Next’s Marketing Strategy for the China Market

Cultural Differences of UK and China affect Next’s Marketing Strategy for the China Market

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Cultural Differences of UK and China affect Next’s Marketing Strategy for the China Market

This research is based on primary as well as secondary data. The research methodology for the purpose of this research consists of survey of online available various clothing & footwear retailer’s practices. Additionally, we conducted a survey through questionnaire attached in the appendix. The participants involved managers and other decision makers of Next Plc. By circulating the questionnaire, we found out that different people have different perceptions about the cultural differences of UK and China pertaining to the Next Plc’s marketing strategy. This research also includes different comments of Next Plc Managers and conclusions are based on the secondary data.

The methodology used for the purpose of this research is based on the secondary data. This research is more or less based on the literature review and the conclusions are drawn on the basis of actual resources listed in the references.

The method of investigation used consists of a theoretical framework of secondary data by reviewing the current position of the clothing and footwear retailers’ entry into China. Using secondary data as a basis for conclusion will therefore aim to ensure the reliability and validity of this research by demonstrating how the cultural differences of UK and China affect Next Plcs marketing strategy for the China market.

Secondary research was conducted through a number of sources, including libraries and the Internet. A number of libraries were visited for gathering valuable data from textbooks and journals. The Internet was also a major tool in obtaining relevant information, leading to the search for a number of articles in journals and newspapers from database.

We conducted a survey of the practices of clothing and footwear retailers for proving the research hypothesis. This was done by adopting the three stage process: sample selection, questionnaire distribution and compiling responses obtained from the questionnaire. The questionnaire used for conducting this research is attached in the appendix. Also the data has been gathered through various sources out of which some are online while some are on paper.

The results of this research are accumulated by the questionnaire results and the information available on the web. We conducted a thorough study to find out how the cultural differences of UK and China affect the marketing strategy of Next Plc. We also analyzed the news articles published on the internet over a certain period of time.

Qualitative research methods, aims to provide a culture or are studying the situation and direct interaction with the public and the target audience’s point of immersion researcher. In marketing research, qualitative and quantitative methods provide more authentic and reliable results as compared to the results obtained by using any one method. In this study, the combination of these methods provide us an indepth knowledge and understaning about the affect of cultural differences on the marketing strategy of Next Plc in China. Assuming the generated data collection and analysis, the measurement is often subjective. In the qualitative paradigm, as the researcher’s data collection instrument, the results may vary depending on who were studied. (Albaum and Duerr 2008 pp.15-19)

The benefits of using combination of qualitative and quantitative research methods is that they produce rich, which gives the views of participants and provide a complete detailed data on health behavior. Once the process and “cause” from the quantitative research is obtained, it involves the correlation between variables focus of the differences. There is no such disadvantage of using combined methods of research. The only one disadvantage is that the combination of these two methods require some more time as compared to the single method in conducting the research.

This report analyzes how the cultural differences between UK and China will affect Next Plc’s marketing strategy while entering into the Chinese market. By using this methodology, we were able to report more easily an analysis of cultural differences between UK and China for Next PLC vis-a-vis global benchmarks. (China Statistical Publishing House 2006 pp.45-48)

In this report, I evaluated cultural differences between UK and China and/or marketing tactics by analyzing Next Plc at the universal level, as compared to analyzing it on local level. There is also a detailed quantitative study, as it relate to the large amount of digital data acquisition. However, detailed quantitative studies, the data itself is often both the shape and limit analysis. (China Statistical Publishing House 2008 pp.102)

Firstly, the industry of Next Plc was identified to gain an insight into the industry practices. This was done by employing North American Industry Classification System (NAICS) which is a comparatively newer system for classifying the marketing practices and tactics of organizations. Secondly, the research analyzed how cultural differences between UK and China have affected Next Plc’s marketing strategy in the past? Thirdly, the research sheds some light on the situation of Next at present, considering the risks, opportunities and cultural differences faced by Next Plc. Lastly, this research consists of some recommendation on how Next Plc should manage the cultural difference between UK and China while developing strategy for China.

Chapter IV: Empirical Analysis

Introduction

As mentioned before, Next Plc should have made some adjustments to suit the cultural & regional customers’ needs. Next Plc should quickly respond to the regional customer’s needs by adding some new product lines by opening two factories in Shanghai. For Next Plc, they simply adjust the number -of orders of existing products so as to satiate the demand regionally. Next Plc should provide more suits in Shanghai and Beijing while offers more colorful and low-priced products in Guangzhou. (Euromonitor 2009 pp.45) However, it is worthwhile to note that Next Plc does not specifically design its products to suit regional customer’s needs even though they know that Guangzhou people are fond of bright colored causal wear while Beijing and Shanghai consumers are fond of more formal style of clothing. Playboy has considered the conflict of regional product adaptation strategy and scale economies. Next’s China manager thinks that regional product adaptation strategy will incur prohibitive costs and it may not be economically feasible. If the regionally adapted products in particular regional market cannot have good sale records, it will increase the number of stocks and even losses. (Xu 2005 pp.324)

Discussion

The market in China is highly competitive and any miscalculation will lead to great losses. Next Plc is already a market leader and its brand loyalty is high. No wonder, Next Plc only adjusts the number of orders regionally. (Euronmonitor 2006 pp.11) for Next Plc, there is no such a regional product adaptation strategy as it is a leader in the market. It has already introduced cheaper product line-Word shoes in China and it is not necessary to invent new products to suit the regional customer’s needs. (Marieke & Hofstede 2002 pp.61 — 69) This is similar to Next Plc’s situation. The company tries to utilize the success of one particular product such as the “easy ironing” clothing to expand to the remaining product lines. In this way, it is the market leader or follower, production costs and types of industry can really have strong influences on regional product strategy. (Wong 2005 pp.59)

Market positioning is important as it determines the positions that the firm has occupied relative to competitors in the mind of consumers. They have already occupied significant market shares within their industries. (Curry 2008 pp.78)

MNCs from different industries have different marketing strategies. For Next plc, it is an industry selling branded athletic products such as sports shoes. It can make use of the sports event like the world club to promote its products and increase brand awareness. For Mary Kay, it belongs to the cosmetics industry. It has to adapt its shapes of make-up to suit the needs of the beauty conscious Chinese ladies. For the ice-cream industry, Wall’s have to adapt its flavors regionally so as to suit the tastes of the Shanghai and Beijing customer’s needs. (Cooke 2009 pp.5-8) the ice-cream industry has to have a high level of product adaptation, as there is a wide selection for customers. Unlike the ice-cream industry, the clothing firms like Playboy, Giordano and Baleno and Bedding industry like a-Fontane do not adapt their products regionally though they have noticed the existence of regional customer needs. Playboy, Giordano and AFontane have factories in China to localize the product offerings in China. (China Statistical Publishing House 2008 pp.225) However, the cost of regional adaptation is so prohibitive and it may not be wise to adapt the products regionally. An alternative way for them is to adjust the number of product offerings to suit the regional customer’s needs. (Veeck and Burns 2005 pp.47-61)

There is a diverse Chinese customer’s needs and culture. This can explain the reason why Next Plc is so keen on pursuing the premium pricing strategy. They have placed great emphasis on delivering superior quality standard to customers. On the contrary, the poor rural population’s consumption behavior is thrifty in nature. (Ng and Tuen 2006 pp.23-25) They demand basic necessities only. (Abdelal & Tedlow 2003 pp.23-25) This creates rooms for Giordano and Baleno in exploiting the low-end market by charging reasonable price at good quality level Mary Kay is a foreign branded cosmetics firm. It has done a research to know more abo^ the Chinese make up habit the Chinese ladies are generally having different make up habit from the western ladies. Mary Kay has to adapt certain shades of make up in China, Most importantly, Chinese views “face” as a kind of “respect and consideration.” (Lu 2001 pp.32) This want “face” culture is consistent with the Chairman of a-Fontane’s views that the Nouveau Riche want to show off and this can represent their status. If the foreign marketers in China do not grant some favors or show respect to the Chinese counterpart, it is hard to build up a long-term relationship and worsen the future business opportunities. (Dwyer and Hsu 2005 pp. 1 — 28)

Regional factor is influential as Next Plc has different markets. Nike has chosen Guangzhou and Shanghai as the target regions and expanded to Beijing and Shanghai through franchising. MNCs have to adjust their marketing tactics regionally. (Tretiak 2005 pp.45)

From the above analysis, it is obvious that spatial variation is an influential factor. For the affluent coastal regions, Next Plc have established foothold through operating flagship stores as the showrooms. (Baker 2005 pp.89-91) They are grand in design targeting at affluent consumers. For the less profitable regions especially the interior, Next Plc do not want to take the risk and expand through franchising only. They can extend market influence with little costs and risks. Giordano is going to build a fourth-floor high flagship store in Shanghai. It is foreseeable that Next Plc will operate more flagship stores in affluent coastal regions and the competitions for place will be fiercer. (Porter 2008 pp.179)

The analyses clearly show that Next Plc will become a powerful brand name in the retail market of China through adjusting to the cultural differences between UK and China. Despite the fact that there are a number of strong rival companies, current tense economic situation, unpleasant conditions, and very much altering customer behaviour, company has applied its devoted intelligence, constantly growing and improving the products, and keeping high level of quality to defeat these problems. (Abdelal & Tedlow 2003 pp.23-25)

Next features this constant increase in retail to the strong correlation between Next Brand own label and ability to adapt to the market of China fluctuations rapidly. At the current times, it is of high importance to have a sound name in the trade due to people’s willingness to purchase higher-priced products, sometimes just because of a Brand of the company. This is a core reason of companies like Dorothy Perkins, Top Shop, New Look, H&M spending huge amounts on advertising their Brand.

In spite of everything, Next is not to stop growth, no resting relying on what have been achieved so far. Objectives and Strategies are set and have to be realised, being attentive to threats and weaknesses of the Company and current market of China situation. The Spinning Wheel Never Stops! (Pan 2009 pp.14-18)

After reviewing all the case studies and marketing tactics in China, it is important to pinpoint the tactics for marketing in China. In sum, it is important to incorporate the variables such as countries and products in the analysis of global and local marketing strategies. Next Plc should pursue differentiation and adaptation strategies in order to be successful in China. (Wilson and Gilligan, 2008 pp.69) Differentiation strategy is in terms of quality control, brand building and value added auxiliary services like “after-sale” services. Market adaptation strategy in terms of localization and regional adjustments are prerequisite for marketing success in China, as the Chinese customers are becoming more refined and differentiated from each other. (Pan 2008 pp.6-8)

Conclusion

In general, there are two main types of marketing strategies employed by Next Plc. Some MNCs like Mary Kay in Shanghai may choose one particular province that can suit their products as the stepping-stone in China, in this way, they offer standardized product offerings as they are selling in the western countries. Only other marketing mix such as pricing, distribution channels and promotional tools should be adjusted to suit the particular China province’s needs. In other words, these types of MNCs do not need to adjust their marketing strategies regionally as they have already carefully selected the most suitable segment in China. Another type of marketing strategy is the regional adaptation one. Next Plc may be very ambitious and have chosen many provinces in China as the target segments. Under this ambitious market expansion goal, it is important to think of regional adjustment of entire marketing strategies.

As mentioned before, Next Plc does not need to adjust their product offerings despite choosing penetration into different provinces in China. The key ingredient of success is the already proven product offering and there is no need to adjust the product strategy even regionally in China. Next Plc selling premium products must have good quality control and high-brand images. All the things that they need to adjust may be the promotion, distribution and pricing tactics. They can minimize the cost of regional adjustment through franchising. They leave the responsibility of launching regional marketing strategies to the franchisees. (Paliwoda 2008 pp.63)

For instance, the franchisees must adjust promotion and distribution strategies to suit their particular market needs. This can save initial set up and managerial costs. Be that as it may, Next Plc need to adjust all the marketing tools regionally. Next Plc has to satiate the regional customer needs regarding the dressing tastes as it is more sensitive and customer’s switching cost is low. Next Plc have to adjust the orders of product ‘offerings in different regions. Be that as it mays whether Next Plc have to adjust the market development strategies regionally really depends on product nature, customer needs and market positioning. (Oliver & Stelle 2007 pp.78)

Recommendations

Next Plc should be adaptive in terms of localization and regional adjustment. In order to be successful, it is essential to be flexibile by knowing the customer needs and trends. Knowing the customer needs is important in China, as China is a vast market and highly fragmented. Customer-oriented marketing strategy enables successful market penetration in China. Despite the fact that offering quality products with distinctive images are key ingredients to succeed, flexibility is no less unimportant. In view of the localization strategy, Next Plc should place a special attention on striking the balance of standardization and adaptation strategy. Next Plc may offer the unaltered products to China and this has ended in a complete failure. Nike has successfully added a cheaper line-world cup soccer shoes to appeal the little emperor’s market. It has made use of national athletes to localize the promotion campaign. Chinese fashion designers design Playboy’s clothing and it adjusts the number of product offerings to suit the regional customer’s needs. All these have provided some implications for the importance of “product adaptation” to the China market. In addition to the premium product line, Next Plc should invent a cheaper and localized product line to suit the Chinese customer needs.

If next Plc is familiar with Hong Kong market, it can use Guangzhou market as the stepping stone as the consumption behavior is similar. Market segmentation is of outmost important especially for the fragmented China market. In sum, adaptation in terms of regional adjustments and localization are gists of success in China.

Future Projections

For the projections of future China market, it is imperative to place a special attention on the trends of future consumption pattern, retail and distribution, advertising and media access and China economy as well. Amidst the growth of China economy and its WTO accession, China market will be more competitive and there will be increasing MNC’s entrance to the market. On the other hand, the local brands are in catch-up mode and upgrade continuously. The Chinese customer’s demand will be more sophisticated due to the wider pool of foreign and local brands available for selection. The customers will be more quality and brand conscious. Next Plc have to face keen, competitions with both local and foreign competitors. All these will lay profound implications to marketers in formulating future marketing strategies. Instead of confronting fierce price competition, Next Plc should differentiate and localize their marketing tactics. With an aid of Michael Porter’s Industry analysis, Next Plc must set up higher barrier of entry through continuous research and development, customization of product and auxiliary services, aggressive brand building, and tailor-make marketing and advertising strategies. Indeed, the future China market will be full of opportunities and challenges for Next Plc.

References

Albaum, G. Strandskov and Duerr (2008) International marketing and export management. England: Addison-Wesley, pp.15-19

China Statistical Publishing House (Zhongguo Tongji Chunbanshe) (2008) Beijing Statistical yearbook (Beijing Tongji Nianjian). Beijing; Author, pp.102

China Statistical Publishing House (Zhongguo Tongji Chunbanshe) (2006) Statistical Yearbook of Guangdong (Beijing Tongji Nianjian). Beijing: Author, pp.45-48

China Statistical Publishing House (Zhongguo Tongji Chunbanshe) (2008) Statistical Yearbook of Shanghai (Beijing Tongji Nianjian). Beijing: Author, pp.225

Cooke, T (2009) Marketing in China and Asia-achieving success in complex markets, Financial times Business Ltd., pp.5-8

Curry Jeffrey E (2008) a short course in international marketing: approaching and penetrating the global marketplace, San RafaeLCalifomia: World Trade Press, pp.78

Euromonitor International (2009) China Marketing Data and Statistics. London: Euromonitor International, pp.45

Euronmonitor (2006) Consumer Lifestyles in China. London: Euromonitor, pp.11

Marieke de Mooija, Geert Hofstede (2002). Convergence and divergence in consumer behavior: implications for international retailing. Journal of Retailing 78 (2002) 61 — 69.

Ng, LJF. And Tuen, C (2006) Three Chinese Economies, China, Hong Kong, Taiwan; Challenges and Opportunities.Hong Kong: The Chinese Economies, pp.23-25

Oliver H, M Yau, Henry C, Stelle (2007) the Changing Economic Environment in the People’s Republic of China. Hong Kong: Chinese University Press, pp.78

Paliwoda, S (2008) New perspectives on international marketing. London & New York: Routledge, pp.63

Pan Y.G (2008) Greater China in the global market, New York: Business Press, pp.6-8

Pan Y.G (2009) Where Do Products of Foreign Enterprises in China Go? An Analysis of Market Strategy. Hong Kong: Chinese Management Center, pp.14-18

Porter, M. (2008) Michael Porter on competitive strategy (videorecording). Boston, MA: Nathan/Tyler, Harvard Business School Video Series, pp.179

Rawi Abdelal, Richard S. Tedlow (2003). Theodore Levitt’s “The Globalization of Markets”: An Evaluation after Two Decades. Harvard NOM Research Paper No. 03-20, Harvard Business School.

Sean Dwyer, Hani Mesak, and Maxwell Hsu (2005). An Exploratory Examination of the Influence of National Culture on Cross-National Product Diffusion. Journal of International Marketing, Vol. 13, No. 2, 2005, pp. 1 — 28, ISSN 1069-031X

Tretiak, D (2005) Distribution in the PRC-assessing China’s market. Hong Kong: Business International, pp.45

Veeck, a and Burns, a (2005) the Formation of Belief in a Price-Quality Relationship: A Study of Urban Chinese Consumers. Asian Journal of Marketing, 4(1), pp.47-61

Wilson and Gilligan, 2008, “Strategic Marketing Management,” 2nd edition, Butterworth Heinemann, Oxford, pp.69

Baker M., 2005, “Marketing Strategy and Management” 3rd edition, Macmillan Business, London, pp.89-91

Lu T.H. (2001) Marketing in China, Guangzhou: Guangzhou press, pp.32

Wong, K.S. (2005) Perspectives in launching Consumer Products in PR China. MBA Dissertation, University of Hong Kong, pp.59

Xu, B.Y (2005) Marketing to China: one billion new customers. USA: NTC Business Book, pp.324

Appendix

This questionnaire aims to investigate how cultural differences affect the marketing strategy of Next in China.

Age

16 — 20

20 — 26

26 — 40

Background

Chinese

British

Other

Sex

Male

Female

How often do you buy products from NEXT?

Never

Less than Once a Month

Once a Month

2-3 Times a Month

Once a Week

2-3 Times a Week

Daily

Why do you like shopping in NEXT? Please rank the following options.

Fashionable

Price

Style

Atmosphere

Brand name

What brands do you prefer more? Please rank the following options.

HM

ZARA

River Island

TOP SHOP

What do you think about the price of product from NEXT?

Extremely expensive

A little expensive

Fair

cheap

Extremely cheap

How important is price for you?

Very important

Important

Not important

Do you think that NEXT operates more promotions and discounts more customers will be attracted?

If you say yes, please answer yes. If you say no, please give me your reason.

Where do you buy NEXT products?

On line

Shopping Mall

High street others

How do you find out that NEXT’s new products?

TV advertising

Visiting the shop

Friends or families

Street Advertising

Others

Do you think brand loyalty is very important for a company?

If you say yes, please answer yes. If you say no, please give me your reason.

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