Intercultural Product Marketing: Analyzing Ways for Products to go International in Intercultural Environment

SRH University of Applied Sciences Berlin

Business Administration

Bachelor’s Thesis on

«Intercultural Product Marketing: Analyzing Ways forProducts to go International in Intercultural

Environment»

Submitted by: Hamlet Hayrapetyan

Matriculation No.: 26204510Address: Bornimer Str. 19 c/o Fidanyan, 10711 BerlinTel.: +49 176 76 56 92 22E-Mail: [email protected]

First Supervisor: Prof. Dr. Anabel Ternès

Second Supervisor: Prof. Dr. Ian Towers

Processing Time: eight weeks

Hamlet Hayrapetyan Prof. Dr. Anabel TernèsBachelor Thesis Intercultural Product Marketing: Analyzing ways for products to go

International in Intercultural Environment

Date of Submission: 12.07.2013

Affidavit / Eidesstattliche Erklärung

I declare that I wrote this thesis independently and

on my own. I clearly marked any language or ideas borrowed

from other sources as not my own and documented their

sources.

I am aware that any failure to do so constitutes

plagiarism. Plagiarism is the presentation of another

person's thoughts or words as if they were my own—even if I

summarize, paraphrase, condense, cut, rearrange, or

otherwise alter them.

I am aware of the consequences and sanctions

plagiarism entails. Among others, consequences may include

nullification of the thesis, exclusion from the BA program

without a degree, and legal consequences. These

consequences also apply retrospectively, i.e. if plagiarism

is discovered after the thesis has been accepted and

graded.

My name: Hamlet Hayrapetyan

Title of my paper: Intercultural Product Marketing:

Analysing ways for products to go international in

intercultural environment

1



Date: 12/07/2013

Signature: ____________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTS...............................................3ABSTRACT.......................................................4

Table of Tables and Figures....................................51. INTRODUCTION................................................6

1.1 Hypothesis...............................................71.2 Goal of the paper........................................81.3 Methods of research......................................81.4 Structure of the paper...................................9

2. INTERCULTURAL ENVIRONMENT AND MODERN MARKETING.............102.1 Theories of Internationalization........................19

3. MODERN BRANDS..............................................22

3.1 How to Create a Successful Brand........................263.1.1 The principles of a successful XXI-century brand. Valueco-creation................................................27

2



3.2 Brand: Strengths and Weaknesses.........................333.2.1 Global Brands: strengths and weaknesses..............353.2.2 Local Brands: strengths and weaknesses...............36

3.3 Model Prototype for “Brand Strength Measurement”........384. THE INFLUENCE OF CULTURE ON BRANDING.......................414.1 Culture and Cultural Differences........................424.2 Socio-Economic Differences..............................444.3 Adaptation vs. Standardization..........................464.4 Case Study..............................................53

5. EXPORT & COMMUNICATION.....................................55

5.1 Entry Strategies to Foreign Markets.....................575.2 Brand Communication.....................................59

6. NEW APPROACH TO INTERCULTURAL PRODUCT MARKETING............626.1 A New Model: Model Description..........................656.2 The Intercultural Competence Building (ICB) Model.......69

7. Conclusion.................................................73

8. Future Research............................................749. Bibliography...............................................75

ACKNOWLEDGEMENTS

First of all, I would like to thank SRH University of

Applied Science Berlin and its administrative staff and

professors where I had an opportunity to study and become

introduced to the best practices of management and to

receive background knowledge in all the fields related to

the business administration and beyond. I was given a

chance to express myself in scientific and professional way

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by doing different presentations on different companies and

various topics.

In addition, I am thankful to my group mates with whom

we were preparing group works, presentations and scientific

papers. All of these activities played an invaluable role

in my personal professional growth. Moreover, being in

international environment is the most exciting and one of

the most important stages of life as it gives intercultural

experience and a possibility to get acquainted with

different cultures.

Undoubtedly, this thesis would not have been possible

to prepare without the immediate supervision of Prof. Dr.

Anabel Ternès and second supervisor Prof. Dr. Ian Towers.

Thank you very much for guidance, support and exchange of

thoughts on the thesis topic as well as for the time spent

on discussions of ideas.

4



ABSTRACT

This Bachelor Thesis is the final part of my studies

at SRH University of Applied Sciences Berlin, 6th Semester:

faculty of Business Administration. The title of this

thesis is “Intercultural Product Marketing” which

concentrates on finding and analyzing the ways of the

products that are willing to go international by focusing

on the intercultural environment of products and markets.

The above mentioned will be found by answering the

following questions: How does the cultural aspect affect

the need for changes in the appearance and concept of the

product? Why having cultural competence in the target

market is important? How should the companies build

cultural competence? Is it good when the product is as

international as possible? Is the brand stronger when it’s

everywhere the same as in the local market or is your brand

stronger when it is adapted to every local market, based on

cultural, social and psychological differences? All of the

questions will be answered with the help of different

methods, such as, conducting a detailed research on all of

the topics, literature research and using different

frameworks.

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The reason for choosing the following topic is that

Intercultural field by itself (e.g. intercultural

management, intercultural marketing, etc.) is an emerging,

broad and vital area to investigate. It contains many

unexplored questions and my aim is to discover an aspect

and create a model that can be useful for every

entrepreneur who is eager to make his own products

international but does not possess knowledge how to do it

and which way to choose. The model for the products that

want to go international will be created on the basis of

the analyses of top brands which have been international

for many years now and have accumulated sophisticated

experience on what to do and how to work in the field; ,

also on the analyzes of numerous other sources on

Marketing, Communication, Branding, Culture, etc. The

findings of this study will be useful for the

companies/firms that plan to go international, especially

for the ones that are going to adapt their products and

marketing activities from country to country. This model

will provide a clear structured chain of activities to help

to understand the culture and intercultural environment of

the target market, in the context of how to organize the

process and to evaluate the extent to which the company can

be successful with its chosen entry strategy and marketing

activities.

Table of Tables and Figures

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Table 1. Intercultural Conceptualizations

14

Table 2. Exporting Issues for Business

22

Table 3. World Internet Usage and Population Statistics

24

Table 4. Value Creation Process 32

Table 5. Global Brands: Strengths and Weaknesses

36

Table 6. Local Brands: Strengths and Weaknesses

38

Table 7. Brand Strength Measurement: Factor’s Explanation

40

Table 8. Standardization process in the framework of 7P

concept 48

Table 9. Adaptation process in the framework of 7P concept

50

Figure 1. Circle of Developing Cultural Competence

13

Figure 2. Development of Modern Marketing 17

Figure 3. Internationalization Process Model (The Uppsala

Model) 20

Figure 4. Value Creation: How companies and consumers think

31

Figure 5. Brand Strength Measurement Analyzing Factors

39

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Figure 6. The „Onion Diagram“: Manifestations of Culture

42

Figure 7. Entry Strategies to Foreign Markets57

Figure 8. Interaction between Institutional Environments

60

Figure 9. Creating End Concept of the Product

68

Figure 10. The Intercultural Competence Building (ICB) Model

69

Picture 1. Nike Air Shoes with the Script of “Air”

19

1. INTRODUCTION

Stereotyping, discriminating and labeling are not new

phenomena in different cultures, but researching, analyzing

and understanding cultures and their role by internalizing

them within ourselves is more important, because it helps

us to think rationally in the context of international

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marketing, international business environment and simple

relationships among people. Although the world is in a very

fast globalization period, anyhow every country and region

in the world has its own specific culture, which has to be

considered before entering that particular market.

Undoubtedly, it is a necessary requirement for building

firm customer relationships. Mahatma Gandhi once said, “A

Nation’s culture resides in the hearts and in the soul of

its people”1. These words make people think about the

importance of internalizing culture and intercultural

methods in developing business and marketing strategies.

Whether a company wants to participate in international

business directly or not, it cannot escape the effects of

the ever-increasing number of domestic firms exporting,

importing and/or manufacturing abroad and the number of

foreign-based firms operating in local markets; the growth

of regional trade areas; the rapid development of world

markets and the increasing number of competitors for global

markets (Ghauri & Cateora, 2005). There are different

trends that affect global business today but out of all,

“five of them stand out as the most dynamic and as the ones

that are influencing the shape of international business”

(Bird, 2003):

1. The independence of the world economies,

1 Mahatma Gandhi Web-Page, Quotes. Available at: http://www.mahatmagandhionline.com/#quotes [18.05.2013]

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2. The rapid growth of regional free-trade areas such as

EU, NAFTA, ASEAN and APEC,

3. The increase in wealth and economic growth in most

parts of the world, causing enhanced purchasing power,

4. The evolution of large emerging markets such as

Brazil, China, India, Malaysia, Russia, Hungary and Poland,

5. Availability of advanced methods of communication and

transportation due to development in information

technologies.”2

Going international, of course, brings more customers

and generates more profit especially in modern free-trade

areas where companies do not pay tariffs and skip

restrictions, but today going international brings new

challenges as well. Many professors, books, scientific

journals and newspapers always discuss ways and needs for

export of products and dispute about companies that go or

plan to go international. Everyone counts different

aspects, various advantages and disadvantages, but there is

one point which is often omitted - cultural aspect.

Companies that plan to go international, should consider

all the relevant factors, but they should also go beyond

the stereotypes of traditional national culture in order to

capture cultural diversities and contradictions of other2 Allan Bird, Michael Stevens, „Towards an Emergent Global Culture and the Effects of Globalization on Obsolescing National Cultures”, Journal of international Management, 2003, 6, pp. 395-407, and T. Clark and L.L. Mathur, “Global Myopia: Globalization Theory in International Business”, Journal of International Management, 2003, 9, pp. 361-372.

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cultures in terms of ethnic culture, regional culture,

professional culture, cultural history and emerging global

cultural groupings within, across and outside of the

national borders. To overcome the challenges, companies

develop different strategies, tools and mechanisms, some of

which succeed, while others fail. Through research,

analysis and comparison of different theories and

approaches to the intercultural product marketing, this

study will develop an approach which the companies may use

to understand their power in case of going international;

an approach with a strong accent on culture and that

regards it as a vital factor in product’s concept and

appearance. To my mind, Intercultural Marketing is the

group of activities which lead the product to go out of its

concept by internalizing and imbibing some new factors that

adapt it to the local culture but at the same time keep its

core unchangeable.

1.1 Hypothesis

”Brand is stronger in different markets when products take into account the local culture while developing their concept and appearance.”

1.2 Goal of the paper

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The main objective of this research is to analyze and

show that in modern international trade culture plays a big

role during penetration to and getting acquainted with new

markets, it influences the concept of products, etc.

Findings will help to define “intercultural” and

“marketing” terms and their interconnected meanings, which

are quite broad and vital notions to research to be able to

find new approaches and make notable discoveries. The goal

of the paper is to create a new approach towards how

companies can go international in terms of intercultural

product marketing, not only on the example of top brands,

that have been international for many years, but small

companies that are still in the process of developing their

own mission, vision and goal. This is supposed to be done

by analyzing cultural factors and building intercultural

competence of the company. The objective and goal will be

reached by answering the following questions: How does the

cultural aspect affect the need for changes in the

appearance and concept of the product? What is the need of

the product to be as international as possible? Is it good

when the product is as international as possible? Is the

brand stronger when it’s everywhere the same as in the

local market or is the brand stronger when it is adapted to

every local market, based on cultural, social and

psychological differences? Why is being aware of the

culture and mentality of the target market important? How

should the companies build cultural competence?

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1.3 Methods of research

Within the framework of this thesis a huge set of

books and relevant reliable online articles were thoroughly

examined to be able to make some conclusions and create an

up-to-date model that can be put into practice. The above

mentioned questions will be answered with the help of

different methods, such as, conducting a detailed research

on all of the specified topics, literature overview with

references to different frameworks such as Hofstede’s

Cultural Dimensions, Onion Diagram, Brand Identity Planning

Model, Value Co-creation Model, Cultural Competence

Development Cycle, etc.

1.4 Structure of the paper

The paper consists of five main parts. The first part

defines the intercultural environment, and helps to

understand the approaches and field of modern marketing and

its tools.

The second part concentrates on modern brands, the

ways of creating a strong and successful brand in the 21st

century, brings comparison study between local and global

brands by analyzing their strengths and weaknesses. The

second part proposes a new model for the brand strength

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measurement which is aimed to create the brands’ strength

in the local market and globally.

In the third part we discuss culture and its influence

on branding, cultural, socio-economic and psychological

differences and factors that influence on marketing and

business environment. The analyses go through the question

‘what to do?’ to adapt or to standardize the product for

the specific market? To illustrate the theory some brands,

such as Coca-Cola, Rexona and Blend-a-med will be examined.

The fourth part of the paper is talking about the

export and communication: general approaches to market

entry strategies, whether there should be a separate

strategy for each country and studies the bases and

instruments of Brand Communication.

The fifth part of the paper starts with the

introduction and creation of a new approach to the

Intercultural Marketing which is aimed to help the

companies to analyze their abilities of going international

and opportunities to succeed in the context of

Intercultural Product Marketing by reaching intercultural

competence.

Finally, in the end conclusion and the subjects of

possible future research will be presented.

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2. INTERCULTURAL ENVIRONMENT AND MODERN MARKETING

Presently many companies are expanding their operations

because of the globalization and growing trade

opportunities. Many countries come into cooperation and

create free trade markets, open borders and every country

by itself tries to export more as it is the main factor of

not having a trade deficit in the end of the economic year.

To overcome these challenges, companies should develop new

strategies. At this point the role of marketing is

invaluable.

“The challenge for the Marketing Manager is to

handle the differences in values and attitudes,

and subsequent behavioral patterns that govern

human interaction on two levels: first, as they

relate to customer behavior and, second, as they

affect the implementation of marketing programs

within individual markets and across markets.”3

During the last decades of the world’s

internationalization process, importance of integrating

cultural aspects into marketing activities has been arising

along with the development of national and international

culture, politics, law and economics. Culture by itself has

3 Czinkota R. M., Ronkainen A. I., 2004, International Marketing, 7th Edition, pp. 58, United States of America; THOMSON Learning – South-Western

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more than 180 definitions (Baldwin et al, 2006) and has a

very subjective meaning for each person or nation. One of

the most correct definitions of culture is given by eminent

Geert Hofstede (1980, pp. 21-23) who defines culture as

“the collective programming of the mind which distinguishes

the members of one group from another”. Coming to the

intercultural environment, first of all it is very

important for every manager to understand what culture is,

and then develop in him- or herself cultural literacy and cultural

competence. A manager/professional needs to know what

cultural literacy is – in order to be able to function

effectively within different cultures and among different

people, with various cultural backgrounds. The culturally

literate manager that compensates for local needs and

desires, brings his or her company closer to customers and

improves the firm’s competitiveness (Wild, et al. 2007).

Along with cultural literacy goes cultural competence which

is very similar to cultural literacy but compared to the

latter, it has a more niche meaning. Cultural competence is

the ability to work together with people of different

cultures, it is especially important for the professionals

that work in HR departments, non-profit organizations, in

the spheres where employees work with people that have

different cultural backgrounds. Cultural competence

consists of four main components4: 4 Mercedes Martin and Billy E. Vaughn, 2007. Strategic Diversity & Inclusion Management magazine, pp. 31–36. DTUI Publications Division: San Francisco, CA. Nine-Curt, Carmen Judith. 1984. Non-verbal Communication in Puerto Rico. Cambridge, Massachusetts.

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Awareness of someone’s own cultural worldview

Attitude towards cultural differences

Knowledge of different cultural practices and

worldviews

Cross-cultural skills

Cultural competence is developed to be able to

understand, communicate and effectively interact with

people from different cultures. To understand the cultural

competence we need to once again say what culture is, and

one of the many definitions of culture from Nine-Curt

(1984) is as follows: “The bearer of human wisdom that

includes a wealth of human behaviors, beliefs, attitudes,

values and experiences of immense worth. It also carries

things that are offensive to a person's dignity and well-

being and certainly to others whose cultural framework is

different”. Cultural competence can also be connected with

diversity from an organizational communication viewpoint -

this phenomenon is called a diverse culture. Diversity has

to be customary and valued before an organization is

considered culturally competent or diversity competent.

Diversity has developed to include ideas focusing on

organizational culture and the intersections of power,

structure and communication where all of this can be

contributed to diversity proposals or potentially obstruct

them. “Diversity proposals are typically part of a more

human resources management approach which not only needs

employee’s input but also values it: differences are

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recognized as a connecting thing rather than an untying

one”5. Diversity is a tricky term in context but it does

not mean the same thing to all the people all the time.

While some people were born with cultural competence,

others have to develop it in themselves. This can be

achieved by examining our preconceptions and chauvinism, by

developing cross-cultural skills, spending a lot of time

with people who share their knowledge and abilities in

cultural competence and searching for models of developing

the competence in us. There are many definitions for the

cultural competence but most of them are shared by

professionals from healthcare industry because their

perspective is more useful in the wider timeline of

diversity work. A definition is: “Cultural competence is

defined simply as the level of knowledge-based skills

required to provide effective clinical care to patients

from a particular ethnic or racial group”6. It is not a

mystery that the healthcare sphere was the first promoter

of cultural competence: due to the lack of cultural

understanding in medical service delivery, poor diagnoses

can lead to mortal consequences. Cultural incompetence in

the business community can damage an individual’s self-

esteem and career, but the unobservable psychological

5 Anderson, M. Moscou, S., 1998. Racism and Ethnicity in Research on Infant Mortality, Methodological Issues in Minority Health Research. Family Practice, Vol. 30#3,p.224-2276 A project of The National Center for Cultural Competence. Georgetown University. Center for Child and Human Development. Available at: http://www.nccccurricula.info/culturalcompetence.html [21.05.2013]

18



impact on the victims can go largely unnoticed until the

threat of a class action suit brings them to light (Martin

& Vaughn, 2007). We should be careful and notice that some

definitions emphasize the knowledge and skills required to

interact with people from different societies while other

definitions talk about attitudes. Some people and

organizations try to measure the cultural competence in

attempt to offer solutions for development. The DTUI

(Diversity Training University International) brings four

cognitive components7 which altogether are necessary for

cultural competence:

Awareness

Attitude

Knowledge

Skills

Awareness is the realization of someone’s personal

reactions to people who are not like him. A police officer,

who notices some people that look like “illegal aliens”

from Mexico, has big cultural awareness of his reactions to

that group of people.

Attitude is emphasizing the difference between

training that increases the awareness of cultural

partiality and beliefs in general, and the trainings which

7 Mercedes Martin and Billy E. Vaughn, 2007. Strategic Diversity & Inclusion Management magazine. DTUI Publications Division: San Francisco, CA. Nine-Curt, Carmen Judith. 1984. Non-verbal Communication in Puerto Rico. Cambridge, Massachusetts.

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engage participants that carefully examine their beliefs

and skills about cultural differences.

Knowledge is a very important factor in cultural

competence because it shows how our values and beliefs

about equality are inconsistent with our behaviors and how

unaware of this matter we are. To improve the cross-

cultural effectiveness we should understand how our

attitude corresponds to our behavior.

Skills are practicing the cultural competence and try

to reach perfection. The gestures vary from culture to

culture and as far as they are a communication language,

good skills in using right gestures are fundamental tools.8

8 Mercedes Martin and Billy E. Vaughn, 2007. Strategic Diversity & Inclusion Management magazine, pp. 31–36. DTUI Publications Division: San Francisco, CA. Nine-Curt, Carmen Judith. 1984. Non-verbal Communication in Puerto Rico. Cambridge, Massachusetts.

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Figure 1. Circle of Developing Cultural Competence9

The diagram (see above: Figure 1) shows the Development

of the Cultural Competence in steps. We should notice that

the collection of four components of the cultural

competence represents the basic features of each of the

popular definitions. The utility of the definition goes

towards the simple integration of previous definitions. It

is the diagnostic and intervention development benefits

that can make the approach most appealing. The importance

of such a phenomena as cultural competence is, is growing

increasingly and it becomes a necessity in work, home and

social life.10

9 Trinity University. Robert William Jensen. Available at: http://www.trinity.edu/rjensen/cultures/culture_files/image002.gif [21.05.2013]10 Hayrapetyan, Hamlet. 2011. Intercultural Team Working Together: Description of the Development and Characteristics of Intercultural Communication in Caucasian Culture. Development of Measures with Practical Relevance for an Intercultural Team Working Together.Scientific Paper, Berlin, SRH University Berlin

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During last decades, the term “Intercultural” has

started developing and creating a new sphere of studies and

research. Different professors and philanthropists have

started discussions on Intercultural communication as a

base of interaction between customers and companies. Some

say that it has a mediating role of comfort on assessment

of quality (Lloyd and Luk, 2011), others say that it

addresses the issue of cultural differences in the context

of business-to-business relationships (Reimann et al, 2008)

and in contrast some think that it has a moderating role of

involvement in the relationships between customers and

employees (Baker et al, 2009). In Table 1 only some of the

latest researches on the concept of “Intercultural “are

presented:

Table 1. Intercultural Conceptualizations11

Author Concept Definition

Homes and O’Neill (2012)

Intercul

tural

“Thirty-five student

researchers (the participants in

this study), guided by an

ethnographic approach, engaged

socially over a six-week period with

a previously unknown Cultural Other.

11 Ihtiyar, Ahmad Sh., 2012. Impact of Intercultural Competence on Service Quality and Satisfaction in the Grocery Retailing: A Conceptual Framework. International Journal of Science Management, 1, pp. 13-28, Available at: http://www.academia.edu/2012995/IMPACT_OF_INTERCULTURAL_COMPETENCE_ON_SERVICE_QUALITY_AND_SATISFACTION_IN_THE_GROCERY_RETAILING_A_CONCEPTUAL_FRAMEWORK [16.05.2013]

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The PEER model (developed by the two

researchers) guided student

researchers through the

interconnected and interdependent

phases of Preparing, Engaging,

Evaluating, and Reflecting upon

their competence within these

intercultural encounters.”

Lloyd and Luk (2011)

Intercul

tural

“This study seeks to

investigate the service interaction

behaviors that elicit a sense of

comfort for the in the service

encounter, and to investigate the

mediating role of comfort on

assessments of quality, satisfaction

and positive word-of-mouth in two

industries.” (p. 176)

Sharma et al (2009)

Intercul

tural

“This article presents a

conceptual framework for

intercultural service encounters

applicable to both customers and

employees.” (p. 227)

Baker et al(2009)

Intercul

tural

“This paper aims to report a

study that focuses on the moderating

role of involvement in the

relationships between customer

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contact employees’ customer

orientation and service quality

perceptions and satisfaction.” (p.

115)

Hartman et al (2008)

Intercul

tural

“The purpose of this paper is

to develop and test a new measure

called the “culture cushion” to

account for the inherent positivity

surrounding the intercultural

tourist experience. “ (p. 259)

Reimann et al (2008)

Intercul

tural

“This article addresses the

issue of cultural differences in the

context of business-to-business

relationships.” (p.63)

Thomas et al (2008)

Intercul

tural

“In this article, we develop a

conceptualization of cultural

intelligence that addresses a number

of important limitations of previous

definitions.” (p. 123)Ward (2008) Intercul

tural

“The paper pays tribute to the

work of John Berry and the

organizational frameworks that he

has proposed for research on

identity, acculturation and

intercultural relations. It also

suggests that over-reliance on these

24



frameworks may constrain

developments in the field.” (p. 105)

Euwema et al (2007)

Intercul

tural

“This study explores the

relationships between intercultural

competencies and conglomerate

conflict behaviors in interpersonal

conflicts within an intercultural

context.” (p. 427)

Kong and Jogaratnam (2007)

Intercul

tural

“This research extends previous

work by examining cross-cultural

differences and intends to provide a

better understanding of restaurant

customers in the USA and Korea, as

well as to enable restaurant

operators and managers to better

service their clientele in the

global marketplace.” (p. 275)

Marketing, Global marketing, International marketing,

Inbound and Outbound Marketing, Customer Relationship

Marketing, etc. are types of Marketing we know, study and

interact with in our everyday life. I remember how one day

during one of our presentations, my colleague said: “The

world we live in requires marketing all the time. If we are

a product, so our clothing is our packaging”, and then I

added: “How we talk and behave, is how we sell us, so it’s

25



our marketing”. It was a very remarkable moment for us,

because at first everyone started laughing and it was

thought to be just a joke, but afterwards we thought about

it and understood that it is the simplest definition about

packaging and marketing that we could ever think about.

Being an exciting, dynamic discipline, marketing

affects our daily lives in many ways. We are all consumers,

and many people are part of the marketing process as

salespeople, advertising executives, retailers, product

managers and so forth.12 One of the most reliable sources

for getting acquainted with marketing are the books and

analyzes of Philip Kotler: “Marketing is the science and

art of exploring, creating, and delivering value to satisfy

the needs of a target market at a profit. Marketing

identifies unfulfilled needs and desires. It defines,

measures and quantifies the size of the identified market

and the profit potential. It pinpoints which segments the

company is capable of serving best and it designs and

promotes the appropriate products and services.”13 Culture

defines values and beliefs, and marketing defines needs and

desires. Together they are a perfect combination to define

Intercultural Marketing. Moreover, another definition of

12 American Management Association, The Concept of Modern Marketing, availableat: http://www.flexstudy.com/demo/demopdf/99037_1.pdf [22.05.2013]13 Kotler, Philip. Kotler Marketing Group. Available at: http://www.kotlermarketing.com/phil_questions.shtml#answer3 [22.05.2013]

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Intercultural Marketing could be stated as follows:

Intercultural Marketing is where Needs and Desires are

defined by Beliefs and Values of a specific Culture. By

discussing marketing and culture, we cannot forget about

Global Marketing, which is basically a root of

Intercultural Marketing.

Global commerce thrives during peacetime. The economic

boom in North America during the late 1990s was mainly

caused by the end of the Cold War and the penetration of

the formerly communist countries to the world trading

system. However, we should also understand the important

role that trade and international marketing play in

producing peace.14

Figure 2. Development of Modern Marketing

14Cateora, Philip R., Gilly, Mary C., and Graham, John L., 2011. International Marketing. Fifteenth Edition. pp. 3 New York: McGraw-Hill Irwin.

27

Sellers’ MarketProduction Era

(produce as much as possible)

Sales Era(convince customers to

buy what you have)

Marketing Concept(give customers what

they want)

Buyers’ Market



Modern Marketing traces its origin to the primitive

forms of trade. As people began to adopt the techniques of

work specialization, a need for individuals and

organizations to facilitate the process of exchange

emerged. Until about 1900, however, marketing was little

more than physical distribution. We can trace the

development of modern marketing through three stages – the

production era, the sales era and the era of the marketing

concept. As it is shown in Figure 2 – “Development of Modern

Marketing”, these changes took place as markets evolved

from sellers’ market to buyers’ market.15

What we have today may be described as the triumph of

international marketing. There is no proof that market

economies are more efficient than planned economies,

however governments all over the world encourage market-

based activities. We are witnessing the abolition of state

monopolies, the opening of national economies towards the

world market, and the ongoing introduction and enforcement

of rules to ensure competitive market conditions.16

Regardless from which aspect we consider the problem, in

modern business and economic environment we cannot neglect

modern marketing, international market place and the

outcomes that it gives; conversely, the trend of

international marketing is so significant that every15 American Management Association, The Concept of Modern Marketing, availableat: http://www.flexstudy.com/demo/demopdf/99037_1.pdf [23.05.2013]16 Czinkota, Michael R., and Ronkainen, Ilkka A., 2004. International Marketing. Seventh Edition. pp. 3. USA; THOMSON Learning -Western.

28



company and even country works on its marketing and

highlights its marketing activities. Thus, it could be

stated that the marketing environment has developed and

internalized in our every day’s life so deeply, that it has

become a way of not just selling what we have but selling

it in the way that the entities in front of us want to see

and want to have - people and companies acting not only in

the marketing sphere, but also generally in routine have

become professionals in making a great vision.

“International marketing is hard work.

Making sales calls is no vacation, even in

Paris, especially when you’ve been there 10

times before. But international marketing is

important work. It can enrich you, your family,

your company, and your country. And ultimately,

when international marketing is done well, by

large companies or small, the needs and wants

of customers in other lands are well

understood, and prosperity and peace are

promoted along the way.”17

17 Cateora, Philip R., Gilly, Mary C., and Graham, John L., 2011. International Marketing. Fifteenth Edition. pp. 3-4. New York: McGraw-Hill Irwin. “In response to criticisms of globalization catalyzed by the riots in Seattle in 1999, a growing literature Argues for trade as a fundamental cause of peace. For a variety of such arguments, see Jagdish Bhabwati, In Defense of Globalization (Oxford: Oxford University Press, 2004); Thomas L. Friedman, The World Is Flat (New York: Farrar, Straus, and Giroux, 2005); Clifford J. Schultz III, Timothy J. Burkink, Bruno Grbac, and Natasa Renko, “When Policies and Marketing Systems Explode: An Assessment of Food Marketing in the War-Ravaged Balkans and Implications for Recovery, Sustainable Peace, and Prosperity,” Journal of Public Policy & Marketing 24, no. 1 (2005), pp. 24–37;

29



2.1 Theories of Internationalization

In the modern world with high

technologies such as Internet, TV,

Radio and many other tools for

customizing the Marketing efforts,

going global combined with

localizing the product for a

specific market is a better

solution. While going global and

entering new markets, almost every

company starts to localize, which

means adapting the characteristics and specialties of the

local environment and culture to the vision and strategy of

the product or service. Colors should be chosen carefully,

numbers should be selected with care, time adjustment

should be kept properly, language barriers should be

followed, exchange rates and currencies should be

calculated accurately, etc. All in all, we assume that even

a small sign can negatively influence the future of the

product: “For example, under the threat of worldwide

boycott by Muslims, who considered Arabic Script of “Allah”

(See Picture 118) – the Arabic name for God – as a

sacrilege. Nike recalled a large batch of shoes with a

design on the heels which reminded of the above mentioned

William Hernandez Requejo and John L. Graham, Global Negotiation: The New Rules (New York: Palgrave Macmillan, 2008), Chapter 13.”18 Jury L. 1997. Nike to trash trainers that offended Islam. The Independent.

30

Picture 1: Nike Air Shoes with the Script of “Air”



script and agreed to build several playgrounds in Muslim

communities as part of its apology.19

Internationalization, from the first sight, is a very

simple term, means becoming international, in academic

words: “In economics, internationalization has been viewed

as a process of increasing involvement of enterprises in

international markets.”20 While conducting a research on

it, it has become clear that there is no specific

definition, but a general understanding and overall idea

stamped in our consciousness.

Internationalization is basically a model – a model of

how to go international. Starting from David Ricardo21, the

famous economist, there are different types and models of

international trade developed and one of the most famous

models is the Uppsala Model, also named The Internationalization

Process, introduced by Jan Johnson and Jan-Erik Vahlne in

1977:

“They saw internationalization as a

learning oriented process and studied

past empirical studies on market

selection and entry forms. Their model

emphasized the gradual and incremental19 Wild, John J., and Wild, Kenneth L., and Han, Jerry C.Y., 2007. International Business: The Challenges of Globalization. Fourth Edition. pp. 54. New Jersey; PEARSON – Prentice Hall. 20 Susman, Gerald I. 2007. Small and Medium-Sized Enterprises and the Global Economy. Edward Elgar Publishing. p. 281. ISBN: 1-84542-595-2.21 For more information about David Ricardo see: http://www.econlib.org/library/Enc/bios/Ricardo.html [22.05.2013]

31

Figure 3. Internationalization Process Model (The Uppsala Model)



character of international expansion.

Organizations could best reduce their

risk level by adopting an evolutionary

approach.”22

The model was a really evolutionary one, as it was

emphasizing the most important steps and activities,

discussing Market Commitment, Market Knowledge and bringing

up the base of know-how internalizing in new markets. The

main point of the model is

that the export process

and building presence in a

new market is conducted

step by step.

In Figure 323

“Internationalization

Process Model”, it is

shown that the

relationship of Market

Commitment and Market

Knowledge are rising incrementally. By starting with no

regular export activities, the level of commitment in the

new market and the knowledge about it starts to rise and

the company gets more competent in the market. Depending on

the target market it is very important for a company to

22 John A. Mathews. 2002. Dragon Multinational: A New Model of Global Growth. Oxford University Press: United States. ISBN 978-019512146923 Proven Models. Internationalization Process. Available at: http://www.provenmodels.com/586 [23.05.2013]

32



think about the special issues while exporting, e.g.

licenses, packaging, standards, fees, etc. And then of

course with the full competency in the market a company can

start developing and go to the next steps by exporting via

independent representatives, which on one hand can cost

more, but on the other hand, depending on the means of

export, can bring more advantages to that particular

company. As we see, the next step is the establishment of a

sales subsidiary which means that the level of market

competency has risen and the company is now ready to insure

a subsidiary to sell and distribute its products. All the

three steps are practically arising from export activities,

while the company should also deliver the products to the

specific target market which by itself can cause different

problems. Cateora and Graham (2007) developed the exporting

issues for business: “Exporting is an integral part of all

international business, whether the company is large or

small, or whether it markets in one country or is a global

marketer.”24 When we talk about the point where a company,

either big or small, starts exporting, there are lots of

factors and different needs for various types of companies

and especially for products that should be considered. In

Table 2 “Exporting Issues for Business”, the basic factors

that companies come across are shown, e.g. licenses,

documentation, logistics, standards, etc. In the Uppsala

model, the last step is Production/Manufacturing in the24 Cateora, Philip R., and Graham, John L., 2007. International Marketing. pp.435 – Chapter 15. Thirteenth Edition. New York: McGraw-Hill Irwin.

33



host country. Investment, production, distribution are

bases of the market processes. By meeting all these

requirements a company enters the market, and subsequently

absolutely different factors for being competent in the

desired market are revealed:

1. Marketing of the product

2. Packaging

3. Logistics/Distribution

4. Appearance of the product

5. Concept of the product

All the above mentioned points are not exhaustive that a

company faces, but most of them are directly connected with

cultural aspects of the host country: which color to

choose, which font to use for the copywriting, in what size

the text should be written in, where the consumers will

meet the product, etc. To be able to answer all these

questions every company needs to conduct researches and

find out the characteristics of the specific culture. When

Walmart entered Germany, it failed, and failed very hard25.

And the reason for that was that Walmart didn’t take into

consideration the peculiarities of the German culture. The

products are basically the same in every supermarket, but

the presentation and country specified activities are

25 Knorr A. and Arndt A. Materialien des Wissenschaftsschwerpunktes „Globalisierung der Weltwirtschaft“, Why did Wal-Mart fail in Germany? Universität Bremen, 2003, ISSN 0948-3837

34



important. Kaisers, Aldi, Lidl turned out to be stronger

competitors than US originating giant Walmart.

Today numerous theories of internationalization have

been developed, e.g. The Uppsala Model, The Eclectic

Paradigm, The industrial network approach, etc., but the

core of internationalization stays the same in all the

theories: it is the process of becoming international. So

it could be added that a model like “Intercultural

Conceptualization Approach” is needed to be developed for

companies to analyze their power in the

internationalization process.

Table 2. Exporting Issues for Business26

Leaving the Exporting Country

Physical Distribution

Entering the Importing Country

LicensesGeneralValidated

DocumentationExport declarationCommercial invoiceBill of ladingConsular invoiceSpecial certificatesOther documents

International shipping and logisticsPackingInsurance

Tariffs, taxes

Nontariff barriersStandardsInspectionDocumentationQuotasFeesLicensesSpecial certificatesExchange permitsOther barriers

26 Cateora, Philip R., and Graham, John L., 2007. International Marketing. pp.435 – chapter 15. Thirteenth Edition. New York: McGraw-Hill Irwin.

35



3. MODERN BRANDS

Brand is a name, brand is a philosophy, it is a belief;

brand is a vision, it evokes emotions and brings memories:

brand is a lifestyle. Modern brands are making their

successful way through customer loyalty, special status,

digital advantages, consumer protection, granting style to

the brand owner which many people take as their own

lifestyle. Apple is not a fruit anymore and it is not even

a company or just a brand, it is a promise, it simply

reproduces desires of people and helps them to feel the

advantages of loyalty and communication, it gives them the

feeling of power by being connected to the whole world

through just one device: “Don’t sell products, sell dreams”

– Steve Jobs.27

Modern brands tend to be as unique as possible,

because singularity guarantees a strong reputation to the

brand. Its uniqueness is the fastest key to absorb the

attention of public and create good relationship with the

target group. Modern World and modern Brands are very

similar to each other: being a product of globalization

they both go holding each other’s hands while companies

continue expanding to new markets, and since the borders

between local markets disappear the brand gains more

27 Bloomberg’s BusinessWeek. Available at: http://images.businessweek.com/ss/09/09/0929_jobs_presentations/4.htm [26.05.2013]

36



popularity and becomes more acceptable. In spite of

globalization that tries to cover the entire world, there

is still one factor that company managers should always

consider in their brand management activities – the

cultural aspect. Coca – Cola, maybe the most famous brand in

the world, with 127 year history, available in more than

200 countries28. In every type of market, it is a

recognizable and strong brand, nonetheless it has to think

about the

cultural aspects of each market. When it entered China,

after a while it was found out that the name of the brand

read in China sounds like “ke-ku-ke-la” which means “a

female horse stuffed with wax”. The management of the

company researched more than 40.000 Chinese characters and

finally they stopped on the name “ko-kou-ko-le”, which

means “happiness in the mouth”29.

Saying ‘modern brand’ nowadays implies ‘digital brand’:

“The rate of digital innovation is fast and getting faster.

Every week there is a new startup demanding attention, and

brands are viewing these companies as essential partners

and properties with whom they need to activate.”30 If

nearly 20 years ago companies did not need search engine

28 Coca-Cola company official Web-page: Available from: http://www.coca-colacompany.com/ [04.06.2013]29 Solovev G. 2012. Multifaceted Brands (Article is in Russian: Многоликие бренды). AdMe.ru. Available from: http://www.adme.ru/kreativnyj-obzor/mnogolikie-brendy-22304/ [05.06.2013] 30 Josh Nafman, digital Brand Manager for PepsiCo: Available from: http://www.digiday.com/brands/the-modern-brands-biggest-challenges/ [01.06.2013]

37



optimization and search engine marketing, these days almost

every company hires specialists in those fields to help the

product to develop and conquer the digital sphere. Out of 7

billion people living in the world, 34% (nearly 2.4

billion) are

Table 3. World Internet Usage and population Statisticsby June 30, 201231

using internet (table 3). From 2000 to 2012 there was a

566.4%32 increase in the number of internet users which

means that with these speeds half of the world will be

digitalized in only 10 years from now. People use internet

for communication, being informed, news updates,

maintaining social life and - which is most important for

us – online shopping. If someone is lazy and does not want

to go out for shopping, he/she can just visit the web-page

of his/her favorite store and order everything he/she

31 Internet World Stats. Available from: http://www.internetworldstats.com/stats.htm [04.06.2013]32 Internet World Stats. Available from: http://www.internetworldstats.com/stats.htm [04.06.2013]

38



wants/needs with door-to-door delivery. For these reasons

an inseparable part of the strategy of the modern brands is

the existence of online/digital platform. “When creating a

digital strategy, it is essential to accept that we do not

control content or conversation. As a brand, we are

speaking to the Flipboard [an application that aggregates news from

your favorite social networks and websites in one place] generation — an

army of digital natives who form the verge culture. Youth

effortlessly consume and interact with media in different

ways and across various platforms; they are resourceful,

heterogeneous, non-committal creators, both influenced and

influential. It is undoubtedly necessary to find and engage

with this demographic where they digitally reside, rather

than relentlessly, always trying to usher them back to a

brand’s owned platform. Brands are too self-centered and

must boldly act on the desire that the consumer possesses

the desire to transparently experience and interact with a

brand online.”33 In this fast moving integrity of digital

techniques, every company that has an online platform has

to think about its appearance and concept before moving to

the new market’s domain. Internet users need online

experience which will meet their cultural context. In

particular the following points have been identified which

are important to take into account:

33 Remi Carlioz, Senior Head of Digital at Puma: http://www.digiday.com/brands/the-modern-brands-biggest-challenges/ [01.06.2013]

39



1. Colors should be chosen in the right combination for a

specific culture. For example, in many cultures black

is associated with funeral, so having the web page in

black can revolt users from that specific culture.

2. Selection of numbers used on the web page is an

important aspect as in different cultures different

numbers have distinct meanings. In China, number 4

stands for being unlucky and in the US the worst

number ever is 13.

3. Every country has its own language and even if in the

US and UK the official languages are English, there is

still a huge difference between them, and the US based

consumers will negatively evaluate it if a company

makes the online platform in the UK English for the

US. Also it is very important to think about the slang

and dialects in each part of the country and try to

use the most grammatically correct version by avoiding

dialects. While in many cultures it is not accepted to

speak the dialect of the neighboring region, to avoid

offensiveness or downgrading, the companies should

speak the language of their customers.

4. The geographical position of the selected country should

be considered, as the landscapes, nature, weather are

specific for each part of the world and the together

influence the mentality of the locals. Also companies

should pay attention to the technical parts of the

geographical differences while in some countries the

40



clock times is used 24 hour and in others 12 hour by

showing the night and day time with P.M. (Past

Moonlight) and A.M. (After Moonlight).

5. While providing online shopping platform, for the

consumer’s convenience there is a need to converse the

price of an item to the local currency. In the shopping

platform all the auto calculation points of taxes,

costs, tariffs, shipment, etc. should be carefully

considered.

6. Do not forget about customer relationship management,

try to get feedback whenever and wherever possible. One

of the best tools to help yourself in correcting and

amending the online platform, is getting feedback from

the consumers in the specific culture and keeping very

warm relationships by offering customer support.

All the above mentioned points are key factors for the

modern brand’s online platform development and its success.

3.1 How to Create a Successful Brand

Brand is an identity for a specific product combined

with a promise. Companies work on building a strong brand

and creating a favorable brand image. But before a brand

becomes a “brand” it is just a product, a simple product,

similar to numerous other products in the same category. In

the beginning there is just an idea, the generator of which

decides to bring it to life, first of all by designing it,

41



then prototyping and measuring its potential success

through the testing process – to see how it works out of

his imagination, in real. Creating a product and creating a

brand out of that product or a bunch of products –

especially a successful one – are totally different things.

While the product is in the development stage, its name and

identity are registered as a trademark to protect the

rights of the product owner. The process of creating and

maintaining a strong brand continues through the lifetime

of the product. So when does a brand become a brand? To me,

it happens at a point when a product starts to contain a

promise for the customer; it evokes associations and

memories; it has its own values and benefits that are

substantial for a consumer. From the strategic point of

view the brand creation process starts from the positioning

of the product and the selection of the strategy type.

Companies should never forget to create Economic Value of

the product and Value proposition for a customer. The more

customer benefits the product has, the more it determines

the “willingness to pay”. Value Proposition is the group of

benefits a particular product offers to a customer to

satisfy his needs and which are determined by the needs,

wants, demands and expectations of the target market. In

the process of development of a successful brand the

differentiation strategy may be the best decision as it

promises high customer benefits, uniqueness of a product,

and a definite target market. From this aspect the key

42



functional areas of the company are Research and

Development, Marketing and Sales management.

Differentiation strategy puts emphasis on branding,

advertising, design, service, quality and product

innovation which is the most important requirement in the

modern successful brand creation process. When we look at

the modern market, we can simply see that everything is

already produced – the market is full of what people want

and need, their factual and basic needs are completely

satisfied. This means that companies, entrepreneurs and

individuals, that have a desire to get into the market,

have to create something new and in the process of creation

the need for that ‘new’, ‘want’ should be integrated in

people. Consequently, innovation creates new feelings and

desires in people, it reveals unknown and formerly

unrealized needs and therefore creates demand for the

product. Thus, the challenge is to make people believe that

they want what they do not need. “Your premium brand had

better be delivering something special, or it's not going

to get the business.” – Warren Buffet34. Of course,

scientific and organized approach to business is very

important but the lucky way to success goes through design

thinking, creativity, innovation, new strategies and

approach to the brand, that gives totally new emotions and

brings completely different values. As it was mentioned34 Ro S. 2012. Here are 18 Brilliant Quotes from The Greatest Investor of All Time. Business Insider. Available from: http://www.businessinsider.com/warren-buffett-quotes-2012-8?op=1 [29.05.2013]

43



before, a key factor for a modern brand to be successful is

the brand’s digital world. Unilever Ice Cream Company’s

Magnum Ice Cream’s web-page is one of the best in terms of

creating a feeling towards their product. When you go to

the web page you are totally engaged by the brand and it is

so entertaining35 that when you go to a supermarket the

next time, the memory of a funny and joyful interaction

will make you buy Magnum ice cream.

Overall, creation of a successful brand is a long and

hard process which needs and takes time for thinking,

creating and discovering new heights and sometimes even

inventing totally new and genius approaches to product

marketing.

3.1.1 The principles of a successful XXI-century brand. Value co-creation.

Brand creation process becomes trendy nowadays. A group

of well-defined and globally recognized values of the brand

gives the company much more effective organizational

framework than the financial performance indicators such as

market share, earnings per share, exchange price or quarter

earnings. Financial goals of the company do not tell the

customers anything about the company and its desired

results, when in contrast the values of the brand mean a

lot more for the public. Values help the company to

35 My magnum interactive Web-page. Available at: http://pleasurehunt.mymagnum.com/?lc=en_uk

44



differentiate itself from its competitors and a strong

brand with its own set of values guarantees a separate

niche in the minds of the customers.

“In the new world of brands there will not be

lack for competitors and limit for consumers'

expectations imposed on corporations that have

become more influential than some governments.

Noise, stillness and confusion of the public

have increased to an unpleasant level especially

over the previous decade. But I truly believe

that in this increasing chaos the difficult task

of being seen, heard and remembered, let alone

the aspiration for being desired and respected,

will not just check us, but will also reveal the

best part of us. So let’s get the things done!”

– Scott Bedbury36.

Scott Bedbury developed 8 principles for achieving brand

leadership in the 21st century37:

1. Relying on brand awareness has become marketing fool’s gold.

The first point is that awareness and recognition of the

brand is only a superficial indicator of its effectiveness.

It is more important for a strong brand to build

36 Bedbury, S. 2003. A new Brand World: Eight Principles for Achieving Brand Leadership in the 21st Century. Penguin Books. ISBN-13: 978-014200190537 Bedbury, S. 2003. A new Brand World: Eight Principles for Achieving Brand Leadership in the 21st Century. Penguin Books. ISBN-13: 978-0142001905

45



relationships with consumers. They correspond to the needs

of consumers and keep in touch with them.

2. You have to know the history of the brand to be able to develop it in

future.

Before a company finds a good way to develop its brand, it

has to understand the brand’s DNA, where it comes from and

what gives strength to it. Only by understanding this, the

company can find very effective ways to develop and enhance

the value of the brand in the future.

3. Just because you can doesn’t mean you should.

All companies that have passed the way from good to

outstanding, openly face the competition that exists in

their markets, without losing their faith that, in the end,

they will win. Honesty and sincerity allow these companies

to make the right decisions as they move forward, and do

not distort the facts. When you have the opportunities for

growth, when you see that the market requires new products

that your company can offer, doesn’t mean you should accept

the challenge, because if you start to produce diversified

products, you jeopardize the established image of the

brand. Customers may get lost and understand your brand no

more. Your company can’t be everything for everyone.

4. Transcend a product-only relationship with your customers.

Well-known brands respect the emotional needs of their

customers and satisfy them. They are looking for approaches

46



to basic feelings or deep cultural traditions of the people

that their competitors cannot understand, fake or copy.

5. Everything matters.

Brand is like a sponge. It absorbs and reflects all that is

going on around: both positive and negative. Therefore,

always protect your brand, and try to present it in the

best light.

6. All brands need good parents.

Unforgettable brands reflect the values of the people who

run the company. As in the education of children, there is

no ready-made recipe for a good brand. It is people who

give life to brands, periodically invent them in new ways,

and manage them and, ultimately, it is their pillar. And,

in fact, every brand is as strong as the weakest person in

the organization is.

7. Big doesn’t have to be bad.

The more successful the brand has become in the market, the

more it will grow and the more it gets, the more likely it

will be considered as Goliath of the industry and will be

criticized for everything it does. The key to solving this

problem is to find tangible ways and means by which a

company can use to improve the standard of living of those

who are interconnected with the specific brand.

47



8. Relevance, simplicity, and humanity – not technology – will distinguish

brands in the future.

To create a brand, stick to the basics. The names of

prominent and powerful brands are simple, relevant, and

warm. New technology may provide some additional tools,

which have new abilities, but the creation of a viable

brand still firstly requires the declaration of the major,

important values for people.

In the modern and fast developing 21st century,

companies should be open for customers, to new ideas and

should be pocketful to innovation. In 2012 McDonalds

started an advertising campaign in Germany38 which was

aimed to promote new types of drinks and meal. They

developed a web page, where customers could go and offer

their own hamburgers, sandwiches or drinks and name them.

Afterwards, the best ideas were advertised and sold in all

the McDonalds restaurants. That campaign helped McDonalds

to set relationships with customers, engage them and bring

more interest in their products which raised the sales in

the period of the campaign. “Companies spent the 20th

century managing efficiencies. They must spend the 21st

century managing experiences” 39 - Coimbatore Krishnarao

Prahalad. Starting from the times of industrialization all38 McDonald’s Corporation. My Burger Campaign. Available From: http://www.mcdonalds.de/produkte/meinburger39 Prahalad, C.K., Ramaswamy V. The Co-Creation Connection. Strategy + Business, Issue 27. Available from: http://www.tantum.com/tantum/pdfs/2009/2_the_co_creation_connection.pdf [01.06.2013]

48



the companies do specific activities to create value for

their products. Consumers also have values concerning the

products and services that they interact with and in many

cases the values of company and customers do not match.

Modern market is a jungle and it is a very important point

to be able to create such values for the products that

match the target audience’s values, needs, wants and to

satisfy them. For a company the value creation is a process

of cost effective production but for customers it is the

experience of the quality of the products and services that

they had in past. At this point comes an idea to create the

values of the product directly with the customers, called

Value Co-creation. “Because companies have historically

controlled all business activities involved in the creation

of the things they sell, it is their view of value that is

dominant. Indeed, the consumer typically has little or no

influence on value created until the point of exchange when

ownership of the product is typically transferred to the

consumer from the firm.”40 In the table 441 customers’

position out weights because in modern market it is no more

like in the 20th century when firms were selling what they

thought was right, now companies are trying to satisfy the

needs of the customers so it means that companies should

40 Prahalad, C.K. 2004. Co-Creation Experiences: The Next practice in Value Creation. Journal of interactive Marketing. Volume 18, Number 3. Availableat: http://deepblue.lib.umich.edu/bitstream/handle/2027.42/35225/20015_ftp.pdf&embedded=true?sequence=1 [06.06.2013] 41 Own Source, Self-Created. [05.06.2013]

49



reckon with customers’ wants, needs, culture and values by

connecting them to their product and getting a co-created

product or service.

Table 4 shows the key points of Value Creation

Process which are very important steps in that activity.

Table 4. Value Creation Process42

42 Prahalad, C.K. 2004. Co-Creation Experiences: The Next practice in Value Creation. Journal of interactive Marketing. Volume 18, Number 3. pp. 8. Available at: http://deepblue.lib.umich.edu/bitstream/handle/2027.42/35225/20015_ftp.pdf&embedded=true?sequence=1 [06.06.2013]

50

The point of Exchange

Figure 4. Value Creation: How companies and consumers think



WHAT CO-CREATION IS NOT WHAT CO-CREATION IS

• Customer Focus • Co-creation is about jointcreation of value by the Company and the Customer. Itis not the firm trying to please the customer

• Customer is king or customer is always right

• Allowing the customer to co-construct the service experience to suit the context

• Delivering good customer service or pampering the customer with lavish customer service

• Joint problem definition and problem solving

• Mass customization of offerings that suit theindustry’s supply chain

• Creating an experience environment in whichconsumers can have active dialogue and co-construct personalized experiences; product may be the same (e.g., Lego Mindstorms) but customers can construct different experiences

• Transfer of activities from the firm to the customer as in self-service

• Experience variety

• Customer as product manager or co-designingproducts and services

• Experience of one

• Product variety • Experiencing the business as consumers do in real time

51



• Segment of one • Continuous dialogue

• Meticulous Market Research • Co-constructing personalized experiences

• Staging experiences • Innovating experience environments for new co-creation experiences

• Demand-side innovation fornew products and services

Thus, taking under consideration all the principles

and factors is not possible for any product or service. The

important thing is to keep the idea of the product, the

desired level of the brand and taking into consideration

some principles and important key factors that rule the

market of 21st century. This will make a very productive

and enjoyable process of creation of a successful modern

brand. Therefore, it could be finalized that people are

pocketful of values, companies are pocketful of

possibilities, so bring a sunshine for people with their

values and company’s opportunities.

3.2 Brand: Strengths and Weaknesses

The strength of the brand measures its capability of

creating loyalty among customers and breeding profit for

the company in its future. There is no brand in the world

that we may call the strongest brand. Every brand,

depending on the company’s strategy and values, has its

advantages and disadvantages, strengths and weaknesses in

52



the market. It is very hard to measure a brand’s strength

accurately but in the modern science there are several

types of analyses that can be used for measuring the

competitiveness of the company in the existing competition

and accordingly try to understand how strong the brand out

of that is. Competitor Analysis tools help in discovering

the competition among firms and strengths of the brand

among companies but besides that, there are some key

factors that companies should think of to help their brand

to have more strong sides then weak sides. Every company

that has the desire to build and keep a strong and

successful brand should have a management that is thinking

out of the box, which allows to go more into innovation and

keep the product always up to date and do not let the

product to become old. Companies should always implement

research and development activities – to be up to date with

the market trends and understand the change of their

consumers’ wants and desires, which in its turn will help

them, to add new values and find new approaches to the

brand during the production process. Regardless of the size

of the company, whether it is international, global or

local, having a strong brand requires different operations

and activities. If the company goes global, it means that

it is acting in at least 7 markets and it means that the

brand is global. International brand is the one that acts

in 2 to 6 countries43. However, if a brand goes out of its43 Hollis, Nigel. 2008. The Global Brand: How to Create and Develop Lasting Brand Value in the World Market. Palgrave McMillan Publishing. ISBN: 978-0230606227

53



market of origin, there are factors that have to be

considered and which will lead to unavoidable changes in

the concept, strategy, appearance, etc. of the product. The

changes might be necessary even when a company operates in

different regions of one country. Big countries like

Germany, have different regions and each region has its

specific culture which determines different needs and

behavior of the consumers. But anyways local brands’

bonding is 35%44 higher than that of global brands. People

enter into the strongest attitudinal relationship with a

brand, into a bonding, when they believe that it is the

brand that delivers best on the most important criteria in

the category. People who are bonded to a brand are

typically at least 10 times more likely to buy it, and, as

a result, there is a strong relationship between the

proportion of people bonded to a brand and its market share

(Hollis, 2008). Most global brands fail to establish

consistently strong relationships outside their home

country. In average, fewer people bond with global brands

than with international or local ones.45 So it means that

by going international a firm has to adapt its product’s

concept and appearance to the local culture, needs, wants,

tastes and other factors that affect the establishment of

the product in the new market. Building and establishing

cultural competence for the new market is one of the most44 Hollis, Nigel. 2008. The Global Brand: How to Create and Develop Lasting Brand Value in the World Market. Palgrave McMillan Publishing. ISBN: 978-023060622745 Hollis, Nigel. 2008. The Global Brand: How to Create and Develop Lasting Brand Value in the World Market. Palgrave McMillan Publishing. ISBN: 978-0230606227

54



important factors for the product’s success. These

activities are not free, they will cost a lot of money, but

the outcome will show positive numbers in the balance

sheet. The Global Brand Survey46 revealed that many people

think that the brand should be a part of the national

culture, which is a significant driver for both local and

global brands. At this point, it is worth to mention a

factor that local brands have a field advantage and it is

their factor of success. Global brands are strong in terms

of popularity and sizes of the company (economies of

scale), but the local ones are sometimes getting

traumatized in the competition, but actually their local

culture adhesion is a move with the horse as basically the

local brand contains in it at least 50%47 of the culture,

which do not have the global ones. There are, of course,

many factors to analyze in competition, but surely one

factor is dominant in business when going international.

Remember: culture matters!

3.2.1 Global Brands: strengths and weaknesses

Global brands are the ones that operate in at least 7

countries. It is an obvious fact that if a company could

manage to take its brand to 7 countries, it is a strong

brand. But the important point is how they achieved that

46 Hollis, Nigel. 2008. The Global Brand: How to Create and Develop Lasting Brand Value in the World Market. Palgrave McMillan Publishing. ISBN: 978-023060622747 Hollis, Nigel. 2008. The Global Brand: How to Create and Develop Lasting Brand Value in the World Market. Palgrave McMillan Publishing. ISBN: 978-0230606227

55



strength and what were the forward pushing factors. Each

brand, depending on the status, has its strengths and

weaknesses (See Table 5). Global brands in this case have

their special quality of being strong or the special

concept of being weak. When a company takes its brand to

other countries, it means it is ready and eager to invest.

For some time these companies accumulate revenues which are

later spent on new investments. This way in the moment of

entering a new market, they have a strong power to invest,

which can sometimes shock the local competitors. For

example, if Starbucks enters a new market, where there is

no strong competitor to it, it will set totally new

strengths and will give a birth to competition in the

market, where many local companies may either succeed or

fail. When a brand becomes global, it means that it

provides high quality goods, as it is, first of all,

locally trusted by customers and internationally known for

its products and services that are being provided. This

means that in the new market, an advantage of the

international brand is that it is already known, people

have heard of or experienced its high quality product or

service. International brands create new propositions and

set new standards in the new markets, and local firms tend

to adapt their products to the new standards (but

sometimes, as mentioned in the previous chapter, they can

continue doing what they are used to doing, appeal to their

being local, and accent their devotion to local

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traditions). Every global brand has its brand identity,

which is the expression of the brand, including its

appearance, concept, communication with customers,

trademarks and of course its name. All this brings the

presence in the market and generally global firms create

strong presence as it is a part of their portfolio of

having a strong brand.

Table 5. Global Brands: Strengths and Weaknesses48

Global Brands

Strengths Weaknesses

Strong power to invest Low Bonding

Setting new trends Fail to establish strong consumer relations

High quality products and services compel new propositions

New Markets, new factors: not competent

Stronger presence and identity

Incompetency in culture

Every new market brings its barriers and sometimes

because of those barriers there are fails that may occur.

The first weakness for the global brand when entering new

market is the low brand bonding. In general, people are

more bonded to local brands, as local brands include more48 Own Source, Self-Created. [07.06.2013]

57



of the local culture. Due to the differences between the

global brand’s home country and new market it is often very

hard to establish strong consumer relationships and

companies fail in their consumer relationship management

because of not being competent with the market’s consumer’s

needs, specific culture and trifle relationship ways. Being

not competent with those factors, reveals a huge bunch of

problems in managing the brand, as if a customer gets

disappointed with the product once, he will never try it

once more. Therefore, if the company has a desire to become

a strong global brand and be successful in the new market,

it should adapt its product to the specific market and make

a vision of being a brand of a local origin.

3.2.2 Local Brands: strengths and weaknesses

Local brand is very special, as by being only a national

product, it is a sign, an allegory for that geographical

region and it automatically brings a special feeling for

customers, feeling of patriotism, and feeling of supporting

their country. But like the global and international

brands, local brands also have their strengths and

weaknesses, the most common of which is show in Table 6. The

strength of the local brand is just the status of a

national product, as it brings a lot of economic and social

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profits for the country. That is why people are more bonded

to local products than to global ones and that difference

is 35%, which is quite a significant index. Local firms are

very competent with the market, as, first of all, they have

been operating in that market all the time, their founders

had been consuming the market’s products and services

before setting their own trends. Being competent with the

market’s driving factors, the companies are also totally

able to consider all the cultural aspects and add them into

the set of values of their brand and in its concept and

appearance - a factor which is highly appreciated by the

customers as they feel very comfortable with those

specifically and characteristically designed products.

One of the weaknesses of the local brands is that they

are generally weak from finances. In their local market

they have small market share and they are mostly small or

medium enterprises. It does not allow them to invest in

order to expand the scale of operations and places of

commerce. As soon as their brands are not widely spread, it

is a common phenomenon that they do not have a strong brand

identity and do not get into relationships with customers

which makes the brand weaker. All in all, instead of having

weak sides local brands can be strong competitors for the

global firms as even if their presence and identity in the

market is not so high, they are a typical example of a

national culture, which is raising more faithfulness in

people in terms of psychological aspects. As the best

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example for what was presented above can serve the history

of The Coca-Cola Company in India. In 1977 Coca-Cola left the

Indian Market, because the government was pushing Coca-Cola

to reveal its secret recipe. After that the government was

trying to establish national Cola, it was called Thumbs Up,

but they failed. In 1993 Coca-Cola Company acquired that

brand and re-entered the Indian market49. Nowadays it is

being sold more than any of Coca-Cola’s products50.

Table 6. Local Brands: Strengths and Weaknesses51

Local Brands

Strengths Weaknesses

High Bonding (35% higher than Global ones)

Small market share

Competency with the market Not always up to date with the trends

All the cultural componentsare considered

Low brand identity

National Product: High confidence of consumers

Low presence in the market

49 Halve A. 2011. Darwin's Brands: Adapting for Success. Sage Publications Pvt. Ltd50 Coca-Cola Company India Web-Page. Available From: http://www.coca-colaindia.com/products/thumsup.html51 Own Source, Self-Created. [07.06.2013]

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3.3 Model Prototype for “Brand Strength Measurement”

We have already discussed the ways of measuring the

strength of the brand and found out that there is no

concrete form or a model or a type of measurement which can

measure the strength of the brand. Several companies have

developed their own tools to measure the strength of

brands. Some of the most successful companies among them

are Nielsen and Interbrand52 which have their own ways and

models for measurement and every company generates its own

approach and model to do that. I would like to propose a

two-step (See Figure 553) model, where the primary factors

are analyzed first of all and afterwards the Secondary

factors are considered. In the end they are connected and

come to a joint point/grade which shows how strong the

brand is.

Below are presented the offered factors, all in all

15, which basically include all the points and aspects that

are included in a brand. In the Table 7, all the factors are

52 Nielsen: http://www.nielsen.com/us/en.html , Interbrand: http://www.interbrand.com/en/Default.aspx53 Own Source, Self-Created. [07.06.2013]

61



defined and it is explained why they are used in this

model.

Having all these factors makes this model more useful

as the factors take into consideration the brand as a broad

complex and squeeze the most out of it. The difference of

this model from the others is that it tends to be directed

to a customer from a customer’s point of view and considers

it externally, as a 3rd person who looks at the brand from

aside.

The proposed model could serve as a sample which can

be changed and modified for serving its purpose fully and

bring more value to the measurement process.

Table 7. Brand Strength Measurement: Factor’sExplanation54

Brand Strength Measurement

Factors Definition

1. Financial History Financial facts & figures ofthe company, old, current and future earnings of the company which show the financial situation of the company.

2. The Brand History The history of the brand creation, how it was done, steps and the “tale” of the brand which is sold to customers.

3. The Brand Value The financial value of the

54 Own Source, Self-Created. [08.06.2013]

62

Figure 5. Brand Strength Measurement Model



brand

4. Proficiency of the Brand The gained experience and proficiency of the brand in different markets.

5. Differentiation and CostLeadership

Customers tend to get a product or service that is different from others, with low cost and high quality. Therefore, the differentiation and cost leadership strategies have been conducted for the brand.

6. Applicability of theBrand

Whether the brand is applicable with the market’sconsumer’s needs and desires.

7. Precision of the Brand How precisely the brand delivers its set of values to customers.

8. “Status Existence” ofthe brand

Whether the brand gives a specific “Status” to the customer.

9. Acceptability of thebrand

How much the brand is accepted by the customers and generally in the market and among competitors.

10. Flexibility of theBrand

How much the brand is flexible with the market changes, how fast it reacts to new trends, how it can be

63



changed but at the same timestay relevant for the consumers.

11. Secureness of theBrand

How much the brand is protected: trademark, legal acts, geographical indications, etc.

12. Competency of theBrand

How much the brand is competent with the new market before entering and after entering. Its competency level.

13. Adhesion to thebrand

The adherence to the brand, first of all from the employees, and then the loyalty of the customers andsuppliers.

14. Reliance on thebrand

People rely on the brand as it is a part of their valuesand propositions. This showsthe level of trust towards the brand from consumer’s and company’s points of view.

15. Cultural Commitmentof the Brand

How much the brand is committed to the local culture, how much it is adapted and conceptualized by the local cultural standards and how it reflects itself in the eyes of customers, is it perceived as a part of theirculture?

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4. THE INFLUENCE OF CULTURE ON BRANDING

Culture is the set of values, beliefs, assumptions,

traditions, patterns and a sample of lifestyle which

collects people in one group. Different countries,

different regions, different histories and different

cultures. Each culture determines its specific factors with

which people live and, being customers, consume products

and services by following their usual affairs of everyday

life. Culture sets rules and influences the individual

behavior. It has an impact on the consuming factors as

consumers use the products which they are more comfortable

with. Following the cultural history and psychology,

customers instinctively follow specific consumption

samples. “Successful brands have been able to adopt their

branding strategies in line with this dominant cultural

philosophy and weave their brands into the cultural fiber”

– Martin Roll55. Many successful brands like Coca-Cola,

McDonald’s and Starbucks after a while being in the

international level, understood that adaptation of their

products to the host market is the most important factor in

building successful and strong brand. While entering new

market, it is an unavoidable process that firms face since

the new markets have new values and needs which should be

fulfilled, otherwise the brand will just simply fail.

Adaptation means bringing new components into the products,55 Branding Strategy Insider, Global Branding. Available at: http://www.brandingstrategyinsider.com/global-branding [09.06.2013]

65



which are needed for building brand identity in the new

market. New components usually arise from the specific

cultural gears and to understand what is needed to be added

or removed from the philosophy and values of the brand, the

companies should start researching the market and get as

competent as they can. Saying market, means the group of

people with their everyday activities, lifestyle and

philosophical orientations. These people get into

relationships with the products and services if they

fulfill their needs and wants and, what is a very important

part that the product does not take the customers a lot of

time to get or search for, which brings additional strength

and advantage for the brand.

4.1 Culture and Cultural Differences

Culture has been defined in many ways and nowadays we

can find at least 180 definitions (Baldwin et al, 2006) of

it. One of them is “The 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

66Figure 6. The „Onion Diagram“: Manifestations of Culture at Different levels of Depth (Hofstede, 2001)



striving” (Samovar & Porter, 2003, p. 8). Culture and its

differences are coming from very old times, thousands of

years of history and development of people, different

groups, nations and the world. It does not matter how many

definitions there are for only one term, as its meaning is

different from culture to culture, for specific groups of

people the term “culture” has its meanings, and every

person perceives culture in a unique way, which is a

special part in his internal world. Symbols, Heroes,

Rituals, Values and Practices basically build the base of

each culture and here is where the difference comes from.

The difference in culture is not only because of the

geographical position or spoken language of the country, it

is because of the history, it is deeper than we can think,

as it has developed along the development of people. In the

Onion Diagram (see Figure 6), are shown the 4 main factors,

where all they are connected with practices, and that

experience, coming from there, forms the culture of the

specific group of people. The sign with half-moon and a

star is a traditional symbol in Muslim countries and due to

Religious differences this sign cannot be used everywhere.

This kind of simple differences occur even inside one

single country, from region to region, that is why, when a

firm operates not only in the region where it is based but

also takes its products to other regions of the country, I

do not call it local, I prefer calling it Inter-country

operating firm.

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In the modern world, culture is often seen as a

pattern, way of life, system of some processes or

activities, which include those symbols and attitudes which

that specific culture has, and it is considered to be a

structured culture as they follow their roots, beliefs,

life concepts or behaviors. Culture is also often

considered as a process which is dynamic and ongoing,

because as time goes by, people change and also change

their culture with them. It could be considered as the

reason of globalization, building single economies. For

instance, regarding the system of European Union, where

many countries are like one single country, a federation,

comes an interesting thing. “I feel Dutch at home and very

different from other Europeans, such as Belgians and

Germans; in Asia or the United States, we all feel like

Europeans.”56 This means that people start having a double

type of culture, where in Europe they have their own

nationality, but outside of Europe they are all Europeans.

We have to remember: “Culture is not the same as identity”

(Hofstede, 2001).

Therefore, from the business point of view, “culture”

should not be considered as a “…set of values and beliefs…”

but as a “…set of wants and desires, which, being

fulfilled, realize the required level of needs for

56 Hofstede, Geert H. 2001. Culture’s Consequences: Comparing values, behaviors,institutions and organizations across nations. Second Edition. Chapter 1, pp. 10-11. Thousand Oaks CA: Sage Publications.

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systematic circulation of everyday life”. “As the world’s

cultures are characterized by both differences and

similarities, the task of the marketer is twofold” (Keegan,

Green, 2005). From the entrepreneurial point of view, the

marketers should first of all study the culture of the

country where they are going to operate in as it gives a

competitive advantage and helps in the marketing activities

planning process. By understanding the culture, the

marketing activities will be, of course, adapted to the

specific culture which will help to avoid unwanted costly

marketing campaigns and will be executed in a correct,

structured way, which will bring to a successful entrance

into the specific market with its specific cultural

differences as a result.

4.2 Socio-Economic Differences

“Culture is the moral and social passion for doing well.

It is the study and pursuit of perfection, and this

perfection is the growth and predominance of humanity

proper, as distinguished from our animality” (Harrison,

1971, p. 270). Socio-economic status of the country and the

socio-economic groups (SEG) in that country form the

customer segments of the products that exist in the market

and help the companies to understand which customer

segments they can concur when they enter that market with

their product. By analyzing the socio-economic status they

understand if their product can be competitive or not. The

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World Bank Group classifies countries into 3 types57: low

income, middle income and high income countries. Out of

this, in each country there are different groups of people

with different socio-economic statuses and the main factors

to classify the groups of people within the considered

country are education, income, health and occupation. The

DJS Research LTD in the UK, described the socio-economic

groups:

“Market Research agencies often divide the population

into different groupings, based on the occupation of the

head of the household, for the purpose of

drawing comparisons across a wide range of people - it is

used to see how people in differing socio-economic

situations react to the same stimuli. The groups are most

often defined as follows:

A - Higher managerial, administrative, professionale.g. Chief executive, senior civil servant, surgeon

B - Intermediate managerial, administrative,professional e.g. bank manager, teacher

C1 - Supervisory, clerical, junior managerial e.g.shop floor supervisor, bank clerk, sales person

C2 - Skilled manual workers e.g. electrician,carpenter

D - Semi-skilled and unskilled manual workers e.g.assembly line worker, refuse collector, messenger

E - Casual laborers, pensioners, unemployed e.g.pensioners without private pensions and anyone livingon basic benefits”58

57 World Bank Group. How We Classify Countries. Available from: http://data.worldbank.org/about/country-classifications [10.06.2013]58 Market Research World. FAQs about Market Research. “DJS Research”LTD UK (http://www.djsresearch.co.uk/). Available at:

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Depending on the country’s class, the socio-economic

groups can be different and have different sizes. In

general, the socio-economic groups are relative to the

country’s economic class, but it may also happen that the

SEGs are very polarized in one country, which means that

there are only people with either very high or very low

income, middle income class is almost absent.

Socio-economic differences of countries are not

determined only by the income class or the amount of SEGs.

While entering the market, in terms of Socio-Economic

factors of the country companies should also consider the

demographical aspects. For example, for a children’s food

company, it is very important to find out the birth rates

in the country, the mortality rate by birth, the abortion

rate, etc. All this draws the picture of the segment that

the children’s food company wants to reach – it is the

first important thing to clarify before entering the

market. Following this example, Germany has one of the best

positions in the world, in every aspect. It has one of the

lowest Child mortality rate (4 per 100059), the sex-

selective abortion rate is in the normal ratio (100 boys to

104-106 girls60) and the population under 14 years old is

approximately 10.634.000 (13% of total population61). These

http://www.marketresearchworld.net/content/view/2918/78/ [11.06.2013]59 World Bank Group. Germany Statistics. Available at: http://data.worldbank.org/country/germany [12.06.2013]60 World Bank Group. Germany Statistics. Available at: http://data.worldbank.org/country/germany [12.06.2013]61 World Bank Group. Germany Statistics. Available at: http://data.worldbank.org/country/germany [12.06.2013]

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numbers are very attracting from the first point of view

but for the children’s food company Germany cannot be a

desired market, because only 13% of the population is under

14 years old. The target desired market for that company

can be Egypt where population under 14 is 31% of total62

(25.587.400 approximately). This is a two and a half times

bigger number which leads to building a better market

positions there. Combined with several other factors these

results form the overall picture of that market and the

desired consumer segment.

In Germany and Egypt, the Primary School Enrollment

Gross Rate is 102%, which means that all the school aged

people and plus older people are enrolled to schools. With

the Adult Literacy Rate Indicator63 Germany is ranked in

the 5th place, where the mean years of schooling are 12.2

but for example Ukraine is in the 78th place. Here the mean

schooling years are only 11.3. This means that Faber-

Castell64 will firstly concentrate on Germany and Egypt

rather than on Ukraine because of the social differences in

the schooling systems and rates in these countries.

With the health index, Germany is in the 5th

position,65 and in the list of different indexes more than

62 World Bank Group. Population ages 0-14 Statistics. Available at: http://data.worldbank.org/indicator/SP.POP.0014.TO.ZS [12.06.2013]63 UNDP. International Human Development Indicators. Available at: http://hdrstats.undp.org/en/indicators/101406.html [12.06.2013]64 Faber-Castell - worldwide manufacturer of stationery65 UNDP. International Human Development Indicators. Available at: http://hdrstats.undp.org/en/indicators/72206.html [12.06.2013]

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190 countries are presented, which allows to see the whole

portrait of the country which helps the companies operating

in the health services field to concentrate their

operations and find target markets.

Modern world and existing international organizations

make all the statistics and information available for the

whole population of the world and with that information

every individual or a company can get the desired result.

From country to country, and even from region to region

socio-economic differences can be very significant,

therefore, in marketing and in intercultural product

marketing they are the first thing to consider for the

Chief Marketing Officer of the company.

4.3 Adaptation vs. Standardization

When there is a decision to go international, it means

that the next question will be, to keep the product as it

is in the home market or adapt it to the new market? A

company has four basic alternatives in approaching

international markets: (1) selling the product as it is in

the international marketplace, (2) modifying products for

different countries and/or regions, (3) designing new

products for foreign markets, and (4) incorporating all the

differences into one product design and introducing a

global product (Czinkota and Ronkainen, 2004). Adaptation

and Standardization are totally different approaches and

demand totally different activities. If Standardization is

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a way to make a global brand which is everywhere the same,

like Gucci, Adaptation is making a product which is

modified for each new market, to its characteristics,

specific factors and culture, like Coca-Cola. They both

deal with different factors. Standardization is working and

routing activities on keeping the product standard

everywhere and making a general product or brand which is

used everywhere in the same way. Adaptation is the circle

of activities and operations which change the product

according to the needs, habits, and wishes of a consumer in

the desired market.

In the process of both, there are factors that each of

them have to deal with. Table 8 and Table 9 illustrate all the

factors that they meet within the Standardization and

Adaptation processes in the following 5 directions:

Product

Price

Place

Promotion

People

Processes

Physical Environment

It is obvious that every process has its advantages

and disadvantages. The most important advantages of the

Standardization process are the Economies of Scale, where

the larger the production is, the lower are the costs;

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economies in product research and development, economies in

marketing, economic integration and, what is also very

important, when companies practice standardization they no

longer compete in the local competition, they enter the

Global Competition.

Another advantage of standardization process are

economies of scale of communication which include design

and advertising. A package for a global brand may be

designed in, for instance, Sweden, but the product wrapped

in it is sold all over the world; the Television commercial

may be created and shot somewhere in Russia, but be

broadcasted all over the world. This means cutting down the

costs. Standardization gives opportunity to set up the

product in the market very fast and reinforces the image of

the company as a result of worldwide campaigns. But it can

also happen that because of standardization companies may

face loss of advertising effectiveness. It can lead to the

damage of the image of the product in the long-term

activities.

Table 8. Standardization process in the framework of 7P concept66

Standardization

66 Vrontis D., Thrassou A., 2007. Adaptation vs. standardization in international marketing – the Country-of-origin effect. Innovative Marketing. Volume 3 (4). pp. 12. Available from: http://www.businessperspectives.org/journals_free/im/2007/im_en_2007_04_Vrontis.pdf [13.06.2013]

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Product Price Place Promotion People,Processes,Physical

Environment

Productioneconomies of scale

Better andeasier Control

Transfer of efficiencyand experience

Economies of scale

Achieve consistency with customers

Economies in research and development

Price uniformityand consumer mobility

Economies of scale

Consumer mobility and consistency with customers

Offer a universally appealing message and image

Stock CostReduction

Worldwide distribution throughmultinational chain stores

Create world-wideuniformity

Achieve a strong corporate identity

Consumer Mobility

Synergeticeffects

The creation of a global community of loyal employees who work to achievethe corporate mission

Create world-wideuniformity

One universal meaning and promise of

The development of know-how’s

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the product for as consumer

Psychological meaning for consumers

Better identification by the customer

Consistency with consumersImproved Planning and controlSynergicEffects

If Standardization has to deal with numerous factors

during its process, Adaptation is a longer and more

complicated process, which requires long-term orientation.

To summarize, adaptation mainly means differing the

conditions of use of the product, it goes more under the

Government regulatory processes, takes into account

consumer behavior patterns and starts becoming more or less

local, pays attention to local competitors and to the local

culture of competition. This gives an excellent local image

to the brand and the company. Indeed, it is a great

advantage that the company is competent with the market and

meets the specific needs of the host market. First of all,

this gives an advantage of being very flexible and have

opportunity to react to the changes of the market. It is

77



obvious that adaptation needs a lot of various activities

and it does not allow the company to cut its costs,

therefore it is quite expensive for the company to choose

the path of adaptation. Discrepancy occurs during the

adaptation process and it affects the company’s global

image. Companies should develop different controlling

activities for their advertising campaigns, otherwise the

new ways and the execution of adapted marketing campaigns

can go out of the control.

In general, consumer goods require product adaptation

because of their higher degree of cultural grounding. The

amount of change introduced in consumer goods depends not

only on cultural differences but also on economic

conditions of the target market (Czinkota and Ronkainen,

2004). Product adaptation is not only the work of the

company but it also affects the consumer side, by their

cultural and psychological factors which themselves affect

the product adaptation process.

Table 9. Adaptation process in the framework of 7P concept67

Adaptation

Product Price Place Promotion People,Processes,Physical

67 Vrontis D., Thrassou A., 2007. Adaptation vs. standardization in international marketing – the Country-of-origin effect. Innovative Marketing. Volume 3 (4). pp. 19. Available from: http://www.businessperspectives.org/journals_free/im/2007/im_en_2007_04_Vrontis.pdf [13.06.2013]

78



environment

Meet Differences at the stage of development

Meet development stage differences

Meet different development stage and consumer buying behavior patterns

Meet Differences at the stage of development

Motivate and empower employees

Meet required standardsMeet consumer differences in taste, needs and wants

Meet exchange rate fluctuations

Meet differences in the physical environment


Allow flexibility in meeting consumer non-identical needs

Meet Socio-Cultural Differences

Market Demand rate

Number andsize of intermediaries involved.

Meet different legal and political requirements and restrictions

Meet localcompetition and competitive practices

Meet Differences in lifestyle

Meet competition and competitive practices

Meet market size requirements

Meet Socio-Cultural constraints

Psychological meaning, effect on the consumer

Meet differences in consumer perceptions

Meet differences in the Product Life Cycle

Specialization amongchannels of distribution

Meet differences in technology

79



Meet differences in beliefs and consumer practices

Meet different legal and political requirements

Differences in distribution structuresand patterns



Meet different legal and political requirements and restrictions

Meet differences in consumer perceptions


Differences in logistics decisions


Meet differences in technology


Differing consumer buying patterns

Meet consumer purchase and use motivational factors

Meet consumer’sdifferences in taste

Meet localcompetition and competitive practices


Meet dissimilarity of buying motives

Meet localpackaging requiremen

Meet lack of identical

80



t issues availability of media

Meet different legal and political requirements

Meet different consumer media usage patterns

The Cultural and psychological factors affecting the

product adaptation basically consist of 3 main points68:

1. Consumption Patterns

2. Psychological Characteristics

3. Cultural Criteria

These 3 factors include different questions:

1) Consumption Patterns

a) Pattern of Purchase

i) Is the product or service purchased by relatively

the same consumer income group from one country to

another?

ii) Do the state family members motivate the purchase

in all target countries?

iii) Do the state family members dictate brand choice

in all target countries?

iv) Do most consumers expect a product to have the

same appearance?

68 Henderson, Steuart B. „Standardizing Marketing for the InternationalMarket”. Colombia Journal of World Business, Winter 1974. Pp. 32-40.

81



v) Is the purchase rate the same regardless of the

country?

vi) Are most of the purchases made at the same kind

of retail outlet?

vii) Do most consumers spend the same amount of time

making the purchase?

b) Pattern of Usage

i) Do most consumers use the product or service for

the same purpose?

ii) Is the product or service used in different

amounts from one target area or country to another?

iii) Is the method or preparation the same in all

target countries?

iv) Is the product or service used along with other

products or services?

2) Psychosocial Characteristics

a) Attitudes toward the product or service

i) Are the basic psychological, social and economic

factors motivating the purchase and use of the

product the same for all target countries?

ii) Are the advantages and disadvantages of the

product or service in the minds of consumers

basically the same from one country to another?

iii) Does the symbolic content of the product or

service differ from one country to another?

iv) Is the psychic cost of purchasing or using the

product or service the same, whatever the country?

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v) Does the appeal of the product or service for a

cosmopolitan market differ from one market to

another?

b) Attitudes Toward the Brand

i) Is the brand name equally known and accepted in all

target countries?

ii) Are customer attitudes toward the package

basically the same?

iii) Are customer attitudes toward pricing basically

the same?

iv) Is brand loyalty the same throughout target

countries for the product or service under

consideration?

3) Cultural Criteria

i) Does society restrict the purchase and/or use of

the product or service to a particular group?

ii) Is there a stigma attached to the product or

service?

iii) Does the usage of the product or service

interfere with tradition in on for more of the

targeted markets?

Analyzing all the criterions and questions, it becomes

obvious how the adaptation should be done and if there is

need for adaptation for that specific product, type of

products or a group of products.69

69 Henderson, Steuart B. „Standardizing Marketing for the InternationalMarket”. Colombia Journal of World Business, Winter 1974. Pp. 32-40.

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4.4 Case Study

As a result of globalization people tend to unite.

Racial, national, ethnical and religious differences matter

in their own kind. Many of us want to be a part of a global

village, where everyone knows each other, where every

person strives to be a part of the whole. We all want to

belong to a larger group of people with the same points of

view, the same taste, but not lose our cultural roots and

value system. We have the Internet, we have smartphones and

social networks which help us to communicate with each

other and keep in touch with friends and acquaintances, but

the deeper they penetrate to our routine, the lonelier we

feel. The aspiration for being with people like us is

caused by this feeling. How can people achieve this goal

nowadays? Well, the simplest and the most accessible way is

through consumption of certain products, or better, brands

that are now symbols of this or that social group, which

are media of a well-established system of values and have

become a standard of a lifestyle. Therefore, people tend to

be alike.

The best example is Apple Inc. with its products. There

is only one design available for each of its products,

which are manufactured in millions of copies. But people

like them. Why? Because all over the world Apple passes a

message - “Think different”70. Well, if you want to be a

part of the group of outstanding and creative, successful70 Apple Official Web-Page: http://www.apple.com [19.06.2013]

84



and innovative people with great taste, you should use an

iPad or an iPhone. Apple brings paradox to our lives

because it promises uniqueness. But it does the same for

millions of other users.

Another example is the Swiss brand of watches Swatch71,

which is positioned as a necessary accessory for happy72,

stylish people who lead a colorful lifestyle. Wherever in

the world you visit Swatch store, you’ll see the same

interior design and absolutely identical assortment. Here

is what globalization and standardization are about.

Parallel to these processes, we can see that in the

result of superfast pace of life, all the difficulties that

life puts in front of consumers and all the unrealized

plans and desires, people choose brands that are winners,

leaders, giants and are the most successful in their

category. For example, out of all the cokes73 42% of

consumers prefer Coca-Cola. Everyone knows that Coke is the

leader. So when it comes to making a choice, people choose

the leader, because of the assumption that “majority can’t

be wrong” could prefer the wrong product (notwithstanding

is the fact that in blind tests people mostly prefer

Pepsi). This creates a vicious circle. For instance, if a

71 Swatch Official Web-Page: http://www.swatch.com [19.06.2013]72 Lury C. 2004. Brands: The Logos of the Global Economy. Routledge publications.73 Russell, Mallory. 2012. How Pepsi Went From Coke's Greatest Rival ToAn Also-Ran In The Cola Wars. Business Insider. Available from: http://www.businessinsider.com/how-pepsi-lost-cola-war-against-coke-2012-5?op=1 [20.06.2013]

85



company is only at the 7th place in the competition, it has

little chances to become a leader. Then they should

concentrate on a small group of people – target, do

segmentation, establish long-term relationships with them

and do everything customers expect.

It is quite easy for a monster leader to enter new

markets. Compared to small companies and local brands they

benefit from economies of scale. And again: standardized

product, all over the world, affiliation with something

huge, accepted all over the world and the expectation that

if they start using this product, they will experience its

success by themselves because it is a lifestyle product.

Economies of scale explain why so many multinational

companies turn to standardization and prefer mass

production. Adaptation means extra expenses which is not

welcomed.

But there is another side of the world market,

consumers and products when the brand has to adapt its

product to local market. It happens when the cultures,

religion, traditions greatly vary and the products are fast

moving consumer goods, which do not make a lifestyle but

consumer’s life more comfortable and easy going.

Adaptation can be regarded as a good solution and be

practiced when it comes to Fast Moving Consumer Goods which

are not associated or linked to a specific lifestyle. These

are, for example, tooth-pastes, not expensive coffees or

86



just detergents. Here we have Crest74 or Blend-a-Med75 which are

the same toothpaste but with different names in different

regions, as Crest in Russian means Holy Cross and people in

Russian speaking countries would hardly buy it. Rexona & Sure

& Degree76: Deo spray Rexona is called Sure in England and

Degree in North America.77 In case of this type of products

adaptation is welcomed because the motives of such

purchases are almost disconnected from lifestyle and here

culture and its components forces companies to adjust their

business policies and practices to be able to be

competitive in the market. In Shanghai, KFC serves porridge

for breakfast and Peking Duck burgers for lunch. In

Beijing, Starbucks serves green and aromatic teas. In

Shenzhen, Coca-Cola produces carbonated fruit drinks and

bottled water. The brands are indisputably western and they

are carving out good market share as global businesses. But

they have also learned that success in the emerging markets

requires adaptation to local tastes, attitudes and

values.78

74 Crest Official Web-Page: http://www.crest.com [19.06.2013]75 Blend-a-med Official Web-Page: http://www.blend-a-med.de [19.06.2013] 76 Rexona Official Web-Page: http://www.rexona.de [20.06.2013]77 Solovev G. 2012. Multifaceted Brands (Article is in Russian: Многоликие бренды). AdMe.ru. Available from: http://www.adme.ru/kreativnyj-obzor/mnogolikie-brendy-22304/ [26.06.2013]78 Vorhauser S. S. 2012. Going 'Glocal': How Smart Brands Adapt To Foreign Markets. Forbes. Available from: http://www.forbes.com/sites/sylviavorhausersmith/2012/06/22/cultural-homogeneity-is-not-an-automatic-by-product-of-globalization [27.06.2013]

87



Adaptation plays a big role in the market penetration

and makes the brand strong as it becomes very acceptable by

the consumer by having taken into account the local culture

and preferences in the appearance and concept of the

product.

5. EXPORT & COMMUNICATION

Nowadays’ managers are looking for a new market every

day, they are looking for opportunities to export their

products to emerging and developing countries and get more

expanded in the international market. By exporting its

products and services to international level, doing

international trade activities, a company puts deeper

routes in the way of becoming global investor or just being

more expanded in the international trade. Every manager is

deeply researching and exploring their desired markets to

have reliable information about them which will lead to

right decision on when and how to enter the new market.

Managers have to find the right moment and the right way of

expanding, which means trying their power in global

marketing which is not an easy work. Understanding where to

export is a primary point but the activities and operations

conducted beforehand, in addition, need communication

skills, because every new country as a new market, has its

specific ways and factors that affect the trade operations

and export-import regulations. During the exporting process

there are different barriers which could occur. Some of

88



them appear in the beginning and others - at the later

stages of the process. Those barriers can differ and vary

from company to company, for example, lack of finances,

lack of knowledge, lack of competency with the new market

and international trade, technical barriers of trade, lack

of distribution channels in new markets, market risks,

commercial risks, political risks, etc.

Relationships between companies are built and ruined

like between people. The development of firms goes through

5 stages: recognition, learning, expansion, dedication and

break up (Hollensen, 2001). The relationship between

customer and company establishes when the customer starts

consuming its products and breaks up when the needs of the

customer change (or when the customer is no longer

satisfied with the product or the service he gets) and he

goes to other product. That relationship is as complicated

as a marriage, it encompasses both emotional and

psychological factors, which develop during the time and

ruin in the end. Relationship can be between customers

(C2C), between businesses (B2B), businesses and customers

(B2C). These relationships are created through establishing

communication, which is the most important factor in

today’s relationship establishing process. Before setting

up the communication, the starting side should understand

different factors of the target side, like cultural

differences, social and economic differences, organization

type and status. Communication provides a wide perspective

89



to get in touch with partner companies and what is the most

important, with the customers. Having cultural factors

adopted, the communication process will start at a right

point and will go smoothly as customers will feel more

comfortable in the communication process and it will be a

competitive advantage for the firm and a customer benefit

for the customer.

5.1 Entry Strategies to Foreign Markets

The moment that the company decides on its target

markets, comes a point to understand which is the best way

to reach them. For choosing a right strategy to enter a

foreign market the company should consider all the factors,

criterions and specifications of existing strategies and

how to be guided with their help. Entry strategy to a new

market is a set of institutional activities aimed to

successfully enter the desired market with desired

90

Figure 7. Entry Strategies to foreign markets



products. One of the critical questions to examine in

establishing an international development strategy is to

select the entry model in the target foreign country and

the distribution channel. Several alternative entry

strategies can be considered (see Figure 779), such as

Domestic Production or Foreign and each of them requires

different operations. Indirect exporting is the market-

entry technique that offers the lowest level of risk but

the least market control, products are carried abroad by

others. The company is not engaging in international

marketing and no special activities are carried out within

the company; the foreign sales are handled like domestic

ones. Indirect export can open up new markets without

requiring special expertise or investment. Both the

international know-how and the sales achieved by these

indirect approaches are generally limited. In this

approach, the commitment to international markets is very

weak. 80 Indirect exporting itself has different methods

like use of international trading companies which have

offices all over the world, work with Export management

Company which is located in the production country and

takes on it all the process of export, etc.

Direct export is when the firm directly implements the

marketing activities in the host country as the company

itself conducts the export process. Market research,79 Lambin, Jean-Jacques. 2007. Market-Driven Management: Supplementary web resource material. Chapter 13 - pp. 1. Palgrave MacMillan. 80 Lambin, Jean-Jacques. 2007. Market-Driven Management: Supplementary web resource material. pp. 2. Palgrave MacMillan.

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Physical distribution, Export documentation, Pricing,

Market knowledge, Market contact, etc. are necessities that

every company should take into consideration and the

exporting department of the firm should have them in the

pocket. The benefits of this approach to export are

increased sales, stronger control, greater market

competency and gained experience on the international

stage. Employing international sales representatives,

having local representatives, contracting local

distributors, creating a fully owned commercial subsidiary,

etc. are the essential ways of conducting direct export

operations.

Foreign manufacturing is a totally different set of

operations and activities that are required for the

company. A company can decide to move its manufacturing

process to the foreign country because of many factors,

advantages and disadvantages, e.g. the logistic costs are

high, custom rates can make the product non-competitive.

The positive factors that can affect the decision of

producing abroad, can be that the host country has an

attractive market, low manufacturing costs and cheap labor,

government’s support, etc. Assembling (a compromise between

exporting and foreign manufacturing), Contract

Manufacturing (firm’s product is produced in the foreign

market by local producer under contract with the firm),

Licensing (another way to enter a foreign market with a

limited degree of risk), Joint Ventures (the international

92



firm has an equity position and a management voice in the

foreign firm) and 100% ownership (international firm makes

a direct investment in a production unit in a foreign

market and greatest commitment to have 100%) are the

different styles of conducting foreign manufacturing. The

best example for that is Samsung, on the phones written

“Cell made in Japan, Assembled in China”, or Apple:

“Designed in California, Assembled in China”.

All in all, every strategy of a new market entry has

its strong and weak sides and in the limitless numbers of

existing companies it is totally impossible to say which

strategy is better or is the best one. The company that

decides to go international and penetrate new markets has

already done all the research for its local market and it

does the same for the host market. This process is called

researching the institutional environment of the country.

After having researched the host country, the second step

is the decision about the strategy and researching the host

country’s institutional environment, try to make

connections, find similarities and ways to act in the right

order of activities. The whole interaction process of

institutional environments of the home and host countries

is shown in the Figure 881 with all the components which are

being researched during the strategy decision making

process.

81 Suk, Yong J., Li D., Ferreira, Manuel P. 2009. Foreign Entry Strategies: Strategic Adaptation to Various Facets of the Institutional Environments. Development and Society. Vol. 38 (1). pp. 27-55

93



5.2 Brand Communication

The skill to establish communication is one of the

most important factors of globalization. The role of

communication in international and domestic marketing is

the same: it establishes relationships and communication

with customers by providing them with the needed

information to help them make a decision to buy a certain

product. Communication process provides the information

that customer needs but its primary goal is to create the

consumer, not the product, now or in the future.82 There

are different techniques and instruments to get in touch

and communicate with the customers, in order to influence

their decisions and influence them to buy the product.

Advertisement is the usual and main tool for the product

promotion and besides this, companies use other techniques

to reach customers, like personal sales, exhibitions,

publicities, inbound and outbound marketing which get

directly to the customers.

82 Hollensen, Svend. 2001, Global Marketing: A Market Responsive Approach. Harlow: PearsonEducation. ISBN: 0-273-64644-3

94



If there comes a need to adapt or standardize the

product, in the framework of communication process

companies think of adapting the complex of marketing

95

Figure 8. Interaction between institutional environments



activities to the specific market. Sometimes companies

adapt not the product, but the

way they promote it. This question comes with several

factors and the most important are, firstly, if their

international promotion activity will be acceptable from

the customers in the specific region, and the second is how

the mass media is distributed within the specific region.

Usually, when a company wants to inform the target

segment of consumers about its product, it starts to

advertise it heavily to the target group. In case when

consumers, after the first purchase of the product, are

satisfied with it and start to consume it persistently the

vice versa occurs: consumer starts reaching the company

with his offers and orders by himself. In the beginning of

the market entry, the company does everything that their

brand starts to talk to and be comprehensible for the local

customers. After which, if the previous activities have

been successful, word of mouth does its work. We have to

understand that the inductee of communication establishment

is, first of all, the seller who is the sender of the

message and through communication channels it reaches the

receivers (potential clients). To make the communication

process effective, the sender should totally realize who

the target of the message is, to which segment it is

addressed, how the target segment will accept it and what

the reaction will be. In some cases the auditorium does not

clearly understand the message because of “not hearing

96



well”. It occurs because of the competitors, whose message

is similar to the company’s message or is its opposite.

This emerges misunderstanding in customers. The basis of

any strong brand is a promise, based on the correspondence

and personal brand values of the consumer. However, the

brand is not just a promise, it's a real match of this

value, a product or service should also meet the targets’

generated motivational values. It can be concluded that the

value is neither just a base to control the user, nor just

a base to create an effective advertising message. Value

must globally define the whole process of creating the

brand, including development of the product as well. We can

formulate the concept of branding as a process of

significant personal commercial objectification of human

values. Therefore, that promise and value should be

delivered to the customers in order to reach the people and

satisfy their values, needs and wants by taking into

consideration different factors that influence the

communication process and situations, such as language

barriers, economic, social and cultural differences, legal

differences and competition style differentiation.

6. NEW APPROACH TO INTERCULTURAL PRODUCT MARKETING

Having researched and examined the important factors

of brand building, ways of entering new markets,

establishing connections with culture, cultural

97



differences, factors of intercultural processes and

intercultural marketing operations, new market entry

strategies and modern market environment, it could be

concluded that in today’s world people have started

consuming goods for 2 reasons. Firstly, they consume some

products because they need them to stay alive and second,

the goods they consume to have their dreams about the style

of their lives realized. Therefore, it shall be pointed out

that in terms of Intercultural Marketing and Intercultural

business environment 3 types of products are taken into

consideration:

1. Fast-Moving Consumer Goods

2. Lifestyle Products

3. Household Appliances

Every kind of product that we consume to eat, drink,

clean, wash and to satisfy our priority required needs are

collected under fast-moving consumer goods. These are only

the things that we buy because we have to, excluding e.g.

clothing, because nowadays we buy it not because of the

need to close parts of our body – no, clothing determines

your style, unique for everyone. And a shoe, that we in

general need to secure our feet, has become a method to

realize ourselves. So, the shoe you wear determines who you

are. Fast moving consumer goods are in most cases adapted

products with adapted Marketing strategy. In every market

they preach what the people want and those products should

98



be as simple and acceptable by the consumer as possible

because the competition is very big and tough and consumer

has many choices, so he chooses the product that is the

best for his eyes, the best for his taste, the best for his

pocket and the best for his time.

Lifestyle, style of life, style. Word style

differentiates all the 7 billion people in the world.

There is a way to talk about someone and say “he’s not my

style…” or “his style of talking is charming” or “her hair

style is beautiful” and it brings kind of differentiation

and generalization within people. Everyone chooses his own

lifestyle based on a specific background, which is formed

under the influence of cultural specifications, traditional

factors and family pedagogy. However, today we all are

becoming members of a single social environment as

globalization reaches and develops in all the corners of

the world. Besides the goods that we consume to keep us

clean, alive and healthy, there are goods that we actually

consume not only for their usefulness but also to enrich

our style, to fulfill the lifestyle that we have chosen. If

10 years ago, entering a mobile phone shop you could find

different sizes of phones with different colors and

different characteristics and technical specifications, now

you enter a mobile phone shop and in 90% of cases you will

see only black, white and grey screens. That is the style

today and we all want to belong to a larger group of people

with the same points of view, the same taste, but not lose

99



our cultural roots, value system and own exclusive style.

Well, if you want to be a part of the group of outstanding

and creative, successful and innovative people with great

taste, you should use an iPad, an iPhone or a Samsung

maybe. Lifestyle is not only about the phones. It includes

clothing, computers, tablets, cars, all the luxury goods

and international services. These products have the trend

not to be adapted; especially cell phones and luxury goods

are not adapted, while in contrast their accessories are,

e.g. the charging cables for the US and Europe vary because

of the electricity plug system differences. Usually the

appearance of these products is not adapted, but their

components and accessories are modified. For example, all

the keyboards of computers differ from country to country

and if someone wants to buy a new computer and if he/she is

used to the US QWERTY Keyboard but lives in Germany, he/she

would have only two choices, either get used to the German

QWERTZ Keyboard, or to order a computer from the United

States because all the computers produced for the German

market are adapted technically and technologically, but not

with the appearance. A very important part worth paying

attention to is that Lifestyle products always adapt their

Marketing strategies to the market. For these products the

important thing is not to make the consumer buy a

particular product just for saving time, but making him

believe in the complex of the values, understand the whole

process of creating the brand, provide the vision of

100



lifestyle with that product and make him imagine himself

using it in the crowd and dream of the cool impression he

makes on everyone around him.

The third type of the products cannot be consumed

fast, cannot be seen as a style, but cannot be left out.

All of these are the household appliances, which people buy

once in 5-10 years and buy, to their thought, the best one.

Refrigerator, Washing Machine, Oven, food mixer, coffee

maker, etc. are the required and necessary appliances that

every household owns and these products are the same

everywhere. Only the marketing concept of the region of

sales can be adapted.

So, we have three types of products with their own

Forms of Realization (Standardized product or Adapted),

Marketing strategy and its Form of Realization thereof.

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6.1 A New Model: Model Description

Having these differences in the forms of realization

of the products and their Marketing, we have to understand

and explain a process which could be a way for the

companies, to reach cultural competence through different

steps, decide on marketing activities and define market

entry strategy. This process will be the pre-entry stage to

a new market for a company and a test of their experience

and competency with the market, its culture and,

furthermore, the product. Here we come to Intercultural

Marketing, which is the group of activities to lead the

product to go out of its concept by internalizing and

imbibing some new factors which adapt it to the local

culture, but at the same time keep its core unchangeable. A

102



new approach concentrates on the competence building

process, that is, in the pre-entry stage, after having

built the cultural concept of the product, the company

should understand how the other processes of the entry

period should be implemented. To reach the best decisions

on the entry strategies and entry marketing activities, to

get acknowledged to the culture and make the product

culturally competent for the target market the

Intercultural Competence Building Model (ICB Model) has

been developed.

The main idea of the ICB Model is to internally

understand the cultural competence in the company’s new

market and externally prepare the product and its

components to be as competent and competitive for the

target market as it can be. The outcome of the model is to

define the best way for the company to go international

which, first of all, depends on the entry strategy and

marketing strategy. This model is aimed for the products

that either take into consideration the local culture for

their concept and appearance, or the products that are

standardized but take into account the local culture while

delivering the Marketing activities or, thirdly, the brands that

adapt both – the product and the Marketing.

ICB Model includes 5 interrelated stages.

1. Defining the product as a culture and in the culture of the

target market: What a product should be.

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2. Getting the results of the defining process and

answering to questions which help to understand the

product’s cultural dimension and lead to the creation of

the Cultural Concept of the Product.

3. After creating the Cultural Concept of the Product the

3rd stage is to define the type of product, how it will

be presented to the target market, its type of marketing

and form of realization of both, either Adaptation or

Standardization.

4. Understanding the Target Market: undermining the specific

behavioral factors of the consumers in the target

market, defining the market’s characteristics, measuring

the cultural competence level (this comes directly from

stage 1 & 2 where the company already got acquainted to

the target market’s culture); after having understood

the market, deciding the final type of product and

marketing and their forms of realization which lead to

the development of a prototype of the End Concept of the

Product.

5. The final stage is when having all the information,

knowledge and competent thinking about the target

market, the company makes the final decisions on the

Entry Strategy, Entry Marketing Strategy. And finally

goes into the process of Entry to the Target Market.

The 1st stage is the process of defining the product

as a culture and in the culture of the target market: What

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a product should be. Here the company considers the product as

the following:

1. Product as Culture: finds out how significant the

product can be in the target market’s culture.

2. Product is considered as a component of a culture:

reveals what impact it can have on the culture and the

competition.

3. Product is considered as a cultural change, a new

component in the market’s culture, how it can be

integrated in consumer’s concept of life and how it can

be diffused in the culture.

4. Product as a physical environment: Influence of physical

environment and technology on one another and their

impact on culture. What is the product as a topography

(mountain, see), as a climate (warm, cold, dry), as a

road or way for the consumers’ physical environment?

After this comes the 2nd stage where the questions

continue to build the cultural concept of the product. The

results of the defining process and answering to questions

help to understand the product’s cultural dimensions and

lead to the creation of the Cultural Concept of the Product. These

cultural dimensions are the 5 Cultural Dimensions of Geert

Hofstede’s framework83, adapted for the product and the

culture of the country. In a research conducted by Geert

Hofstede and IBM on the 5 dimensions of the culture for

83 The Hofstede Center. Dimensions. Available at: http://geert-hofstede.com/dimensions.html [26.06.2013]

105



different countries that determine the behavioral patterns

which vary from culture to culture were revealed. The list

gives a clear view on the basic components of the culture

and how the product should be positioned in terms of those

dimensions:

5. Does the Product Promote Individualism or Collectivism?

- Defines whether the product is more individual or

collective, whether the product’s self-image is defined

as “I” or “we”.

6. Is the Product Masculine or Feminine? - The masculinity

side of this dimension represents a preference in

society for achievement, heroism, assertiveness and

material reward for success. Society at large is more

competitive. Its opposite, femininity, stands for a

preference for cooperation, modesty, caring for the weak

and quality of life.84 So this question defines whether

the product, being used in the market, will give

competitiveness for the society or cooperation and

modesty.

7. Does the Product Help to Avoid Uncertainty? - These

questions reveal how, by consuming the product, the

consumer will be certain in his decision or how

ambiguous it will be for him.

8. Does the Product give long or short term satisfaction? -

Here it is revealed, whether the consumer will be long

84 The Hofstede Center. Dimensions. Available at: http://geert-hofstede.com/dimensions.html [26.06.2013]

106



or short term oriented on the product while the product

satisfies his needs, and how long the consumer will

consume it for the satisfaction.

9. Does the Product Help to Feel More Powerful? - Here the

company finds out whether the customer, consuming this

product feels more powerful and whether he places

himself in a higher social class or not and if the

consumption of the product helps the consumers to avoid

the feeling of unequal distribution of power among

people.

After having clarified these questions the company is

able to create the Cultural Concept of the Product. The Cultural

Concept of the Product includes all the points that were

revealed during the first 2 stages. Afterwards, the

analyzing process goes into 3rd step, where the company

decides on the type of the product and marketing. The product in

the home market may be positioned as a lifestyle good, but

the company can make a decision to launch it to the new

target market as a fast moving consumer good, therefore, at

this step the decision making process on Type of the

Product with its form of realization (Standardization or

Adaptation) and Type of Marketing with its form of

realization is executed. Type of Market includes Promotion,

Strategy and Distribution/Communication where every point

is flexible and can be adapted to the market by its form of

realization.

107



The 4th stage of the ICB Model is the process of

getting acquainted with the economic specialties of the target

market. Here the company should conduct a research on 3

main fields: Specific Behavioral Factors of Customers,

Market Characteristics, and Cultural Competence. The

company should be very well informed about this as the

specific behavioral factors of the consumers in the target

market clear the vision of the product distribution and

communication, the market characteristics reveal the best

strategic approach for the competition and integrating

cultural competence within the company (or the branch

working for that region of the target market) and within

the product (this is already done in the 1st stage, by

analyzing the product as a culture and understanding the

culture of the target market). Here comes the final

decision on the type of product and marketing which creates

the End concept of the Product (Figure 985) before the target

market entry.

The final 5th stage is where the company determines

its Foreign Market Entry Strategy, its Marketing Strategy

and activities and goes to the Entry to the Target Market.

85 Own Source, Self-Created. [20.06.2013]

108

Figure 9. Creating End Concept of the Product



6.2 The Intercultural Competence Building (ICB) Model

Below the whole ICB model with the stages and all the processes is presented:

Figure 10. The Intercultural Competency Building

1. Product as Culture

2. Product as aComponent of Culture

3. Product as aCultural Change

4. Product as a physical environment. Influence of physical environment and technology on one another and their impact on culture

Assume theproduct is theculture of thetarget market; Find its significance in the Home Market and explore how significant itcan be for theHost Market

Assume theproduct is a component of the culture, it is something likea value, belief, habit,etc. (acceptedand practised by the majority); Explore what impact itcan have in the business environment and how it will behave incompetition

Assuming the product as a new componentin the host culture, think of the changes that may occur when customers integrate it intheir concept of life; How fast can it penetrate into the culture?

What is theproduct as a topography? As aclimate? As a road? For the customer’s physical environment? How technology used in that product can help the product to integrate and become a part ofthe consumer’s physical environment?

109

Stage

1Stage 2

Cultural Concept of the Product

5. Does the

product promote

individualism or

collectivism?

6. Is the product masculine

or feminine?

7. Does the

product help to avoid

uncertainty?

8. Does the

product long or short term

satisfaction?

9. Does the

product help to

feel more powerful?



110

Stag

e 3

Cultural Concept of the Product

Type of Product:LifestyleFMCGHousehold Appliances

Marketing:PromotionStrategyDistributionCommunication

Form of Realization:AdaptationStandardization

Stage

4

TARGET MARKET

? to !Specific

behavioural factors

? to !Market

characteristics

? to !Cultural

competency

1. Type of Product

2. Form of Realization

3. Type of

Marketing

4. Form of Realizatio

n

5. End Concept of the Product



111

Stage

5

End Concept of

the Product

1. Standardized product with standardized marketing2. Standardized product with adapted marketing

3. Adapted product with adapted marketing4. Adapted product with standardized marketing

2 & 3: Intercultural Competence Building; Intercultural Marketing

3 & 4: Intercultural Competence Building; Cultural Product Adaptation

ENTRY & MARKETINGSTRATEGY

ENTRY TO THETARGET MARKET



During the research conducted it was found out that

the fast moving consumer goods are adapted most of all. ICB

model is created to build intercultural competence in the

target market to avoid the failure after the market entry.

For the products that are standardized and have their

Marketing adapted, this model can be used to define the

marketing activities and strategy and to adapt them to the

culture, make them competent for it, where the difference

is that Marketing is taken through every stage of the model

instead of Product.

The desired outcomes of the model are:

High level of cultural self- and product

awareness

deep understanding and knowledge of the target

market’s culture

decisions on communication and behavior strategy

target market competence building process and

result

entry strategies,

marketing strategies

intercultural campaigns

With all of these the company should have openness and

flexibility.

Though the Intercultural Competence Building model is

a big, time and resource consuming one, in case of correct

implementation it can be very useful for the managers as

112



far as besides its primary aim, it provides and reveals a

lot of additional information which can be used in other

decision making processes of the company.

7. Conclusion

Intercultural Marketing is a tremendous type of

marketing and actually a skill for marketing managers which

leads to better positions in the international market. When

the point comes to culture, which includes the beliefs and

values of the people, it should be examined carefully,

because culture determines personality and it must never be

avoided.

Intercultural product marketing opens new areas and

ways for the companies to act, to operate in the way that

they can generate higher profits and can expand, go through

the internationalization process and create a 21st century

successful brand. In today’s fast heading market with its

even faster changing trends it is a very hard work – to

build and keep a modern brand, but through the analyses of

113



the product, analyses of its cultural competence on the

international level, companies are able to build a strong

brand which can be local, global or maybe glocal.

Specific culture of a specific group of people affects

the market and companies are forced to bring changes to

keep positions in the market and survive in the rivalry.

Some companies choose to standardize their products, while

others choose to adapt products and / or marketing

strategies. The research of some successful top brands have

led to the conclusion that the brand becomes more

successful and stronger when the company acts in the way of

not only fulfilling the universal needs and desires of the

customers, but also creating a special world for them via

adaptation of the products, their concept and appearance

which helps the customer to feel the product, be close to

it, be comfortable with it.

The Intercultural Competence Building Model is a big

and long one, but it considers all the aspects which are

important for Intercultural Product Marketing. I hope that

this can be my humble contribution to the development of

Intercultural Marketing, first of all, as a scientific work

and afterwards as a Practical Tool for the entrepreneurs

which will help, facilitate and make Marketing Manager’s

work more effective.

In the modern world no one can promote and expand

operations to international level without paying attention

to culture and integrating it in the marketing strategy as

114



Intercultural Marketing is a place where Needs and Desires

are defined by Beliefs and Values of a specific Culture.

8. Future Research

During the work on this thesis numerous questions

regarding Intercultural Product Marketing, Intercultural

Competence Building and Brand Strength Measurement have

arisen. A lot of books and articles have been written on

these topics recently but none of them covers the processes

thoroughly, from all the aspects.

What is needed now is a cross-cultural research

involving different companies and their target markets to

find out the real outcomes and effectiveness of the

Intercultural Competence Building model.

A further study is needed to be conducted to moderate

the Brand Strength Measurement Model, to define the

measurement system and to find out how all the factors

interconnect and create an overall score/grade of the

brand’s strength. The model can become a flexible and

concrete measuring tool for the companies that are eager to

find out the value of their brand among the competition.

Further research can be conducted to go deeper in the

Intercultural Marketing, connect it to the Intercultural

Competence Building Model and by implementing a study,

reveal new fields and types of market entry strategies for

115



companies providing products and services in the

international markets.

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Intercultural Product Marketing: Analyzing Ways for Products to go International in Intercultural Environment

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