New perspectives on marketing mix programme standardisation

International Business Review 7 (1998) 617–634

New perspectives on marketing mix programme standardisation Paul Michella,*, James Lyncha, Obaid Alabdalib a

Leeds University Business School, 11 Blenheim Terrace, Leeds LS2 9JT, UK b King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia

Received 9 September 1997; received in revised form 5 May 1998; accepted 28 May 1998

Abstract The marketing mix programme standardisation/localisation policies of 63 UK multinationals operating in a developing market (the six Gulf States) are examined, using a three-factor, 53variable model of country, firm and marketing mix programme factors. The research framework is unusually broad compared with other standardisation studies, which have also tended to concentrate more on the developed than the developing economies. Three firm variables and three country variables correlate closely with differing degrees of marketing mix programme standardisation. Product strategies are much more standardised and promotion, distribution and price more localised. Unexpectedly, industrial product firms appear to be no more standardised in marketing mix programmes than consumer goods firms in the Gulf. British Multinationals tend to treat the six Gulf states as a single market cluster with only minor variations between each state.  1998 Elsevier Science Ltd. All rights reserved. Keywords: Marketing standardization; UK firms; Gulf States

Our research contributes to the ongoing debate concerning the degree of marketing mix programme standardisation multinational companies should adopt in their international marketing strategies. We offer two additional perspectives to most previously conducted research. Firstly, whereas most studies have involved a relatively narrow focus, we propose a broader framework entailing the simultaneous manipulation of variables across three main factors: firm, country and marketing mix programme areas. Secondly, our emphasis is on the marketing mix programme strategies

* Corresponding author. Tel.: 0113 233 4453; Fax: 0113 233 2640; E-mail: [email protected] 0969-5931/98/$19.00  1998 Elsevier Science Ltd. All rights reserved. PII: S 0 9 6 9 - 5 9 3 1 ( 9 8 ) 0 0 0 2 9 - 8

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of major British firms exporting to a developing economic region. While less developed countries have been studied (for example, Samiee & Roth, 1992 and Hill & Still, 1984), the great majority of writers have hitherto focused on the developed economies. We believe therefore that there is an opportunity to further develop the literature. We have selected as our research location the six Gulf States which form the Gulf Co-operation Council (GCC), namely Saudi Arabia, United Arab Emirates, Bahrain, Oman, Qatar and Kuwait. This region demonstrates the major characteristics of a rapidly developing market and is already a significant trading area. For example, the Arab British Chamber of Commerce (1994) have estimated that UK exports to the GCC were £4053 million in 1993, up 8% over the previous 5 years, and British imports from the GCC were £1906 million, up 97%. The main exporters to, and importers from, the GCC were the USA, followed by Japan and then the UK. According to the World Bank (1994), the population of the GCC countries was 24.1 million. GNP per capita for the GCC was US$9560 in 1992, ranging from US$22 200 in the UAE to US$6500 in Oman. The GCC was set up in 1981 with the objective of bringing the six states closer together by developing more common economic and social policies. Although there are economic differences, there are similarities in the political, religious, cultural and geographical profiles. The literature can be divided into four parts, by the proponents of four international marketing mix programme strategies: standardisation; localised adaptation; a “middle of the road” mix of standardised and adapted elements; and a cluster approach of transnational regions with common market characteristics. (i) Standardisers: advocates of marketing mix programme standardisation (for example, Elinder, 1961; Fatt, 1961; Rijkens et al., 1971; Dunn, 1976; Levitt, 1983), argue for the transferability of better marketing practices, lower marketing costs, more effective planning and control, and the development of more consistent corporate and brand images on a global basis. (ii) Adapters: advocates (for example, Buzzell, 1968; Miracle, 1968; Wiechman, 1974; Britt, 1974; Green et al., 1975; Onkvisit & Shaw, 1987; Muller, 1987) stress the dissimilarities between countries and even regions within the same country concerning culture, nationalism, the general environment, marketing infrastructures and other forces determining customer behaviour. Essentially, these two contrasting viewpoints tend, on the one hand, to aggregate factors to provide a rationale for standardisation or, on the other, to disaggregate factors to support a localisation argument. (iii) Middle of the roaders: a third category (for example, Sommers & Kernan, 1967; Peebles et al., 1978; Quelch & Hoff, 1986; Whitelock & Jones, 1993) argue for standardising some elements (often strategy) and localising others (often execution), or for tailoring the global marketing concept to fit each business. The essential factor is flexibility. (iv) Clusterers: proponents of the cluster approach (for example, Boddewyn et al., 1986; Whitelock & Kalapaxoglou, 1993; Kassem et al., 1993), favour marketing standardisation across identifiable transnational market clusters. On marketing mix programme standardisation, attention has been focused on individual marketing mix variables, especially promotional strategy (see, for example, Colvin et al., 1980; Ryans & Ratz, 1987; Hite & Frazer, 1988; Sriram & Gopalak-

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rishna, 1991). Fewer articles have related to other parts of the marketing mix (for example, Rau & Preble, 1987; Clark, 1990; Szymanski et al., 1993). The findings of this study would support a multi-faceted approach to the issue, since the degree of marketing mix programme standardisation of British multinationals exporting to the Gulf States appears to be positively correlated with six variables associated with country and firm factors.

1. The model In approaching the standardisation issue, we have been influenced by Jain (1989), who conceptualised five broad variables and 14 sub-variables as being associated with the degree of marketing mix programme standardisation. Jain’s framework conceptualised the target market, market position, product positioning, the environment and organisational factors as being the important variables relating to the degree of marketing mix programme standardisation adopted by firms. His model was developed as an attempt to establish a research agenda on the standardisation issue. Our review of the literature led us to refine and develop Jain’s model for our particular needs. Our model of the main variables is similar to Jain’s for the country factor utilising target market and the environment, but we have collapsed his product positioning variable within our market position main variable (as “product life cycle stage” and “compatibility of product to the local culture”). For the firm factor, we have taken the three sub-variables from Jain’s organisational factor, corporate orientation, delegation of authority, and HQ-subsidiary relationships, and operationalised each of them as main variables for our particular study, given our interest in exploring UK firms and their GCC agent relations. Our expanded model (Fig. 1) thus postulates that six main variables will correlate with the degree of marketing mix programme standardisation adopted by major UK companies exporting to the Gulf. Three main variables relate to the country factor: target market, market position and environment. The other three main variables relate to the firm factor: corporate orientation, delegation of authority, and relations between HQ and agent–partner. Within these six main variables, there are 34 subvariables: four related to target market, eight to market position, five to environment, five to corporate orientation, six to delegation of authority, and six to HQ–partner relations. These sub-variables were, again, taken from the literature with the objective of operationalising Jain’s basic model in more detail for comparison of the UK market with that of the GCC for both the target market and market position. Jain’s subvariables for the environment were used, but we have added media structure as an additional variable for a comparison between a developed and developing market. Jain’s model did not develop sub-variables for his organisational factors, so we have used the literature, as described below, to elaborate these sub-variables. The marketing mix programme is divided into four main variables: product, price, distribution and promotion. There are 19 related sub-variables, taken from the literature: four associated with product, three with price, six with distribution and six with promotion.

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Fig. 1.

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The factors and variables associated with the degree of marketing programme standardisation.

As a pilot stage, we presented our model to the directors of five UK firms responsible for exports to the GCC, and to ten agent–partners, to obtain their feedback into the relevance of the proposed model to the realities of their UK-GCC operational activities. Resulting from these discussions, some minor adaptations were made to the descriptive clarity of our variables and sub-variables. Subsequent to the research, in data analysis we conducted two tests, principal components and correlation analyses, to check that sub-variables loaded as predicted and for interrelationships. Ten variables, additional to those in the model, were rejected at this stage either because they loaded to different factors than predicted or because their correlation coefficients were greater than 0.40.

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Discussion of the literature from which these variables have been derived is outlined below. 1.1. Country variables Concerning target markets, Boddewyn (1981) has stressed the many differences between European countries, suggesting the use of an adaptation strategy to marketing mix programmes, while Ohmae (1985) has, conversely, argued for an increasing level of standardisation in Western Europe (and also USA and Japan). If firms are operating in similar market positions in differing markets and with similar competition, cultures, and market development, more standardisation of marketing mix programmes will be feasible. Environment variables include media structure, political stability, physical conditions, marketing infrastructures and legal systems (Buzzell, 1968; Donnelly, 1970; Green et al., 1975; Dunn, 1976, Cavusgil & Yavas, 1984). Similarity of economic environments and infrastructures can facilitate similar, more standardised marketing mix programmes. 1.2. Firm variables HQ corporate orientation may take a more global or a more local perspective. The more global view would stress the importance of linkages between national markets and synergies across national boundaries (Douglas & Craig, 1995). Quelch & Hoff (1986) have argued that organisational constraints in the delegation of authority are the key obstacles to marketing mix programme standardisation, much more so than environmental variables. Garnier et al. (1979) found different degrees of delegated authority, high on advertising, pricing and distribution, and low on product decisions; and varying degrees of autonomy from function to function within the same HQ firm. Once the marketing strategy and programme are in place, the challenge for MNCs is to ensure, through effective HQ partner-relationships, that local partners implement them effectively (Hamel & Prahalad, 1985; Kashani, 1989) with support and commitment by local managements (Brandt & Hulbert, 1977; Barker & Aydin, 1991). Since conflict is inherent in all HQ-local relations, measures are required for the rectification of such conflict (Das, 1981; Jain, 1989), and tight linkages between HQ and local partner may create conditions conducive to successful implementation of a standardised strategy. 1.3. Marketing mix programme variables Typically, studies have found that product and branding are the most standardised elements of marketing mix programmes while price, advertising, promotion, distribution and customer service are much less standardised. Ozzomer et al. (1991) have characterised marketing mix programme studies as having concentrated on advertising and product activities, while giving less attention to pricing and distribution. Both Boddewyn et al. (1986) and Quelch & Hoff (1986) found increasing standardis-

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ation of marketing mix variables over a 10-year period, the most standardised elements being product and branding. Barker & Aydin (1991) argued that price standardisation across markets was not a viable long-term strategy, and that the prevalence of independent distributors in less developed countries discourages standardised promotions. Jain (1989), in relating that 14 of the 34 significant studies on marketing standardisation since 1965 concerned advertising, found that most studies discovered a great propensity to communications adaptation. Most commentators (cf. Rau & Preble, 1987; Grosse & Zinn, 1990) have also found that distribution issues tended to be more adapted to the local conditions. Our model suggests that we should evidence a strong inter-relationship between the degree of marketing mix programme standardisation adopted and the amount of variation in country and firm factors. The specific hypotheses underpinning the model are as follows: H(i) increasing variation in country variables and increasing decentralisation in firm variables will correlate positively with increasing levels of marketing mix programme adaptation utilised by UK companies in the UK and when exporting to the GCC countries. H(ii) there will be a greater degree of standardisation by UK firms of productrelated variables than of other marketing mix variables when comparing their UK marketing mix programmes to those used when exporting to the GCC. H(iii) there will be higher degrees of standardisation of the marketing mix programme by the UK companies producing industrial goods than by UK companies producing consumer goods when comparing their UK marketing mix programmes to those they use when exporting to the GCC. H(iv) UK companies will in general adopt a policy of clustered standardisation of the marketing mix programme within the GCC, with only minor variations between Gulf countries. H(v) UK companies and their matched GCC agents will have similar perceptions concerning the degree of marketing mix standardisation adopted by UK firms at home and when exporting to the Gulf.

2. Methodology Eighty-two UK product companies were identified through trade and Embassy sources as active in at least three of the six Gulf Co-operative Council (GCC) states of Saudi Arabia, United Arab Emirates, Bahrain, Oman, Qatar and Kuwait. Personal interviews were conducted in mid-1994 with senior executives from 63 companies (77 per cent response) agreeing to participate (see Table 1 for respondents by job titles). Thirty companies (48 per cent) were principally involved in consumer products and 33 in industrial products. By size, the sample split 44 per cent for businesses with total sales revenues of under £300 million and 33 per cent with over £900 million per annum. Overall, we believe that our sample provides an acceptable representation of firm size and type, although we recognise that there is a bias

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Table 1 Breakdown of respondents by job title Job title Managing Director Marketing/Sales Director Middle East Director Export Director International Marketing Director Others Total

No. 6 14 14 12 9 8 63

% 10 22 22 19 14 13 100

towards larger, more established companies. For 60 per cent of companies, exports accounted for over 30 per cent of total sales. The great majority (78 per cent) had at least 15 years of experience in operating in the Gulf States. Interviews, averaging 70 min duration, were arranged at respondents’ UK offices to assist in verifying factual information. The ten-page questionnaire consisted of demographics, and structured and semi-structured questions relating to the 53 variables in the study. As a second leg of the research, the Saudi Arabian agents of the 63 UK firms involved in the study were mailed the same questionnaire in late 1994, with a guide to completion, and 25 responses were obtained (40 per cent response rate), to check the perceived differences of view between HQs and agents. The 63 UK firms were asked to rate the 19 marketing mix programme variables comparing their UK strategies to those adopted in exporting to the GCC, on a 5point Likert scale ranging from (1) identical to (5) substantial variation. Initial hierarchical cluster analysis, using between groups linkage and squared euclidian distance, divided the sample into three groups: 25 companies with an overall mean of the 19 variables of 2.14 and labelled “more standardising”; 26 firms with an overall mean of 3.08 and labelled “moderately adapting”; and 12 companies with an overall mean of 3.78, labelled “more localising”. Standardising companies had almost identical marketing mix programmes between the UK and Gulf for each of the four marketing mix strategies. Localisers exhibited moderate-to-substantial variations in their price, distribution and advertising programmes and some variation to product strategy. The moderate adapters showed some-to-moderate adaptation in price, distribution and advertising between the UK and the Gulf, but only minor variation to their product strategies (Alabdali, 1996). Subsequently, in early 1995, as a qualitative stage, 15 UK firms from the original sample, representative of the above differing marketing mix programme strategies, were reinterviewed to present the results, and to elaborate, interpret and provide richer detail to the quantitative findings (Miles & Huberman, 1994). Finally, an agent of each of the 15 UK firms was interviewed in the GCC, again in early 1995, with the same objectives.

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3. Findings 3.1. Different degrees of marketing mix programme standardisation correlate positively with multi-factor country and firm discriminating variables Discriminant analysis, comprising the 17 country variables and 17 firm variables combined, was used, with more standardising marketing mix programme firms coded: 1, moderately adapting: 2, and more localising: 3. The stepwise discriminant analysis results are shown in Table 2, predicting group membership correctly in 82.54 per cent of cases, and utilising only six of the 34 variables to explain the variation in the data between the three types of strategies. In terms of the Model, of the six discriminating variables, three related to the Country factor and three to the Firm factor. For the Country factor, the market segment sought, the level of political stability, and the level of intensity of competition were very significant (p > 0.00001) in discriminating between the three levels of marketing mix programme, with one variable relating to each of the three parts of the Country aspect of the Model. For the firm factor, decision-making criteria, budget methods used, and inteTable 2 Discriminant analysis by degree of marketing programme standardisation Summary table Step Variable

Wilks Lambda

Significance

1 2 3 4 5 6

0.66761 0.45360 0.34523 0.29217 0.24773 0.21320

0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Decision making criteria Market political stability sought Level of the marketing function Integration of the marketing function Level of intensity of competition Budget methods

Canonical discriminant functions Function Eigenvalue % Variance

1 2

2.54202 0.32422

Classification results Actual group

Canonical correlation

Wilks’ Lambda Chi-square

88.69 11.31

0.8471572 0.4948143

0.2132000 0.7551588

No.

Predicted group membership 1

More 1 25 22(88%) standardising Moderately 2 26 5 (19%) adapting More localising 3 12 0 (0%) Percentage of cases correctly classified ⫽ 82.54%

88.0 16.0

2

3

3 (12%)

0 (0%)

19 (73%)

2 (8%)

1 (8%)

11 (92%)

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gration of the marketing function with other corporate functions, were very significant (p > 0.00001), the first two relating to delegation of authority and the third to corporate orientation. None of the six HQ–agent relation variables had predictive power. The first hypothesis, H(i), that firm and country variables will correlate positively with the degree of marketing mix programme standardisation utilised by UK companies in the UK and when exporting to the GCC, was therefore upheld. Firms employing more localised marketing mix programmes averaged 3.98 across the 17 country variables, indicating that they saw a “moderate variation” between the UK and GCC, as did moderately adapting firms, with an overall mean of 3.80 (Table 3). More-standardising HQs on average saw “some variation” between the two economies (mean 3.37). Country variables which all firms, standardising and adapting, regarded as having substantial variation between the UK and GCC (and not shown in the table for brevity) included physical conditions (mean 4.77), customs and traditions (4.50), legal systems (4.34), economic similarity of the markets (4.25) and culture (4.20). Country variables, which all firms regarded as having relatively minor variations between the UK and GCC, were the perceived quality of British products (mean 2.34), compatibility of products to culture (2.83), and the stage of the product life cycle (2.89). Firms employing more localised marketing mix programmes averaged 3.19 across the 17 firm variables, showing on average that HQs employed a mix of centralised and decentralised policies toward their GCC agents, as did more adapting firms with an overall mean of 2.74. HQs with more standardised marketing mix programmes

Table 3 Comparing country variables by the three clusters of UK firms exporting to the GCC

No. (%) of firms in cluster Degree of marketing programme standardisation Variables Average for target market Average for market position Average for environment Average for country variable

Cluster 1

Cluster 2

Cluster 3

Full Sample

25 (40%)

26 (41%)

12 (19%)

63 (100%)

More standardised

Moderate adaptation

More localised

Meana 3.60

Mean 4.27

Mean 4.19

Mean 3.99

3.07

3.32

3.60

3.27

3.68

4.19

4.41

4.03

3.37

3.80

3.98

3.66

a Comparing UK country variables to those when exporting to the GCC: (1) identical; (2) only minor variation; (3) some variation; (4) moderate variation; (5) substantial variation.

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employed a mainly centralised policy (2.22), as shown in Table 4. Firm variables on which all HQs agreed as to using a mix of centralised and decentralised policies included distribution, the communications systems, and management thinking in terms of serving market needs and marketing policies. Standardisers tended to utilise guidelines or manuals, control procedures, authority to make decisions, and budget methods to retain mainly centralised control, while localisers mainly decentralised the methods for analysing marketing situations, decision-making criteria and process, and budget methods. 3.2. Product variables were more standardised while other marketing mix variables were more adapted Respondents rated the 53 variables on a 5-point Likert scale, with low numbers indicating standardisation and high numbers localisation between the UK and Gulf States. We compared the percentage of all 63 firms rating variables as either 1 (identical) or 2 (only minor variations), with the percentage of firms rating variables as either 4 (moderate variation) or 5 (substantial variation) to emphasise the two extremes. The results are shown in Table 5. Some of the results could be predicted from the literature; for example, five of the ten most important variables prone to standardisation related to product strategy (respectively, brand name, product warranties, packaging, product characteristics, and perceived quality of British products). Likewise, four of the other five top-ten standardised variables were associated with marketing authority/control (budget Table 4 Comparing firm variables by the three clusters of UK firms exporting to the GCC

No. (%) of firms in cluster Degree of marketing programme standardisation Variables Average for corporate orientation Average for delegation of authority Average for HQ– agent relations Average for firm variable

Cluster 1

Cluster 2

Cluster 3

Full sample

25 (40%)

26 (41%)

12 (19%)

63 (100%)

More standardised

Moderate adaptation

More localised

Meana 2.34

Mean 2.75

Mean 3.17

Mean 2.67

1.92

2.47

3.51

2.45

2.41

2.99

2.90

2.74

2.22

2.74

3.19

2.62

a Comparing UK firm variables to those experienced when exporting to the GCC: (1) highly centralised; (2) mainly centralised; (3) mixed centralised/decentralised; (4) mainly decentralised; (5) decentralised.

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Table 5 Comparative importance of more standardised and more adapted variables (UK versus Gulf States) Identical or similara

Moderate or substantial variationb

Variable

%

1 2 3 4 5

Brand name Product warranties Packaging Budget methods Product characteristics

78 71 70 65 64

1 2 3 4 5

6

Authority on marketing decisions Control procedures Perceived quality of British products Control of marketing decisions Integration of marketing function Guidelines and manuals Decision making criteria Management thinking on meeting needs of market Customer service Decision-making criteria

62

7 8 9 10 11 12 13

14 15

Variable

% 97 96 87 86 79

6

Physical conditions Customs and traditions Legal systems GNP similarity Consumer characteristics Culture

62 60

7 8

Media structure Market share position

75 73

60

9

Marketing infrastructure 70

59

10

Role of middlemen

57 56

11 12

55

13

Intensity of competition 56 Authority on promotion 54 decisions Authority on 54 distribution decisions

54 53

14 15

79

65

Types of retail outlet 51 Channels of distribution 50

Percentages are rounded. a Percentage of all companies rating variable (1) identical or (2) similar. b Percentage of all companies rating variable (4) moderate variation or (5) substantial variation.

methods, authority on marketing decisions, control procedures and control of marketing decisions). More unexpectedly, an area of marketing ethos/integration was regarded as a more standardised variable (integration of marketing with other functions). The top nine variables connected with adaptation concerned country variables, three related to target market (customs and traditions, consumer characteristics, and GNP similarity), two to market position (culture and comparative market share position), and four to the environment (physical conditions, legal system, media structure and the marketing infrastructure). Regarding the marketing mix, distribution strategy and promotions strategy were strongly represented as adaptive variables. Four variables related to channel strategy (types of retail outlet, channels of distribution, authority on distribution decisions and the role of middlemen). Promotions strategy variables mainly related to sales force management and sales promotions (types of sales promotion and authority on

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promotion decisions). Concerning advertising, only the advertising budget was a main variable related to adaptation, but not, as expected, the advertising message. Evidence is thus provided to support H(ii), that there would be much more product standardisation and much less for other marketing mix variables. 3.3. The degree of standardisation was not related to firm’s industry type The means for the two types of consumer products (consumer durables and nondurables) and three types of industrial products (electronic/electrical, basic industrial and engineering products, and construction/building products) used in the sample (Table 6) indicate that type of industry per se was not associated with the degree of standardisation adopted by UK companies exporting to the GCC. The overall picture is one of similarity rather than divergence, although there were differences. For example, industrial companies were slightly more centralised on firm variables than consumer durables firms, but all exhibited a centralised/decentralised mix. On country variables, each industry type had almost identical means. For marketing mix programmes, the main differences were between two industrial subgroups, industrial/engineering and construction/building firms, primarily because the former were more standardised on product and distribution strategies. On average,

Table 6 Levels of standardisation/adaptation by nature of business Mean scores for consumer and industrial product firms Consumer Consumer Electronic/ durables non-durables electrical No. (%) of 16 (26%) 14 (22%) 10 (16%) firms Mean Mean Variables Meana Average for Firm variables Average for Country variables Product strategy Price strategy Distribution strategy Promotion strategy Average for Marketing Mix Programme

Industrial/ engineering 11 (17%)

Construction/ Full sample building 12 (19%) 63 (100%)

Mean

Mean

Mean

2.81

2.52

2.56

2.41

2.74

2.62

3.70

3.78

3.58

3.57

3.63

3.66

1.86

2.08

1.94

1.83

2.36

2.01

3.21 2.97

3.02 3.35

2.87 3.29

3.09 2.49

3.36 3.27

3.12 3.08

3.00

3.00

2.92

2.96

3.07

3.01

2.79

2.91

2.78

2.62

3.05

2.84

a Comparing UK strategies to those used when exporting to the GCC: (1) identical; (2) similar; (3) some variation; (4) moderate variation; (5) substantial variation.

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industrial firms had similar levels of marketing mix programme standardisation (2.82) to consumer firms (2.85). The analysis indicated that the degree of standardisation related more to withinfirm variables and less to the industry type. Hypothesis H(iii) was therefore rejected. There was some indication, however, that industries more likely to have customised products (construction/building and consumer non-durables) were slightly more adaptive in their marketing mix strategies than industries more likely to have standardised products (consumer durables, electronic/electrical industrials, and industrial/engineering firms). 3.4. British firms could be characterised as taking a cluster approach to standardisation when exporting to the Gulf States Part of the questionnaire requested British HQ respondents to compare their exporting strategies within the Gulf States, by relating their strategies for Saudi Arabia to those for each of the other five GCC States, using a 5-point Likert scale across 45 variables. For brevity, the results are shown for the averages of the variables related to the Firm, Country and Marketing Mix Programme. Table 7 indicates that on average the exporting strategies for UK firms to Saudi Arabia were similar concerning Country factors and Marketing Mix Programme variables to those adopted for the other five states, and that similarly Firm variables were on average of a mainly centralised nature for Saudi Arabia and others in the GCC. The biggest differences (not reported) concerned target market and environment characteristics, but even these showed only that a similar approach with some variation was considered necessary by UK exporters. The general picture was, thereTable 7 Comparison of UK firms’ exporting strategies to Saudi Arabia with other GCC States Comparing exporting to Saudi Arabia with Variables

Kuwait

Qatar

Bahrain

Oman

UAE

Mean

Mean

Mean

Mean

Mean

1.90

1.92

1.86

1.91

2.40

2.48

2.43

2.44

1.95

1.96

1.95

1.94

Average for 1.86 Firm variablesb Average for 2.32 Country variablesa Average for 1.95 Marketing Mixa Programme variables a

(1) Identical; (2) similar; (3) some variation; (4) moderate variation; (5) substantial variation. (1) Highly centralised; (2) mainly centralised; (3) mixed centralised/decentralised; (4) mainly decentralised; (5) decentralised.

b

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fore, one of high levels of standardisation with only minor adaptations of UK firms’ exporting strategies to the six Gulf States, and we may conclude that British firms do tend to treat the Gulf States primarily as a single market area. Discriminant analysis identified two variables only as discriminating between Saudi Arabia and the rest of the GCC: retail price and management of the sales force, two infinitely adjustable variables within as well as between countries. Hypothesis H(iv), that UK firms will employ a cluster strategy toward marketing mix standardisation in the Gulf States, was therefore upheld. 3.5. British HQs and their agents had similar perceptions of the degree of standardisation adopted in the Gulf A matched sub-sample of 25 UK firms and their Saudi Arabian agents indicates that on average they had very similar perceptions of the degree of marketing mix standardisation adopted by UK firms when exporting to the Gulf compared to their home-market policies. Table 8 shows the mean scores for the matched HQs and agents for 19 marketing mix programme variables. Overall, the HQs and agents had common perceptions that UK firms used some variation in their marketing mix programmes to adapt to Gulf conditions, a paired samples T-test showing a significance of 0.34 and a correlation of 0.771. There was a tendency for British HQs to perceive that their distribution strategies were slightly more adapted to the Gulf, compared to agent perceptions. Agents, conversely, believed that products, prices and promotions were somewhat more adapted to the Gulf, compared with the views of their UK counterparts. However, none of the differences in the matched responses were significant at the 0.05 level, although three, product characteristics, management of the sales force and the role of middlemen, were significant at the 0.10 level. While the general picture is one of agreement, stepwise discriminant analysis, using the UK firms and their agents, classified each of the two groups correctly in 74 percent of cases, with the management of the sales force and role of publicity as the two differentiating variables. Overall, however, the research evidence lends support to Hypothesis H(v), that UK firms and their matched GCC agents would have similar perceptions concerning the degree of marketing mix standardisation adopted by UK firms at home and when exporting to the Gulf.

4. Summary and discussion This paper has attempted to add to the literature on international marketing mix programme standardisation by using a broader framework than has typically been used in such investigations, influenced by Jain’s (1989) encouragement to take a wider perspective. We have also offered an additional emphasis by focusing upon the strategies of UK firms operating in a rapidly developing market, the Gulf states. Our model was underpinned by five hypotheses which were tested through a relatively extensive empirical investigation, compared with most other articles on the

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Table 8 Comparing the perceptions of British HQs and Saudi Arabian agents towards Marketing Mix Programme variables Perceptions of

No. of firms Variables Product characteristics Brand name Packaging Product warranties Average for product variables Retail price Pricing methods Offer of price discount Average for price variables Types of retail outlet Channels of distribution Role of sales force Management of sales force Role of middlemen dealers Customer service Average for distribution variables Advertising budget Basic advertising message Media selection Sales promotion Creative expression Role of publicity Average for promotion variables Average for Marketing Mix Programme variables a

British HQs 25 Meana

Saudi Arabian agents 25 Mean

2.04 1.72 2.16 2.32 2.06 3.24 3.04 3.60 3.29 3.68 3.32 2.96 3.08 4.08 2.64 3.29 3.32 2.84 3.24 3.36 3.24 2.92 3.15 2.95

2.72 1.24 2.40 2.40 2.19 3.64 3.40 3.76 3.60 3.56 3.48 2.60 2.32 3.32 2.24 2.92 3.84 2.60 3.64 3.24 3.52 3.52 3.39 3.03

(1) Identical; (2) similar; (3) some variation; (4) moderate variation; (5) substantial variation.

subject, using a large sample of UK organisations exporting to the Gulf States, and a smaller sample of their Gulf agents. Our findings indicated that four of the model’s five supporting hypotheses could be upheld. Overall, the differing degrees of marketing mix standardisation/adaptation employed by British exporters to the Gulf could be associated with six variables, three associated with country and three related to firm. The discriminating country variables were market segment sought, the level of political stability and the level of intensity of competition; the three firm variables were decision-making criteria, integration of the marketing function, and the budget methods used. “Adapters” indicated a greater willingness to modify their plans to the Gulf marketing environment and to competition and to delegate more authority to their agents. “Standardisers”, in contrast, were mainly concerned with more centralised authority and control, and more standardised products. Since complete marketing mix standardisation with no

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deviation is a practical impossibility, our interest was in the degree of standardisation exhibited by UK firms. In-depth qualitative interviews with standardising firms suggested that their use of the same marketing approach when exporting to the Gulf was driven by product cost economies and the wish to retain a consistent corporate and brand image. Similar interviews with moderately adaptive firms indicated that while they wished to retain control over product and technical support, they were prepared to work closely with local agents to change other parts of the marketing mix to adapt to local conditions. Qualitative interviews with localisers indicated that these companies felt they had no option but to adapt their products somewhat to meet local specifications and laws, particularly where government procurement was involved. Changes to the rest of the marketing mix emanated from a wish to give agents freedom to adapt to their local conditions. In common with most other studies, product strategy was much more standardised than other parts of the marketing mix programme. Our study found that price and distribution adaptation were more common than advertising modification. We could find no evidence to support suggestions that industrial products per se were standardised more than consumer products. Our study does give some indication, however, that the nature of the product is important in influencing standardisation, but based on the required degree of customisation whether industrial or consumer. Virtually all UK firms had agents in each of the six GCC countries. High levels of standardisation occurred across the Gulf with only minor variations between states. British firms thus tended to treat the Gulf primarily as a single market area, or market cluster. There was close accord between the perceptions of the British HQs and perceptions of their Saudi Arabian agents concerning their rating of the standardisation of marketing mix programme variables. While we believe that our study has provided a useful series of insights into the standardisation issue from the developing country perspective, we recognise the need for caution in interpreting the results. The sample has a bias toward relatively large companies with long histories of exporting to the Gulf. The appropriate strategies for smaller firms, particularly those entering the market for the first time, may be different and an appropriate focus for further research. References Alabdali, O. S. (1996). International marketing programme standardisation of UK companies in the Gulf. Unpublished PhD thesis, Manchester Business School. Arab British Chamber of Commerce (1994). Arab UK business year book (10th ed.). London. Barker, T., & Aydin, N. (1991). Implications of standardization in global markets. Journal of International Consumer Marketing, 3, 15–34. Boddewyn, J. J. (1981). Comparative marketing: The first twenty five years. Journal of International Business Studies, 12, 61–79. Boddewyn, J. J., Soehl, R., & Picard, J. (1986). Standardization in international marketing: Is Ted Levitt in fact right? Business Horizons, 29, 69–75. Brandt, W., & Hulbert, J. (1977). Headquarters guidance in marketing strategy in the multinational subsidiary. Columbia Journal of World Business, 12, 7–14.

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