mix strategy uncertainty, the

greater the likelihood of price adaptation.

H3c. In the case of a project business there is a high likelihood of a firm using a uniform and standardised personal

sales system.

H3d. The better the assessment of environment and, therefore, the lower the marketing mix strategy uncertainty, the

greater the likelihood of promotional adaptation.

Data Set And Operationalization

SURVEY

Random companies were selected from the database of German Chamber of Commerce (GCC)

Included small/medium sized German Manufacturing Companies operating within Project Business

(44% < 250 Employees, 17% between 250 – 300, reaming 39% 500 – 3000 employees)

Survey was Pretested with experts from the field, staff of GCC and select B2B companies

Managers in top management position in 600 companies were directly contacted

Foreign Activity of these companies mainly concentrated in ASIA,SOUTH AMERICA & MIDDLE EAST

( emerging markets)

198 usable data returned with a Response Rate of 33%

QUESTIONNAIRE

All items were conceptionalized using 6 POINT BIPOLAR SCALES - Strongly Disagree (1) & Strongly

Agree (6)

To measure Degree of Adaptation or Standardization of each of the 4 Marketing Mix Elements

SINGLE ITEM SCALE was used

MethodologyP

revi

ou

s R

ese

arch

Me

tho

d

Aldrich (1979)model was dimensions of dynamism, complexity and munificence.

The other research claimed decision-making uncertainty is an outcome of external environment uncertainty.

De

fin

itio

n Marketing Strategy Uncertainty=Ability of a company to access the required degree of adaption for marketing mix element.

All items were conceptionalized as six-point bipolar scales with the range indicating strongly disagree (1) and strongly agree (6).

Ass

um

pti

on 4 items: product, price

strategy, sales structure and promotional strategy when entering new market.

3 measured items: intensity of network, degree of support from network and the relevant of network establishing long-term relationships.

Statistical Model Analysis

1. Structural Equation Model Software (EQS, AMOS and EPLUS).

2. PLS is a statistical model used to find the fundamental relations between two

matrices (X and Y）

3. This model is suitable as the research context of the study aims to achieve a

Predictive Relation Model. It can be use to ensure constructs are valid and reliable,

the Outer Model has to evaluated before the inner structural model.

4. R2>=0.67 is very good model, >0.33 good fit, >0.19 weak fit.

(There are other conditions for Convergent Validity , Indicator Reliability and

Construct Validity )

CONFIRMATORY FACTOR ANALYSIS (CFA)

STRUCTURAL EQUATION MODEL(SEM)

PARTIAL LEAST SQUARES ( PLS)

Outer Model Results

Loading

AVE ( Average Variance )

Composite Reliability

Results of Outer Structural Model

Components and Manifest Variables Loading Critical Ratio AVE ( Average Variance ) Composite ReliabilityInternational Entrepreneur 0.552 0.6951

Innovativeness 0.5114 2.7513Proactiveness 0.9179 14.3954

Use of Network 0.6518 0.7877Intensity network 0.881 6.943Support Network 0.7262 3.7612

Marketing Strategy Uncertainty 0.5656 0.8384Assessment Place 0.7122 11.2981

Assessment Promotion 0.7565 14.0083Assessment Price 0.823 34.3433

Assessment Product 0.7109 11.0754

Better the Model ifLoading > 0.7 to meet Indicator

ReliabilityAverage Variance AVE > 0.5,

Convergent Validity Exits

Composite Reliability > 0.6, to ensure Construct Reliability

Inner Model Results

Path

Critical Ratio

Results of Inner Structural Model

Predicted Variables Predictor Variables Hypothesis Path Critical Ratio

Adaptation Product Marketing Strategy Uncertainty H3a 0.03 0.3245

Adaptation Price H3b 0.21 2.8056

Adaptation Place H3c -0.3 0.4099

Adaptation Promotion H3d 0.25 3.6804

Marketing Strategy Uncertainty International Entrepreneur H1 0.32 4.4747

Use of Network H2 0.15 2.1649

H1,H2,H3b and H3d are supported as BOOTSTRAP CRITICAL RATIOS (t > 1.96, p < 0.05) and Path coefficient > 0.1

Path Co-efficient > 0.1 Critical Ratio t > 1.96

Results Summary

1. H1 : Path between International Entrepreneur & Marketing

Strategy Uncertainty is significant. P<0.01,PV of 0.32, H1 is

supported.

2. H2: Path between use of Network Ability & the construct of

marketing strategy uncertainty is significant. P<0.05,PV of 0.15,H2

is supported.

3. H3b (PRICE) and H3d (PROMOTION) are significant. PV of 0.21

and 0.25 respectively.

4. H3a ( PRODUCT) is not supported, PV of 0.03

5. H3c (PLACE) is un-significant, PV of - 0.03

ABILITY OF A COMPANY TO ACCESS

A GIVEN MARKET ENVIRONMENT

ADAPTATION OF PROMOTIONAL

ELEMENTS

ADAPTATION OF PRICING STRATEGY

ABILITY to REDUCE

UNCERTAINTY

NETWORKING ABILITY OF A

COMPANY

INTERNATIONAL ENTREPRENEURSHIP

ABILITY

1. Data Indicate +ve Relationship b/w Ability of Company to ACCESS given Market Environment

and Adaptation of Pricing Strategy and Promotional Elements

2. Data indicate +ve Relationship b/w International Entrepreneurship Ability of a Company &

its Network Ability and the Ability to REDUCE UNCERTAINTY about their MARKETING

MIX STRATEGY

3. Data indicate No Evidence for general adaptation of Products or the Sales Distribution System

Findings Of The Research

Other Inferences

• Not possible to derive general advice for Standardized or Adapted Marketing Mix

approach all 4 Elements Need to be considered separately1

• CULTURAL DIFFERENCES still play important role

• As results show that PRICE & PROMOTION are Highly Influenced by it

• Drift towards TRANSNATIONAL SIMILARITIES has to Critically Reviewed2

• The Model Connected the Ability of the 2 Elements International

Entrepreneurship & Network Ability to reduce MARKETING STRATEGY

UNCERTAINTY

3

• Lesser Importance of Networking Capabilities of a Company revealed is in Line

with Previous Findings4

Managerial Implications

• Mangers of Firms need to do Intensive Information

Research

• Market Scanning

• Sometimes even a Later Market Entry

(1.)

ACTION UNDER UNCERTAINTY

• LOW BUSINESS PERFORMANCE RESULT IF NO

EFFORT IS MADE TO ADAPTING ANY OF THE

MARKETING MIX ELEMENTS

(2.)

BUSINESS PERFORMANCE

Managerial Implications

• Important for compensating Insufficient Market

Information and Potential Lack of Resources

• But not a Perfect Counterpart to Solve the STRATEGIC

Issue ( concerning Standardization vs. Adaptation )

(3.)

NETWORKING ABILITY

• International Entrepreneurship Spirit should be fostered

within the Company as its better to solve the STRATEGIC

Issue.

• Help to Identify Global Business Opportunities and to

identify strategically appropriate responses.

(4.)

TO REDUCE UNCERTAINTY

Managerial Implications

• Managers have to consequently ensure Adaptation of

any PROMOTIONAL tool to foreign market

environment.

(5.)

ADAPTATION STRATEGY

The American Way The “DESI” Way !!

Managerial Implications

• COMPANIES NEED TO ADAPT RIGHT PRICING

STRATEGY ESPECIALLY IN UNKNOWN COMPETITION

CONSTELLATION IN FOREIGN MARKET CONDITIONS

(6.)

ADAPTATION STRATEGY

Managerial Implications

• UNIFORM and STANDARDIZED Personal Sales /

Distribution System is Most Promising means of

ensuring SUCCESS within PROJECT Business

(7.)

STANDARDIZATION STRATEGY

• Negative – Differentiation of Product Standard is

Not Practical

(8.)

STANDARDIZATION STRATEGY

Limitations and Future Research

LIMITATIONS

(1.) Measurement of the construct “ UNCERTAINTY”

is already a controversial issue within the research

field of International Marketing

(2.) Model does not include “All Factors” that

influence Marketing Strategy Uncertainty.

Therefore not sufficient for explaining the

Phenomenon of the Ability to Reduce Uncertainty

(3.) Important Missing Link – Measurement of The

EFFECT ON PERFORMANCE

FUTURE RESEARCH

1.) Future research is necessary to Identify all

other possible variables.

( Low Value of R2= 0.137 < 0.19 but > 0.1

recommended value) indicate existence of

Additional Determinants of Marketing Strategy

Uncertainty Reduction

2.) Further research has to concentrate on the

Marketing Mix Strategy as a PERFORMANCE

Enhancing ONE !!

THANK YOU !!