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Mohammed Shafiq Hanif – 100134260 1 Mohammed Shafiq Hanif – 100134260 Marketing across cultures – 6MK 503 Word count - 2967 Charles Hancock Marketing assignment 2 – Beck’s blue Due 15 th December 1

Marketing Assigment, becks blue, anheuser busch inbev, finland and pakistan, grade 2:2 derby uni

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crosscultural anylsis, pestle, cultural framework, marketing mix, market entry stratagies

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Mohammed Shafiq Hanif 100134260

Mohammed Shafiq Hanif 100134260Marketing across cultures 6MK 503Word count - 2967Charles Hancock Marketing assignment 2 Becks blueDue 15th December

ContentsExecutive summery4Introduction5Cross cultural analysis6Introduction6Pest6CCA approaches8Cultural affect on promotion strategy11Introduction11A cultural frame work11The marketing mix14Price14Product14Place15Promotion15Market entry strategies16Introduction16Recommendations18Conclusion18References19

Executive summery The aim of this report is to highlight the cultural differences between Finland and Pakistan, from this list and identify socio and cultural factors that might affect the marketing mix. And finally to analyse various market entry option available to Anheuser Bush InBev and make recommendation to which one is most suited to each country.

The CCA which are included within this report are the cultural dimensions, pest and Halls language context. The finding from this suggest that Finland would be an easier country to export to but Pakistan is a growing economy and investment should be done know whilst the costs are low.

Another aspect addressed within this report the cultural framework; the eight aspects of this frame work are listed and how Pakistans and Finland culture might affect the marketing mix is also discussed.

Lastly the suggestions for market entry for Finland was direct exporting and for Pakistan it was joint ventures as they are lower risk than greenfield FDI and Anheuser Bush InBev could gain knowledge from their partners.

Introduction This report will look at how the social and cultural factors prevalent within Pakistan and Finland could influence attitudes towards Becks Blue alcohol free beverage, also using the information gather to analyse the strategic implication this would have on their marketing mix. From this there will be a critical evaluation of various market entry strategies available that they could adopt to suitably enter these two culturally different destinations. The first country that will be used within this report is Finland, as of the end of 2013 they had a total population of 5,451,270 million. Also data shows that 22.1% of people have no religious affiliation, of this men being the majority. Within Finland the national languages are Finnish and Swedish; these account for 89.3% and 5.3%. Other languages include Sami, Romani, Karelian and Finnish sign language. Data suggests that the number of Swedish speakers will be overtaken by foreign language speakers by 2015. Finland is also known for being placed at number 3 out of 177 within the transparency corrupt perception index 2013 and they have the highest levels of education within the world. (Statistics Finland, 2014) The second country is Pakistan, they have a population of 180.44 million and data suggest that 0.5% of them have no religious affiliation. The national languages of Pakistan are Urdu and English, there are also regional languages of which there are many. Pakistan has been placed at 127 out of 177 with the corruption perception index and has is located at 158 out of 181 on their levels of education. (Pakistan Bureau of Statistics, 2014)Table 1 GDP statistics

Finland Pakistan

GDP$256.8 billion $236.6 billion

GDP per capita$47,218,77$1,299,12

GNI $38,480$4,920

Data taken from Pakistan Bureau of Statistics, 2014 and Statistics Finland, 2014

The product that has been chosen is Becks blue alcohol free beverage; Becks is a subsidiary of Anheuser Bush InBev. Other brands they have under their control are Budweiser and Stella Artois. They reported $43.2 billion total revenues which were a 3.3% increase on the previous year; of which 7.5% came from Europe and 3.0%, came from Asia Pacific. In their report they describe themselves as having a long term strategic mind set which motivates us to continually seek and seize opportunities for future growth and share holder value creation (Anheuser Bush InBev, 2013).Cross cultural analysis Introduction The cross cultural analysis (cca) consists of various marketing tools that can be applied to different countries to help with a general understanding of the market conditions and buyer behaviour (Doole & Lowe 2008. P: 7). These tools play an important part as they help identify the influences affecting a consumer, Doole & Lowe (2008) also highlight that they help identify the motivations and important behaviours of the consumer and stop faux-pas in promotional strategies. Doole & Lowe (2008) give the example of a Cadburys promotional advertisement in India were they misjudged the sensitivity of Kashmir, this in turn damaged their reputation in India. The biggest benefit gained form this is localisation, this helps an international firm lower the advantages of domestic firms. Pest The first cross cultural analysis tool is the PEST framework; this framework helps identify the macro economic factors affecting an organisation, so their marketing strategies can be adjusted accordingly. Within this framework there are political, economic, social and technological factors; The political aspects link to how much the government intervenes with a countries economy and what policies they have put in place. The economic factors refer to a countries economy and how it might affect the company The social factors include the trends and culture that are prevalent within the foreign society that the marketing strategy needs to be adjusted against The technological aspects of a country that might be significant, when understanding the bigger picture of an economic environmentTable 2 Political

FinlandPakistan

Capital Helsinki AA+ / stable, credit rating Air and water pollution issues Cost, insurance and freight (CIP) method of import tax Duty rates 0% to 17%, special duty on bikes from China of 48% Electronic products are duty free Duty only applies to countries outside EU Reduced rate of 14% VAT on food Ranked 3 on corruption Elections every 4th year Have elected president

Capital Islamabad B- / stable, economic rating Natural disaster, air, water, noise and climate change issues Cost, insurance and freight (CIP) method of import tax Duty rates 0% to 100% Electronic products are duty free VAT 17.5% No minimum threshold for tariffs Ranked 127 on corruption Political issues concerning presidency War with Taliban Drone bombing from USA of Taliban Elections every 5th year History of coup d'tat Military / political dispute over Kashmir

Table 3 Economic

FinlandPakistan

GDP 0.20% increase 1 euro = 0.79 GBP Interest rate = 0.5% Part of the Euro zone Within a free trade area Top 5 imports crude / refined petroleum, cars, computers and packaged medicaments Exports to Sweden, Russia, Germany, USA and Netherlands GDP 5% increase 1 Pak rupee = 0.0063 GBP Interest rate = 9.5% Reliant on international aid Close to China Top 5 imports crude / refined petroleum, cars, palm oil and coal briquettes Exports to USA, china, Germany, Uk and Afghanistan

Table 4 Social

FinlandPakistan

1st education ranking Population 5,268,799 as of July 2014 Median age 43.2 years Population growth rate 0.05% Obesity 23% Statutory law Lutheranism 75.2% No religious affiliation 22.1% Orthodox -1.1% Muslim 1% Catholic 0.2% Other 0.3% Celebrate Christmas High quality healthcare Saunas Coffee Like milk, quite common to have often Emphasis on fairness 158th education ranking Population 196,174,380 as of July 2014 Median age 22.6 years Population growth rate 1.49% Obesity 5.5% Laws based on common law of England and Whales and Sharia law Muslims 97% Hindu 1.20% Roman catholic / protestant 1.9% Celebrate Ramadan and two Eids Low quality healthcare Strong cultural ties Low equality High corruption and crime Like the colour white Like gold and prestige Western cultural influence

Table 5 Technological

FinlandPakistan

R&D funding of 3.55% of total GDP European technology leader Good distribution networks Specialises in healthcare technology Specialises in large flat rolled stainless steel, kaolin coated paper, uncoated paper and sawn wood R&D funding of 0.33% of total GDP Poor distribution networks Specialises in solar panels, house linens, non retail pure cotton yarn and non knit men suits textiles based mostly Listed a number 4 on global milk production charts

From this analysis above several comments can be made; firstly Finland would be an easier country to launch a new product in as Finland is within the European Union; it is in a free trade area which means companies from the UK can freely trade to Finland for minimal cost. Finland is also a more politically stable country but as it is a developed country the competition within the beverage market will be high so good a product differentiation strategy would be needed. Finland is distinguishable as there is a cheaper tariff and VAT rate on food.Pakistan would be the better area for foreign direct investment as it would be cheaper to move manufacturing there and this can be used within the promotional strategy; this would also negate the poor logistical operations and has closer proximity to China which is the worlds second largest economy. Also as there is a big difference in exchange rate the company would make more money despite the higher Duty rates and VAT. There are also many aspects where Pakistan falls short but as it is a developing economy; investment should be made now as the cost is reduced. CCA approaches The first cross cultural analysis that was chosen was Edward T, Halls (1976) high and low context cultures; this approach relates to the context of everyday communication (Hall, 1976), this pertain to two types of communications; High context are more non verbal more exclusive, many unwritten rules that need cultural understanding, knowledge is conditional; examples of high context cultures are Pakistan, China and Southern United States Low context are more verbal more inclusive, more explanation and less misunderstanding, rule orientated, more freedom of information, task cantered; examples of low context cultures are Finland, UK and GermanyNevgi (2010) describes Finlands cultural context as having a Janus face but is shifting from high context to low within it younger generations. Nevgi (2010) also describe the Finnish communication style as having western European values wrapped within an Asian communication style. For marketing this would have a negative impact as they would need multiple and complex promotional strategies to appeal to both parties.In contrast to this Pakistans communication is high context, within their culture speaking and understanding English is seen as a status symbol. Also within Pakistan promotional strategies will need to be heavily scrutinised so they are not misunderstood by the population as many things are assumed and people look beyond what is said to find deeper meaning and links. Additional to this, for Pakistan a change in the CCA approach needs to added, this is the inclusion of Wills cross cultural diffusion. Pakistan is a slow diffusion country as education levels are lower than their Finnish counterparts, this needs to be taken into consideration within the promotional strategy as the product might take time to be accepted as different to soft drinks but not actual alcohol within the culture.The second CCA approach chosen was Geert Hofstedes cultural dimensions; this was chosen as it provides an insight into how the society is structured and general consumer behaviour. The information gained from this would help create better promotional strategies or ethno marketing strategies (Sonny, 1995); there is also the seven dimensions of culture by Fons Trompenaars which would be better suited for marketing strategies but the information for this would need to be acquired, also the cultural dimensions could be used as a foundation for the overarching promotional strategy and the seven dimensions to help communication of it to the market. (Chart taken from http://www.geert-hofstede.com)Table 6 cultural dimensions and marketing strategies

Finland Pakistan

Power distance 33 equality, sharing, friends etc55 selfishness, power, respect etc

Uncertainty avoidance 59 as much information as possible, benefits of product etc70 - as much information as possible, benefits of product etc

Individualism-collectivism63 images of successful individuals, leadership etc14 working together, emphasis on collaboration and relationships

Masculinity / femininity 26 more emphasis on relationships etc50 competitiveness, winning, achievement

Pragmatism 38 - 50 -

Indulgence 57 strong branding, uniqueness of product, exclusivity, fun, recreation0 emphasis on self control, strong branding and uniqueness

Table 7 seven dimensions of culture

FinlandPakistan

ParticularismUniversalism

IndividualismCommunitarianism

DiffuseSpecific

NeutralEmotional

AchievementAscription

SynchronousSequential

InternalOuter

Cultural affect on promotion strategy IntroductionKale (1991) expresses the view that culture is important to international marketing and that it is learned and always changing, this is due to the disadvantages that international companies contend with when entering a foreign market. Domestic companies within the foreign markets have an established presence and a better knowledge and understanding of how marketing strategies will affect the consumers. To help with the localisation process of an international firm a cultural framework by Terpstra and Sarathy which consists of eight factors can be used to better understand the three elements of culture; these elements are; Values values held for a long time and are widely accepted, these consist of signs consumers use to serve as guides for acceptable behaviour, for example not making eye contact when being disciplined is a sign of respect in eastern cultures but disrespect in western cultures. Beliefs mental and verbal processes which are a reflection of knowledge which we assess products by. For example what is offensive and rude etc Customs approved or acceptable ways of behaviour and major events like marriage and death etc. A cultural frame work The cultural framework provided by Terpstra and Sarathy has eight elements to it; language, religion, value and attitudes, aesthetics, technology and material culture, social organisation, education and laws and politics. These elements will be looked at below and any behaviour that can be derived from them will be listed, also additions to the marketing strategy will be made from this information. These factors are crucial for a successful strategy. Table 8 religion

FinlandPakistan

The Evangelical Lutheran Church of Finland which hold membership from 75.2% Finnish Orthodox Church which as 1.1% 22.1% have no religious affiliation remaining being the minority religious groups, such as Muslims, Judaism and Finnish paganism 30% of them pray regularly and 50% at least once a month also has blasphemy laws for which people have been prosecuted for religion clashes with sense of equality celebrate Christmas and Easter but linked to some forms of paganism two religious sects have differing opinions of Easter, one more humble and one celebrates more very religious country 95% to 98% of people practice Islam in one form or another the remaining are classed as minority religions such as Christianity and Hinduism plays a bigger part in Pakistani peoples lives Eid twice or three times a year Ramadan Hajj and Umrah season Majority of the Muslims are Hanfi school Also has blasphemy laws which are abused and used Religion clashes with politics Pagan culture and religion has been mixed Separates religion from consumerism

Table 9 values and attitudes

FinlandPakistan

New years day Epiphany Good Friday Easter Sunday Easter Monday May day Ascension day Pentecost Mid summers eve most important to population Mid summers day All saints day Independence day Christmas eve most important to population Christmas day St Stephens day Saunas Equality and fairness Like milk and coffee Social bonds A strong sense of national identity Self indulgent Friendly but reserved to tourists Silence is regarded as part of a conversation Negative attitudes towards smoking Enjoy healthy lifestyle Kashmir solidarity day Pakistan day Labour day Independence day Kashmir black day Iqbal day Birthday of Quaid e Azam Eid ul Adah religious holiday Eid ul Fitr religious holiday Eid e Milad un Nabi religious holiday Youm e Shahadat e Ali religious holiday Ashura religious holiday Defence day Death Anniversary of Quaid-e-Azam Muhammad Ali Jinnah Big on western culture Family and culture Like material things which give status Strong sense of national identity Like products from USA and Japan as they have a higher perceived value Japanese and German cars Like street food Lunar calendar which moves back 10 days every year Like mangoes, cricket, hockey and football Growing western culture and social views

Table 10 languages

FinlandPakistan

Low context Finnish and Swedish national languages Sami languages Romani, Karliean and Finnish sign language 100% literacy level High context Urdu and English national language Regional languages include Punjabi, Pashto, Sindhi, Balochi, Kashmiri, Brahui, Shina, Balti, Khowar and Burushaski 54.9% literacy level

Table 11 education

FinlandPakistan

100% literacy level English is taught in schools

54.9% literacy level Males are more educated Taught English in school

Table 12 social organisation

FinlandPakistan

Men and women are equal in law and society There is a class system Mostly middle class Small gap between rich and poor 1 year mandatory military civil service Women are equal in law but not in society Ingrained cast system throughput classes Growing middle class Large gap between rich and poor

Table 13 laws and politics

FinlandPakistan

Constitution of Finland Statutory law Based on constitution and Sharia law Based on common law of England and Whales

Table 14 technology and material culture

FinlandPakistan

High diffusion Good logistics Material / consumer culture Low diffusion Poor logistics Poor electricity supply Poor water supply in some areas Strong material / consumer culture Like sales

Table 15 ascetics

FinlandPakistan

Appreciate art and music Modern contemporary style Bold colours Like the colour white Religious music is the most popular Poetry is very popular

The marketing mixThe marketing mix consists of four elements; product, price, place and promotion, these were first identifies by E, J McCarthy in the 1960s. Waterschoot (1992) states the purpose of this tool as being to create the right product, sold at the right price, at the right place with the most suitable promotion. This section will concentrate on the social and cultural factors identified above and how they impact these four elements and recommendations to the marketing mix to bring the product more in line with the cultures. Price The price of the product is essential as it determines the profit made by the company; Finland has an average price of 5.00 Euros for 0.5l domestic beer and 5.00 Euros for 0.33l of imported beer. As the product is not actual beer it might be seen as expensive compared to them, the price for Coke / Pepsi for 0.33l is 2.12 Euros. Pakistan has an average price of 300.00 Pak rupees for 0.5l of domestic beer and 500 Pak rupees for 0.33l of imported beer, for Coke / Pepsi it is 35.20 Pak rupees for 0.33l. These beverages are considerably cheaper in Pakistan; this might be due to the price elasticity of the products or the levels of poverty, Hofstedes indulgence factor might also be a factor. Finland has a high indulgence factor so there is demand for consumer products whereas Pakistan scores 0 so the pricing has to be alluring. Surprisingly even though Pakistan has poor logistics the cost of the products is still low, this might be due to the units sold. The pricing for both and Pakistan and Finland should be competitive within their own markets, firstly they should use market penetration pricing to get the product into peoples hands and then charge 3.3 Euros for Finland and 100 Pak rupees after the product has been diffused. (Statistics taken from www.numbeo.com, 2014)Product The product of Becks alcohol free should not cause any problems for Pakistan or Finland; the issue would be in educating people in both countries that it is alcohol free without damaging its reputation. For Pakistan the product should be designed in gold with white with a big Halal sticker as they are popular colours and appeal to the majority of the people there; and the most important issue affecting its consumption. Think Becks Gold alcohol free with a Pakistan flag at the top. As the only legal brand of beer is designed to be quit traditional Becks should be the opposite and its design should be up to date with its western alcoholic competition. There should be two types of product information on the product, Urdu and English. This is because English is seen as a status symbol and Urdu is in the family group of most of the regional languages spoken there. For both countries the national flags need to be on the product as both cultures are extremely proud of their nations. For Finland the design of the product should be more in line with older alcoholic products to give the feeling of nostalgia and heritage as they are extremely proud of their heritage. As Finnish is spoken by 91% of the population the information on the product should be in Finnish to appeal to the majority but as they value equality it wont matter if there are other languages on there.Place For Finland it would be more efficient to sell to distributers via wholesale as their distribution networks are good. For Pakistan on the other hand their distribution networks are poor but the same method would be needed, this would enable the company to get rid of their product as fast as possible and leave the distribution to some ones else. Promotion The views and opinion that affect Finnish people are equality and fairness, as long as the promotional strategy doesnt infringe on these; Blaspheme or insult the Finnish heritage there should not be any issues. The promotions should include friends and family with emphasis on having a good time and fun; and may be even saunas. The promotional material should also provide as much information as possible as this is inline with there uncertainty avoidance score. On the other hand Pakistan has a power distance rating of 55 so the promotional material should reflect this; they are also more masculine so aspects of winning and competitiveness would be needed. Also images of power and respect etc; and tie in families and saving face to be in line with their emphasis on family and community. They share the levels of uncertainty avoidance so the same would apply. An example of this would be Becks gold, a drink you dont have to share at home and a woman putting the product with her gold, this would also be in line with their high context language.

Market entry strategies Introduction Zahra (2000) defines market entry strategies as how a company plans to deliver a product or service into a foreign market, there are many strategies available ranging from exporting to a Greenfield investment. Each successive strategy has increasing control and risk. Some of the reasons why strategy is needed are tariffs, marketing and transportation costs. Some things to consider when strategy is being formed; Size, experience and resources of the organisation Location, competition and demographics of the market Politics, technological aspects, social and cultural elements and economic of the countryFurther to this there are four factors which also need to be considered; these are control, cost, risk and involvement. The first method available to Anheuser Bush InBev is indirect exporting; this method involves using their own resources to manufacture the product and hiring a third party agents / distributers to represent them in the foreign markets. Within this method there is piggybacking, export management companies and licensing; these three methods have a minimal level of control and the least risk. Piggybacking refers to using another companies distribution methods and handing over the unpackaged product to them. Export management companies are as described and do all the global operating functions. Licensing in this case refers to handing over control of all aspects of the product to a foreign firm. The advantages and disadvantages re listed in table 16;Table 16 indirect exporting

Advantages Disadvantages

Minimal risk and cost Products produced in one place and can take advantages of economies of scale Easy market exit No direct management Keeps financial liquidity No barriers to entry Lower profits Sale at cheaper prices No internalisation or new knowledge of foreign markets Higher risk to brand image Requires the right third party

The second method available to Anheuser Bush InBev is direct exporting, this the oldest form of trade and involves creating the product, market research, foreign distribution and logistics. The levels of control are higher than indirect exporting but the risks are greater as well. There are two forms are direct exporting, these are passive and aggressive. The advantages and disadvantage are listed in table 17;Table 17 direct exporting

Advantages Disadvantages

Greater profits More control Better feedback Better protection of brand Better and more flexibility in promoting product More financial risk Initial costs are increased More informational requirements Taxes and other barriers to entry Poor distribution networks

The third form of market entry strategy is joint ventures, this is when two or more companies come together to achieve business goals and objectives. This involves a moderate amount of risk and costs than the exporting methods but there is more control over the product and activities that are needed. The advantages and disadvantages are listed in table 18;Table 18 joint venture

Advantages Disadvantages

Increased productivity Access to new markets Access to new distribution methods Increased capacity Risk reduction Access to more or better resources Organisational culture clashes are common Increased cost Increased risk Imbalance of knowledge and investment leading to differing levels of control

The fourth form is acquisition; this is classes as a company buying enough stocks of a foreign company to take controlling interest. There are many costs and risks involved with this, but they have 100% control or near enough. The advantages and disadvantages are listed in table 19;Table 19 acquisition

Advantages Disadvantages

Minimum risk when compared to greenfield investment Overcomes barriers to entry Better distribution Access to new products, markets, skills and resources etc

High costs of acquisitions Low financial returns for acquisitions Integration problems No guarantee of stability

The last is greenfield investment, this is when a company directly enters a foreign market by creating new organisation operations. This form gives the most control, has the most involvement but has the most risks associated with it. The advantages and disadvantages are listed in table 20;Table 12 greenfeild

Advantages Disadvantages

Greater control when compared to all other forms of market entry Greater economies of scale Implementation of the best strategies Overcomes barriers to entry

Increased cost Increased risk Lengthy entry process Starting from scratch

RecommendationsThe recommendation for Finland would be to use direct exporting, using all forms of media to get the best coverage of the product. This is due to the company already being located within Europe which would be classed a free trade area. This would enable Becks to concentrate on finding more distributers willing to sell their product for them.For Pakistan the recommendation would be to partake in a joint venture with the primary form of promotion being in television, this would enable Anheuser Bush InBev to gain the critical information needed to operate independently within Pakistans market place. As Pakistan is a developing country the risks would outweigh the potential benefits and profits. Conclusion This report has highlighted the social and cultural aspects of two different cultures to find how the social and cultural aspect could affect Becks blue alcohol free beverage. It has shown the aspect of the two different cultures the aspects that could affect the product and given suggestions to better localise the product to these markets. Also it has analysed various market entry strategies and made recommendation as to the best one for each country. In closing this report doesnt mention that the products success is more dependent on the demand for it within the chosen markets. The demand is the deciding factor in which the market entry strategy is based on, the more demand the more a company will involve themselves to attain greater profits.

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