INTERNATIONAL MARKETING PROGRAMME

STANDARDISATION OF UK

COMPANIES IN THE GULF.

A Thesis submitted to the University of Manchester for the degree of Ph.D. in the Faculty of Business

Administration.

Obaid Saad Al-Abdali Manchester Business School

1996

INTRODUCTION, RESEARCH TOPIC, UK AND GCC BUSINESS RELATIONSHIPS AND THESIS STRUCTURE.

CHAPTER ONE

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1.1 INTRODUCTION

Many researchers, including Elinder (1961); Fatt (1964); Roostal (1963); Sorenson and Wiechmann (1975); Chase (1984); Harris (1984); Thackray (1985); Hamel and Prahalad (1985); Boddewyn et al. (1986); Friedman (1986); Hill and Still (1984); Huszagh et al. (1986); Kotler (1986); Whitelock (1987); Levitt (1983); Martenson (1987); Wind (1985); Walters (1986); Ghoshal (1987); Yip (1989); Grosse and Zinn (1990) and Wills et al. (1991) question the degree of international standardisation of various elements of the marketing mix programme and wonder whether to standardise their marketing programme or to have a different marketing programme in each country.

This question is still troubling practising business managers as well as academics, and produces divergent viewpoints. The issue has become prominent since the publication of Levitt’s (1983) article arguing that the world has become one global market. On his analysis great differences in culture, national tastes and standards are something of the past. Many researchers have tried to refute Levitt’s argument, with varying degrees of success. Some of those critics are Boddewyn et al. (1986); Douglas and Wind (1987).

According to Franzen and Light (1976) and Akaah (1991) one of the most striking developments in business in the past three decades has been the trend toward increased internationalisation of business operations. Jeannet and Hennessey (1988) argue that many companies are expanding their operations outside their local market, especially overseas, because they think the world-wide marketplace is becoming accepted as a reality.

Robock and Simmonds (1989) remind us that international business is not new, and can be traced back in history to around 2800 B.C. The Dutch East India Company, founded in 1602, was one of the first international corporations. Robock and Simmonds (1989) argue that the multinational enterprise as we know it today dates back to the mid-1800s, when the Singer Company expanded internationally and began operating with a global horizon.

According to Barker and Aydin (1991), multinational companies (hereafter MNCs) had developed by the 1960s and 1970s, followed by global companies, prominent by the 1980s. Nowadays there is greater competition, interdependence of national economies, companies aiming at the same target in the same markets and trying to improve their market position, and new competitors have entered the international market. Some international firms have lost their market position. All of this can be seen as a threat to the existing companies doing business abroad and at home, and obliging them to engage in new competitive strategies (Barker and Aydin (1991) and Barker (1993)).

The term globalisation is used in the literature in different ways: one of its meaning is standardisation as opposed to adaptation (Barker and Aydin (1991); and Barker (1993)). When a company treats the world market as a whole rather than looking at markets country by country, then it can be said to be a global company. Hout et al. (1982), Barker and Aydin (1991), and Jeannet and Hennessy (1988) have defined multinational companies as companies having subsidiaries that are autonomous and where the competitive balance is struck on a country-by-country basis. Kashani (1990) argues that global marketing is a worthy element in a firm's search for competitive advantage. Levitt (1983) claims that multinational companies are nearing extinction. He thinks that multinational and global corporations are not the same thing, since differences exist between multinational and global co-operation. “A multinational corporation operates in a number of countries, and adjusts its products and practices in each market at high relative costs. The global corporation operates with resolute consistency at low relative cost as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere”. Halliburton and Hunerberg (1987) view international, multinational and global as alternatives along a continuum. According to them, international firms “..grew from a national parent base by way of exports, with key competitors normally determined in the parent country”. Multinational firms “..evolved separate international divisions acting as semi-independent operating units, focused upon their particular markets and countries, with key competitors defined in relation to each separate market..”. The global corporation, “..operates on a world scale as an interdependent total system facing other global competitors. Non-optimal country strategies may be accepted provided the firm benefits corporately.”.

Boddewyn et al. (1986) argue that Levitt’s idea is good in theory but hardly grounded in fact. The validity of Levitt’s case needs to be examined. In this study we see

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globalisation in the context of standardisation versus adaptation. According to Kustin (1994) in globalisation there are many different interpretations of specific terms. Walters and Toyne (1989) state that “..global marketing is the process of focusing an organisation’s resources on the selection of global market opportunities consistent with and supportive of its short and long-term strategic objectives and goals”. The same definition is given by Cateora (1990), supported by Levitt (1983) and Pride and Ferrell (1991), who add that “..global marketing... strives for efficiencies of scale by developing a standardised product, of dependable quality, to be sold at a reasonable price to global markets, that is, the same country market set through the world”. According to Dahringer and Muhlbacher (1991), “Global marketing, in contrast to international marketing, concentrates on product strategies (groups of customers with shared needs), emphasising their similarities, regardless of the geographic areas in which they are located. However, it does not ignore differences among markets”.

1.2 INTEREST IN THE TOPIC

The debate on the issue of marketing standardisation goes as far back as the 1960s (Elinder (1961); Fatt (1964); Roostal (1963); Chase (1984); Harris (1984); Thackray (1985); Hamel and Prahalad (1985); Boddewyn et al. (1986); Friedman (1986); Hill and Still (1984); Huszagh, et al. (1986); Kotler (1986); Levitt (1983); Martenson (1987); Simmonds (1985); Wind (1985); Walters (1986); Ghoshal (1987); Yip (1989); and Wills et al. (1991)). Marketing standardisation is a complex question, but it should be given very careful consideration by international companies (Walters 1986). Onkvisit and Shaw (1987) also affirm that marketing standardisation is a significant problem which warrants attention and evaluation.

The concept has many implications for business firms, government, international trade, and marketing education. During the literature review stage, it became obvious that international marketing standardisation was an area relatively poorly examined by academic researchers. But the fact is that international marketing is a significant issue that deserves serious academic study. The issue is a complex one (Walters, 1986). From the literature available, a distinction was made between standardised marketing programmes and the marketing process. Most of the literature focuses on the marketing programme, and promotion is the element most researched, with some attention given to product design, whereas other elements of the marketing programme, such as price and distribution, are overlooked in the literature. Price and distribution, as well as other elements in the marketing programme, will be included in this study. As the literature indicates, marketing standardisation cannot be accomplished without a reference market, and most of the existing research is about the developed world, while markets

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in the developing world are neglected. Therefore, it is the purpose of this research to study marketing standardisation in the developing world, namely the GCC market. Furthermore, of the research so far has focused on consumer-goods companies, with little attention given to companies in other sectors such as industrial goods. This study will include both consumer and industrial companies. Finally, many of the marketing standardisation studies have lacked high quality empirical evidence (Jain, (1989) and Kanso (1992)), with a few exceptions such as Sorenson and Wiechmann (1975); Kacker (1975); Killough (1978); and Huszagh, et al. (1986), which were empirical.

According to Walters (1986), most studies of marketing standardisation are limited to markets in Western Europe or the developed world. Onkvisit and Shaw (1987) plead for more empirical evidence to resolve the standardisation/localisation controversy. From the literature available, it appears that no systematic research has been conducted into the standardisation of international marketing practice since Sorenson and Wiechmann (1975); Boddewwyn et al. (1986). According to Hornik (1980), the debate on advertising standardisation continues without reaching agreement because of the lack of empirical data on the subject. Practical considerations are important but, also, most of the existing research has dealt with multinational companies based in the USA. Researching multinational companies in other parts of the world will give a clear comparison of UK multinational companies and USA multinational companies.

This study is significant, since previous work on marketing standardisation has concentrated mainly on the supply of goods to overseas markets through subsidiaries based in those countries, and thus ignored direct export, which is still an important part of international marketing activity, particularly for trading nations such as the UK (Whitelock (1987); (Reichel (1989)).

1.3 DEFINITION OF MARKETING STANDARDISATION

One source of problems in the debate over marketing standardisation is the definition of the term (Onkvisit and Shaw, 1987). In the literature there are differences in definition which produce problems of comparability in the research results (Sandler which result in problems in comparability of research results (Sandler and Shani, 1992). For example, Onkvisit and Shaw (1987) define standardisation in advertising as using the same advertisement everywhere with no change in its theme, copy, or illustration, except for translation when needed. Peebles et al. (1977) and Peebles and Ryans (1984) in their definition of standardisation, allow for local flexibility while maintaining the standardisation heading. They differentiate between prototype standardisation and pattern standardisation. First, prototype standardisation is the same marketing programme used by multinational marketers in many markets. This programme was initially designed to be used in the home market and because of its success it has been employed in multiple markets. Second, pattern standardisation is the design of flexible marketing programmes intended from the beginning for multi-market use. For this approach to be successful, a centralised system is necessary. In implementing this approach, multinational marketers could gain many of the advantages of standardisation, such as geo-segment image, and lower marketing cost.

Onkvisit and Shaw (1987) state that pattern standardisation is a cross between standardisation and localisation and is designed from the outset to be susceptible to extensive modifications to suit local conditions, while maintaining sufficient common elements to minimise the drain on resources and management time. Jeannet and Hennessey (1988) define standardisation as the amount of similarity companies want to achieve across many markets with respect to their marketing programme. Levitt

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(1983) argues that standardisation seeks to view the whole world (or major regions) as a single entity and to sell the same standardised product in the same way everywhere. Picard (1978) defines standardisation as the degree of similarity in the marketing activities, programme or policies of a multinational enterprise between one country and another. According to Buzzell (1968), standardisation means using the same marketing strategy in overseas markets as in the home market, while adaptation means using a different marketing strategy in each overseas market.

Miracle (1990) believes that advertising strategies, advertising objectives, and advertising execution can all be standardised to varying degrees.

As mentioned earlier, there are many definitions of marketing standardisation in the literature, producing problems of comparability in the research results. According to Halliburton and Hunerberg (1987), the measurement problem means that the concepts of standardisation and adaptation are difficult to operationalise, and standardisation and adaptation are not absolutes but should be seen rather as two ends of a continuum, suggesting that researchers should establish the degree of standardisation or adaptation along a continuum. Similarly, Quelch and Hoff (1986) suggest that the decision on marketing standardisation is not a dichotomous one between complete standardisation and adaptation. Rather, there can be degrees of standardisation. Jain (1989) argues that total standardisation is unthinkable. As can be seen from these discussions, in practice there is no such thing as complete standardisation, since any company will change some of its marketing mix programme to some extent. It is thus impossible in practice to use an absolutely identical marketing mix programme in the overseas market as compared to the home market. Therefore, our definition of standardisation will not assume “total” standardisation, since we will not expect companies to use an identical marketing mix programme in the GCC markets to that used in the UK market. We will expect degrees of standardisation. In our definition we will consider companies standardised if on average they use a similar marketing mix programme with only minor variation in the GCC market as compared to that used in the UK market.

We will consider companies as standardising any part of the marketing programme if they rate it as identical (1) or similar with minor variation (2) on the five-point Likert scale.

In judging, overall, whether a company has a standardised, moderately adapted or localised marketing mix programme, we will take the average, for all the marketing programme variables. Thus, for a standardising company on average it will have marketing programme variables which are identical or similar with minor variation, even if a number of individual variables are localised. Similarly, a company with a localised profile on average may have some marketing programme variables which are standardised. We will thus be researching the degree of marketing programme standardisation.

1.4 RESEARCH TOPIC

For the last three decades the issue of international marketing standardisation has generated considerable discussion among both academics and practitioners (Elinder (1961); Fatt (1964); Buzzell (1968); Sorenson and Wiechmann (1975); Brandt and James (1977); Colvin (1980); Levitt (1983); Boddewyn et al. (1986); Douglas and Wind (1987); Hite and Fraser (1988); Jain (1989); Muller (1991); Grosse and Zinn (1990); Kashani (1990); Akaah (1991); Whitelock and Jones (1993)). Despite the long-standing interest in the issue, there is still controversy about it and no clear answer is in sight. There are sharp differences of opinion as to the desirability and feasibility of each strategy (Walters, 1986). A continuing issue in the international marketing literature is whether multinational companies should pursue a marketing strategy that is broadly standardised across different markets or broadly adapted to each market.

In the literature, arguments for and against both of these strategies are found. Multinational companies typically assume one of two extremes when dealing with the world market. Some companies see the world as one homogeneous entity, and consequently use a standardisation strategy. Others view each nation of the world as unique and for that reason they use a localisation strategy. In recent years it has been suggested that multinational companies could be more effective by avoiding these extreme positions and instead recognising the presence of market clusters within the world. Whitelock and Jones (1993) note, for example, that the most frequently practised strategy lies somewhere between standardisation and localisation. From the discussion above there seems to be considerable controversy concerning the most appropriate marketing strategy for multinational companies when they operate overseas, and this is of practical significance since their success will largely depend upon the right choice.

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To clarify this controversy it is important to provide empirical evidence: this is the object of this study. The research offers two additional perspectives to most previously conducted research. Firstly, whereas most studies have involved a relatively narrow focus, our research proposes a broader framework entailing the simultaneous manipulation of variables across three main broad factors: firm, country and marketing programme. Secondly, we research the marketing strategies of UK companies in a developing economic region (the Gulf States), in contrast to the great majority of studies which have focused on the developed economies.

1.5 OBJECTIVES OF THE STUDY

There are several objectives the research will try to achieve.

The first objective is to determine the overall degree of standardisation of marketing mix programme activities used by UK companies exporting to the Gulf States, using a three-factor, sixty variable model of country, firm, and marketing programme. (as discussed earlier complete standardisation is impossible, companies will standardised some of their marketing programme and adapt some of it)

The second is to test several hypotheses that have been propounded or supported in the relating fragmented literature on international marketing.

The third is to see if there is any differences in views regarding marketing programme strategies between UK companies and their agents in the Gulf States.

1.6 GCC AS A TARGET MARKET

The GCC was set up on 26 May 1981, under an agreement signed by the six leaders of the states of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates. The objective, as stated, is to bring the six states gradually closer together by developing common economic and social policies. Although there are differences, the States are similar in their economic, political, religious, and geographical profiles, and cultures. The GCC states provide tremendous opportunities for exporters of a wide variety of products. They have been attractive targets for companies from all over the world (Yavas and Glauser, 1985; Abu-Ismail, 1982; Balasubramanian, 1992). They offer immense business opportunities and they are collectively one of the strongest financial powers in the world. From the literature available it emerges that writers have two different approaches regarding multinational companies operating in the GCC market.

1.6.1 THE AGGREGATE APPROACH

Writers who support this approach assume that multinational companies see the GCC market as one homogeneous entity due to the similarities of the States. Consequently, they argue for marketing standardisation among these countries (Berger, (1962); Almaney, (1981); Elbashier and Nicholls, (1983); Fernea and Fernea, (1985); Culpan, (1985) ; Looney, (1989) and Hourani, (1990)). It is argued that the cultural and geographical proximity as well as similarities in the economic, and political sphere and in life styles might lead to the emergence of similar behaviour patterns to encourage the use of standardised marketing activities all over the region. In general, consumers in the GCC markets are much alike. They live under largely similar conditions and consume the same food and drinks (Kassem et al. 1993). As a result, Yavas and Alpay (1986) suggest that multinational marketers aiming at the Gulf countries may profitably employ standardisation in their marketing activities, and several reasons are given for this suggestion. First is the formation of the Gulf co-operation council, and an Arabic and Islamic Common Market that includes the GCC. Second, the markets are relatively homogeneous in economic development, social structure, and language. Third, the GCC are also in geographical proximity that might lead to the emergence of similar behaviour patterns and therefore standardisation is possible. Fourth, economic, political and lifestyle factors are related, leading to a standardisation of marketing activities throughout the GCC market. Fifth, cross-national circulation of media is rising, due to the emergence of pan-Arabic publications which make regional advertising campaigns possible. The overlap in the media is increased by the exchange of TV programmes through the Arab satellite (Arabsat). Above all, Kassem et al. (1993) suggest that "...marketers should view the six nations of the GCC as a single market area due to their geographical proximity as well as the remarkable homogeneity of their cultures, economies, politics, language, religion, income levels and consumption patterns..".

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1.6.2 THE REDUCTIONIST APPROACH

Writers who support this approach assume that multinational companies see each market in the GCC as unique, and as a result, marketers should devote attention to each market, using a localisation strategy (Apgar, (1977); Abu Naba, (1984); Tuncalp, (1988); Luqmani et al. (1989)). According to Sriram and Gopalakrishna (1991), economic characteristics are often used to identify groups of countries that are potential candidates for a standardised approach. In their research in 1989 they found that countries which are similar economically are not necessarily similar in their media usage and availability pattern, which is very important for standardising advertising messages. Huszagh et al. (1986) used economic development measures to group 21 industrial nations into 5 clusters based on their similarity, but found differences in product acceptability even within the same economic cluster, and concluded that economic similarity may be necessary but not sufficient for standardisation. Walters (1986) showed that differences between consumers even in similar countries do exist and gave an example of the differences in the level of disposable income between European consumers. Green and Cunningham (1980) suggest significant differences in the way in which family purchasing decisions are made in the United States and Venezuela.

In the GCC differences certainly exist. For example, Saudi Arabia, which is the biggest market in the GCC, exhibits unique characteristics deriving from its culture, which is different from that of other GCC countries, even though they have a common heritage and religion. Above all, within Saudi Arabia the different regions exhibit strikingly different characteristics.

differences in character. To conclude, the GCC market has never been quite as homogeneous as some international marketers believe.

GCC countries represent a very important market for UK companies, and inversely the UK market is still very important for GCC oil products. The UK and GCC represent two groups with common interests. The GCC countries and the UK have enjoyed very good business relations for the last two decades. In the following pages, their business relations will be discussed to show how important both the GCC and the UK are in their trading.

1.7 UK AND GCC BUSINESS RELATIONS

GCC countries have been one of the biggest markets for capital equipment and consumer goods. They have been attractive to many international companies from all over the world, including UK companies. The GCC represents very important countries in terms of commercial as well as political and strategic factors. The GCC holds world oil reserves on which the UK is expected to be heavily dependent by the end of the century when supplies from other sources are running out.

According to trade statistics, the GCC markets have taken 75 per cent of British exports to the entire Arab region and supplied 67 per cent of British purchases from it in the last few years. These figures contrast with 70 per cent and 56 per cent respectively in 1990. Of all the GCC countries Saudi Arabia is by far Britain’s biggest Arab trade partner, absorbing £2,229 million worth of UK exports in 1991 (46 per cent of UK exports to all Arab countries) and supplying £964 million of British imports (48 per cent of total UK imports from the Arab region).

In value terms, Saudi Arabia accounted for the biggest rise in British exports to any Arab country in 1991. The increase was £218 million, or 10.82 per cent. The United Arab Emirates, again a GCC country, is the UK’s second biggest trade partner among Arab countries. The British exports to UAE also rose in 1991, by 14.3 per cent to £760 million, and UK imports from the UAE also increased significantly, rising by 28 per cent to £232 million. Table 1.1 shows the British exports to the six GCC countries.

Historically, GCC markets have been profitable markets for UK companies and British products were in a dominant position until recently (Abu-Ismail, (1982) and Greenstock, (1984)). The reasons for losing the dominant position are many but, according to Abu-Ismail (1982) and Yavas and Tuncalp (1984), the most important one is that UK companies fail to match their competitors’ marketing expertise and skills in adapting their marketing strategy to the needs of the local customers. Oil and military projects seem to control the level of economic and commercial co-operation between the UK and GCC countries, but recently GCC countries have tried to diversify this co-operation in the interests of both sides. According to Shah (1985), over 350 UK companies are very active in Saudi Arabia. There is no proof that this figure is correct because the only directory issued by the Department of Trade states that UK companies with representatives in Saudi Arabia numbered no more than 180 in 1993. In recent years a good deal of British business with Saudi Arabia has comes under the Al-Yamamah economic offset programme started in 1989, involving supply of air defence equipment and training. It was agreed in 1986 and involved participation by UK companies in industrial and other joint ventures in Saudi Arabia. The agreement emphasises commercial viability and technology transfer. The main industries in the GCC are petrochemical, oil refining, steel, fertilisers, cement, cables, truck assembly, and pipes; the main exports of the GCC are crude and refined oil and petrochemicals.

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Table 1.1 UK Exports to the GCC countries (£M)

Country19891990199119921993Saudi Arabia2432 2011222819861826

Kuwait228181178262312Qatar8998109118143

Bahrain138127147167151Oman298272237241306UAE5716647599261315

Total37563353365837004053Source: Arab British Chamber of Commerce, London (March) 1994

From Table 1.1 it can be seen that British exports to the GCC increased by 10 per cent in 1993. Saudi Arabia represents a very important market for British exporters and is the largest market in the GCC, followed by the UAE. However, this growth has not been matched by GCC exports to the UK. The value of such exports was £1906 million in 1993, an increase from 1992, when the figure was £1577 million. The increase in GCC exports to the UK may be due to the strong awareness among UK companies of GCC products. The deficit in balance of trade between UK and the GCC resulted from the military projects of the latter. In general, the GCC markets represent a very important market in the Arab World and 75 per cent of total British exports. The UK exports many goods and services to the GCC countries, including food, beverages, tobacco, chemicals, manufactured goods, machinery, transport equipment, general manufactured goods, consulting, banking, contracting, insurance, shipping and training.

Table 1.2 UK imports from the GCC (£ M)

Country19891990199119921993Saudi Arabia5027949649641274

Kuwait15010830127236Qatar4752110

Bahrain6148395052Oman8489738383UAE165181232332251Total9661227134315771906

Source: Arab British Chamber of Commerce, London (March) 1994

Table 1.2 shows that UK imports from the GCC have increased since 1989. The total reached £1906 million in 1993, which is almost double the 1989 total for exports. It can be seen from Table 1.2 that there is a gradual increase in the GCC exports. Within the GCC countries Saudi Arabian exports to UK were the largest, reaching £1274 million in 1993, followed by the UAE, which exported £251 million, and Kuwait with £236 million. The GCC countries try very hard to promote their non-oil products in the UK. Much of this growth has been in the non-oil sector, almost 42 per cent in 1993. As the figures in Tables 1.1 and 1.2 show, in terms of UK companies’ performance, a surplus has been achieved. Qatar is Britain’s smallest trade partner within the GCC countries, but despite the relatively low level of trade previously, there are many UK companies working on big projects in Qatar at present.

Table 1.3 Economic importance of the GCC in 1992

Country(Population('000($) GNP per headSaudi Arabia159097940

Kuwait382811200Qatar52416240

Bahrain529*Oman16476490UAE166822220Total24105

Source: World Bank , Washington, USA 14 April 1994

From Table 1.3 one can see the importance of all the GCC countries, which have a total population of 24.105 million, representing a very important group of customers with a high average income per head. Although there are other groups with more customers, their purchasing power is not as great as it is in the GCC countries; for example, the GNP per head in the UAE is $22,220, which is one of the highest in the world.

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1.8 MAIN DESTINATIONS OF EXPORTS AND IMPORTS FOR THEGCC COUNTRIES IN 1992

Table 1.4 Main destinations of exports and imports of Saudi Arabia Main destinations of

exports 1992 of % total

Main origins of imports 1992

of sales %

USA20.2USA20.9Japan18.4Japan14.2

South Korea5.3UK10.6France5Germany8.1

Singapore4.7Italy5.9Netherlands4.2France5.3

Source: The Economist Intelligence Unit Limited, 1993

Table 1.4 shows the main destinations of exports and imports for Saudi Arabia. As can be seen, the main destination for Saudi’s product exports is the USA and at the same time the USA is the main supplier to Saudi Arabia. The UK is the third supplier to Saudi Arabia, representing 10.6 per cent, behind the USA with 20.9 per cent and Japan with 14.2 per cent. Saudi Arabia's export performance depends heavily on crude oil and refined petroleum. Petrochemicals and plastics exports amounted to £2,536 million in 1990. The countries importing from Saudi Arabia include the USA, taking 22.4 per cent of the Kingdom's exports, followed by Japan (21.9 per cent). The Saudi government is trying hard to diversify the country’s exports and has become the world’s sixth biggest wheat exporter. The main suppliers to Saudi Arabia are the USA, which in 1990 provided 16.4 per cent of the Kingdom's imports, followed by the UK, providing 14 per cent, and Japan 13.6 per cent.

According to Tuncalp (1990), there are 35,000 British expatriates living in Saudi Arabia and, according to Shah (1985), there are 350 UK companies active in Saudi Arabia. The companies have formed 166 joint ventures, comprising 126 service ventures and 40 industrial ventures, with British capital investment of around $700 million. Saudi Arabia is regarded by Britain as a good source of income, from the transfer of profit as dividend remittances from these British joint ventures. A British-Gulf Co-operation Council Trade Exhibition was held in 1994, and considered to be the largest of its kind in Europe. The objectives of this exhibition were to promote British products in the Gulf countries, to promote Gulf products in Britain and to strengthen the business relationships between the GCC States and Britain. GCC represents a very important international marketing block for international marketers, especially those from Europe.

Table 1.5 Main destinations of exports and imports of Kuwait Main destinations of

exports 1992 of total %

Main origins of imports 1992

of sales %

France16.1USA34.8Italy14.9Japan12.4Japan12.3UK8.80UK11.1Canada8.70

Egypt10.0Germany7.80USA7.90South Korea3.50

Pakistan7.90France3.10Source: The Economist Intelligence Unit Limited, 1993

Table 1.5 shows that the main destination of exports for Kuwait is France, representing 16.1 per cent. The UK is the fourth main destination for Kuwait’s exports, representing 11.1 per cent. The main source of imports is the USA, followed by Japan (12.3 per cent) and the UK, representing 8.8 per cent of the total imports.

Table 1.6 Main destinations of exports and imports of Qatar Main destinations of

exports 1992 of total %

Main origins of imports 1992

of sales %

Japan61.4Japan13.6Brazil5.6UK11.8

South Korea4.9USA11.6UAE3.7Germany8.5

Singapore2.7France5.2Source: The Economist Intelligence Unit Limited, 1993

Table 1.6 shows that the main destination of exports from Qatar is Japan, representing 61.4 per cent, while Japan is also the main source of imports, representing 13.6 per cent, followed by the UK, representing 11.8 per cent.

Table 1.7 Main destinations of exports and imports for Bahrain Main destinations of

exports 1991 of total %

Main sources of imports 1992

of sales %

Japan12.9Saudi Arabia41.5UAE12.3USA13.8India9.5UK7.2

Pakistan7.8Japan4.6Singapore5.8Germany4.1

Source: The Economist Intelligence Unit Limited, 1993

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From Table 1.7 it can be seen that Japan is the main destination for exports, representing 12.9 per cent, and Saudi Arabia is the main source of imports, representing 41.5 per cent, followed by the USA, representing 13.8 per cent and the UK, representing 7.2 per cent.

Table 1.8 Main destinations of exports and imports for Oman Main destinations of

exports 1992 of total %

Main sources of imports 1992

of sales %

Japan40.2Japan20.4South Korea28.3UAE18.8

Taiwan7.6UK14Thailand5.7USA6.8Singapore4.6West Germany5.5

Source: The Economist Intelligence Unit Limited 1993

Table 1.8 gives the main destinations of exports and imports for Oman. It can be seen that the main supplier to Oman is Japan, representing 20.4 per cent, followed by UAE, representing 18.8 per cent, and the UK, representing 14 per cent. The main destination of exports is Japan, representing 40.2 per cent.

Table 1.9 Main destinations of exports and imports of UAE Main destinations of

exports 1991 of total %

Main sources of imports 1992

of sales %

Japan39.4Japan14.2Singapore4.60UK9.30

South Korea4.40USA8.50India3.90Germany5.60Iran3.90

Source: The Economist Intelligence Unit Limited, 1993

As can be seen from Table 1.9, the main destination of UAE’s products is Japan, absorbing 39.4 per cent. The main source of imports is likewise Japan, followed by the UK and USA, representing, 14.2 per cent, 9.30 per cent and 8.50 per cent respectively. As can be inferred from the above tables giving the main destinations for exports and the main source of imports, a good partner for all the GCC countries, close behind Japan and USA, is the UK.

1.9 UK AND GCC COUNTRIES’ TRADE

In the following tables each GCC country’s balance of trade with the UK is shown.

Table 1.10 UK-Saudi Arabia trade balance 1981-1991 (£'000)UK exportsUK importsUK trade balance

198111341893-759198213621447-85198314788985801984138754584219851256483773198615074361071198719783831595198817136141099198924335021931199020117951216199122299641265

Source: Arab-British Chamber of Commerce, London (March) 1994

Table 1.10 shows the trade balance between Britain and Saudi Arabia. As can be gleaned from the table, British exports to Saudi Arabia in 1991 were £2229 million, compared with £2011 million in 1990. Saudi Arabian imports from Britain were £795 million in 1990 and £964 million in 1991. The surplus of imports over exports was £1265 million in 1991. The British achieved a surplus from 1983 till 1991. Data are not available for more recent years.

Table 1.11 UK-Kuwait trade 1981-1991 (£'000)UK exportsUK importsUK trade balance

1981281477-196198233310522819833336726619843011421591985348157191198630159242198722582143198823872166198922915079199018110972199117830148

Source: Arab-British Chamber of Commerce, London (March) 1994

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From Table 1.11 it can be seen clearly that Kuwait has had strong ties with Britain for many years. British trade with Kuwait declined in 1990 and 1991 because of the Gulf war. British exports to Kuwait dropped by 21 per cent in 1990 to £181 million, and again by 1.73 per cent in 1991 to £178 million but Britain has achieved a surplus since 1982. In 1991 Kuwait’s exports to Britain were £178 million, whereas British imports from Kuwait were £30 million. For many years Kuwait has enjoyed a good relationship with the UK. Financial links have been particularly strong, with several Kuwaiti banks and financial institutions establishing branches in London. At the end of the Gulf war UK companies participated in the reconstruction of Kuwait. Figures show that the UK was Kuwait's third largest supplier in 1990, following Japan. The main industries are oil refining, petrochemicals (including fertilisers) and liquefied petroleum gas; the main exports are crude and refined oil, liquefied petroleum gas, and fertilisers.

Table 1.12 UK-Qatar Trade 1981-1991(£'000)UK exportsUK importsUK trade balance

198113611125198224534211198321610206198413428106198514233109198611230821987105149119888948519898948519909979219911095104

Source: Arab-British Chamber of Commerce, London (March) 1994

From the figures in Table 1.12 it can be seen that British exports to Qatar achieved a surplus in each year. British exports in 1991 were £109 million, whereas imports were £5 million and the surplus was £104 million for the UK. British exports to Qatar in 1991 were £109 million, 2.25 per cent more than in 1990. British imports from Qatar are small and declined by 22 per cent in 1991 to just £5.5 million, giving Britain a surplus of £104 million. The main industries are petrochemicals, fertilisers, steel, flour, cement and the main export products are crude oil, petrochemicals, fertilisers and steel.

Table 1.13 UK-Bahrain trade 1981-1991 (£'000)UK exportsUK importsUK trade balance

1981102178519821523511719831503711319841392810819851624511719861312011119871256164198813876621989139617819901274879199114739108

Source: Arab British Chamber of Commerce, London (March) 1994

As the figures in Table 1.13 show, Britain achieved a surplus in each year from 1981 to 1991; in the latter year it was £108 million. Britain has long established trading links with Bahrain. In 1991 Bahrain ranked eighth among Britain’s Arab customers, taking £147 million worth of goods, while imports from Bahrain were worth £39 million, giving Britain a £108 million surplus. The main exports are refined oil and aluminium.

Table 1.14 UK-Oman trade 1981-1991 (£'000)UK exportsUK importsUK trade balance

1981171401311982265462191983449913581984390833071985490694211986400873131987250492011988345147198198929984215199027289183199123874164

Source: Arab-British Chamber of Commerce, London (March) 1994

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Table 1.14 shows the trade balance between Britain and Oman, which proves to be a good partner. In 1991 British exports were £238 million, and imports were £74 million, achieving a surplus for Britain of £164 million. According to IMF figures, Britain was the biggest supplier to Oman. The main industries are oil refining, cement and other construction materials, copper mining, numerous light industries, and the main exports are crude oil, copper, fish, wheat flour, dates, fruit and vegetables.

Table 1.15 UK-UAE trade 1981-1991 (£'000)UK exportsUK importsUK trade balance

19814924344919825592672921983568310258198454287455198562197524198658274508198747995384198846384379198957116540619906651814841991760232528

Source: Arab-British Chamber of Commerce, London (March) 1994

Table 1.15 shows trade between the UK and UAE. UK exports in 1991 were £760 million, having risen by 14.3 per cent from 1990. The UK has enjoyed surpluses in its trade with the UAE for many years. In 1991 the surplus stood at £528 million. The main industries are oil refining, natural gas liquefaction, fertilisers and aluminium; the main exports are crude oil and refined products, fertilisers, aluminium, and natural gas.

Table 1.16 Exporters to the GCC by main Country suppliers, 1990 (£‘000)UKUSAGermanyFranceItalyJapan

Saudi Arabia342540351692130712113350Kuwait308401329130231418

Qatar17511589198114152Bahrain2277181785966151

Oman49116312510440421UAE117899810796775821553Total580464303492247522446045

Compiled from trade statistics Yearbook 1991, 1991

From Table 1.16 we see clearly that the main supplier to the GCC is the USA, followed by Japan, and then the UK. Saudi Arabia is the largest GCC importer. We conclude that the long-standing business relationships between the GCC states and Britain are still growing, despite the world recession. As the statistics show, the total trade between the two sides increased by 11 per cent between 1992 and 1993, to just under £6 billion. The GCC states are trying hard to get their non-oil products into the British market. Looking at the statistics, in 1984 the GCC non-oil exports to Britain were worth £332 million, roughly a third of total GCC exports to Britain; by 1993 the GCC non-oil exports increased to £924 millions, representing almost half of total exports. This is clearly a success for the GCC. For UK companies the GCC market is now regarded as more important than a decade ago.

In 1993, 73 per cent of British exports to the whole Arab world were sold into the GCC market, compared with 59 per cent in 1984. Saudi Arabia is the largest market in the GCC, followed by UAE; these two countries represent almost 75 per cent of the market for British goods in the GCC. British exports to the GCC are dominated by machinery and transport equipment. In 1993 these were worth £1854 million, followed by chemicals (£540 million), general manufactured articles (£511 million), and manufactured goods classified by materials (£493 million). In 1993, £186 millions worth of food was exported to the GCC, roughly 12 per cent of Britain’s total annual food exports. Exports from the GCC to the UK are dominated by crude oil, but nowadays the non-oil sector is becoming increasingly important. The GCC are the main external suppliers of oil and gas to UK and have provided a big market for capital equipment and consumer goods for UK companies. The GCC states are all seeking to achieve unity, solidarity and cohesion with the aim of becoming a single international trade block. Despite the world recession trade between Britain and the GCC grew in 1993.

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1.10 THESIS STRUCTURE

The study will comprise six main chapters, followed by appendices and references. The following is a summary of the chapters.

Chapter One: this chapter is an introduction, including the research topic, UK/GCC business relations, the conceptual framework and the structure of the thesis.

Chapter Two: this chapter deals with the literature review for firm, country and marketing programme variables, which represent the proposed model. It examines previous empirical research into the question of international marketing standardisation.

Chapter Three: this chapter describes and explains the models, the methodology employed in the research and the hypotheses.

Chapter Four: this chapter represents the findings of the qualitative and quantitative stages employed in the study.

Chapter Five: includes the perspective of the GCC agents and covers the findings which required more explanation and elaboration.

Chapter Six: this chapter discusses the findings, draws conclusions and makes recommendations; it also indicates the contribution made by the study, as well as its limitations.

The thesis concludes with appendices and a bibliography

LITERATURE REVIEW AND BACKGROUND

CHAPTER TWO

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2.1 INTERNATIONAL MARKETING STRATEGIES

The initial description of marketing standardisation/ localisation was presented by many researchers including Elinder (1961); Terpstra (1967); Buzzell (1968); Bartels (1968); and Keegan (1969). The literature on international marketing can be divided into proponents of five international strategies: standardisation; localised (adaptation); a ‘middle of the road’ mix of standardisation and adapted elements; a cluster approach of transnational regions with common market characteristics and an intermarket segmentation approach. The argument for each approach is provided in the following sections.

2.1.1 STANDARDISATION APPROACH

Proponents of standardisation argue that a MNC should analyse the world market as a whole rather than country by country. They argue that due to developments in communication systems and information technology the market place and competition are becoming global, and integration of international markets is a reality. Consumer needs are relatively homogeneous all over the world. According to Domzal and

Unger (1987); Wells (1987); Langholz-Leymore (1988), people everywhere share certain needs and emotions. Another reason to use standardisation is the adequate international marketing infrastructure. The argument for a standardisation strategy is generally the same across the literature. Among the proponents of standardisation are Elinder (1961 and 1965); Fatt (1967); Rijkens et al. (1971); Britt (1974); Dunn (1976); Peebles (1978); Levitt (1983); and Jain (1989). Elinder (1961), a Swedish marketing executive, thought that European customers share similar needs and wants, and have similar characteristics. He predicted that one promotion campaign could be used across Europe, and it would be a waste of effort and money to use different promotional campaigns in each country.

Miracle (1968) maintained that the communication requirements are the same and fixed, cannot be changed with time or place, and therefore the same approach can be used everywhere. According to Peebles et al. (1978), customer mobility and media overlap make advertising standardisation possible. Fatt (1967) supported the approach to standardisation by arguing that the marketing concept is spread across the world, and the development of international media all make standardisation of advertising possible. Levitt (1983) argued that technology has forced the world to become more homogeneous.

Transportation, communications and travel close the gap between the peoples of the world, which results in the emergence of the world citizen. Levitt went on to argue that everyone everywhere wants what he sees and has heard about through the new technologies. This results in a new phenomenon called the global market for standardised consumer products. Levitt (1983) argues that in a world of growing internationalisation the key to success is focusing on marketing standardised global products and brands.

2.1.1.1 BENEFITS OF STANDARDISATION APPROACH

The proponents of a standardisation approach claim many benefits for its use. Proponents of this approach argue for the transferability of better marketing practices, which means that if a marketing strategy has been a proven success in one country, it can be transferred to another, with the same market conditions, and lead to better consumer acceptance, larger market share and higher profits. The other advantage is economies of scale, which can be in production, marketing, research and development, and management time and effort. All these can lead to cost reduction. Companies using standardisation reflected in price can enjoy price competitiveness and consequently market share( Buzzel (1968); Keegan (1980 and 1989); Saporito (1984); Douglas and Craig (1986); Quelch and Hoff (1986); Whitelock (1987); Robock and Simmonds (1989); Barker and Aydin (1991); Whitelock and Pimblett (1994)). According to Harris (1985), these savings from standardisation should be used for better investment in

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plant, additional promotion and better quality. According to de Jonquieres (1991), the savings made by Unilever from standardising all Lever Brothers products throughout European markets will be around £250 millions. Another example of savings was given by Berkowitz et al. (1992) with regard to Colgate-Palmolive, where around $2 million in television production costs was incurred in each country whereas the same common advertisement might be used.

The cost savings associated with standardisation lack empirical evidence (Robinson (1986); Hout et al. (1982) and Jain (1989)). Samiee and Roth (1992) argue that no attempt has been made to validate the financial pay-off associated with standardisation. Some empirical studies have found no relation between standardisation and return on assets, or sales growth and return on investment (Walters (1986) and Samiee and Roth (1992)). Sorenson and Wiechmann (1975) do not believe cost savings can be associated with marketing standardisation in product design, packaging, sales promotion, advertising and production costs. They regard it as an attractive argument but not proven; in other words, they say the cost savings are not as significant as claimed. In their study only one company out of twenty-seven offered documented evidence of saving resulting from standardisation.

According to Braidwood (1984) and Douglas and Craig (1986), the argument of economies of scale ignores the recent developments in flexible automation, where a non-standardised product can be produced at substantial cost savings, and, above all, product costs are only a partial and not necessarily a critical factor in determining the total price of the product. Sometimes the costs of distribution exceed production costs. Douglas and Wind (1987) argue that production cost is only a minor component in the total costs, and understanding the local condition of customers, including tastes and preferences, may be more important than the cost reduction gained from standardisation. For example, the cost of advertising copy may be less than media cost. Another cost saving can come from the minimisation of duplicated services at headquarters and at subsidiary levels (Kirpalani et al. 1988). Another advantage of standardisation is effective control and planning. Proponents of the standardisation approach stress management and headquarters controls which can be pursued with this strategy.

Standardisation can lead to more effective planning and control (Douglas and Craig (1986)). According to Robbins (1987) and Whitelock and Jones (1993) standardisation will also focus management resources and talent, and simplify the strategic planning process by minimising overlaps and also capitalising on good ideas. Many researchers stress that standardisation does not always mean control. Local management sometimes ask for details of marketing programmes used by HQs, because they regard them as beneficial locally. In this case, standardisation is used and HQ do not impose it on the local management. Samiee and Roth (1992) do not believe that control is

necessarily achieved as a result of marketing standardisation. Another advantage is consistent corporate and brand image on a global basis: some companies strive for a coherent world-wide brand image. Levitt (1983) and Peebles (1978) argue for the importance of global brand names, and standardisation can achieve this. Other benefits of standardisation include decision simplification, ease in execution, operational efficiency, and consistency in customer service (Onkvisit and Shaw, 1987). Exploitation of similar world-wide customer groups and the exchange of ideas are other advantages suggested by Halliburton and Hunerberg (1987).

2.1.2 LOCALISED (ADAPTATION) APPROACH

The second approach is localisation (adaptation). Proponents of this approach (Pratt (1956); Horn and Gomez (1959); Nielsen (1964); Lenormand (1964); Reed (1967); Buzzell (1968); Miracle (1968); Ryans (1969); Wiechman (1974); Green et al. (1975); Onkvisit and Shaw (1987); Mueller (1987) and Barker and Aydin (1991) stress the dissimilarities between countries and even regions within the same country concerning culture, the general environment, marketing infrastructures and other forces that determine customer behaviour. The claim that differences among countries are gone forever is not yet true, they argue, and the claim on the other hand that standardisation of marketing programme will help companies to compete better may even mislead. Barker and Aydin (1991) argue that the elements of a marketing programme should be grounded in the needs and the environment of the customers in order to gain long- term success. According to some researchers, the findings of advertising research studies have indicated that multinational companies are using a localisation strategy more than before (Peebles et al. (1978); Dunn and Lorimore (1979); Quelch and Hoff (1986); Meffert and Althans (1986) and Kanso (1992)). Kotler (1986) and Wind (1985) argue that differences in product use and customer tastes and preferences make the localisation strategy essential for any company.

Simmonds (1985) states that a MNC, to survive competitively, must adjust to a local market which requires a different treatment, because of the differences in customers’ preferences and tastes. Arndt and Helgesen (1981) argue that nothing is universally appropriate in marketing practice, which should be adapted to local conditions. Fisher (1984) and Vedder (1986) argue that greater return and profit should be obtained from adapting products to local conditions.

Lenormand (1964) states that differences in religious beliefs, standards of living, customs, legislation, media availability, and advertising agency structure all work against the standardisation approach. Roostal (1963) concludes that there are potential benefits in standardisation, but market differences represent a barrier to it. Klippel and Boewalt (1974) called the standardisation approach "behaviourist", assuming that people everywhere have the same needs, wants, and motivations, while calling

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the adaptation approach "environmentalist", taking into account the differences in demography, culture, and social factors between countries. Kotler (1984) argues that the standardisation approach will be appropriate in only some cases, such as rapid innovation, high technology products, and truly international consumer products such as Coca Cola and MacDonalds. According to Douglas and Wind (1987), there is substantial evidence to suggest an increasing diversity of behaviour within countries and the emergence of idiosyncratic country- specific segments.

2.1.3 MIDDLE OF THE ROAD APPROACH

Some writers conclude with a more middle of the road approach, in an attempt to isolate those factors that determine when to standardise and when to localise. They argue that standardisation and localisation may be too extreme to be useful in all markets. Therefore, in certain situations it may be desirable to be standardised and in other situations it is desirable to be localised. Examples of this view are Sommers and Kernan (1967); Peebles, et al. (1978); Quelch and Hoff (1986); Daniels (1987); Whitelock and Jones (1993). Peebles, Ryans and Vernon (1978) argue that the faults of both standardisation and localisation strategies are in the implementation and not in the validity of the concepts.

Whitelock and Chung (1989) argue that using a standardisation strategy can result in missing out on important target segments, inappropriate positioning in view of long-term market trends, or encountering negative attitudes. Using a localisation strategy might lead to loss of potential economies of scale in production and loss of brand name recognition world-wide. According to Day (1985), the brand is a unique aggregation of facts and feelings which set the product apart from the general. Some uniformity of marketing is needed, but differences must also be recognised. According to some writers, the middle of the road is where we should find current marketing practice (Sandler and Shani (1992); Onkvisit and Shaw (1987)). Jain (1989) argues that total standardisation is unthinkable.

More recently, researchers seem to assume that standardisation and localisation are the ends of a continuum, and that the right strategy lies somewhere between standardisation and localisation, referred to as the middle of the road approach (Daniel, 1987; Kanso, 1992 and Whitelock and Jones, 1993)). Whitelock and Pimblett (1994) argue that very few products are in fact fully standardised. They give Coca Cola as an example of having a global image and position, but adapting its flavour to the local taste. Douglas and Wind (1987) and Kashani (1989) argue that global products and brands may be appropriate for certain markets and in targeting certain segments, but adopting such an approach as a universal strategy in relation to all markets may not be desirable and may lead to major strategic blunders. Hite and Fraser (1988) found a mixed approach desirable and argue that the practice of most successful MNCs lies at the middle of the standardisation-localisation continuum, with some exceptions.

2.1.4 CLUSTER APPROACH

Proponents of the market cluster approach argue that multinational companies should recognise the presence of identifiable market clusters in the world, such as European countries, South American countries, and the Middle East countries. In other words, standardisation of marketing must be limited to one or a few geographical areas (Elinder, (1961); Berry (1961); Lainder et al. (1967); Shethi and Holton (1973); Doyle and Gidengil (1978); Boddewyn et al. (1986); Reichel (1989); Whitelock and Kalpaxoglou (1991); Kassem et al. (1993); Ayal and Nachum (1994)). The proponents of this approach strongly favour the use of marketing standardisation across similar countries. Appropriateness of the standardisation approach will, however, vary according to product-related environmental variables. Sommers and Kernan (1967) recognise that standardisation is possible when environmental factors are the same and note that environmental differences will require product adaptation, and that many products will not be used universally and will therefore require adaptation. Quelch and Hoff (1986) argue that it is not important to go global, but to tailor the global marketing concept to fit each business. Flexibility is essential. The creation of the European Community market, USA, Canada and, Mexico markets, the discussion between USA and Japan to ease the trade between them, some of the changes in the world market, and the signing of the GATT agreement by many countries to remove trade barriers between the countries, and the creation of the Middle East market, all these will increase the opportunities to implement a standardised marketing programme among groups of similar countries (Dudley (1990); Tillier (1992)).

Writers have tried to cluster countries according to their economic characteristics and to identify groups of

countries with potential for standardisation (Sriram and Gopalakrishna (1991); Sethi (1971)). Huszagh et al. (1986) group 21 industrial countries into five clusters using economic measurements. Another study by Day et al. (1988) used 18 economic variables to cluster similar countries. Huszagh et al. (1986) found differences in product acceptability even between five countries that were members of the same cluster. Another study, by Sriram and Gopalakrishna (1989), found different media usage and availability even in economically similar countries. That might lead to the belief that economic similarity and media availability alone are not enough to justify standardisation. Vandermerwe and L’Huillier (1989) studied some economic demographic variables of Europeans, Americans and Japanese, and found differences indicating that economic demographic variables should not be used as grounds for using a standardisation approach. They identified six clusters of consumers within Europe based on income, language, age and geographical area.

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Regarding the GCC countries, the object of this research, many attempts have been made to place them within conventional country classification. Lainder et al. (1967) treated the GCC as developing countries based on demographic analysis and economic development. Lugmani et al. (1980) classified these countries as a Muslim market. Apgar (1976); Shilling (1977); Fernea and Fernea (1985) saw them as an Arab market. Searby (1976); Arbose (1981); Elbashire and Nicholas (1983); and Amine and Cavusgil (1986) classified them as a Middle East market. Lastly, Srivastava and Green (1986) classified them as an OPEC market.

It is our belief that the GCC countries represent a unique market in themselves. They share many similar characteristics, including culture, language, economic development, religion, and the legal convention signed by the heads of the six states to form the Gulf Co-operation Council and thus create a common market. Therefore, this should be considered by multinational companies as a cluster market, and be treated accordingly. Kassem et al. (1993) argue that MNCs should view the GCC countries as a single market area because of their geographic proximity as well as the remarkable homogeneity of their culture, economics, politics, language, religion, income levels, and consumption patterns.

2.1.5 INTERMARKET SEGMENTATION APPROACH

Finally, there is the intermarket segmentation approach. In recent years, there seems to be an argument for the presence of a homogeneous consumer segment across many countries, having the same characteristics and identified by similar criteria, providing a foundation for marketing standardisation. Proponents of this approach, for example, Levitt (1983); Sheth (1986); Onkvisit and Shaw (1987 and 1990); Douglas and Wind (1987); Kale and Sudharshan (1987); Ohmae (1989) and Jain (1989) propose that customers, not countries, should be the focus of marketing strategy. The argument is that in focusing on similar segments in several countries and capitalising on their similarities, companies can reduce the costs associated with a localisation strategy, and on the other hand meet the needs and wants of this market, and preserve the customer orientation which is at the heart of the marketing concept. Therefore, MNCs should find comparable target groups in different countries and try to use the standardisation approach.

A few empirical studies have been found in the literature to support this approach. Among them are Kreutzer (1988) and Samiee and Roath (1992). Hill and Still (1984) studied less developed countries and found that in rural areas adaptation of marketing was more required than in urban areas. This may lead to the belief that urban people in less developed countries may comprise a segment similar to those in developed countries. Ohmae (1985) and Douglas and Wind (1987) argue that some MNCs have successfully identified global customer segments and have developed a marketing

programme and brand targeted at these segments. Examples given are Rolex watches, St. Laurent perfume, BMW cars: usually these products are targeted on special market segments. The success of this strategy depends on the size and economic viability of the segment and the ability to reach it effectively and profitably (Douglas and Wind (1987)).

Having considered these approaches, one can conclude that the issue of marketing standardisation and adaptation has been much discussed in the literature, although there is little empirical evidence on how far it is used in practice. According to Kanso (1992) the controversy over the use of standardisation or localisation may continue for decades. According to Douglas and Wind (1987) and Kustin (1994), there is no single best strategy for international marketing. The choice of strategy depends on many factors. MNCs need explicit goals in order to judge the success or failure of a specific strategy (Whitelock and Jones, 1993).

2.2 RATIONALE FOR STANDARDISATION OR LOCALISATION

Essentially, the two contrasting viewpoints on standardisation and localisation 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. The factors which affect the standardisation strategy have not been discussed much in the literature (Akaah, 1991).

According to Jain (1989), standardisation of one or more parts of a marketing programme is a function of many factors. These factors can be grounds for disagreement between the proponents and opponents of either approach. Depending on the importance of these factor differences in a marketing context, they can be either barriers to standardisation in some situations, or encourage the use of standardisation in others. Some writers have examined the factors that could influence the decision to be standardised or localised: these are the homogeneity or heterogeneity of markets, the type of product, the political and legal system, the marketing infrastructure, country factors such as target market and market positions, and firm factors such as the relationships with the headquarters, corporate orientation and delegation of authority (Jain, 1989; Miracle, 1968)). The following paragraphs will explain in more detail how these factors can affect the degree of standardisation, citing relevant empirical studies where available.

2.2.1 TARGET MARKET

Some researchers argue that when MNCs seek similar target markets in different countries, marketing standardisation can be used. Elinder (1961); Roostal (1963) and Fatt (1964) argue that standardisation is feasible in European countries because of the similarity of these markets. Another study by Ohmae (1985) maintains that standardisation should be used in Western Europe, the USA, and Japan, because they

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have become fairly homogeneous target markets. Boddewyn (1981) found many differences between European countries, including behaviour and income, leading to the use of an adaptation strategy. Fournis (1962) who was an opponent of the standardisation concept, notes that custom and traditions in the developed world will hinder the use of standardisation. Fisher (1984) argues that the more educated the people, the more their tastes will diverge, and standardisation will not be advisable.

2.2.2 TYPE OF PRODUCT

Many writers argue that standardisation varies with the nature of the product (Jain, 1989), whether it is an industrial or a consumer product. For industrial products standardisation is more likely (Bakker, 1977). Among consumer goods, durables offer greater opportunity for standardisation than non-durable products, which need more matching to the local customs and tastes (Douglas and Urban, 1977 and Jain, 1989)). An empirical study concludes that consumer non-durable products are more adapted than consumer durable products and industrial products are more standardised (Quelch and Hoff, 1986 and Boddewyn et al. 1986)). Day and Huszagh (1988) studied twenty-one industrial countries and twenty-seven consumer product categories and found that for consumer durable goods standardisation was greater than for most consumer non-durables. Another study, by Seifert and Ford (1989), found that for industrial products standardisation was the rule for product, branding and pricing. These arguments have been supported by empirical research (Douglas and Wind (1986); Miracle (1968)). Boddewyn et al. (1986) again found greater standardisation for industrial products, followed by consumer durable products, and more adaptation in consumer non-durable products.

Other studies, by Quelch and Hoff (1986) and Huszagh et al. (1986), found that consumer non-durable products were most affected by the local conditions, requiring adaptation more than industrial and durable consumer products. Seifert and Ford (1989) studied small and medium-sized industrial US exporting firms and found that product, branding and pricing were more standardised. Grosse and Zinn (1990) found that consumer non-durable products were more adapted to local conditions, whereas consumer durable and industrial products were subject to more standardisation. According to Bartlett (1979) and Levitt (1988), when a product satisfies a universal need, standardisation can be used across many countries. Product positioning is concerned with how the product is put across to the customer. If MNCs position the product as the same at home and abroad, then standardisation can be achieved (Sorenson and Wiechmann 1975). According to Masdag (1987), the selling of food and beverages is most difficult as far as standardisation is concerned. Cutler and Javalgi (1992) found that advertising standardisation does not depend on the type of product, but on the consumer involvement.

Many researchers argue that high involvement products may discourage the use of standardisation, and conclude that the influence of product type on standardisation is slight (Boddewyn et al. (1986); Douglas and Wind (1987); Hite and Fraser (1988); Keegan (1989); Jain (1989); Mueller (1991); Samiee and Roth (1992); and Cutler and Javalgi (1992)). Picard et al. (1988) conclude that an increased degree of standardisation between 1973 and 1983 was found in many consumer goods.

2.2.3 MARKET POSITION

Market position is concerned with competitive factors, market development, and market conditions. As regards the first, competition might be different from one country to the other, which will make adaptation preferable. For example, if competitors in one country are lowering their price, a company should lower its price to be competitive, and therefore, standardisation would not be a good strategy in this case. When a firm faces competition from the same rivals, the sensible way is to adapt its marketing activities to meet the local customers’ needs, but if competition is absent, the firm can use the standardisation approach.

Hill and Still (1984) studied US MNCs in developing countries and found that competition was a relatively weak factor in influencing product standardisation, when compared to the legal system, or local conditions. Sorenson and Wiechmann (1975) had a similar finding in their study of US consumer packaged goods, examining the competition when a product moves through its life cycle. They concluded that competition is a relatively unimportant factor in determining the degree of adaptation.

Killough (1978), Dunn (1976), Purdy and Carl-Zeep (1988) argue that market differences regarding media availability and the competitive situation are a barrier to standardisation. Grosse and Zinn (1990) found no significant differences in behaviour between firms in highly competitive markets as against the others. Henzler and Rall (1986) and Porter (1986) argue that if a firm is doing business in different markets with the same competition, pursuing a standardisation approach may then be worthwhile.

If MNCs compete with the same rivals, with similar share positions in different markets, standardisation is possible (Copeland and Lewis (1985); Quelch and Hoff (1986); Jain (1989)). As regards the second factor, market development, international markets are at different stages (Keegan 1989). Jain (1984 and 1989); Kirpalani and Macintosh (1980) examine market development through the product life cycle, and argue that if a product is at the same stage of the product life cycle at home and abroad, standardisation may be used.

To turn to the third factor, market conditions, many aspects of these conditions affect the degree of standardisation. Among them are cultural differences (Hall (1959); Lee (1966); Arndt and Helgesen (1981); Schiffman et al. (1981); Ricks (1983); Terpstra

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and David (1985); Parameswaran and Yaprak (1987); and Lipman (1988)). Culture has a major impact on marketing standardisation (Killough (1978); Dunn (1976)). Hofsted (1983) states that culture differences have a great impact on management and organisations. Researchers have argued that differences exist everywhere and a universal approach to managing MNCs is inappropriate unless similarity is found (Dunn (1976); Green and Langeard (1975); Urban (1977); Killough (1978) and Ryan and Fry (1976); Adler (1983); and Lannon (1988)).

According to Douglas and Dubois (1977) and Hornik, (1980) culture is a powerful factor in determining the degree of standardisation. Many writers argue that international marketers fail abroad because they fail to understand local culture (Ricks et al. (1974); Still and Hill (1985) and Thorelli et al. (1986) and Mesdag (1987). Hall (1959) and Sommers and Kernan (1967) state that the differences between cultures in different countries create barriers in trying to communicate effectively with another culture. Ryans (1969) stressed that one factor stopping international marketers from using the standardisation approach is the difference in culture between countries. Mallen and Litval (1966) and Whitelock and Chung (1989) argue that culture plays an important role in the perception and use of advertising. Lenormand (1964) recommends adapting promotion to a specific culture to avoid unnecessary risk. Kaynek and Mitchell (1981) argue that similar advertising messages have a different impact on different cultures.

Munson and Mcintyre (1979) believe that cross-cultural diversities exist which affect the reception and acceptance of an advertising message. Dunn and Yorke (1974) conducted Pan-European research and found great differences between European countries, such as language, perceptions, values, and norms, which affect marketing standardisation in one way or the other. Douglas and Dubois (1977) found that culture affected advertising in four ways: advertising theme, choosing the words and symbols, media selection, and the way pictorial conventions are interpreted. Amine and Cavusgil (1983) found that when there are some economic and cultural differences between countries, standardisation is then unsuitable.

On the other hand, Boote (1983) found homogeneity among consumers in the United Kingdom, France and Germany, and recommended the use of standardised advertising in these countries. Boote’s conclusion was challenged by Shaw and Onkvist (1983) and Boddewyn et al. (1986), who argue that the evidence, when analysed carefully, was overwhelmingly diverse. Nielsen (1964) and Unwin (1974) argue that the advertising message must take cultural differences between countries into account. Martenson (1987) argues that even if markets have different cultural values, successful standardisation is possible. Sorenson and Wiechmann (1975) found that similarity in market conditions leads to a high level of standardisation. Cavusgil and Yavas (1984) found that the indifferent attitudes of Turkish managers towards marketing know-how, as well as production-oriented philosophy, affected by the culture, can be a barrier

to international marketing standardisation in developing countries. Researchers argue that different cultures create different needs. Even though some needs are basic across cultures, people will not be satisfied with the same product, or communication appeal.

Attitudes and perception are influenced by culture, life style and traditions (Cole and Bruner (1971); Bond et al. (1975); Linton and Broudbent (1979); Schiffman and Leslie (1987 and Chadraba and Czepiec 1988)). According to Gurivith (1971); Labarbera (1987); and Luqmani and Quraesh (1989), one of the culture factors which determines the individual's behaviour and attitudes is religious feeling. Keegan (1969) argues that when a product is culturally compatible with the local culture, it is likely to be more suitable for standardisation. In some cultures people perceive foreign products, especially Western products, as high- quality, and in this case standardisation would be desirable (Friedman (1986); Douglas and Wind (1987) and Shalofsky (1987)). Some researchers have found differences between countries enough to discourage the use of standardisation, these differences ranging from transfer of technology, decision making, to the control mechanism (Fisher (1984); Kedia (1988); Tse et al. (1988) and Kreder and Zeller (1988)).

Terpstra (1990) argues that there are universals common to all cultures, and Ricks (1983) and Hawes (1985) argue that some elements of culture are widely accepted, for example, language. All these should be included in any marketing strategy. Kanso (1992) concludes that managers who use the standardisation approach to advertising are less culturally oriented and vice versa. Another factor which has an effect on marketing standardisation is customer characteristics; as we know, customers differ from country to country, and even within different regions in the same country, which will result in differences in taste, preferences, and shopping patterns. Therefore, adaptation of some of the marketing elements is desirable in order to meet the customer’s need, and gain competitive advantage.

Colvin et al. (1980) conducted research on how consumers in the UK, Germany, Sweden, and France perceive the Ford Granada car, and found differences in consumer perceptions from country to country. Other studies have found major differences in behaviour between regions and subculture segments (Garreau (1981); Saegert et al. (1985) and Kahle (1986)).

Language is another obstacle to standardisation, and may be the most difficult obstacle to advertising standardisation (Thackray (1985); Whitelock and Chung (1989); Engel et al. (1990); Jacobs et al. (1991)). Language differences make standardisation difficult. Hempel (1974); Green and Cunningham (1980) found that US family buying behaviour (English speaking) was similar to the behaviour of the English family (English speaking) but differed greatly from that of the Venezuelan family (Spanish speaking). Reichel (1989) states that differences between the various EEC countries

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regarding culture, languages, and customer preferences still exist in the highest degree. Mayer (1978) argues that some Western marketing concepts cannot be translated into another language, such as Arabic. Elbashier and Nicholls (1983) emphasise the role of linguistic barriers in international marketing.

Another market condition factor affecting standardisation is the economic differences between different countries around the world. It has been argued that economic differences between nations affect the degree of standardisation in many ways (Henzler (1981); Luqmani et al. (1980); Terpstra (1986); Douglas et al. (1986)). According to Jain (1989), poor economic performance may preclude developing countries from enjoying the variety of products available in USA. He gives examples, such as automobile. Because of the high cost of this product, in many developing countries it will not be available to the majority of the people, and therefore MNCs should modify the product to cut costs without reducing the quality significantly.

2.2.4 ENVIRONMENT

According to Shao et al. (1992), the factors which play the key role in determining how successfully MNCs operate abroad are environmental. These factors, where managers have little control, must be recognised and considered in all marketing activities. Decisions in marketing include product, price, promotion and place, the same in any market, but these decisions too are influenced by the environment. These environmental factors affect marketing decisions in different degrees (Buzzell (1968); Donnelly and Ryans (1969); Donnelly (1970); Britt (1974); Green et al. (1975); Dunn (1976); Michell (1979); and Cavusgil and Yavas (1984)). As regards legislation, Rutenberg (1982); Kacker (1972); Killough (1978); and Hill and Still (1984) argue that differences in various countries make the standardisation of marketing difficult.

Barker and Aydin (1991) state that government regulations are the factor which most distinguishes international from domestic business, and are the most difficult to deal with. Some governments penalise international brands in favour of national industry (Whitelock and Jones 1993). Another environmental factor is the marketing infrastructure. This includes the institutions and functions necessary to create, develop, and service demand, such as retailers, wholesalers, media houses, advertising agencies, transportation, the distribution system, harbours, storage, level of customer services, and store type (Jain (1989) and Barker and Aydin (1991)).

According to Tajima (1973); Ricks et al. (1979); Shimaguchi and Rosenberg (1979); Thorelli and Sentell (1982); Bello and Dahringer (1985); Douglas and Wind (1987); and Jain (1989), the availability and cost of such infrastructures will affect the degree of standardisation and might require considerable adaptation of strategy to local conditions.

According to Michell (1979), UK companies to some extent adapt their offerings and implement a detailed marketing mix to overcome infrastructure problems. Media availability varies from country to country (Kaynek and Mitchell, 1981). Some countries ban TV advertising, and some countries restrict its use. These can hinder the use of advertising standardisation (Whitelock and Chung (1989)). Another factor is the advertising agency, with some advertising agencies present world-wide and encouraging the use of standardisation. Another environmental factor which affects standardisation is physical conditions.

Jain (1989) argues that the physical condition of a country may affect the degree of standardisation. An example given is the Middle East, where in the hot climate products such as cars need consequent modification, and the design of a house affects the size of household products. Politics too is an environmental factor having some effect on the degree of standardisation. Some developing countries’ governments intervene in the affairs of MNCs, requiring changes in company policies, and operative procedures. These interventions may invalidate standardisation (Vernon (1971); Poynter (1980)). MNCs are trying to minimise their risks by seeking politically stable areas for investment (Michell 1979).

2.2.5 ORGANISATIONAL FACTORS

Many researchers argue that once the marketing strategy and programme are in place, the challenge for MNCs is to get the local management to implement them (Davidson and Haspeslegh (1982); Hamel and Prahalad (1985); Quelch and Hoff (1986); Fannin and Rodriguez (1986); Yip et al. (1988); Raffee and Kreutzer (1989); Kashani (1989) and Barker and Aydin (1991)). To get standardisation implemented effectively, good relationships between MNCs HQ and local management must be maintained, with the support and commitment of local managers (Brandt and Hulbert (1977); Bartlett and Ghoshal (1987); Kashani; (1989) Jain (1989); and Barker and Aydin (1991)). Wind et al. (1973) and Perlmutter (1969) have identified three orientations among international managers towards building international companies: "ethnocentric" (home-country oriented), "geocentric" (world-oriented), and polycentric, the overseas subsidiary acting independently of the HQ. In ethnocentric, the reference point is the home market, and therefore standardisation will be used because domestic policy is dominant. In geocentric, the marketing policy is derived from an international base, assuming the world to be one big market. Therefore, standardisation will be used. Some researchers argue that the idea of the geocentric approach has been greatly over-rated (Wind et al. 1973). In polycentric, marketing policies will be driven by the host market and adaptation will be used. Perlmutter (1969) and Jain (1989) argue that international orientation alone is not sufficient grounds for standardisation.

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Simmonds (1985) argues that "A geocentric approach to global strategy must be ready to accept national adjustment even as it looks for international standardisation". "Regioncentric" companies are trying to standardise within specific groups of markets. According to Wind et al. (1973), most of the standardisation studies implicitly refer to Regioncentric, such as Western Europe or less developed countries. Sim (1977); Reynolds (1978); Das (1981); Nowakoski (1982); and Jain (1989) all pointed out that conflict exists between headquarters and local management, resulting in different points of view. When the level of co-operation (a good relationship between HQ and local management) is greater, the greater the degree of standardisation is likely to be (Jain, 1989; Akaah, 1991).

The final organisational factor which influences the degree of standardisation is how much authority is delegated to the local management. The more authority the local manager has, the better adapted the marketing decisions will be. According to Picard (1987), the location of authority has important implications for marketing decision-making. Local management will try to be more autonomous from the HQ, and, on the other hand, HQ will require more control over the local operations. d'Antin (1971) and Doz (1980) think that delegation of authority has more influence on marketing standardisation. Aylmer (1970) found different degrees of authority for different marketing decisions: for advertising decisions local managers were responsible for 86 per cent, 74 per cent for the pricing decisions, 61 per cent for distribution decisions, and there was a high degree of standardisation for product decisions. These findings were supported by another study by Brandt and Hulbert (1977). A study by Garnier et al. (1979) of Mexican affiliates of US companies shows varying degrees of autonomy from function to function within the same firm. Regarding the marketing function, they found local managers were responsible for 83 per cent of price decisions, 89 per cent of distribution decisions, and 47 per cent of product decisions. Aylmer (1970) reported more autonomy in advertising decisions. Sim (1977) studied the subsidiaries of different national origins, including British, American and Japanese in Malaysia. The sample included firms from different fields such as consumer goods, chemical, transportation, electronic, electrical, and textiles.

The study findings show that authority was given to local management on decisions such as promotion, pricing, and distribution. HQs control the product decisions. Other factors affect the degree of marketing standardisation. Kacker (1972) Rutenberg (1982) and Hill and Still (1984) all argue that differences in product usage, the level of literacy, the level of education, social class structures, eating patterns, and the development of self-service retailing are all important obstacles to marketing standardisation. Downham (1982) identified eight factors requiring changes in the marketing programme, and leading to market differences. They are: brand name, distribution structure, regulation regarding product formulation, media availability, packaging, content of advertising, price and promotion. Quelch and Hoff (1986) argue that organisational constraints are the key obstacles to standardisation, more so than the environmental variables.

To turn to nationalism in European countries, this would increase, and promotion would have to be adapted or modified accordingly. Thus, the degree of nationalism affects the degree of standardisation (Kaynak and Mitchell 1981).

Within the international environment, there are forces which create pressures towards the using of a standardisation strategy across many countries. On the other hand, there are other forces which create pressures to adapt the strategy to the local environment (Fayerweather (1969); Doz (1980); Porter (1980 and 1985 )). Different organisations perceived these factors differently, which has resulted in different strategies for firms on the same market (Onkvisit and Shaw (1987); Douglas and Wind (1987); Yip (1989); Cateora (1990); Terpstra and Sarathy (1991)).

2.3 EMPIRICAL EVIDENCE

While the debate on the standardisation issue has been extensive, empirical data relating to actual corporate practice has been less forthcoming (Sandler and Shani, 1992). Writers distinguish between marketing programme and marketing process (Walters (1986); Kreutzer (1988); and Jain (1989)). According to Walters (1986) and Ozsomer et al. (1991), most of the early literature on the subject focused on marketing programme standardisation. Process standardisation was taken up in more recent studies. In programme standardisation the focus has been on the marketing mix elements (product, price, promotion and distribution), whereas process standardisation is concerned with marketing planning, marketing philosophy, and budget and control; or, as Whitelock and Jones (1993) put it, process standardisation involves the standardisation of the tools utilised for development, implementation and control of marketing strategy. According to Whitelock and Jones (1993), standardisation of the marketing process does not have to result in programme standardisation.

In the following sections, marketing programme and marketing process elements are analysed to show some of the empirical evidence.

2.3.1 MARKETING PROGRAMME STANDARDISATION

According to Ozsomer et al. (1991), studies of marketing programmes concentrate mainly on the advertising and product elements of the marketing mix. Other elements, such as pricing and distribution, have been given much less attention by academic researchers. Most of the literature on the subject of standardisation has been involved in international promotions (Elinder (1961); Fatt (1964); Roostal (1963); Miracle (1968); Ryans (1969); Donnely (1969); Britt (1974); Green and Langeard (1975); Dunn (1976); Colvin and Thorpe (1980); Hornik (1980); Walters (1986); Ryans and Ratz (1987); Onkvisit and Shaw (1987); Hite and Fraser (1988); Synodinos et al. (1989); Mueller (1991); Sriram and Gopalakrishna (1991); Whitelock and Kalpaxoglou (1991); Kanso (1992) and Agrawal (1993)). Few articles were found in the literature that involve

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other elements of the international marketing mix (Buzzell (1968); Keegan (1969); Hovell and Walters (1972); Levitt (1983); Walters (1986); Boddewyn et al. (1986); Rau and Preble (1987); Clark (1990); Szymanski et al. (1993)).

Altogether, from the literature on programme standardisation, it was found that attention has focused on the degree of standardisation of individual marketing mix variables, with promotional strategy remaining very much in the forefront of attention. Boddewyn et al. (1986) examined the literature for a period of 10 years (from 1973 to 1983) and found an increasing standardisation in all parts of the marketing programme. Quelch and Hoff (1986) found that firms were trying to standardise their marketing activities during the 1980s. In the following sections the empirical evidence of each element of the marketing programme will be presented.

2.3.1.1 PRODUCT

Regarding product elements, Olfermann (1987); Kirpalani and Macintosh (1980); Hill and Still (1984); Aydin and Terpstra (1981); and Sorenson and Wiechmann (1975) all found high levels of standardisation. Sorenson and Wiechmann (1975) studied marketing standardisation in the European subsidiaries of twenty-seven MNCs and found a high degree of standardisation with brand names, physical characteristics and packaging of consumer non-durable goods. Bakker (1977) studied Dutch firms operating in the Common Market and found the same result as Sorenson and Wiechmann. Hill and Still (1984) researched MNCs doing business in less developed countries, and found that companies dealing with food and general consumer products required adaptation to the local condition, whereas cosmetics and pharmaceutical products showed a high level of standardisation. They also found more than half of the products sold in less developed countries were originally developed for the home market. Ozsomer et al. (1991) studied MNCs operating in a developing country, namely Turkey, and concluded the following: different levels of standardisation were found for different marketing elements. With brand name, product characteristics, and product positioning, high levels of standardisation were found. High levels of adaptation were found in price and type of middlemen.

Regarding the type of product, pharmaceutical and chemical products show high standardisation, followed by consumer non-durable products. Electronic and motor vehicle parts and components showed low levels of standardisation. Moderate standardisation was found in food and drink products. Kacker (1972 and 1975) studied the products of American firms doing business in India, and found a great propensity to standardise. Despite this, 45 per cent of the American firms reported significant changes in the product arising from legal requirements, for example, the use of local materials, and differences in the product usage.

Walters (1986) states that in a market where significant change in product was necessary

the tendency was to avoid these markets. Ayal and Zif (1979) argue that one limitation of a company’s geographic expansion is the significant production adaptation required. Aydin and Terpstra (1981) studied MNCs in Turkey and found that 46 per cent adopted standard products. Akaah (1991) studied the degree of standardisation of US firms with operations overseas, and found only 43 per cent of marketing programme and marketing process activities displaying a high degree of standardisation, for example, brand name, product characteristics, product warranties, and packaging.

As regards marketing process activities, marketing planning and budget and control system were highly standardised. Michell (1979) studied the exporting practices of sixty-three UK companies, and found that 65 per cent of the sample marketed the same product to differing parts of the world. Ward (1973) studied the product and promotion strategies of US subsidiaries of European companies for both industrial and consumer products. He found that consumer products required more adaptation than industrial products. These product adaptations related to the following: how the product is used, labelling, quality, packaging and styling. Most of these adaptations were minor, and the most influential factors in adaptation were customer needs and competition.

Quelch and Hoff (1986) found that the most standardised elements of the marketing programme were product and branding. Kacker (1972) studied 26 US firms operating in India and found that the most standardised elements of the marketing programme were product, followed by pricing. Grosse and Zinn (1990), found branding and product were least adapted. Donnelly and Ryans (1969) found that the majority of US companies use their domestic marketing approach in overseas markets to some extent.

According to Walters (1986), most marketing standardisation was on product policy, namely branding. Rosen et al. (1989) reviewed the literature on international branding and cited only four studies dealing with this matter. Boddewyn and Hansen (1976) found brand standardisation high among US companies in the EEC market: consumer durables (66 per cent), industrial goods (49 per cent) and consumer non-durables (38 per cent). Boddewyn et al. (1986) replicated the study some years later, and found high standardisation for the brand name in consumer durables (75 per cent), industrial goods (62 per cent) and consumer non-durables (50 per cent). Sorenson and Wiechmann (1975) studied American and European non-durables and found 90 per cent of the companies standardising their brand name. Still and Hill (1984) found that 72 per cent of firms standardised their brand name, with product the next standardised variable.

Another study of US consumer goods companies by Rosen et al. (1989) found 82.5 per cent of the sample used the same brand name internationally. Akaah (1989) studied US companies with overseas operations, and found that 73 per cent standardised their brand name.

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2.3.1.2 PRICE

Another element of the marketing programme is price. According to Barker and Aydin (1991), countries have different levels of competition, distribution of income, and nature of demand, which will make it very difficult to apply a standardised price strategy in all the markets the company operates in, even within the same country. Other researchers argue that price is affected by transportation costs, taxes, tariffs, raw materials, level of services required, the nature of warranties, discount, and many others factors, which will make it difficult to standardise (Ozsomer, et al. (1991), and Martenson (1987)).

Sorenson and Wiechmann (1975) found that price decisions tend to be dissimilar across countries. Aydin and Terpstra (1981) found only limited influence by MNCs on pricing in Turkey. They state that there seems to be general agreement that prices are difficult to standardise. Walter (1986) argued that distribution and pricing should be the most adaptable elements of the marketing programme. Aydin and Terpstra (1981) found that among US companies in Turkey pricing was most adapted, followed by distribution, advertising, and product. Grosse and Zinn (1990) found that price and advertising elements were generally most adapted. Barker and Aydin (1991) argue that standardisation of price across many international markets is not a realistic and viable long-run strategy.

2.3.1.3 SALES PROMOTION

Traditionally, sales promotion decisions have been delegated to the local management. Local managers have the right to choose which sales promotion they want to adopt out, such as samples, coupons and point-of-purchase displays. The headquarters typically exerts little influence on sales promotion. For example, in less developed countries limited space in the store will discourage the owner from displays, and the limited power of the retailers will make it difficult to negotiate individually and set up point-of-purchase promotions in many independent shops. All these will require adaptation (Barker and Aydin 1991).

Another problem in the developing countries, for example Saudi Arabia, is the unreliable mail system which makes it difficult for sales promotion (sampling) by mail or door to door. Quelch and Hoff (1986) found sales promotion to be more adapted than other marketing programmes. Kacker (1972) found that the most adaptive element of the marketing programme was promotion. Kashani and Quelch (1990) think that sales promotion is still a local management activity but, in recent years, with the increasing cost of sales promotions, headquarters interest has become more emphatic.

2.3.1.4 ADVERTISING

Interest in the topic of advertising can be traced back to the 1920s, when many researchers stated that humanity possessed certain common attributes and it was logical to standardise advertisement across countries. Advertising standardisation continues to be at the forefront of the debate on marketing standardisation (Miracle (1968); Killough (1978); Peebles et al. (1977 and 1978)). According to Walters (1986), the amount of advertising standardisation is mixed. Michell (1979) found a great propensity to adapt the communication strategy. Jain (1989) examined the thirty-four significant major studies on standardisation in the last twenty-five years and found that fourteen related to advertising. Kustin (1994) identified twenty-seven major studies on globalisation, sixteen of which were empirical, while only two studies supported Levitt’s argument on globalisation.

Killough (1978) and Sorenson and Wiechmann (1975) found a lower level of standardisation in creative expression than in the basic advertising message, and more autonomy for the local management in advertising decisions. Similar finding are reported by Meffert and Althans (1986). Ryans and Donnelly (1969) found mixed evidence for standardisation: 90 per cent of the sample studied made some use of standardisation, but only 17 per cent used standardisation for more than half their advertising.

Dunn (1976) found a decreased use of standardisation in terms of promotion in 1973 than in 1964. 65 per cent of the respondents felt the need for adaptation. Britt’s study (1974) found few companies using the standardisation approach. Mindak (1975) studied American advertisement content in foreign markets and found widespread use of American-type appeals, tactics, and advertising themes used in different countries. Ryans and Ratz (1987) found standardisation high among the advertising variables. Picard (1987) found in Western Europe that only 20 per cent of the sample had substantially standardised their international advertising and 39 per cent adapted their advertising. Hite and Frazer (1988) studied American firms conducting business overseas and reported that 36 per cent used localised advertising, 8 per cent used standardised advertising and 66 per cent used mixed localisation and standardisation.

Kanso (1992) researched US consumer durable companies, and reported that 75 per cent used the localisation and 24 per cent the standardisation approach. Dunn (1966) found many US advertisements were transferred to Europe and parts of the Middle East. Aylmer (1970) studied US companies based in Europe and found that more autonomy was given to the local managers in advertising decisions than in other marketing

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decisions. Empirical research by Plummer (1977) and Hornik (1980) shows that in order to be successful in foreign countries advertising adaptation is necessary. Boddewyn et al. (1986) found advertising more resistant than product to standardisation. Dunn and Eli (1974) examined how large US firms transfer their promotion strategy and drew up a list of 31 variables significant in affecting transfer decisions. The study carried out by Mueller (1991) revealed that the use of standardised advertising messages was greater among Western than among Eastern countries. Boddewyn et al. (1986) found little evidence of advertising standardisation even among the European countries considered by many as similar. Mueller (1987) found that few international companies have adopted an advertising standardisation approach, and standardisation was used among culturally and economically similar countries. Michell (1979) found that advertising messages could be standardised about half the time by British exporters. James and Hill (1991) suggest that advertising standardisation is most likely to be successful in developing markets, where competition is less and the image of foreign products is perceived as superior to that of local products. Takeuchi and Porter (1986) found a decrease in companies using a standardised advertising approach over the years. Other studies by Caffyn and Rogers (1970) and Hornik (1980) reported that overseas advertising is perceived to be less effective than local advertising.

Green et al. (1975) studied customers in four countries, namely the United States, India, Brazil and France, exploring their attitudes towards toothpaste and soft drinks. They found that many differences exist between customers, and concluded that standardisation of advertising message would be inappropriate. Killough (1978) studied the transferability of 120 international advertising campaigns and concluded that complete standardisation was not feasible. Another empirical study was carried out by Meffert and Althans (1986), involving the European headquarters of international advertising agencies, asking how advertising campaigns are standardised in Europe. They found that many multinational companies standardised all or parts of their advertising campaigns across borders.

Many researchers found that the influence of product type on the degree of standardisation is of rather minor importance. Examples are Samiee and Roth (1992); Cutler and Javalgi (1992); Mueller (1991); Wills et al. (1991); Douglas and Wind (1987); Boddewyn et al. (1986).

2.3.1.5 DISTRIBUTION

The choice of channel for distribution is restricted by the availability of distribution systems in differing international markets, and a MNC cannot create its own distribution system, but has to work with the existing one. In this case, a MNC cannot standardise its distribution system, but must adapt it. The place which always makes standardisation difficult has been mentioned in international marketing literature (Rau and Preble.

1987). Quelch and Hoff (1986); Grosse and Zinn (1990) found distribution tended to be more adapted to the local conditions. Kacker (1972) found the most adaptive element of the marketing programme was promotion, followed by distribution.

2.3.2 MARKETING PROCESS STANDARDISATION

According to Barker and Aydin (1991), the marketing process is the ways and means that are employed to develop strategy and to implement it. Walters (1986) defines marketing process as the manner in which marketing programme decisions have been arrived at. In process standardisation, attention has been focused on the degree of standardisation of the process through which marketing programmes are developed, including marketing planning, the budgeting and control system, and marketing philosophy (Sorenson and Wiechmann, 1975). According to Walters (1986), it is often more important and feasible to have a uniform system for international marketing and decision making than it is to standardise the marketing programme. Sorenson and Wiechmann (1975) argue that having a standardised system for marketing planning is essential for marketing standardisation. Brandt and Hulbert (1977) provide an empirical study of MNCs in Brazil, which shows that a subsidiary's strategic objectives are strongly influenced by headquarters' guidance.

Aydin and Terpstra (1981) conclude that MNCs with a standardisation approach tend to make more marketing know-how transfers than those with a localisation approach. Within the marketing process, attention was chiefly directed towards market planning. Dunn (1976) argues that standardisation seems to work in the methodology of planning. Shuptrine and Toyne (1981) state that the process approach should provide a way of thinking, together with methodology, for implementation of a marketing programme rather than detailed guides for action. Following this approach will result in many advantages, including systematic analysis of the relevant overseas marketing environments. International marketing policy will be compatible with corporate resources, and will increase the company’s market knowledge in the international market. Proponents of marketing process standardisation argue that careful analysis and planning, following a uniform format throughout the firm, are an essential for

success.

The literature on marketing process suffers through lack of empirical evidence. Among the few empirical studies is Weichmann and Pringle (1979). They studied the HQ in a sample of MNCs, and found that executives think the key problem in international marketing is the shortage of local marketing management talent, and failure of local management to plan effectively and provide the necessary information. Therefore, the standardisation of the marketing process is needed to overcome this problem. On the other hand, subsidiary management complain that they have little autonomy, and the HQ does not take into account the local differences. A very good example of

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successful process standardisation is provided by the Nestle company. d'Antin (1971) described the marketing process standardisation of Nestle and reported that marketing planning was standardised: the Nestle marketing bible could and should be followed by a manager in any market.

2.4 CONCLUSION

The arguments for and against marketing standardisation have continued since their emergence in the 1960s. As discussed in this Chapter, there are proponents of five international marketing strategies. Proponents of a standardisation strategy argue for similarity among countries, and developments in communications and transportation make it easier for MNCs to use a similar marketing strategy world-wide, and enjoy the perceived advantages which the standardisation approach will bring such as cost savings, world-wide brand image, etc. On the other hand, other writers argue that people are different, that what works in one country might not work in another: culture, legal systems, customer tastes and behaviour are different in different countries, and therefore the use of a standardisation approach might lead to market failure. Therefore they argue for a localisation approach to be used.

Neither of these two extreme approaches may be desirable. In recent years, researchers have argued for policies somewhere between standardisation and localisation. In some situations, they argue, it is desirable to standardise and in others to localise. In recent research there have been arguments recommending MNCs to recognise the presence of identifiable market clusters around the world, such as the Western European countries and The Middle East. Proponents of the existence of intermarket segments argue for the presence of a homogeneous consumer segment across many countries, and argue that customers and not countries should be the focus of marketing strategy.

As the literature review shows, standardisation of one or more element of the marketing programme is a function of many factors which can be either obstacles to standardisation or aids. These factors can be grouped under two main broad factors, namely firm and country. The empirical evidence was discussed, and indicates that the issue of marketing standardisation needs yet more empirical studies to fill in the gaps in our knowledge.

Regarding the marketing mix, advertising has continued to be at forefront of the debate on marketing standardisation. The previous empirical research on the area shows that product is the most standardised element of international marketing. Other elements, such as price, promotion, and distribution, are more adapted.

To conclude this literature review, it is hard to reach general conclusions from these studies, partly because of the different definitions given to marketing standardisation. Most of the research is concerned with developed countries. Developing nations are,

comparatively, neglected, or information is based upon the responses of the HQ executive only. Most of the studies focus upon marketing elements, such as advertising. Onkvisit and Shaw (1987) plead for more empirical evidence to resolve the standardisation- localisation controversy.

According to Kustin (1994), a relatively small quantity of empirical research on standardisation was conducted prior to 1986. Since then empirical research has increased. As Kustin (1994) and Douglas and Wind (1987) argue, there is no single best strategy for international marketing, good for all products and companies. Halliburton and Hunerberg (1987) argue that the problem of precise measurement means that concepts of standardisation and localisation are difficult to define precisely.

MODELLING, HYPOTHESES AND METHODOLOGY

CHAPTER THREE

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3.1 INTRODUCTION

The first part of this chapter will outline the general and the detailed models used in this study, and will explain each variable within the model in section 3.2 (model) and 3.4 (hypotheses). Hypotheses will be presented and discussed. Later in the chapter the research methodology adopted for quantitative and qualitative stages will be explained.

3.2 THE MODEL

The model for determining the degree of marketing programme standardisation is shown in Figures 3.1 and 3.2. The rationale for this is that it was apparent that in the literature limited attention had been given to the combination of these factors, underlining marketing programme standardisation, in part because of a relative lack of a theoretical framework (Akkah, 1991).

Our model is influenced by Jain’s model in his seminal article “Standardization of International Marketing Strategy: Some Research Hypotheses” in Journal of Marketing, 1989. Many researchers, including Onkvisit and Shaw (1990); Akkah (1991) and Kustain (1994), argue that insufficient effort has been devoted to the factors that affect

the degree of marketing programme standardisation, the chief reason being the lack of theoretical models and all recommend Jain’s conceptual model as an important step to the understanding of the issue of marketing standardisation. Jain argues that his model is likely to be particularly useful in future studies for directing attention to the key variables in marketing standardisation.

FIGURE 3.1: MODELLING THE DEGREE OF MARKETING PROGRAMME STANDARDISATION

Our model contains two principal factors, firm and country, as independent factors or predictors, and marketing programmes as a dependent factor or criterion. Firm and country factors contain many sub-variables. Forty-one associated variables will be used to interpret the degree of marketing programme standardisation adopted by UK companies headquarters in the GCC countries. The model encompasses a broader framework than has typically been used in investigation of marketing standardisation.

Our objective was not to test Jain’s model, but to understand and expand the factors that influence the degree of marketing programme standardisation. Jain argued that he was attempting to gain insight into the standardisation issue, and indeed we use it as a starting point for understanding the issue and building our Model.

Consulting the available literature, we have been influenced by other work in the area of international marketing standardisation, and have found other variables which we (and others researchers) believe will influence the degree of marketing mix programme standardisation. Such works include Sorenson and Wiechmann (1975); Quelch and Hoff (1986); Kotler (1986); Douglas and Wind (1987); Pride and Ferrell (1987) and Akkah (1991). After identifying these variable we interviewed managers in the field of international marketing during the pilot study stage (Appendix 1). From

Firm Factors

1. Corporate orientation 2. Firm characteristics 3. Relations between HQ and local agent

4. Delegation of authority

Country Factors

1. Target market

2. Market position

3. Environment

Degree of marketing programme standardisation

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these discussions with people are working in international companies, we asked them which they regard as the important variables and requested them to add any variable(s) which they regarded as significant to marketing programme selection or to exclude any variable(s) which they thought would not affect decision on marketing programme selection. After these discussions we have been able to derive the variables in our Model which has incorporated more variables than Jain’s original model.

In Jain’s model there were five broad factors and fourteen related variables which he regarded as influencing the degree of marketing standardisation. In our model these five factors and fourteen variables have been expanded into seven factors and forty one associated variables. These seven factors were grouped under two broad headings, namely country and firm. While Jain argued for five factors. Akaah (1991) later grouped these five factors into the two main factors, we are using, and were discussed with respondents during the pilot study (Appendix 1) which gave confirmation to our selection of these two broad categories.

3.2.1 COUNTRY FACTORS

Country factors include target market, market position, environment and nature of the product. Jain’s model incorporated ten variables. Of these, we considered the nature of the product as a Firm characteristics variable rather than country factor (as Jain argued), confirmed by the pilot study. Seven more variables were added to the Country factors taken from the literature and confirmed by pilot study. In the following sections we will elaborate on our choice of these seven variables.

3.2.1.1 TARGET MARKET

In Jain’s model the target market was restricted to variable relating to economic development between home and host countries, for example, GNP and geographical area. In our model we have also included the market segment the company seeks, and how consumer characteristics, customs and traditions differ, since these were seen by the pilot study and the literature (e.g. Ozsomer et al. 1990) to be important variables which may inhibit marketing programme standardisation. For example, if a company seeks the same market segment both at home and abroad, a more standardised marketing programme might be possible, but if it is seeking a different market segment, greater adaptation to the foreign market might be more appropriate. Similarly, with consumer characteristics, customs and traditions, if the company face differing consumer characteristics, customs and traditions in differing markets, adaptation to the local condition is more likely.

3.2.1.2 MARKET POSITION

In the Jain model, the area of market position relates to culture and the competitive environment. In our model, we have added the product life cycle stage, because the literature (Britt, 1974; Halliburton and Hunerberg, 1987 and Ozsomer 1990) corroborated by the pilot study suggests that if a product is in the same life stage in differing countries, then standardisation might be more relevant. The perceived quality of the product might also influence the degree of standardisation, since it is well perceived in both home and export markets, standardisation might be used. Again, if a company has a high market share in both home and overseas markets, the use of a standardisation strategy might be possible.

3.2.1.3 ENVIRONMENT FACTORS

In Jain’s model, environmental factors are physical conditions, legal environment, political environment and marketing infrastructure. In our model, we have added media structures because it was argued in the literature (Britt (1974) and Whitelock and Chung (1989)) and confirmed by pilot study that media structure can also impede the use of standardisation because media structure can vary from country to country. For international companies, if the media are different in the foreign market to those used in the home market, these differences could hinder them from using the same advertising campaign.

3.2.2 FIRM FACTORS

In our model, firm factors include firm characteristics, relations between HQ and partner, delegation of authority and corporate orientation, whereas Jain’s model comprises the last three of these. After literature review and discussion with people in the field we have added to the Firm factors nineteen more variables to the five suggested by Jain. These are discussed below.

3.2.2.1 FIRM CHARACTERISTICS

In our Model, we have added firm characteristics, comprising seven variables, after consulting the literature (e.g. Halliburton and Hunerberg (1987), and confirmation by the pilot study. Size of firm may influence the degree of marketing programme standardisation: if the company is large it might choose the standardisation approach to gain from economies of scale, or have influence over their partner to use the same marketing programme as used in the home market. If the company is small in size, conversely it might be willing to adapt to the foreign market to gain more business. The Percentage of foreign sales, and number of countries served by company may also influence the degree of marketing programme standardisation. If the company obtains

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most of its sales from foreign markets, it is likely that it will treat foreign markets very carefully, and use a strategy which will influence by adaptation its business in each of the foreign markets. If the company export to many countries it might prefer to use the same marketing programme used in the home market for simplicity and control. The nature of the product, as discussed in the literature and discussed with people in the pilot study, is suggested as an important variable correlating with standardisation of marketing programme, with standardisation more feasible for industrial products than consumer product.

3.2.2.2 RELATIONSHIP BETWEEN HQ AND PARTNER

In his model Jain used the subsidiary instead of partner, while partner is used in this model, because the companies we researched have local partners not subsidiaries. In Jain’s model, he mentioned the conflict between HQ and subsidiary as influencing the degree of marketing programme standardisation. But our model explores more variables which were regarded by the literature and the people in the pilot study as important to the relationship between HQ and partner, such as guidelines or manuals, formalisation of relations, the communication system, agreement on objectives, and development of organisational linkages. Regarding guidelines or manuals, if the company has very clear guidelines or manuals the partner can follow and use the same which makes standardisation possible, but where the company has not got clear guidelines or manuals the partner might be in a more powerful position to adapt. The more open the communications between the HQ and the partner the easier it will be to affect marketing programme standardisation, but if the communications between HQ and partner is not good or broken then standardisation will be difficult. The literature and pilot study discussion suggest standardisation is more likely to be accomplished through a tight linkage of the HQ and partner. Agreement to objectives and development of organisational linkages are also seen as important to co-operation between the two parties, and will thus have a bearing on the degree of marketing programme standardisation.

3.2.2.3 DELEGATION OF AUTHORITY

In Jain’s model, he thought that standardisation was influenced by how decision-making authority was delegated to the foreign subsidiaries. Our model argues similarly but after our literature review and pilot study we have added the decision-making process and how decision-making criteria are developed, control procedures, and how budget methods are set up. Regarding the decision-making process and how decision-making criteria are developed, if companies set up decision processes and criteria with their partners, thus will facilitate standardised decisions especially in the marketing programme. Regarding control procedures, and budget methods, the HQ can set control procedures to control their partners, and they can use budget methods as one

means of control. Some researchers, for example Kirpalani (1988) and Halliburton and Hunerberg (1987), argue that standardisation can be seen as one way of controlling the partners’ business operation.

3.2.2.4 CORPORATE ORIENTATION

Jain argues in his model that the orientation of a company, involving such issues as managers’ attitudes toward doing business overseas, how much risk they want to take, and how they accommodate a foreign perspective, will correlate with the degree of marketing standardisation. Our model adopts the same factors but adds others: how the top management wishes to serve the marketing needs at home and abroad, how the marketing function is integrated with others functions and what methods a company uses for analysing marketing situations and problems. These variables are seen by the people in the field as important in influences on the degree of marketing programme standardisation. If the top management want to serve customer needs in both home and foreign markets they are more likely to use an adaptation approach. If companies are facing the same problems at home and in foreign markets, standardisation might be used to solve the same problem. Lastly, if the marketing functions are integrated in the same ways a standardisation approach may be more feasible.

3.2.3 MARKETING PROGRAMME

In Jain’s model, there were thirteen marketing programme variables, acquired from Sorenson and Wiechmann (1975), whilst in the present model we have added six more variables, namely product warranties, pricing methods, offer of price discount, channels of distribution, advertising budget, and the role of publicity. These variables were collected from the literature (particularly Douglas and Craig, 1986), and confirmed and augmented by pilot study. Product warranties are important in any marketing programme. If the company is trying to develop the same image, one way is to provide the same product warranties in any market, and thus it will try to use standardised warranties. Some companies may want to use the same pricing methods and price discounts at home and in foreign markets. Discount outlets, common in industrialised nations, may not exist in other countries, making it difficult for companies to use standardisation. Channels of distribution may also differ significantly from one country to another, and given the importance of distribution will affect the degree of marketing programme standardisation.

The literature review indicated that of all the marketing programme variables, advertising message, creative expression and product characteristics have been particularly emphasised in previous works. While including these variables, our model will additionally explore other variables in the marketing programme to consolidate and add breadth to the issue.

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Our marketing programme variables were categorised under four broad factors, the 4Ps: product, price, place and promotion.

Figure 3.2: The sixty variables used in the study

Figure 3.2 shows the sixty variables used in the study. Seventeen variables relate to country: these variables can be grouped under three broad factors, namely target market, market position and environment. Twenty-four variables are associated with firm factors, and can be grouped under four broad factors, namely firm characteristics, relationships between HQ and partner, delegation of authority and corporate orientation. Nineteen variables relate to the marketing programme: these variables can be grouped into four broad categories: product activities, pricing activities, distribution activities, and promotion activities.

As regards the marketing programme, the majority of studies, particularly Sorenson and Wiechmann (1975); Quelch and Hoff (1986); Douglas and Wind (1987); Kotler (1986); Pride and Ferrell (1987); Jain (1989); and Akaah (1991) and confirmed by respondents in the pilot study (Appendix 1) have suggested that our study should focus on the degree of marketing standardisation of nineteen individual marketing programme variables. These are classified as product characteristics, brand name, product warranties, product packaging, retail price, pricing methods, offer of price discount, type(s) of retail outlets, channel(s) of distribution, the role of the sales force, the management of the sales force, the role of middlemen dealers, customer services, advertising budget, basic advertising message, media selection, sales promotion, creative expression, and role of publicity. Among the marketing programme variables, advertising message, creative expression and to some extent product characteristics have previously been emphasised in empirical studies. Our study will shed light on and

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provide empirical evidence on a wider range of marketing programme variables than has been common in the past.

The model proposes that the degree of marketing programme standardisation between the UK and Gulf is correlated with variables related to the broad factors of Country and Firm.

Regarding country related factors correlating with the degree of marketing programme standardisation, principal among these are the target market, including market segment sought, consumer characteristics, customs and traditions, and similarity of market, as discussed for example by Elinder (1961); Fournis (1962); Roostal (1963); Fatt (1964); Fisher (1984); Boddewyn (1981); Hill and Still (1984); Ohmae (1985); and Jain (1989), who argue that the more similar the target market variables between host and home country, the more likely marketing programme standardisation will be. Next are market position variables, including product life cycle stage, culture, compatibility of product to culture, similarity, intensity and level of competition, and market share. These variables have been discussed, for example, by Britt (1974); Nagashima (1977); Kirpalani and Macintosh (1980); Arndt and Helgesen (1981); Henzler (1981); Jain (1984); Copeland and Lewis (1985); Ricks (1983); Ricks et al. (1979); Douglas et al. (1986); Quelch and Hoff (1986); Luqmani et al. (1980); Lipman (1988); and Jain (1989). These writers have concluded that these variables influence marketing programme standardisation in different degrees. If a company is operating in different markets with different competition, standardisation will not be advisable. The more similar the culture between home and host market, the more likely it is that standardisation will be appropriate. Lastly, there are environment variables including media structure, political stability, physical conditions, marketing infrastructure and legal systems. These are discussed in the literature, for example, by Buzzell (1968); Donnelly (1970); Britt (1974); Dunn (1976); Green et al. (1975); Poynter (1980); Thorelli and Sentell (1982); Hill and Still (1984); Cavusgil and Yavas (1984) and Jain (1989). It has been argued that similarity of economic environment leads to market homogeneity, thus facilitating standardised market strategies. Likewise, it is argued that if the cultural and competitive environment is similar in both home and overseas markets, a similar market position can be achieved. By contrast, differences in general environment and marketing infrastructures are likely to give rise to adaptation strategies.

To turn to firm-related factors, these consist firstly of corporate orientation variables including methods for analysing marketing situations and problems, management thinking on serving market needs, integration of the marketing function, and corporate marketing policies. Second, firm characteristics, including the nature of the product, size of company, proportion of foreign sales, number of years’ experience in the foreign market, managers’ attitudes towards doing business overseas, and the number of countries with which the company operates. Third, relationships between HQ and

local partner, including rectification of conflicts, guidelines and manuals, formalisation of relations, communication systems, agreement on objectives, and development of organisational linkages. Four, delegation of authority, including the decision-making process and criteria, authority for marketing decisions, control procedures, budget methods and control of marketing decisions. These variables are discussed by many writers, for example Perlmutter (1969); D'Antin (1971); Reynolds (1978); Sim (1977); Das (1981); Nowakoski (1982); Quelch and Hoff (1986); and Jain (1989).

Many writers have argued that standardisation will vary with the size of the firm and the nature of the product, industrial products being more standardised (Bakker (1977); Boddewyn et al. (1986) and Jain (1989)). Consumer products should suit the local taste and conditions more than industrial products. Moreover, HQ-local partner relationships and delegation of authority are organisational aspects which may create conditions conducive to a successful implementation of a standardised strategy, particularly where tight linkages exist between HQ and the local partner. Jain (1989) argues that the higher the level of HQ-subsidiary co-operation, the greater the marketing programme transfer. Corporate orientation towards doing business overseas includes managers’ attitudes towards the foreign and overseas environment, management thinking and the methods of doing business. All of these may influence the degree of marketing programme standardisation. Further details on the country-related and firm-related variables are given in the literature review, Chapter Two, and under Hypothesis I in Chapter Three.

3.4 THE HYPOTHESES

Utilising the literature available on marketing standardisation, four hypotheses were developed. The theoretical background for each of these hypotheses is discussed in this chapter and the empirical evidence discussed in the literature review (Chapter Two) in greater detail. The hypotheses are enumerated.

H (I) Firm and Country variables will correlate with the overall degree of marketing mix programme standardisation ? by UK companies in the UK and when exporting to the GCC countries.

Country and firm factors will be influential in deciding marketing strategy. Country factors, including target market, the difference in economic environment of a firm's home and host countries, will correlate with the degree of standardisation in different ways. We posit that if a company seeks the same target market at home and abroad, it is more likely to use a standardisation strategy will be used.

As regards the economic environment, which includes disposable income, per capita GNP and level of economic development, it has been asserted that a similarity in economic environment leads to market homogeneity, which is associated with a

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standardisation strategy (Cundiff and Hilger, 1984). Market position includes the cultural and competitive environment of a firm's host country compared to the home country, which will influence the degree of standardisation. It has been argued that in the absence of current and potential competition, a company can use marketing standardisation, but when competition is intense, localisation of marketing strategy is necessary for success.

It has been suggested that without current and potential competition, a company can use a standardisation marketing programme. GCC markets are highly competitive (Yavas and Glauser, 1985). This necessitates localisation of marketing activities to gain an advantage over the competition by providing a product that suits the local conditions. On the other hand, it has been argued that, in the GCC market, multinational companies compete with the same rivals, with a similar share position (Kassem et al. 1993) suggesting that standardisation is desirable.

Many writers argue that standardisation of the marketing programme is influenced by economic differences (Luqmani et al. 1980), differences in customers' perceptions (Bilkey and Eric (1982); Cattin et al. (1982), and culture (Lipman (1988); Jain (1989); Hill and Still (1984) which influence every aspect of marketing. Various countries have different environmental features that will affect the marketing mix decisions and therefore differences in environmental factors will have an impact on marketing mix standardisation (Cavusgil and Yavas (1984); Britt (1974).

Among the environmental factors, legal, political, physical, cultural and marketing infrastructure variables are important. With regard to legal and political factors, multinational companies are faced with different laws in different countries that may encourage marketing activity adaptation; and some governments intervene in multinational companies' operations, producing changes in the operation and strategy (Poynter, 1980). According to Vernon (1971), interventions by governments invalidate marketing activity standardisation.

If we now turn to physical environment, Jain (1989) argues that the physical conditions of a country, such as climate, typography and resources, may constrain standardisation and the example was given of the Gulf States, where the climate is hot and some products, such as cars, require additional features such as air conditioners. Differences in the size of homes affects product design for appliances and home furnishings.

Turning to cultural environment, this has a great influence on peoples’ behaviour, attitudes and lifestyle. Product sales are greatly influenced by levels of awareness and knowledge, which are largely determined by culture. Therefore, culture influences every aspect of marketing. According to Schiffman et al. (1981), cultural differences influence consumer acculturation, which in turn constrain the reception of standardised products. Hence, if the product culturally matches the local conditions, it is likely to

be more suitable for standardisation (Britt, 1974). In the view of Schiffman and Leslie (1987), culture influences every aspect of consumer behaviour, including attitudes, perceptions and preferences. The GCC countries have a common language and religion, shared social values and family ties. Culture influences every aspect of life, including consumer behaviour. If the culture of the home and the host countries is similar, one would expect a high degree of standardisation strategy. In short, GCC countries are culturally relatively homogeneous (Kassem et al. 1993), which makes it theoretically attractive for international marketers to appeal to all consumers in the Gulf market with the same marketing strategy, leaving aside the reductionist viewpoint. The degree of marketing standardisation is influenced by the availability, performance and cost of the marketing infrastructure, which includes wholesalers, retailers, sales agents, availability of media, advertising agencies, transportation, credit and the existence of market research organisations (Bello and Dahringer (1985); Thorelli and Sentell (1982)).

When we consider Firm factors, according to Jain (1989) we should include corporate orientation, headquarters’ and local partners' relationships, manager orientation towards doing business overseas, and delegation of authority as organisational aspects that create conditions for the successful implementation of a standardisation strategy. To produce an effective level of marketing programme standardisation, a tight linkage between the local partners and the headquarters is needed to build confidence and trust. Headquarters’ and local partners' relationships will influence standardisation of the marketing mix and sometimes conflict may arise between HQ and local partners through their different points of view (Das 1981).

Delegation of authority also influences the degree of standardisation of marketing activities. If a decision-making authority is delegated to the local partners, then localisation will be encouraged. Aylmer (1970) concluded in his study that local partners were responsible for 86 per cent of advertising decisions, 74 per cent of pricing decisions and 61 per cent of the channel decisions, but the product decision seemed to be standardised. Many writers argue that standardisation varies with the nature of the product. Strategy standardisation is more pertinent to industrial products than to consumer products, because the latter need to reflect more closely the unique needs and preferences of consumers (Boddewyn et al. 1986).

H (II) there will on average be a greater degree of standardisation by UK companies of product-related variables than of other marketing mix variables between the UK and when exporting to the GCC.

An advantage of marketing standardisation advanced by advocates concerns economies of scale in production. This is supported by Levitt (1983), who states that consumers’ needs and interests are becoming homogeneous across the world. According to the supporters of the standardisation approach, these two arguments (cost and homogeneity)

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and others mentioned in the literature review (Chapter Two) make the standardisation of marketing activities attractive to MNCs, especially the standardising of product elements.

Regarding the price activities, it has been argued that price is very difficult to standardise for many reasons, including differences in competition, distribution system, government regulation, tax differences, tariffs, supply and demand, level of services required and many other factors which make similar pricing in different countries impossible. Therefore MNCs are more likely to adapt their prices to the local environment.

The distribution system is different in different countries. Some developing countries lack good transportation systems, others lack good marketing infrastructures. These and other factors oblige MNCs to adapt their distribution to the local conditions. Some researchers argue that distribution and pricing should be the most adaptive elements of the marketing programme, because they are the least likely to yield cost saving, which is, in their opinion, the driving force behind standardisation.

Promotion is also typically a highly adaptive element of the marketing programme, because promotion is restricted by media availability, government regulation, and other factors. This somewhat contradicts the proposal put forward by some researchers, which is to standardise international advertising, due to the similarities between customers around the world. Such standardisation might be valid for countries similar to each other, but the position in the GCC countries is different from that in the UK market in many respects. Consumers are different in culture, religion, shopping patterns, preferences, media availability, and government control over the media. All these factors will encourage promotional adaptation rather than standardisation. This hypothesis has been supported by many researchers, who have argued that the most standardised elements of marketing programmes are product activities, while the least standardised elements are promotion, distribution and price. Sorenson and Wiechmann (1975) studied consumer non-durable products and found that branding was most standardised, followed by product and advertising, and distribution was fairly standardised. The most adapted element of the marketing activities was price.

According to Quelch and Hoff (1986), the most standardised element of marketing activities are product and branding, while the least standardised elements are distribution, sales promotion and customer services. Another study by Boddewyn et al. (1986) concluded that branding was most standardised, followed by product and advertising. Walters (1986) recommends that distribution and pricing should be the most adapted elements, because they are the ones least likely to yield cost savings if standardised. Hill and Still (1984) studied the way in which multinational companies adapt their products to less developed countries and found that consumer products were most standardised in branding, followed by product features. Another study in less developed countries, by Aydin and Terpstra (1981) found that in Turkey, the product

was most standardised and the price was most adapted, followed by distribution and advertising. Kacker (1972) found that US firms operating in India standardised their product, and subsequently price, and they adapted promotion and distribution. (See Chapter Two for more detailed evidence).

H (III) there will on average be higher degrees of standardisation in terms of marketing programme by UK companies producing industrial goods than by UK companies producing consumer goods, between the UK and GCC.

Some writers argue that standardisation varies with the type of product being marketed (Miracle (1968); Walters (1986); Boddewyn et al. (1986); and Jain (1989)), depending on whether it is a consumer product, which is sold to the final consumer, or an industrial product, sold for business use.

Other researchers have argued that industrial products are more capital intensive, thus offering more opportunities for companies to realise economies of scale in production and for this reason argue that industrial products are suitable for standardisation (Bakker (1977) and Boddewyn et al. (1986). Non-durables consumer product tend not to be as capital intensive as industrial products, and they are more sensitive to customer tastes (Douglas and Urban (1977); Hovell and Walters (1972)). Therefore, they are more likely to be adapted to each market. By contrast, durable and high technology products can be standardised more easily than non-durable products.

H (IV) UK companies will in general adopt a policy of clustered standardisation of the marketing mix programme within the Gulf States, with only minor variations between Gulf countries.

Some writers have argued that multinational companies should see the GCC markets as one homogeneous entity because of their similarities. Consequently, they recommend marketing programme standardisation (Berger (1962); Almaney (1981); El Bashier and Nicholls (1983); Fernea and Fernea (1985); Hourani (1990); Yavas and Alpay (1986); and Kassem et al. (1993)). On the other hand, some writers argue that multinational companies should devote attention to each market, using an adaptation strategy (Apgar (1977); Abu Naba (1984); Tuncalp (1988); and Luqmani et al. (1989)).

There is clearly a debate over homogeneity and whether or not there is a similar market in the GCC. The author's experience consists of working with local Saudi Arabia companies, and teaching marketing for a number of years, as well as discussions with local and British businessmen. UK companies tend to see the GCC countries as one single market and use the standardisation approach to marketing programmes. We posit that UK companies will adopt a policy of clustered standardisation of the marketing programme within the Gulf.

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3.5 RESEARCH METHODOLOGY

This study involves four stages, as can be seen in Table 3.1: Stage One is the UK main sample, interviewing sixty-three UK company headquarters, in regard to their perceptions of the degree of marketing programme standardisation in the GCC states. Stage Two is the agents’ quantitative stage, involving twenty-five agents, and the objective is to compare the views expressed by agents and UK companies regarding their perceptions of marketing programme standardisation among their matched HQ-agency firms. Stages Three and Four are the qualitative stages, needed to clarify and enrich the statistical data and to help reach deeper explanation for the findings, involving ten UK companies and their ten agents.

Table 3.1 Samples used in the study

Stage Sample No Objectives

1 UK Main Sample 63 Dynamics of UK companies standardisation policies

2 Agents Quantitative 25 Comparison of views, HQ versus agents

3 Agents Qualitative 10 In-depth understanding4 UK Sample Qualitative 10 In-depth understanding

Table 3.1 shows the samples used in the study and in the following section each sample will be

discussed individually.

3.5.1 UK MAIN SAMPLE (STAGE ONE)

For the UK main sample (stage One), eighty-two larger UK product companies were identified through trade and Embassy sources as currently exporting to at least three of the six Gulf Co-operative Council (GCC) States of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and United Arab Emirates. The personal interviews were conducted in sixty-three companies agreeing to participate (77 per cent response). This is considered to be strongly representative of all the larger UK companies exporting to the GCC. Companies were included in the sample if they are operating in Saudi Arabia and at least two other GCC countries. The reason for insisting on operating in Saudi Arabia is that it is the biggest market in the region (Cavusgil and Yavas, 1984).

According to Tuncalp (1990), Saudi Arabia is the largest market for British firms outside the USA and Western Europe, and is a stepping stone towards a number of additional markets in the GCC.

In each company the study concentrates on the product with the largest sales in the GCC. For the sample framework we chose stratified sampling. After we received the lists

containing the names and addresses of UK companies exporting to the GCC markets, the first step was to divide all companies into two subgroups with respect to whether they were consumer or industrial companies and whether they had business in Saudi Arabia and in at least two other GCC countries. Then a simple random sample was taken from each subgroup. This sampling method ensured proportionate representation of various companies involved in the GCC markets.

Some researchers point out that in using stratified sampling the sample size required to achieve a given level of precision is smaller than it is with simple random sampling, thereby reducing sampling cost (Kazmier, 1988). The reason for choosing a stratified sample was to have a more efficient sample than could be taken by simple random sampling (Zikmund, 1989). More technically, a smaller standard error may be the result of this stratified sample because the groups will be adequately represented when strata are combined. Another reason for conducting a stratified sample is the assurance that the sample will accurately reflect the population on the basis of the criteria used for stratification. This is a matter of concern because occasionally a simple random sample yields a disproportionate number of one group or another and the representation of the sample could be improved.

Table 3.2 Breakdown of respondents by job title

Job Title No %

Managing Director 6 10

Marketing / Sales Director 14 22

Middle East Director 14 22

Export Director 12 19

International Marketing Director 9 14

Others 8 13

63 100

Respondents evinced high levels of interest in the subject of research, as shown by the profile of respondents by job title (Table 3.2), with 73 per cent of them at board level. The nature of the study was itself a selling point. Most of the respondents asked for copies of the results and indicated that the study was of interest to them.

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Table 3.3 Breakdown of sample by type of industry

Type Original population

ActualSample

% of sample % type

Consumer Companies 35 30 86 48

Industrial Companies 47 33 70 52

82 63 100

From Table 3.3 it can be seen that thirty companies (48 per cent) were principally involved with consumer products and thirty-three (52 per cent) with industrial products.

Table 3.4 Breakdown of sample by size in terms of salesNo %

Less than £300M 28 44.4£301-600M 9 14.3£601-900M 5 7.9

More than £900 21 33.363 100

By size, as shown in Table 3.4, the sample split 44.4 per cent for businesses with total sales revenues of under £300 millions, 14.3 per cent for total sales between £301-£600M, 7.9 per cent between £601 and £900 million, and 33.3 per cent with over £900 million per year.

Table 3.5 Breakdown of sample by the percent of exportNo. %

Less than 10% 6 9.511-20% 7 11.121-30% 12 19

Over 30% 38 60.363 100

As can be seen from Table 3.5 the majority of companies (60.3 per cent of the sample) export more than 30 per cent of their production outside the UK market.

Table 3.6 Breakdown of sample by number of years working in the GCC

No. %

Less than 5 years 3 4.86-10 years 8 12.711-15 years 3 4.8

Over 15 years 49 77.863 100

In Table 3.6 it is shown that the great majority (77.8 per cent) had at least fifteen years experience of operating in the Gulf States. Almost all partners were local agents, with different agents in different Gulf States.

Multiple-industry sampling was used. According to Samiee and Roth (1992), this will enhance the external validity of the findings. Above all, focusing on a single industry would have severely limited the size of the sample.

3.5.1.1 DATA COLLECTION FOR UK MAIN SAMPLE(STAGE ONE)

The empirical evidence needed to achieve the objectives from the UK main sample was collected through personal interviews with the UK companies exporting to the GCC. They make up the bulk of UK companies which operate affiliates and export to the GCC and the rest of the world. They are always able to choose between standardisation and adaptation of their marketing strategy. The most satisfactory way of gathering the data required for the study was personally interviewing the top person responsible for GCC markets in depth to obtain the most valid data possible. An alternative would have been a postal questionnaire. The reasons for choosing the personal interview are as follow.

1. We wanted to ensure that the person answering the questions, for our study's purpose, was the most knowledgeable senior executive responsible for the GCC. Using the personal interview method allowed us to insist on interviewing the right person. If the respondent did not know the answer to a specific questions, he could then refer the interviewer to another more knowledgeable person in the company.

2. We wanted to ensure that the respondent understood the questions in the way they were intended. This is particularly important because our sample included companies with different backgrounds, some industrial and some consumer. We regard the personal interview as the best way to avoid potential ambiguity.

3. Personal interviews enabled us discuss marketing standardisation in the total context of company history, policies, and future plans.

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4. In using personal interviews, we made sure the respondents fully understood the purpose of the study and the measurements used. If we had used postal questionnaires, this would have been difficult.

5. It was believed that because of the complexity of the study the data collected through personal interviews would be more comprehensive, accurate, and reliable than what would have been obtainable through a mail survey (Cavusgil and Shaoming 1994).

To arrange the personal interviews for the study, we sent a letter (Appendix 2) addressed to the marketing director in UK companies exporting to the GCC. The letter was initially signed by the research supervisor and the researcher, directed to the marketing director. It asked for an appointment to interview if he was the one responsible for the GCC markets. Otherwise, it requested him to pass it to the person directly responsible for these markets. The letters were sent out on 9th March 1994, and we started to receive the answers on 16th March. The letter sent to the sample companies consisted of a covering letter and a self-addressed stamped return envelope. The initial mailing was followed three weeks later by a reminder letter. To encourage more replies, each respondent was promised a copy of the results of the study, and the confidentiality of respondents was assured. The response was very positive, which showed the interest of these companies in the subject.

The first interview took place on 8th April 1994. A total of sixty-three interviews were conducted over a four month period (April-July 1994). Interviews, averaging 70 minutes each, were arranged at respondents’ UK offices in order to assist in verifying factual information. All these interviews were conducted by the same interviewer, to standardise administration. The final questionnaire, after pretesting which involved five marketing directors in both industrial and consumer-good companies was used in the personal interviews. The ten-page questionnaire (Appendix 3) consisted of firm characteristics, and structured and semi-structured questions relating to the sixty variables in the study. For each question a 5-point Likert scale was used (1: identical, 2: very similar, 3: some variation, 4: moderate variation, 5: substantial variation), except for firm factors, where the scale ranged from 1: highly centralised, 2: mainly centralised, 3: mixed centralised and decentralised, 4: mainly decentralised, 5: highly decentralised. Dummy variables were used for seven firm variables.

The questionnaire was in two parts, Part One relating UK to GCC States and Part Two relating Saudi Arabia to other GCC States. In each company included in the sample, we studied the marketing programme decisions, mentioned earlier, about the most important product or product line (in terms of sales turnover) sold in Saudi Arabia and in at least two other GCC markets. To determine the degree of standardisation of the marketing programme, respondents (HQ) evaluated the degree of similarity in marketing programme between their operation in the UK market and each individual GCC market at the same time.

The marketing programme included nineteen activities mentioned earlier. The respondents reported how similar or different each marketing programme element for the chosen product was in each individual GCC country compared with the UK market. Their judgements were rated on a 5-point Likert scale, ranging from 1: identical, to 5: substantial variation, as the basis for respondents’ evaluations. Respondents were asked to evaluate the similarity of firm factors between UK and GCC firms, using a scale ranging from 1: highly centralised to 5: highly decentralised.

In addition, respondents provided information about what they thought of the similarity of country factors for the product chosen between UK and GCC countries. A 5-point Likert scale was used, ranging from 1: identical, to 5: substantial variation. The firm managers’ attitudes toward doing business overseas, how marketing strategy was developed, and other items of information were obtained by asking respondents their perception about each question individually. Finally, respondents provided information about their position in the organisation, type of business, the size of the company, number of years involved in the GCC market, mode of entry, sales volume, percentage of foreign sales, percentage of foreign sales in the GCC out of the total foreign sales, and their attitude towards doing business overseas and the background of the company.

3.5.2 AGENTS QUANTITATIVE: COMPARISON OF VIEWS (STAGE TWO)

3.5.2.1 OBJECTIVES

The objective of this stage was to see if there are any differences of perception between UK companies and their agents in the GCC countries regarding their marketing programme strategies. The available literature had shown, that typically local agents’ views were not addressed. If they differed fundamentally from those of the HQ company, the accuracy of the findings from UK companies could be called into question, or at least differences of perception identified.

3.5.2.2 METHODOLOGY

To achieve this objective, a three-page questionnaire (Appendix 4), modified from the original UK questionnaire to HQs, was sent to the agents of the UK companies in Saudi Arabia. Firm and marketing programme factors were used but not country factors, of which the agents had not much knowledge, mainly because they are not in a position to compare their market with the British market. For firm factors, a 5-point Likert scale was used (1: highly centralised, 2: mainly centralised, 3: mixed centralised/ decentralised, 4: mainly decentralised and 5: highly decentralised) and for marketing programme factors a 5-point Likert scale was used (1: identical, 2: similar (only minor variation), 3: some variation, 4: moderate variation, and 5: substantial variation).

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A postal questionnaire was used, firstly because of the time constraint and secondly having conducted the personal interviews stage with the sixty-three UK companies, we could simplify the questionnaire, which after pilot testing (Appendix 1) we deemed would be concise and clear to respondents.

The contact names and addresses of the agents were obtained from the HQs in the UK. The questionnaire with a covering letter was sent to each agent in Saudi Arabia of the sixty-three UK companies and, after a reminder letter, twenty-five usable questionnaires were obtained, a 40 per cent response rate, which is considered to be very satisfactory, given the poor postal questionnaire rate in the GCC market (Raad (1990); Tuncalp (1990)). The breakdown of the agents sample (as shown in Table 3.7) is that 64 per cent are agents for consumer companies and 36 per cent agents for industrial companies.

Table 3.7 Breakdown of Agents

Type No. %

Consumer 16 64

Industrial 9 36

25 100

3.5.3 QUALITATIVE RESEARCH (STAGES THREE AND FOUR)

3.5.3.1 OBJECTIVES

Upon completion of the data collection in the sixty-three UK companies, more explanation about the findings was needed. We wanted to know what were the reason(s) for choosing the strategy firms are using and if there are any factors which contribute to their choice, and if there are any differences between those companies who are using highly standardised, moderate adaptation or localisation strategies.

3.5.3.2 Why Qualitative?

The use of a Qualitative leg in this study was to complement the quantitative approach adopted in the research, by providing a clearer picture of the influences on marketing programme standardisation.

The findings from the literature review and from the quantitative stage provided the foundation for the qualitative stage. The purpose of the interviews was to elaborate, providing richer details, interpret, clarify and illustrate the quantitative findings. According to Rossman and Wilson (1984, 1991) and Miles and Huberman (1994), qualitative and quantitative data can be used to achieve these objectives in a mixed way.

3.5.3.3 METHODOLOGY FOR STAGES THREE AND FOUR

3.5.3.3.1 AGENTS’ QUALITATIVE RESEARCH

For further explanation of the findings and the reasons behind different strategies, which is one of the research objectives, qualitative research was needed.

3.5.3.3.2 THE SAMPLE

For the agents’ qualitative research, ten agents were chosen, for the following reasons:

1. We got the approval of fifteen UK companies from the UK main sample to agree to participate in the qualitative stage and provide us with the name and contact address of their agent in Saudi Arabia.

2. We wrote a letter signed by the supervisor and the researcher asking for a meeting with the marketing director if he was responsible for British products in Saudi Arabia or if not, to refer us to the right person. This resulted in ten Saudi agents being willing to participate in the research. Thereafter, we decide to return to see whose agents we had already interviewed. (These ten agents also took part in the agents’ quantitative study).

These agents were representative of the sample used in Stage one (see Table 3.8). From the responses of UK companies (see Chapter Four), out of the sixty-three UK companies, it was found that twenty-two companies (35 per cent) of the sample were standardised, twenty-nine companies (46 per cent) used a moderate adaptation and twelve companies (19 per cent) were using a localised strategy. From these samples we arrived at the sample needed for the qualitative stage. This consists of 4 agents of UK firms exhibiting a high degree, 4 agents of UK firms exhibiting a moderate degree, and 2 agents of UK firms exhibiting a low degree (localised) of standardisation.

Table 3.8 Breakdown of sample in the qualitative stage

Type High Moderate Low %

Consumer 3 4 1 80

Industrial 1 0 1 20

Total 4 4 2 100

Looking at Table 3.8, it is clear that consumer companies are predominant, representing 80 per cent of the sample, whereas industrial companies represent 20 per cent. The predominance of the consumer companies was due to the strong response from such

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companies to participating in the qualitative stage, whereas the weaker response of industrial companies limited the sample size of more companies. Every effort was made to increase the response rate of the industrial companies, but with no success. Within this sample, it can be seen that four companies, three consumer and one industrial, used standardised strategy representing 40 per cent of the sample; four consumer companies used moderate adaptation and two companies, one industrial and one consumer, were using local strategy.

Only agents in Saudi Arabia were chosen, because the findings show that UK companies are predominantly using a cluster approach to all the six GCC markets, but chiefly because the Saudi market is the largest in the area and it has been used as benchmark for all the GCC countries.

Appointments were made and interviews took place in January and February, 1995. During the interview, a three-page set of questions (Appendix 5) was used to guide respondents through the qualitative stage. Respondents provided background descriptive information regarding their companies, such as type of business, size, number of years relationship with the UK firm and respondent title. The questions used during the agents’ qualitative stage were generated from the initial UK findings and were the UK results most needing interpretation and clarification from the agents. Questions predominantly concerned the factors which appeared to distinguish between standardised, moderately adapted and localised strategies. Respondents were asked their opinions on these variables. Then respondents gave their views on why product activities were more standardised than other marketing mix variables such as price, promotion and distribution. Our findings that the degree of standardisation was not related to firm’s industry type was discussed with respondents and their opinions were obtained. Respondents were also asked to what extent they agreed with the finding that UK companies could be characterised as taking a cluster approach towards standardisation in the Gulf States and what would be their recommendation. Relationships between agent and UK firm were discussed in detail. At the end of the qualitative stage, respondents were asked about the advantages and disadvantages of both standardisation and localisation strategies which one they preferred and why.

These questions were used as a starting point for a discussion with agent respondents on further matters which needed clarification. Each interview took approximately ninety minutes, in the respondents’ offices.

In each case the marketing director responsible for British products was interviewed. We started in Jeddah West, then Dhahran East, and Riyadh, in the centre of Saudi Arabia.

3.5.5.3.3 UK SAMPLE: QUALITATIVE RESEARCH

Once we had interviewed the ten agents in Saudi Arabia, we returned to interview the ten UK companies associated with these agents. The objective at this stage was to get in-depth understanding of the issue of marketing standardisation and clarify some of the arguments raised by the agents. During this qualitative stage, which lasted approximately sixty minutes each, we interviewed the same respondent whom we met in the first stage, to ensure consistency of answers. We used during these interviews a semi structure two-page list of note questions (Appendix 6). We began the interview by stating the objectives of the qualitative stage, and gave a summary of the interview with their agent in Saudi Arabia. Then the respondent was presented with the differences in the findings between his company and the agent, and asked for his explanation and views on these differences. Again, we asked the respondent about the variables, dividing the companies into three distinct groups: highly standardised, moderately adapting and localised. Then respondents were asked why product variables are highly standardised compared to price, promotion and distribution variables. Respondents also offered their opinions on why the degree of standardisation was not related to the firm’s industry type and why British companies are characteristically treating each of the Gulf States similarly. Lastly, respondents were asked their future plans regarding marketing activities in the Gulf, and also discussed in which ways our research could help them with their marketing strategies in the Gulf.

3.6 MEASUREMENT OF THE DEGREE OF MARKETING PROGRAMME STANDARDISATION

In each of the sixty-three UK companies selected the respondents were asked about marketing programme decisions for only one product, the largest in terms of sales and sold in UK market and at least three GCC markets, including Saudi Arabia. To measure the degree of standardisation, we asked each respondent to use a Likert scale of five points ranging from (1) identical to (5) substantial variation, to evaluate the degree of marketing programme between the UK market and each of the GCC markets individually and to tell us how similar or different the respondent thought the decisions were. The arithmetic mean was used to determine the degree of standardisation, as mentioned earlier.

3.7 MEASUREMENT OF THE DEGREE OF SIMILARITY OF COUNTRY FACTORS

To assess the similarity of country factors, we asked each respondent to evaluate UK market condition against each of the GCC market’s conditions individually and to tell us how similar or different he thought market condition was for the chosen product, using a five- point Likert Scale ranging from (1) identical to (5) substantial variation.

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3.8 MEASUREMENT OF THE DEGREE OF SIMILARITY OF FIRM FACTORS

To assess the similarity of firm factors, we asked respondents to compare those of the UK with those of each of the GCC market, and tell us how centralised or decentralised the decision was in each case. The decision was regarded as centralised if it was taken by the UK company, and decentralised if it was taken by the local agent. Respondents’ evaluations were measured using a 5-point Likert scale ranging from 1 (centralised) to 5 (decentralised).

3.9 RELIABILITY AND VALIDITY OF THE MEASUREMENT

3.9.1 RELIABILITY

According to Paul et al. (1988), reliability is the extent to which scaling results are free from experimental error. We are interested in the consistency of the scale results over the whole group of respondents. The reliability of the scale may be assessed by three methods: test-retest, alternative forms, and internal consistency. For this study internal consistency will be used to estimate reliability on single testing occasions.

The basic form of internal consistency is split-half reliability. The condition necessary for this test is each split of the scale must contain enough items to be reliable in itself, and this is considered to be eight to ten items, which means that the entire scale should consist of at least sixteen to twenty items.

In this study we have twenty-four items for firm factors, seventeen items for country factors, and nineteen items for marketing programme. We used coefficient alpha available in the SPSS to overcome the potential problem which arises for split-half, in that the result may vary depending on how the items are split in half. Coefficient alpha takes into account all possible ways of splitting an item in half. Cronbach’s coefficient alpha was calculated for each of the scales used. These coefficients were as follows; for firm factors, (Alpha = .8906), for country factors (Alpha =.7102), for marketing programme (Alpha=.8714). All were found to be acceptable using Nunnally’s (1978) and Calantone et al. (1994) criterion of coefficient alpha being greater than 0.70.

3.9.2 VALIDITY

According to Paul et al. (1988), validity means that the data must be unbiased and relevant to the characteristic being measured. In testing the validity of the scale used in this study, we chose content validation which includes the topic, the subject matter and the substance, as they relate to the characteristics that are being measured. We validated the items which could be included in the study and we saw how representative they were. As we know that content validation is judgmental, we used the judgement

of expert people in the field. We asked five marketing executives in UK companies whether the items which were collected from the fragmented literature and used in the study were representative of the field being investigated and, acting on their suggestions, we arrived at the items used in the study.

3.10 STATISTICAL TECHNIQUES

To achieve the research objectives, several statistical techniques were employed, namely, discriminant analysis, factor analysis, descriptive analysis and t-tests. The reason for using these statistical techniques will be explained in the following sections.

3.10.1 DISCRIMINANT ANALYSIS

According to Malhotra (1993) and Churchill (1991), discriminant analysis is used for discriminating between groups. In this study multiple discriminant analysis is used since there are three categories involved. The procedure employed in the discriminant analysis is found in many text books and it is not the purpose of this chapter to explain it. But the aims of this technique are as follow:

1. To examine any differences that may exist among the groups, in terms of the predictor variables.

2. To determine which predictor variables contribute to most of the intergroup differences, and

3. To classify the companies in one of the groups, depending on the value of the predictor variables, and to evaluate the accuracy of classification.

As explained in Chapter Three, the model contains one criterion or dependent factor, namely marketing programme, and two principal factors, firm and country, as independent or predictor factors.

3.10.2 FACTOR ANALYSIS

Factor analysis is used to achieve many objectives. According to Churchill ( 1991), it is one of the more popular techniques for analysis of interdependence and it can be used for data reduction purposes. In this study, factor analysis was used for substantive interpretation and for the identification of the constructs or dimensions underlying the observed variables. We have applied factor analysis to the three different groups, standardised, moderate adaptation and localised. From the results, the focus was on isolating and identifying those factors which can effectively summarise the important information in the data.

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3.10.3 DESCRIPTIVE ANALYSIS

Standard inferential statistics were used to compare each individual variable between the UK and GCC and within the GCC.

3.10.4 T-TEST

T-tests were used to achieve many objectives. One was to see if there were any significant differences between consumer and industrial companies and second to see whether there were any differences in views between HQs and their agents regarding their marketing programme strategies. The t-test for the differences in the two means was deemed appropriate for this analysis. The assumptions for choosing the t-test were as follows: the samples are assumed to have been drawn independently of each other; to have normal distribution of the characteristics in each population; and to have equal variance in the two populations. According to Churchill (1991), “The level of measurement is not important when selecting techniques..rather it is the assumptions that are key in determining whether a particular statistical technique is appropriate for analysing a particular set of data”.

This chapter has discussed the country and firm variables included in the model which seek to explain the degree of marketing programme standardisation between the UK and the Gulf States. This chapter has dealt with four hypotheses generated by the literature on the issue of marketing standardisation. Measurements of the degree of similarity of country, firm and marketing programme were discussed and explained.

This chapter has discussed and described the statistical techniques employed in the study and examined the quantitative and qualitative research methods involving four stages. Stage one is the UK main sample involving sixty-three UK companies, stage two involves twenty-five agents to compare the views of agents with matched UK company HQs. Both stages are quantitative. Stages Three and Four are the qualitative stages involving ten agents and ten UK companies, as shown in figure 3.3.

Figure 3.3 A summary of the

RESULTS: UK FINDINGS

CHAPTER FOUR

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854.1 INTRODUCTION

This chapter will present the findings for a number of the research objectives. As stated in Chapter One, one of the main objectives is to explore the degree of marketing programme standardisation of UK companies exporting to the Gulf States, using a three factor, sixty variable model of country, firm and marketing programme. These findings will either support or contradict the hypotheses stated in Chapter Three.

Table 4.1 Frequency of the Marketing Programme Variables for Each Company

Company Rate 1 2 3 4 5 GM

1 1 9 9 3.39

2 1 2 8 3 5 3.37

3 18 1 1.11

4 5 7 4 3 2.26

5 4 8 4 3 3.09

6 3 4 4 1 7 3.24

7 3 5 9 2 3.37

8 1 2 5 6 5 3.65

9 11 5 1 2 1.84

10 17 2 1.32

11 6 2 5 5 1 2.63

12 2 5 7 5 3.80

13 1 6 2 4 6 3.36

14 10 4 5 2.66

15 3 5 7 4 2.63

16 2 9 3 1 4 2.80

17 3 6 4 5 1 2.74

18 4 3 3 5 4 3.11

19 4 6 3 5 1 2.63

20 1 2 4 5 7 3.79

21 1 2 6 10 3.84

22 9 4 1 2 3 2.26

23 2 3 6 8 3.97

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24 6 7 3 3 2.16

25 12 3 2 2 1.84

26 5 2 3 7 2 2.99

27 3 7 9 3.19

28 6 5 5 3 3.26

29 3 11 3 1 1 2.26

30 4 9 6 3.21

31 12 2 1 4 2.21

32 9 5 2 1 2 2.07

33 5 5 2 2 5 2.83

34 2 6 7 4 3.34

35 5 9 5 2.73

36 5 8 6 2.04

37 4 2 2 9 2 3.17

38 10 2 7 2.58

39 6 2 1 10 3.54

40 3 1 4 2 9 3.68

41 4 6 9 2.26

42 1 13 3 2 2.32

43 14 4 1 1.37

44 5 5 6 3 2.37

45 4 2 2 9 2 3.16

46 16 3 1.47

47 6 5 8 4.09

48 3 12 4 2.26

49 8 2 9 2.62

50 6 8 4 1 3.02

51 2 3 2 5 7 3.61

52 16 1 1 1 2.32

53 4 6 8 1 3.32

54 5 5 5 3 1 2.50

55 4 4 7 4 2.79

56 1 3 6 9 4.04

57 3 8 8 3.11

58 4 1 9 5 3.79

59 5 4 4 6 2.58

60 1 10 2 3 3 2.82

61 2 1 16 4.42

62 5 4 1 5 4 2.95

63 12 4 2 1 1.74

Using 5-point scale, 1: identical 2: similar 3: some variation 4: moderate adaptation 5: substantial

variation GM= Grand Mean

From Table 4.1 it is clear that there is no complete standardisation nor localisation but there is a degree of standardisation for each company, with some variables standardised, some moderately adapted and some localised. Clearly no company standardised all its marketing programme variables or localised them. supporting the argument put by Jain (1989) that total standardisation is in practice impossible. Three companies identically standardised most of their marketing programme variables and only one company fully localised most of its marketing programme variables.

From Table 4.5 we used the grand mean of the nineteen marketing programme variables for each company to classify firms by degree of marketing programme standardisation.

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In classifying companies as to whether they were standardised, moderately adapted or localised, we used the grand mean of the variables for each company, in line with other studies. Companies scoring between 1 and 2.50 were regarded as standardised, 2.51-3.50 as moderately adapted, and 3.50-5.00 as localised. Other studies in the area of marketing standardisation have used grand mean from Likert scales, for example Sorenson and Wiechmann (1975), in using a seven-point scale ranging from (1) quite similar to (7) quite different, they categorised companies rating 1,2 and 3 as highly standardised, 5,6 and 7 as low standardisation, and 4 as moderately standardised on marketing variables using grand means. Another example is Gross and Zinn (1990), using a four-point Likert scale from (1) very substantial standardisation to (4) very substantial adaptation of marketing variables. Using grand means for the companies, they also interpreted the results in a relative way, with higher average scores denoting more adaptation and lower scores more standardisation. Akaah (1991) used a seven-point Likert scale, ranging from (1) highly similar to (7) highly different marketing programme. He used a mean rating of 1,2 and 3 as implying high standardisation, 5,6 and 7 as low standardisation and 4 as moderate. As have other researchers, we argue that standardisation and localisation are relative terms. Unlike the above researchers who used mailed questionnaire, we have used personal interviews, making sure that respondents have fully understood the purpose of the study and, importantly, the measurement used so giving extra confidence.

From the frequency Table, Table 4.5, we argue that a company with a grand mean between 2.51-3.50 be classified as having moderate adaptation of the marketing programme. The great majority of the twenty-nine companies ? classified as being moderately adapted had a majority of the nineteen marketing programme variables rated as (2) minor variation, (3) some variation or (4) moderate variation. In only two cases did companies classified by grand mean as moderately adapted have a mix of standardised and localised rating of variables. These companies, number 34 and 38, were both industrial firms involved in electronic. We carried out, as another check, a cluster analysis of the sample, and this gave us 3 cluster and similar results, giving us added confidence in our split of the sample.

Additionally, care was taken in the personal interviews to bring the labelling of the scale to the attention of respondents, that is: (1) identical, (2) similar, with minor variation, (3)some variation, (4) moderate variation and (5) substantial variation. Moreover, in demonstrating the scale to respondents, we explained that the range between 1 and 2.50 would be classified as standardised; 2.51-3.50 mould be moderate adaptation and 3.51-5.00 would mean localisation. Clearly, the respondents’ answer across the scale are judgmental based on theirs perceptions and their interpretation of the scale, but the use of personal interviews and demonstration of the scale in action provided as objective an outcome as possible.

The use of the grand mean to classify standardising and localising companies was very clear-cut. We particularly ? companies 3,10 and 46 which standardised most of their nineteen marketing programme variables. Company 3 is a consumer durables company involved in educational products selling their ranges in the same way everywhere, company 10 is also a consumer durables firms involved in jewellery, with most of their marketing programme standardised except for pricing and related issues. Company 61, involved in construction contract, localised most of their marketing programme except for some standardised promotion variables.

4.2 MULTI-FACTOR DISCRIMINATING VARIABLES EXPLAINING THE DEGREE OF MARKETING PROGRAMME STRATEGIES BETWEEN THE UK AND GULF

The grand mean for the nineteen marketing programme variables was used to classify each company, and resulted in twenty-two companies with means of under 2.51 classified as identical or similar in marketing programme between the UK and GCC; twenty-nine companies with means of 2.51-3.50 as having some variation in marketing programme between the two areas, and twelve companies with means between 3.51- 5.00 as showing substantial variation in marketing programme. As a validity check cluster analysis was also used and it divided the sample into three parts and with a very similar classification, common in 86% of cases. Such commonality added to our confidence in using the grand mean for classification. We also used the grand mean to classify companies because it was in line with other studies for example, Sorenson and Wiechmann (1975); Akaah (1991) and Grosse and Zinn (1990). For subsequent discriminant analysis more standardised firms were coded 1, moderately adapting firms as 2 and substantially adapting firms as 3. The stepwise discrimanant analysis results are shown in Table 4.2, predicting group membership in 77.78 per cent of cases, and utilising only four of the forty-one variables to explain the variation in the data between the three groups. In terms of the model, three discriminating variables relate to the firm factors and one to the country factors. For the firm factors, “methods for analysing marketing situations”, “control of marketing decisions” and “control procedures”, all relating to process variables, were significant, while for the country factors “the market segment sought” was the differentiating variable.

Since we have three groups, two discriminant functions were calculated (Tables 4.3). The result was highly significant at the 0.001 level. The Wilks Lambda for function one is .3682607 which transforms to a chi-square of 58.4 with 8.0 degree of freedom; the second function has no correlation with the first and has a Wilks Lambda of .7625727 which transforms to a chi-square of 15.8 with 3.0 degree of freedom. Each of the three groups is strongly predicted, 83.3 per cent correct for group 1, 71.4 per cent for group 2 and 81.8 per cent for group 3 (compared with 33 per cent for mere chance). The first postulated HI, that Firm and Country variables will correlate with the overall degree of marketing mix programme standardisation ? by UK companies in the UK and when exporting to the GCC countries.

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Table 4.2 The stepwise discriminant analysis

Step Variable Wilk’s Lambda Significance Function

Coefficient 1Function

Coefficient 2

1Methods for

analysing MKT situation

.69739 .0000 .75319 .12929

2 Control of MKT decisions .55674 .0000 .43223 -1.31447

3 Control procedures .44796 .0000 .12442 1.28503

4 Market segment sought .36826 .0000 .57942 .22170

Table 4.3 Canonical discriminant functions

Fcn. Eigen. % of Var.

Cumula-tive %

Canonical correlation

After function

Wilks Lambda

Chi-square df Signifi-

cance

1* 1.0707 77.47 77.47 .7190835 0 .3682607 58.4 8 .0000

2* .31135 22.53 100.00 .4872652 1 .7625727 15.8 3 .0012

Also worth noting are some of the variables that did not feature in the discriminant analysis: there was no place for relative size of firm, nor for type of product, industrial or consumer.

4.3 PRODUCT VARIABLES MORE STANDARDISED WHILE OTHER MARKETING MIX VARIABLES MORE ADAPTED

Respondents rated the sixty variables on a 5-point Likert scale, with numbers between 1 and 2.50 indicating a high degree of standardisation, numbers between 2.51 and 3.50 indicating a moderate adaptation and numbers between 3.51 and 5 indicating localisation. We compared the percentage of all sixty-three firms rating the 60 variables either between 1 to 2.50, or 2.51 to 3.50 or 3.51 to 5, to emphasise the distinctive groups using different degrees of standardisation. The results are shown in Table 4.4.

Table 4.4 Percentage of Firms rating the sixty variables highly standardised, moderately adapted or localised (UK versus GCC)

Variables which rating have

high degree of standardisation *

Variables which rating

have moderate adaptation **

Variables which are rating

localised ***

% of firm rating % % of firm rating % % of firm rating %

1 Brand name 81 Rectification of conflict 59 Physical condition 94

2 Product warranties 73 Agreement on objectives 53 Customs and

traditions 94

3 Product characteristics 70 Communication system 49 Similarity of

market 83

4 Packaging 70 Organisational linkages 43 Legal system 83

5 Budget methods 65 Customer characteristics 78

6 Perceived British product 60 Culture 75

7 Guidelines or manuals 59 Market share 72

8 Integration of marketing function 59 Media structure 70

9 Decision making criteria 56 Marketing

infrastructure 68

10 Management thinking 56 Role of dealers 62

11 Basic advertising message 54 Potential

competition 59

12 Customer service 54 Intensity of competition 51

13 Decision making process 52 Type of retail

outlet 49

14 Authority on marketing policies 51 Channels of

distribution 48

15 Authority on distribution 51 Offer of price

discount 46

16 Formalisation of relations 48 Management of

sales force 46

17 Role of publicity 46 Sales promotion 4618 Role of sales force 43 Political stability 43

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19 Product life cycle 44 Similarity of competition 41

20 Creative expression 38 Pricing 41

21 Compatibility of product 37 Market segment 38

22 Media selection 35 Retail price 37

23Methods for analysing marketing situation and problems

35 Media selection 35

Percentages are rounded* % of all companies rating between 1 and 2.50

** of all companies rating between 2.51 and 3.50

*** of all companies rating between 3.51 and 5

4.4 HIGHLY STANDARDISED VARIABLES

Some of the results could be predicted from the literature, for example, five of the ten highly standardised variables were related to product strategy (respectively brand name, product warranties, packaging, product characteristics, and perceived quality of British products). Likewise, it could have been foreseen that the other five highly standardised variables would be associated with marketing authority/ control (budget methods, guidelines and manuals, integration of marketing function, and decision making process and criteria). Customer service and the basic advertising message were surprisingly subjects for standardisation.

4.5 MODERATELY ADAPTED VARIABLES

The four variables related to a moderately adapted variables, as can be seen from Table 4.4, were rectification of conflict, agreement on objectives, communication system and organisational linkages. These factors by their nature should be agreed between the HQs and agents if the relations are to be maintained and nurtured. We found these variables to have moderate adaptation, being a mix of centralised and decentralised marketing operations.

4.6 THE VARIABLES RELATED TO LOCALISATION

The nine variables connected with localisation concerned country factors. Three were related to target market (customs and traditions, consumer characteristics, similarity of market), 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 low degree of standardisation variables. Four variables related to channel strategy (types of retail outlet, channels of distribution, management of sales force and the role of middlemen). Promotions strategy variables mainly related to sales promotions (types of sales promotion). Evidence is thus provided to support HII, there will on average be a greater degree of standardisation by UK companies of product-related variables than of other marketing mix variables between the UK and when exporting to the GCC.

4.7 THE RELATIVE IMPORTANCE OF MARKETING PROGRAMME VARIABLES FOR ALL COMPANIES.

Table 4.5 offers the simplest direct comparison using all sixty-three UK companies concerning degree of marketing programme standardisation between the UK and GCC. For ease of presentation, they are summarised under four headings: product, price, distribution and promotion. Comparing the UK market and the GCC market, the table shows the GCC markets as one single market. While we could show the comparison between the UK and each individual GCC market, our finding indicates that UK companies treat the six GCC markets almost identically, so it is appropriate to treat them as a single market.

Table 4.5 Degree of standardisation of marketing programme mean score for all companies (UK versus GCC).

Variable Means * Standard . Dev

A. Product Activities 2.01 1.00

1. Product characteristics 2.10 1.20

2. Brand name 1.68 1.12

3. Packaging 2.22 1.44

4. Product warranties 2.04 1.44

B. Price Activities 3.12 1.11

1. Retail price 3.11 1.23

2. Pricing method 3.02 1.31

3. Offer of price discount 3.23 1.37

C. Distribution Activities 3.08 1.04

1. Type (s) of retail outlet 3.20 1.48

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2. Channel (s) of distribution 3.12 1.52

3. Role of sales force 2.89 1.37

4. Management of sales force 3.12 1.34

5. Role of middlemen dealers 3.64 1.44

6. Customer service 2.49 1.34

D. Promotion Activities 3.01 0.94

1. Advertising budget 3.39 1.34

2. Basic advertising message 2.57 1.15

3. Media selection 3.04 1.31

4. Sales promotion 3.17 1.21

5. Creative expression 3.04 1.30

6. Role of publicity 2.86 1.32

Marketing Programme 2.81 .71* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5: substantial

variation

To reiterate, a mean rating between 1 and 2.50 is considered a high degree of standardisation, a mean rating between 2.51 and 3.50 is interpretable as moderate adaptation and a mean rating between 3.51 and 5 is one indicating localisation. As the table indicates, there are different degrees of standardisation for different marketing programme activities and there is no clear pattern of standardisation, rather one of mixed usage. The highest degree of standardisation between the UK and GCC markets was a product activity rating of 2.01. Within product activities, we see different degrees of standardisation for different elements. For example, brand name showed a high degree of standardisation, almost identical to that used in the UK market, scoring 1.68, with product warranties 2.04, product characteristics (such as colour and design) scored 2.10, and packaging scored 2.22.

A moderate adaptation for marketing programme activities was shown by price scoring 3.12. Within price activities, different elements varied slightly. Pricing method showed a moderate adaptation, scoring 3.02, retail price scored 3.11, and offer of price discounts scored 3.23.

In terms of promotional activities, a score of 3.01 means moderate standardisation obtained, but among the promotion activities different degrees of standardisation were found. The advertising budget was somewhat different in GCC than in the UK. The basic advertising message was similar to that used in the UK, which means that a relatively standardised advertising message was used. Media selection, scoring 3.04, means it was modified somewhat to that used in UK. Sales promotion was broadly similar, scoring 3.17. The role of publicity was similar with a score of 2.86, and creative expression was broadly similar, scoring 3.04. Lastly, distribution activities showed moderate adaptation, scoring 3.08 but with different degrees of standardisation for different elements of distribution. Customer service was highly standardised, rating 2.49, and the role of the sales force was 2.89, showing a moderate adaptation. Channels of distribution and management of the sales force show moderate adaptation, scoring 3.12 each, and the role of middlemen dealer was more localised with a score of 3.64.

To conclude, product activities were highly standardised between the UK and GCC markets. The other marketing programmes, however, showed moderate adaptation, with price the most adapted, followed by distribution and promotion.

It came as a surprise that the marketing programme seems to be standardised-to-moderate adaptation by UK companies in the GCC market. It was broadly similar to that found in the UK market, with only some variations. The surprise was that in the literature the balance of the argument was that multinational companies would standardise their product offerings, but would adapt other marketing programmes such as distribution, price, and promotion. All these seem to show more moderate adaptation.

From Table 4.5, we can notice that some of the variables show high standard deviations suggesting a spread of data from the mean. To overcome this problem we will use the frequency distribution (Table 4.6) which shows the overall frequency and percentage for each variable.

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Table 4.6 Degree of Standardisation of Marketing Programme of UK Companies in the GCC

High standardisation

Moderately adapted Localisation

No. % No. % No. %

Product Characteristic 44 69.8 9 14.3 10 15.9

Brand Name 51 81 7 11.1 5 8

Packaging 44 69.8 5 7.9 14 22.2

Product Warranties 46 73 5 7.9 12 19

Product Activities 48 76.2 10 16 5 8

Retail Price 18 28.2 23 36.5 22 34.9

Pricing Methods 24 38.1 13 20.6 26 41.3

Offer of Price Discount 26 31.7 14 22.2 29 46

Price Activities 16 25.4 24 38 23 36.4

Type of Retail Outlets 22 34.9 10 15.9 31 49.3

Channels of Distribution 24 38.1 9 14.3 30 47

Role of Sales Force 27 42.9 13 20.6 23 36.5

Management of Sales Force 22 34.9 12 19.1 29 46.1

Role of Dealer 15 23.8 9 14.3 39 61.9

Customer Services 43 54 12 19.1 17 26.9

Distribution Activities 16 25 25 40 22 35.1

Advertising Budget 18 28.6 12 19 33 52.4

Advertising Message 32 50 16 25.4 15 23.9

Media Selection 22 34.9 19 30.2 22 35

Sales Promotion 19 30.2 15 23.8 29 46

Creative Expression 25 39.7 13 18.7 25 39.7

Role of Publicity 29 46 13 20.6 21 33.4

Promotion Activities 17 27 26 41.3 20 31.8

MARKETING PROGRAMME 22 34.9 28 48 13 17.6

High standardisation = mean 1-2.50 Moderate adaptation = 2.51-3.50

Localisation = 3.51-5

Table 4.6 shows the frequency and percentage of companies rating the degree of standardisation of marketing programme variables by standardisation, moderate adaptation and localisation. For product characteristics, 69.8% of the companies highly standardised, 14.3% moderately adapted it and 15.9% localised, indicating that most companies highly standardised their product characteristic. For brand name, 81% of companies standardised the brand name, 11.1% moderately adapted and 8% changed their brand name.

Packaging: 69.8% of companies highly standardised their packaging, 7.9% moderately adapted and 22.2% changed their packaging.

Product warranties: 73% of companies highly standardised their product warranties, 7.9% moderately adapted it and 19% used different product warranties.

From these frequencies we can see that 76.2% of companies standardised their product offering, supporting our argument that the majority of companies highly standardised their product offering.

Retail price: 36.5% moderately adapted and 28.2% highly standardised. 34.9% of companies localised the retail price. From this we can see that the majority (71.4%) of companies change their retail price.

Pricing methods: 41.3% of companies changed their pricing methods, 20.6% moderately adapted and 38.1% of companies highly standardised their pricing methods. From this, we found that the majority 61.9%, of companies changed or moderately changed their pricing methods.

Offer of price discount: 46% of companies changed their offer of price discount, 20.6% moderately adapted and 31.7% highly standardised. From this frequency we see that 66.6% of companies change or moderately change their offer of price discount.

From these frequencies we can see that the majority of companies 74%% moderately adapted or localised their pricing activities, supporting our argument that the majority of companies adapt their pricing.

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Type of retail outlets: 49.3% of companies changed their retail outlet, 15.9% moderately adapted it and 34.9% highly standardised. From this frequency we can see that 65.2% change their retail outlets to some extent.

Channel of distribution: 47% of companies used different channel of distribution, 14.3% moderately adapted and 38.1% used highly standardised channels of distribution. From this frequency we see that 61.3% moderately adapted or changed their channels of distribution.

Role of sales force: 42.9% of companies highly standardised the role of the sales force, 20.6% moderately adapted and 36.5% changed the role of the sales force. From this frequency we can see that 57.1% changed or moderately adapted the role of the sales force.

Management of the sales force: 46.1% of companies changed the management of the sales force, 19.1% moderately adapted and 34.9% highly standardised. From this frequency we can see that 65.2% of companies moderately adapted or changed the management of the sales force.

Role of dealer: 61.9% of companies changed the role of the dealer, 14.3% moderately adapted it and 23.8% highly standardised the role of dealer. From this frequency we can see that 76.2% moderately adapted or changed the role of the dealer.

Customer service: 54% of the companies highly standardised their customer service, 19.1% moderately adapted and 26.9% changed their customer service, showing that the majority of companies are standardising customer services.

From these frequencies, we may note that the majority of companies 75% moderately adapted their distribution activities.

Advertising budget: 52.4% of companies changed their advertising budget, 19% moderately adapting. Thus 71.4% moderately or substantially adapt their advertising budget.

Advertising message: 50% of companies highly standardised their advertising message, 25.4% moderately adapted and 23.9% changed their advertising message substantial.

Media selection: 35% of companies changed their media selection, 30.2% moderately adapted it and 34.9% used highly standardised media selection. From this frequency we can see that 60.2% moderately adapted or change their media selection.

Sales promotion: 46% of companies changed their sales promotion, 23.8% moderately adapted and 30.2% used highly standardised sales promotion. From this frequency we may note that 69.8% moderately adapted or changed their sales promotion.

Creative expression: 39.7% of companies highly standardised their advertising creative expression, 18.7% moderately adapted and 39.7% changed the creative expression. Therefore 58.3% changed or moderately adapted the creative expression.

Role of publicity: 46% of companies highly standardised the role of publicity, 20.6%

moderately adapted it and 33.4% changed the role of publicity.

From these frequencies we may see that the majority of companies 75% moderately adapted or changed their promotional activities.

?? summaries

4.8 COMPARISON OF MARKETING PROGRAMME VARIABLES BY THE NATURE OF BUSINESS

The section above has dealt with marketing programme variables for all the sixty-three UK companies but Table 4.7 shows the degree of marketing programme standardisation by type of company, whether consumer or industrial. By comparing the means, we may see clearly that product offering is highly standardised, consumer companies scoring 1.96 and industrial companies scoring 2.06. This means that there

is not much difference in the product offering between consumer and industrial companies. There is no difference in product characteristics between UK and the GCC markets for either consumer or industrial companies, but packaging shows slight differences between the two areas. In terms of price offering in the two markets, there is no difference: both consumer and industrial companies score a moderate adaptation (3.12). In distribution offering, both show a moderate adaptation with consumer scoring 3.15 and industrial scoring 3.01. The biggest difference was in the channel of distribution. UK companies use to some extent different channels of distribution in the GCC markets than those used in the UK market. In promotion, consumer companies score 3.04, whereas industrial companies score 2.99, indicating no difference between the two types of company. Thus, both consumer and industrial companies are using a moderately adapted promotion programme, between standardised and localised. We conclude from Table 4.7 that there is no important difference between consumer and industrial companies in their marketing programme offering in the GCC and UK market.

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Table 4.7 Level of degree of standardisation of marketing programme mean score of consumer and industrial companies

Consumer firms Industrial firms

Marketing Programme Means * Standard. Dev Means * Standard.

Dev

A. Product Activities 1.96 .95 2.06 1.05

1. Product characteristics 2.11 1.15 2.10 1.26

2. Brand name 1.60 1.08 1.75 1.16

3. Packaging 2.18 1.46 2.25 1.45

4. Product warranties 1.95 1.41 2.12 1.47

B. Price Activities 3.12 1.02 3.12 1.21

1. Retail price 3.13 1.16 3.09 1.31

2. Pricing method 2.95 1.25 3.09 1.38

3. Offer of price discount 3.29 1.31 3.18 1.45

C. Distribution Activities 3.15 1.12 3.01 .98

1. Type (s) of retail outlet 3.27 1.47 3.14 1.51

2. Channel (s) of distribution 3.34 1.51 2.92 1.52

3. Role of sales force 2.91 1.40 2.86 1.37

4. Management of sales force 3.11 1.39 3.14 1.31

5. Role of middlemen dealers 3.59 1.52 3.68 1.37

6. Customer service 2.66 1.34 2.33 1.34

D. Promotion Activities 3.04 .80 2.99 1.06

1. Advertising budget 3.31 1.31 3.46 1.38

2. Basic advertising message 2.82 1.14 2.33 1.14

3. Media selection 3.04 1.26 3.05 1.38

4. Sales promotion 3.12 1.07 3.21 1.34

5. Creative expression 3.12 1.36 2.97 1.26

6. Role of publicity 2.82 1.17 2.91 1.47

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5: substantial

variation.

4.9 THE DEGREE OF STANDARDISATION IS NOT RELATED TO FIRM'S INDUSTRIAL TYPE

The discriminant analysis did not feature type of industry (consumer or industrial product) as a discriminating variable between highly standardised, moderately adapted and localised companies. This result is confirmed by the raw means and the t-test for the two types of consumer products (consumer durable and non-durable) and three types of industrial products (electrical/electronic, basic and engineering products, and construction/building products) used in the sample (Tables 4.8,4.9,4.10,4.11, 4.12 and 4.13). The overall picture is one of similarity rather than divergence, although there were differences. For example, industrial companies were slightly more centralised for delegation of authority and HQ relations with agents than consumer firms, but all exhibited a centralised/decentralised mix. On country factors, each type had almost identical means, except for electrical/electronics being more standardised on market position variables. On marketing programmes, the main differences were between two industrial subgroups, industrial/engineering and construction /building, primarily because the former was more standardised in distribution strategy.

Table 4.8 Level of standardisation of firm and country variables by nature of business (mean scores for different companies)

Type of company All Cons. D

Cons. ND Elec Ind/Eng. Construction

The sample (n) 63 16 14 10 11 12

Variables

Corporate orientation 2.67 2.76 2.52 2.71 2.55 2.78

Marketing policies 2.49 3.05 2.54 2.22 1.82 2.85

Distribution decisions 3.19 2.69 4.10 2.72 3.26 2.67

Methods for analysing marketing situation

2.92 2.65 2.43 3.50 2.94 3.32

Management thinking in terms of serving

2.32 2.65 1.82 2.40 2.27 2.42

Integration of MKT functions

2.41 2.63 1.71 2.70 2.45 2.67

Delegation of authority 2.45 2.73 2.11 2.38 2.14 2.82

Decision making process 2.59 2.58 2.14 2.73 2.58 3.03

Decision making criteria 2.65 2.76 2.21 2.60 2.91 2.83

Authority to make marketing decisions

2.34 2.66 1.86 1.93 2.12 3.01

Control procedures 2.33 2.69 2.00 2.32 1.65 2.86

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Budget methods 2.36 2.88 2.00 2.70 1.70 2.43

Control of marketing decisions

2.42 2.84 2.43 1.97 1.88 2.75

Relationships 2.74 2.92 2.92 2.59 2.55 2.61

Rectification of conflict 2.83 2.95 3.10 2.62 2.68 2.67

Formalisation of relations 2.49 2.80 2.76 2.52 1.92 2.25

Communication system 3.06 3.21 3.29 2.77 1.92 2.92

Agreement on objectives 2.76 2.80 3.46 2.32 2.95 2.47

Development of organisation linkages

2.94 3.07 2.99 3.10 3.20 2.33

Manuals and guidelines 2.39 2.71 1.93 2.23 2.00 3.00

Firm Factor * (Average) 2.62 2.81 2.52 2.56 2.41 2.74

Target market 3.99 4.03 4.13 4.03 3.70 4.02

Market segment sought 3.07 3.23 3.44 2.90 2.33 3.25

Consumer characteristics 4.06 4.06 4.21 3.98 3.97 4.04

Customs and tradition 4.58 4.53 4.88 4.85 4.12 4.49

Similarity of market 4.25 4.28 3.98 4.40 4.36 4.29

Market position 3.27 3.41 3.43 2.90 3.22 3.27

Product life cycle 2.89 2.94 3.26 2.08 2.91 3.03

Culture 4.20 4.31 4.10 4.27 4.39 3.96

Compatibility of product 2.83 2.90 2.93 2.60 2.91 2.75

Perceived quality of British product

2.34 2.38 2.36 2.10 2.61 2.24

Similarity of competition 3.10 3.33 3.40 2.48 2.74 3.31

Level of intensity of competition

3.38 3.54 3.71 2.75 3.15 3.49

Level of potential competition

3.54 3.74 3.67 3.43 3.18 3.54

Company market share 3.90 4.15 4.02 3.47 3.85 3.83

Environment 4.03 3.97 4.08 4.12 4.08 3.91

Media structure 3.94 4.19 3.77 3.78 4.17 3.72

Political stability 3.22 2.98 3.67 3.47 3.09 2.94

Physical conditions 4.77 4.57 4.90 4.85 4.82 4.75

Marketing infrastructure 3.87 3.92 3.71 3.97 4.00 3.79

Legal system 4.34 4.19 4.36 4.53 4.35 4.36

Country factors * (Average)

3.76 3.80 3.88 3.68 3.67 3.73

* using 5-point scale, 1: Highly centralised 2: Mainly centralised 3: Mix 4: Mainly decentralised 5:

Highly decentralised

Table 4.9 Level of standardisation of marketing programme variables by nature of business mean score of different companies

Type of company All Cons. D

Coms. ND Elec Ind/

Eng. Construction

The sample (n) 63 16 14 10 11 12

Variables

Product activities (Average) 2.01 1.86 2.08 1.94 1.83 2.36

Product characteristics 2.10 2.20 2.00 2.25 1.53 2.50Brand name 1.68 1.53 1.68 1.68 1.80 1.76Packaging 2.22 1.60 2.85 2.32 2.09 2.35Product warranties 2.04 2.10 1.79 1.50 1.91 2.83Price activities (Average) 3.12 3.21 3.02 2.87 3.09 3.36

Retail price 3.11 3.24 3.00 2.90 3.00 3.33Pricing methods 3.02 3.09 2.79 2.90 2.91 3.42Offer of price discount 3.23 3.29 3.29 2.80 3.36 3.33Distribution activities (Average) 3.08 2.97 3.35 3.29 2.49 3.27

Type of retail outlets 3.20 3.03 3.55 3.77 2.47 3.24Channels of distribution 3.12 3.04 3.69 3.25 2.64 2.92Role of sales force 2.89 2.78 3.06 3.15 2.45 3.00Management of sales force 3.12 2.97 3.27 3.45 2.55 3.42

Role of middlemen 3.64 3.46 3.74 3.70 3.00 4.29Customer services 2.49 2.53 2.81 2.40 1.82 2.75Promotion activities (Average) 3.01 3.00 3.08 2.92 2.96 3.07

Advertising budget 3.39 3.39 3.23 3.10 3.33 3.89Basic advertising message 2.57 2.69 2.98 2.10 2.64 2.25

Media selection 3.04 3.03 3.05 2.90 2.91 3.29Sales promotion 3.17 3.06 3.19 3.30 2.82 3.50Creative expression 3.04 3.10 3.15 3.20 3.09 2.67Role of publicity 2.86 2.74 2.90 2.90 3.00 2.83MKT programme * (Average) 2.81 2.76 2.88 2.75 2.59 3.02

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5: substantial

variation

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As we saw from the discriminant analysis, the type of industry did not feature as a discriminant variable, and when examined, the raw means of consumer and industrial companies again did not reveal major differences between the two types of company. Therefore, t-test will be used to see if there is any significant difference between consumer and industrial companies.

4.9.1 T-TEST ON FIRM AND COUNTRY VARIABLES

Table 4.10 shows clearly that there is not much difference between consumer and industrial companies in their firm and country factors, from which it can be argued that the probability for all the variables except three (methods of analysing marketing situation and problems, integration of marketing function and custom and tradition) is greater than 0.05. Therefore, the differences between consumer and industrial companies are not significant.

Table 4.10 T-test between consumer and industrial companies on firm and country variables

Variables Significance level (P)

Corporate orientation (Average) .670Marketing policies .850Distribution decisions .727Methods for analysing marketing situation .023Management thinking in terms of serving .491Integration of marketing functions .048Delegation of authority .216Decision making process .315Decision making criteria .363Authority to make marketing decisions .452Control procedures .662Budget methods .760Control of MKT decisions .052Relationships .564Rectification of conflict .247Formalisation of relations .614Communication system .245Agreement on objectives .997Development of organisation linkages .775

Manuals and guidelines .412Firm Factor .889Target market .987Market segment sought .534Consumer characteristics .463Customs and tradition .025Similarity of market .767Market position .684Product life cycle .176Culture .527Compatibility of product .209Perceived quality of British product .955Similarity of competition .987Level of intensity of competition .564Level of potential competition .353Company market share .162Environment .746Media structure .366Political stability .978Physical conditions .223Marketing infrastructure .355Legal system .927Country factors .129

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4.9.2 T-TEST ON MARKETING PROGRAMME VARIABLES

Table 4.11 T-test between consumer and industrial companies on marketing programme variables

Variables Significance level (P)Product activities .734Product characteristics .819Brand name .656Packaging .975Product warranties .746Price activities .167Retail price .250Pricing methods .293Offer of price discount .398Distribution activities .349Type of retail outlets .734Channels of distribution .924Role of sales force .684Management of sales force .736Role of middlemen .362Customer services .941Promotion activities .144Advertising budget .713Basic advertising message .873Media selection .715Sales promotion .029Creative expression .702Role of publicity .027MKT programme .849

Table 4.11 shows the t-test results between consumer and industrial companies on the marketing programme variables. As can be seen, the probability for all the variables except two (sales promotion and role of publicity) are greater than 0.05, and therefore the differences between consumer and industrial companies in marketing programme are not significant.

In Table 4.10 and 4.11, the t-test of all the sixty variables for consumer and industrial show that no significant differences exist between the two types of company.

In the following tables, the t-test results will be shown for all the companies: two types of consumer products (consumer durable and non-durable) and three types of industrial products (electrical/electronic, basic and engineering products, and construction/building products).

Table 4.12 T-test of firm and country variables for different types of company

Type of company Cd & Cnd

Cd & Elect.

Cd & Eng

Cd & Con

Cnd&Elect.

Cnd&Eng.

Cnd&Const

Variables Significance level (P)Corporate orientation .406 .936 .909 .854 .527 .347 .567Marketing policies .703 .882 .827 .157 .835 .591 .066Distribution decisions .012 .274 .370 .352 .244 .209 .187Methods of analysing marketing situation .626 .392 .343 .104 .235 .197 .051

Management thinking in terms of serving .463 .102 .267 .418 .291 .595 .843

Integration of marketing functions .319 .186 .284 .086 .058 .091 .022

Delegation of authority .971 .666 .066 .221 .699 .132 .322Decision making process .646 .493 .859 .043 .888 .780 .082Decision making criteria .592 .511 .862 .279 .917 .553 .222Authority to make marketing decisions .016 .483 .331 .424 .234 .293 .188

Control procedures .062 .979 .042 .874 .117 .922 .046Budget methods .927 .006 .289 .533 .022 .451 .554Control of marketing decisions .317 .853 .131 .515 .218 .009 .070Relationships .817 .886 .664 .826 .735 .507 .648Rectification of conflict .505 .696 .919 .826 .271 .407 .249Formalisation of relations .280 .369 .774 .316 .917 .431 .907Communication system .062 .093 .334 .034 .915 .461 .681Agreement to objectives .129 .387 .127 .817 .550 .767 .190Development of organisation linkages .282 .710 .109 .485 .202 .571 .570

Manuals and guidelines .448 .783 .763 .985 .362 .688 .471Firm Factor .648 .726 .855 .660 .998 .824 .983Target market .405 .930 .775 .168 .559 .388 .561Market segment sought .506 .058 .239 .527 .200 .637 .226

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Consumer characteristics .695 .538 .727 .079 .787 .955 .036Customs and tradition .000 .006 .028 .644 .499 .001 .000Similarity of market .638 .887 .581 .828 .619 .987 .566Market position .463 .531 .781 .427 .984 .691 .118Product life cycle .586 .764 .108 .977 .504 .305 .703Culture .355 .388 .943 .154 .987 .426 .731Compatibility of product .131 .510 .739 .646 .051 .093 .328Perceived quality of British product .715 .390 .476 .872 .254 .707 .578

Similarity of competition .265 .215 .828 .430 .657 .130 .856Level of intensity of competition .798 .848 .317 .444 .974 .488 .648

Level of potential competition .608 .659 .762 .895 .341 .434 .458Company market share .663 .044 .641 .554 .157 .999 .897Environment .430 .955 .925 .718 .462 .430 .646Media structure .138 .248 .383 .431 .813 .736 .661Political stability .885 .713 .717 .952 .618 .639 .944Physical condition .001 .037 .028 .067 .391 .170 .023Marketing infrastructure .186 .426 .605 .830 .688 .095 .153Legal system .682 .405 .858 .829 .563 .581 .559Country factors .212 .584 .743 .189 .050 .548 .004

cd= Consumer durable companies cnd= Consumer non-durable companies

elec=electronic companies eng= engineering companies Cons = construction companies

Table 4.12 shows the t-test result between consumer durable companies and other types of companies, including consumer non-durable, electronic, engineering, and construction companies. It also shows the t-test between consumer non-durable companies and electronic, engineering and construction companies for each of the firm and country factors. The table shows clearly whether there are any significant differences between these companies in terms of firm and country factors, provided that the variables show a probability less than 0.05, meaning there is no significant difference. For example, for distribution decisions, budget methods, customs and traditions and physical conditions, between consumer durable and consumer non-durable companies the test shows a probability of less than 0.05. Comparing consumer durables and electronic companies, there were differences in budget methods, customs and traditions, company market share, and physical conditions. Between consumer durable and construction companies, there were two differences: the decision making

process and communication system. In t-tests between consumer non-durable and electronic companies significant differences were found for only one variable, namely budget methods. Consumer non-durable and engineering companies showed significant differences in customs and traditions. For consumer non-durable and construction companies, significant differences were found in the following variables: integration of marketing functions, consumer characteristics, customs and traditions and physical conditions. These differences in firm and country factors could be expected since different companies will have, to some extent, different firm and country conditions. To conclude, the t-tests between these types of companies show much greater similarities than differences.

Table 4.13 T-test for marketing programme variables of different types of company

Types of company Cd & Cnd

Cd & Elect.

Cd & Eng

Cd & Con

Cnd & Elect.

Cnd & Eng

Cnd& Const.

Variables Significance level (P)Product activities .896 .636 .689 .809 .632 .856 .765Product characteristics .908 .606 .029 .646 .677 .026 .731

Brand name .308 .400 .447 .502 .970 .727 .800Packaging .000 .016 .671 .047 .654 .023 .334Product warranties .475 .189 .409 .695 .601 .959 .358Price activities .679 .372 .126 .238 .696 .367 .546Retail price .896 .310 .305 .467 .491 .502 .664Pricing methods .734 .353 .572 .892 .268 .412 .846Offer of price discount .532 .667 .774 .410 .896 .388 .181

Distribution activities .178 .877 .834 .821 .153 .128 .256

Type of retail outlets .869 .777 .241 .382 .884 .155 .455

Channel of distribution .296 .492 .750 .443 .819 .167 .940

Role of sales force .554 .349 .939 .706 .703 .483 .803Management of sales force .092 .184 .994 .873 .885 .077 .047

Role of middlemen .165 .298 .500 .005 .835 .562 .118Customer services .806 .573 .304 .973 .745 .231 .803Promotion activities .063 .141 .850 .454 .004 .092 .264

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Advertising budget .068 .501 .309 .055 ..028 .506 .733Basic advertising message .584 .758 .244 .412 .889 .572 .197

Media selection .815 .658 .902 .631 .775 .940 .766Sales promotion .219 .264 .583 .854 ..023 .067 .110Creative expression .763 .644 .745 .523 .846 .545 .342Role of publicity .313 .018 .080 .183 .147 .450 .770

MKT programme .498 .203 .729 .894 .500 .326 .646

cd= Consumer durable companies cnd=Consumer non-durable companies elec= electronic

companies eng= engineering companies Cons= construction companies

In Table 4.13 t-tests for marketing programme variables are shown for consumer durable companies and other types of company, including consumer non-durable, electronic, engineering, and construction companies. In Table 4.14, the t-test for the same companies will be presented for the firm and country variables. Table 4.13 indicates clearly that there are no significant differences between these companies in terms of marketing programme variables. All show probabilities greater than 0.05, except for packaging, which shows a significant difference between consumer durables and consumer non-durables, and construction companies. The role of publicity between consumer durable and electronic companies shows significant differences. Equally, there is a statistically significant differences between consumer durable and construction companies on the role of middlemen.

4.14 T-test of firm and country variables for different types of company

Types of company Elec & Eng

Elec & Cons Eng & Cons

Variables Significance level (P)Corporate orientation .860 .934 .778Marketing policies .748 .140 .338Distribution decisions .890 .880 .996Methods of analysing marketing situation .959 .584 .614

Management thinking in terms of serving .689 .471 .770

Integration of marketing functions .846 .812 .654Delegation of authority .011 .064 .462Decision making process .634 .042 .047Decision making criteria .474 .173 .358

Authority to make marketing decisions .863 .992 .855

Control procedures .069 .868 .013Budget methods .000 .050 .125Control of marketing decisions .113 .592 .225Relationships .817 .967 .812Rectification of conflict .720 .950 .742Formalisation of relations .512 1.000 .459Communication system .546 .632 .297Agreement on objectives .450 .508 .178Development of organisation linkages .081 .290 .150

Manuals and guidelines .610 .811 .765Firm Factor .866 .989 .855Target market .772 .301 .222Market segment sought .292 .022 .080Consumer characteristics .884 .034 .124Customs and tradition .012 .001 .065Similarity of market .519 .944 .480Market position .739 .162 .283Product life cycle .157 .806 .234Culture .460 .773 .229Compatibility of product .724 .275 .450Perceived quality of British product .175 .433 .342Similarity of competition .138 .614 .299Level of intensity of competition .515 .657 .762Level of potential competition .903 .712 .834Company market share .137 .191 .891Environment .976 .705 .672Media structure .899 .829 .937Political stability .978 .700 .712Physical conditions .847 .431 .451Marketing infrastructure .236 .348 .769Legal system .375 .364 .975Country factors .476 .401 190

cd= Consumer durable companies cnd= Consumer non-durable companies elec= electronic

companies eng= engineering companies Cons= construction companies

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In Table 4.14, the t-test for firm and country factors is shown for electronic, engineering and construction companies. As can be seen, all the variables show probabilities greater than 0.05 between all the companies, except budget methods and customs and tradition between electronic and engineering companies, which show perceptible differences. The market segment sought shows differences between electronic and construction companies. Engineering and construction companies show a probability of less than 0.05 in two variables, namely, decision making process and control procedures. Therefore, these companies are similar rather than different in their approaches towards standardisation between the UK and the Gulf.

Table 4.15 T-test for marketing programme variables of different types of company

Type of company Elec & Eng Elec & Cons Eng & Cons

Variables Significance level (P)Product activities .494 .841 .610Product characteristics .078 .889 .026Brand name .793 .855 .956Packaging .138 .687 .244Product warranties .617 .158 .299Price activities .614 .856 .722Retail price .932 .710 .750Pricing methods .667 .325 .499Offer of price discount .501 .270 .594Distribution activities .960 .695 .650Type of retail outlets .156 .605 .032Channels of distribution .333 .918 .322Role of sales force .245 .492 .594Management of sales force .156 .108 .845Role of middlemen .736 .098 .051Customer services .157 .597 .375Promotion activities .298 .047 .436Advertising budget .145 .029 .381Basic advertising message .541 .352 .045Media selection .772 .966 .750Sales promotion .537 .287 .664Creative expression .473 .293 .772

Role of publicity .448 .211 .615MKT programme * .113 .322 .672

cd= Consumer durable companies cnd= Consumer non-durable companies elec= electronic companies eng= engineering companies Cons= construction companies

In Table 4.15 the t-tests for marketing programme variables are demonstrated, showing a probability for all the variables greater than 0.05, hence no significant differences between electronic, engineering and construction companies in their marketing programme strategies between the UK and GCC. But, for engineering and construction companies two variables (product characteristics and type of retail outlet) show probability of less than 0.05, indicating great differences between these two types of company in only these variables.

From the t-test it was clear that the degree of standardisation was not related to the firm’s manufacturing type.

The above analysis clearly indicates that the degree of standardisation is related to within-firm variables and methods of operation and not to the manufacturing type. Hypothesis H (III) there will on average be higher degrees of standardisation in terms of marketing programme by UK companies producing industrial goods than by UK companies producing consumer goods, between the UK and GCC, is therefore not supported.

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4.10 UK FIRMS COULD BE CHARACTERISED AS TAKING A CLUSTER APPROACH TOWARDS STANDARDISATION IN THE GULF STATES

Part of the main (stage One) questionnaire requested British HQ respondents to compare their standardisation strategies within the Gulf States, by relating strategies for Saudi Arabia with those for each of the other five GCC states, using a 5-point Likert scale (1: identical; 5: substantial variation) for firm and country factors across thirty-four variables and a 5-point Likert scale (1: identical; 5: substantial variation) for marketing programme factors across nineteen variables. These fifty-three variables are common to the whole study. Tables 4.16 and 4.17 show the results for Saudi Arabia compared with the other GCC countries, namely, Kuwait, Qatar, Bahrain, Oman and UAE.

Table 4.16 indicates that there were no really significant differences in strategies towards Saudi Arabia and other GCC countries by UK companies. Fifteen variables related to firm and country factors achieved a mean rating of between 1.00 and 2.00 (identical or similar for country factors) and ten variables a rating between 2.01 and 3.00 (some variation for firm and country factors).

Regarding marketing programme variables (Table 4.17) twelve of these showed ratings between 1.00 and 2.00 (identical or similar) and seven showed some variation in ratings between 2.00 and 3.00.

The general picture is, therefore, one of high levels of standardisation with only minor adaptations of UK firms' strategies towards the different Gulf countries. We may conclude that British firms treat the Gulf states primarily as a single market area, taking a similar overall marketing strategy across the six GCC markets, using Saudi Arabia as the reference, since it is the largest in the region and has more influence on other GCC countries. Hypothesis IV, that UK companies will in general adopt a policy of clustered standardisation of the marketing mix programme within the Gulf States, with only minor variations between Gulf countries.

Table 4.16 Comparison of firm and country variables of UK companies in Saudi Arabia and other GCC countries

Variables Kuwait Qatar Bahrain Oman UAE

Corporate orientation (Average) 1.79 1.84 1.88 1.79 1.87Methods of analysing marketing situation 1.85 1.85 1.90 1.80 1.92

Management thinking in terms of serving 1.72 1.75 1.80 1.72 1.74

Integration of marketing functions 1.80 1.92 1.95 1.85 1.95Delegation of authority (Average) 1.93 1.97 1.97 1.93 1.96Decision making process 1.95 1.95 1.98 1.92 2.03Decision making criteria 1.87 1.97 1.97 1.93 1.97Authority to make marketing decisions 2.08 2.13 2.10 2.03 2.05

Control procedures 1.95 1.98 1.92 1.90 1.92Budget methods 1.77 1.85 1.83 1.84 1.79Control of marketing decisions 1.93 1.93 2.00 1.93 1.98Firm Factor (Average) 1.86 1.90 1.92 1.86 1.91Target market (Average) 2.23 2.43 2.58 2.49 2.45Market segment sought 1.77 1.92 2.03 1.87 1.85Consumer characteristics 2.21 2.35 2.59 2.46 2.58Customs and tradition 2.20 2.37 2.71 2.57 2.63Similarity of market 2.75 3.08 2.97 3.05 2.74Market position (Average) 2.20 2.29 2.30 2.29 2.30Product life cycle 1.82 1.90 1.93 2.00 1.95Culture 2.20 2.25 2.56 2.43 2.53Compatibility of product 1.89 1.93 1.98 1.89 1.95Perceived quality of British product 1.74 1.80 1.85 1.84 1.85Similarity of competition 2.44 2.55 2.42 2.49 2.55Level of intensity of competition 2.21 2.40 2.32 2.39 2.32Level of potential competition 2.31 2.42 2.31 2.38 2.29Company market share 3.00 3.10 3.02 2.92 2.95Environment (Average) 2.53 2.48 2.57 2.52 2.57Media structure 2.84 2.70 2.98 2.92 3.03Political stability 2.70 2.33 2.32 2.36 2.31Physical conditions 2.21 2.23 2.34 2.26 2.35Marketing infrastructure 2.44 2.63 2.54 2.51 2.53Legal system 2.48 2.48 2.64 2.57 2.61Country factors * (Average) 2.32 2.40 2.48 2.43 2.44

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5:

substantial variation

Table 4.17 Comparison of marketing programme variables of UK companies in Saudi Arabia and other GCC countries

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Variables Kuwait Qatar Bahrain Oman UAE

Product activities (Average) 1.55 1.59 1.60 1.56 1.57Product characteristics 1.54 1.60 1.73 1.56 1.58Brand name 1.56 1.57 1.53 1.56 1.53Packaging 1.64 1.70 1.64 1.67 1.65Product warranties 1.44 1.50 1.51 1.46 1.52Price activities (Average) 2.09 2.10 2.11 2.09 2.11Retail price 2.16 2.17 2.17 2.16 2.16Pricing methods 2.07 2.08 2.07 2.08 2.06Offer of price discount 2.03 2.05 2.08 2.03 2.10Distribution activities (Average) 2.09 2.10 2.08 2.12 2.03Type of retail outlets 2.35 2.32 2.34 2.30 2.24Channel of distribution 2.13 2.27 2.20 2.21 2.11Role of sales force 1.93 1.95 1.97 2.05 1.94Management of sales force 1.95 2.05 1.95 2.03 1.93Role of middlemen 2.30 2.23 2.27 2.31 2.23Customer services 1.72 1.80 1.76 1.80 1.76Promotion activities (Average) 1.97 2.01 2.07 2.02 2.05Advertising budget 2.44 2.52 2.56 2.46 2.47Basic advertising message 1.82 1.85 1.88 1.85 1.84Media selection 1.93 2.00 2.03 2.00 2.00Sales promotion 1.93 2.00 2.05 2.00 2.06Creative expression 1.89 1.93 2.05 1.97 2.08Role of publicity 1.80 1.77 1.83 1.82 1.87MKT programme * (Average) 1.95 1.95 1.96 1.95 1.94

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5:

substantial variation

4.11 UNDERLYING MARKETING ORIENTATION FACTORS CORRELATING WITH TO THE DIFFERING DEGREES OF ADAPTATION

Factor analysis was applied separately for standardised, moderate adaptation and localised, using the forty-one variables relating to firm and country factors. The results are shown in Tables 4.18,4.19 and 4.20.

Table 4.18 Factor analysis for high degree of standardisation

Factor Loading

Factor 1 Marketing Control ( 15.4 % variance)

Control Procedures .94961

Guidelines or manuals .94832

Control of marketing decisions .93457

Budget methods .92840

Authority to make marketing decisions .83830

Management thinking in terms of serving needs .60208

Factor 2 Marketing Environment ( 13.1% variance)

Customs and tradition .88204

Consumer characteristics .78913

Physical conditions .76620

Level of political stability .53797

Factor 3 Effective relations (11.6% variance)

Marketing policies .93835

Communication system .67969

Perceived quality of British products -.60735

Formalisation of relations .47175

Factor 4 Firm characteristics (10.1% variance)

Firm manager’s attitude .76684

Firm size .73868

No. of years in the GCC market .73297

Intensity of competition -.61843

Factor 5 Marketing situation (6.7% variance)

Methods of analysing marketing situation .85175

Type of product .75001

Factor 6 Culture ( 5.2% variance)

Culture .89995

Rectification of conflict .51328

Factor 7 Competition (5.0% variance)

Level of potential competition .83188

Similarity of competition .78671

% of sales in the GCC .61333

Factor 8 Legal environment ( 5.0% variance)

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Legal system .82570

Decision making criteria -.63957

Factor 9 Market similarity ( 4.7% variance)

Similarity of market -.79306

Compatibility of product to culture .70869

Decision making process .55457

Marketing infrastructure .43702

Distribution decision -.40698

Factor 10 Organisational complexity (3.9% variance)

No. of countries traded in .78009

Development of organisational linkages .70942

Integration of marketing function .54836

Factor 11 Market position (3.4% variance)

Company market share -.75275

Media structure .63344

Factor 12 Objective ( 2.8% variance)

% of sales exported .91356

Agreement on objectives .57999

Factor 13 Market development ( 2.7% variance)

Product life cycle .89680

Market segment sought .57999

Factor analysis was applied to the twenty-two companies with means of between 1 and 2.50, classified as identical or similar in marketing programme between UK and the GCC, and as having a high degree of standardisation. The results are shown in Table 4.18 above. Thirteen factors explained 89.6 per cent of the variation in the data. For highly standardised companies, the top four factors, explaining 50.2 per cent of the variation, were marketing control, marketing environment, effective relations and firm characteristics.

Table 4.19 Factor analysis for moderate adaptation

Factor Loading

Factor 1 Marketing control (13.7% variance)

Authority to make marketing decisions .90267

Control procedures .84886

Guidelines or manuals .81235

Control of marketing decisions .71257

Factors 2 Marketing condition (12.1% variance)

Marketing infrastructure .85554

% of sales .78577

Level of political stability .65377

Media structure .59861

Similarity of market .59721

Factors 3 Corporate orientation (10.2% variance)

Distribution decisions .78012

Marketing policies .73694

Formalisation of relations .70947

Communication system .62146

Consumer characteristics .59248

Firm manager’s attitude .50366

Factor 4 Effective relations (8.3 % variance)

Agreement on objectives .86184

Development of organisational linkages .84309

Rectification of conflict .75057

Factor 5 Decision making ( 7.1 % variance)

Decision making criteria .81394

Methods of analysing marketing situation .75779

No. of years in the GCC -.64698

Decision making process .63382

Factors 6 Market conditions (6.4 % variance)

Customs and tradition -.81755

Culture -.75264

Similarity of competition .69432

Factor 7 Investing for future (5.9 % variance)

Budget methods .82315

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Level of potential competition .55563

Factor 8 Company size (4.9 % variance)

% of sales in the GCC .79169

Type of product .65919

Company market share -.64865

Size -.57822

Factor 9 Market development ( 4.0 % variance)

Market segment sought .84835

Product life cycle .75169

Factor 10 Marketing orientation (3.5 % variance)

Management thinking in terms of serving needs .80154

Integration of marketing functions .45653

Factor 11 Basic need ( 3.2% variance)

Physical conditions .78890

Perceived quality of British product .76845

Factor 12 International complexity ( 3.0% variance)

No. of countries .82083

Legal system .58131

Factor 13 Competitiveness (2.8% variance)

Level of intensity of competition .81841

Factor analysis was applied to the twenty-nine companies with means between 2.51 and 3.50, classified as having some variation, in other words having a moderate adaptation in marketing programmes between the UK and the GCC. The results are shown in Table 4.19 above. Thirteen factors explained 85.0 per cent of the variations in the data. The top four factors explaining 44.3 per cent, were marketing control, market conditions, corporate orientation and effective relations.

Table 4.20 Factor analysis for localisation

Factor Loading

Factor 1 Marketing environment ( 19.5 % variance)

Customs and tradition .95061

Physical conditions .94089

Culture .80252

Product life cycle .79680

Legal system .74204

Market segment sought .66458

Factor 2 Decision process (17.8% variance)

Methods of analysing marketing situation .96427

Decision making criteria .93843

Decision making process .83474

Budget methods .62309

Factor 3 Management thinking ( 13.2 % variance)

Formalisation of relations .92787

Firm manager’s attitude .87514

Control of marketing decisions .83065

Management thinking in term on serving need

-.65887

Compatibility of product to culture -.65887

Factor 4 Agents relations ( 12 % variance)

Type of product -.91778

Similarity of market -.75578

Distribution decisions .73937

Agreement on objectives .65939

Control of marketing decisions .64359

Factor 5 Market experience ( 10.5 % variance)

Perception of quality of British products .82357

Similarity of competition .79110

Developing organisational linkages .57974

Factor 6 ( 7.7 % variance)

Rectification of conflict .87719

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Consumer characteristics -.77425

Media structure .66405

Factor 7 Market differences (7.4 % variance)

Market share -.93347

Communication system .90004

Marketing infrastructure .52795

Factor 8 Corporate size ( 5.1 % variance)

No. of countries .88389

Level of potential competition .67722

% of sales in GCC -.59751

% of sales .58813

Factor 9 Control (3.9 % variance)

Control procedures .89655

Guidelines and manuals .59779

Authority to make marketing decisions .57112

Size .56779

Integration of marketing function .54535

Factor 10 Stability ( 3.0 % variance)

No. of years experience .81997

Level of political stability .79127

Marketing policies -.56704

Factor analysis was applied to the twelve companies with means between 3.51 and 5.00, classified as showing substantial variation (localisation) in marketing programme between UK and the GCC , in other words having a localisation strategy. The results are shown in Table 4.20 above. Ten factors explained 100 per cent of the variation in the data. The top four factors, which explained 62.5% were marketing environment, decision process, management thinking and agents’ relations. The factor analysis results therefore give further support to the hypothesis Firm and Country variables will correlate with the overall degree of marketing mix programme standardisation ? by UK companies in the UK and when exporting to the GCC countries.

The results of the factor analysis show that companies using a standardisation strategy are associated with control of their local agent operation. They provide the agent with guidelines and manuals, and give no authority regarding marketing decisions, hoping to have a similar image and appeal to customers in different markets.

Companies using moderate adaptation are associated with some of the marketing control variables. They provide their agents with the help needed and some guidelines and manuals, they give some authority to their agent to make necessary decisions to suit local condition, they regard the foreign markets as similar, and the managers have professional attitudes in doing business overseas.

Factor analysis shows that companies using a localisation strategy are more strongly correlated with the marketing environment, such as customs and traditions, physical conditions, culture, legal systems, and, above all, the market segment sought.

Multi-factor discriminant analysis was used and four variables, three related to firm and one related to country, discriminated between the three groups, the firms with standardising, more adapting and more localising strategies. The sixty variables were rated on their importance and the percentage of the sixty-three firms rating variables as high standardisation, moderate adaptation and high localisation, were compared. This analysis shows product variables as the most standardised while other marketing mix variables were to some extent localised. The raw means of marketing programme variables for consumer and industrial companies were compared and no differences were apparent. This again gives added weight to the belief that the degree of standardisation does not correlate related to firms’ industrial type, and this was further supported by the t-test results. The marketing programme variables were compared between Saudi Arabia and other GCC countries and show that UK companies are treating all the GCC markets as a cluster, using the same marketing strategy across these countries. Lastly, factor analysis was applied separately for standardised, moderately adapting and localising firms and the results show that the standardised firms are associated with marketing control, the marketing environment as well as effective relations with local partners. Moderate adapters are correlated with marketing control, corporate orientation and marketing control. Localisers are associated with the marketing environment, agent relations and management thinking.

RESULTS: PERSPECTIVES OF GCC AGENTS

CHAPTER FIVE

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5.1 INTRODUCTION

The objectives of this chapter are twofold. One is to see if there is any difference in views between UK companies and their agents in the GCC countries regarding their marketing strategies. The available literature suggested that agents’ views had not been addressed sufficiently and if agents’ views differ fundamentally, the accuracy of the findings from UK companies may be called into question. The second objective is to give a deeper analysis of the UK findings and attempt to discover whether there are any reasons for choosing different strategies to those currently employed by HQs.

5.2 INSIGHTS OBTAINED FROM QUALITATIVE INTERVIEWS

To reiterate, ten Saudi Arabian agents were interviewed for the qualitative research, and during the interviews semi-structure questionnaires were used. We obtained a number of overall impressions. These impressions can be summarised as follows: all the agents were the sole agents of UK companies and of other companies from USA, Germany and other countries. As one manager of an agent of an industrial company said; “ We are the sole agent of the British company in Saudi Arabia, but at the same time we are an agent of other companies but we do not sell rival products..”. All the companies are family-owned businesses, managed by members of the same family. Marketing departments do not exist, or are not differentiated from advertising and selling. Some Saudi companies assert that the British product quality is not as good as it used to be: British products were the best in the market, but not any more. As one

manager said, “UK companies do not give much attention to quality control, hoping to save some money. They produce a second and third quality product and sell it in the Saudi market as top quality with a high price. The market does not accept this situation any more. Competition is very strong and therefore UK companies are losing share to companies from Japan, USA, Korea and others”.

Agents perceive that British products are expensive compared to most of their competitors. Saudi consumers have become more price-sensitive, putting UK companies in a weaker position. One Saudi manager stated that: ”Because some UK companies have been sold out to foreign businessmen, the business attitude has changed: we are not dealing with British businessmen who understand our market, we are dealing with German businessmen or others who do not know our market as well as the British”.

Most of the companies are computer-linked with UK companies, replacing orders, and making it easier for the agents to do more business and make contacts. Training of Saudi partners is very important, but not much training has been given to local agents, and most agents hope for more training from their UK companies. All respondents said that there was little control from UK companies in some area of the business because of the nature of the trade contract. However, they would appreciate more help, especially in the marketing area, because they think the British are more advanced in marketing knowledge. We noticed that agents in Saudi Arabia tended to admire the British approach: they think the British market is more advanced, and there is nothing wrong with using the same marketing strategy, so long as it does not conflict with local conditions. Thus, they basically require minor adaptation to local factors of a strategy successful in the UK.

5.3 AGGREGATE COMPARISONS OF VIEWS BETWEEN AGENTS AND UK COMPANIES.

After the agents had been interviewed in Saudi Arabia, their UK companies were interviewed, to show them the findings of their agents, and to put the findings and explanations into final shape. These interviews took place in the HQ offices and lasted sixty minutes (during May 1995).

To achieve the research objective of determining whether there are any differences in views between UK companies and their Saudi agents in their perception of firm and marketing programme factors, the following statistical techniques were utilised, using SPSS:

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Descriptive analysis of the grand mean, comparing each firm and marketing programme variable between HQs and agents. Table 5.1 shows the aggregate views of the matched twenty five HQs and agents regarding the standardising of their marketing strategies. As can be seen from the Table, there is no real difference in views between HQs and agents in terms of overall firm factors: HQs score 2.85 and agents score 2.84. If the variables are broken down into the main factors, the following picture emerges.

Corporate orientation shows that HQs and agents differ slightly in their views, HQs scoring 2.95 and the agents 2.84. This might well be due to the different perceptions of the respondents regarding “corporate orientation”. Even if this is broken into its component variables, there are no great differences. HQs claimed that because strategy is set by HQ top management, it is their responsibility, not that of the agent. And in most cases agents share the same philosophy as the UK companies. As one director of an agent of a building materials company said: “The British company has the philosophy that the customer should be the centre of all activities; here we share the same philosophy”.

It was found that there were slight differences in views on the methods used for analysing the marketing situation and problems. As the agents explained, problems facing them are sometimes different from those facing the UK companies. Therefore the same methods should not be used, but when the problem and situation are the same, UK companies’ methods should be used.

Table 5.1 Comparison between HQs and their agents on all the variables based on the grand mean

Variables HQ Agent

Corporate orientation 2.95 2.84Marketing policies 3.12 3.20Distribution decisions 3.96 3.56Methods of analysing MKT. situation 2.88 2.72Management thinking in terms of serving needs and wants 2.24 2.20

Integration of MKT. functions 2.56 2.52Delegation of authority 2.61 2.85Decision making process 2.60 2.64Decision making criteria 2.88 2.84Authority to make MKT. decisions 2.68 2.88Control procedures 2.52 3.04Budget methods 2.32 2.68

Control of MKT. decisions 2.68 3.00Relationships 2.98 2.83Rectification of conflict 3.08 2.80Formalisation of relations 2.80 2.72Communication system 3.36 3.20Agreement on objectives 2.84 2.80Development of organisation linkage 3.12 2.84Manuals and guidelines 2.68 2.64Firm Factor * 2.85 2.84Product activities 2.06 2.19Product characteristics 2.04 2.72Brand name 1.72 1.24Packaging 2.16 2.40Product warranties 2.32 2.40Price activities 3.29 3.60Retail price 3.24 3.64Pricing methods 3.04 3.40Offer of price discount 3.60 3.76Distribution activities 3.29 2.92Type of retail outlets 3.68 3.56Channels of distribution 3.32 3.48Role of sales force 2.96 2.60Management of sales force 3.08 2.32Role of middlemen 4.08 3.32Customer services 2.64 2.24Promotion activities 3.15 3.39Advertising budget 3.32 3.84Basic advertising message 2.84 2.60Media selection 3.24 3.64Sales promotion 3.36 3.24Creative expression 3.24 3.52Role of publicity 2.92 3.52MKT. programme ** 2.95 3.03

* 1: Highly centralised 2: Mainly centralised 3: Mix 4: Mainly decentralised 5: Highly

decentralised

** 1: Identical 2: similar (only minor variation) 3: some variation 4: moderate variation 5:

substantial variation

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As one Saudi agent, the director of a car company, put it; “Yes, UK companies have more advanced problem-solving methods, but they do not work all the time here in my market”.

To turn to delegation of authority, HQs scored 2.61 and agents 2.85, showing slightly different views. This slight difference in view was somewhat surprising, agents claiming that authority is nearly a mix between centralised and decentralised, whereas HQs claim that authority is centralised but the agent is consulted. As regards delegation of authority, the control procedures are seen quite differently. HQs think they have more centralised control over their product, whereas agents think that the control procedure is not great and that they have equal control.

Regarding budget methods, there are slight differences of view: HQs scored 2.32 and agents 2.68. Again, this difference may be due to different perceptions regarding the budget methods employed by HQs. As argued by Terpstra and Sarathy (1991), budget is the basic control technique used by multinational companies. In this case, some of the agents think that UK companies are using the budget method as an indirect control over their operation. There was general agreement between HQs and their agents regarding the decision making process and criteria.

In terms of relationships, both HQs and agents think they enjoy good relationships with each other, but differences do exist. HQs scored 2.98 and agents 2.83. These differences may be due to the different philosophy each company has toward the relationship, and the ways conflicts are resolved. But, as HQs and agents alike admit, good relations can be maintained even when the sides slightly differ in their views. As one local marketing director of a cigarette company said, “Yes, we are the agent, but we enjoy very good relationship with the UK company. Sometimes we differ in views regarding how business should be run, but at the end of the day, we both agree on a consensus solution”. Both UK companies and agents have the same views regarding agreement on objective, and differ slightly on the nature of the communications system between them. They have open communication, and many types of communication are available to them.

Turning to formalisation of relations, both sides agree that they discuss every aspect of the relationship in detail and agree on it. They have mutual trust and interests. The main difference in view regarding formalisation of relations came from the agents, who claimed that UK companies try to centralise this formalisation process: in other words, the companies initially have more control, to sign the contract, while the agents define the contract as a trade contract, where the agents have less control. One general manager of the Saudi Arabian agent of a consumer company said; “ We sit with the British company, we write and sign the trade contract, they are the principal and we are the agent”. There were no perceptual differences concerning manuals and guidelines.

If we consider the marketing programme variables, Table 5.1 shows that both HQs and agents basically share the same view. HQs scored 2.95 and agents 3.03. Again, when these are broken down into their main variables, it can be seen clearly that both agents and HQs differ slightly in their view about product activities. This difference in view was found concerning product characteristics, agents claiming that HQs are using some larger variation in their products in the GCC markets, whereas HQs claimed that this is just a minor variation. When the UK firms offer their product range, the Saudi Arabian agents should be able to choose what best suits their market. With other product elements, such as brand name, packaging and product warranties, there were not many differences. One general manager of the Saudi Arabian agent of a food company said; “We have not enough product authority. The British company sometimes feels that the product will sell, but our feeling is the opposite, that they have to listen to us, otherwise the product will fail”. Another marketing director of the Saudi Arabian agent of a children’s clothes company said; “ We buy what the British company sells, and resell it. Basically, we select what we think is suitable for our market, and resell it without modification”. Another view was given by the marketing director of an agent of heavy equipment products, who stated that: “British companies have a basic machine, they are flexible, and often add the accessories we need to their basic machine”.

As regards price activities, there are slight differences. HQs scored 3.29, and agents 3.60. Individual differences were shown for pricing variables in retail prices, pricing methods and offers of price discount. Agents claimed that they have the decision to set the local price: they have some help from UK companies, but the ultimate decision is theirs. Conversely HQs argued that the price decisions are the same in Saudi Arabia as they are in the British market, with some fine-tuning modification to suit the local markets. One marketing director of the Saudi Arabian agent of a consumer company said, “We have a philosophy: we price our product at what the market will accept. British company people come to us to discuss the prices, and then we have great influence on the final price decisions”. Another local general manager of a food company said: “.. basically the market is one of the most important factors which determine the price: we sit with the British company, and discuss and negotiate the price”.

There were some perceptual differences concerning distribution activities. HQs scored 3.29 and agents 2.92. These differences are highlighted by differences in the variables, such as management of the sales force, the role of middlemen, and customer service. Saudi Arabian agents see the management sales force as similar to what the British company has, whereas the British company claim there is some variation. As to the role of middlemen, UK companies claimed it is different from that used in the British market whereas agents claimed it is the same with some variation. UK companies and their agents differ slightly on the question of customer services. HQs want to have the same customer service as in the British market, but the Saudi Arabian agents lack the knowledge and the resources to maintain the same level of service. As one marketing

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director of the Saudi Arabian agents of an industrial company claimed, “Customer service is not standard, because we are only an agent, and we cannot provide the same services, since we lack the knowledge and resources”. As another marketing director of the Saudi Arabian agent of a children’s clothes company said: “.. customer service seems to be one of the key elements of differentiation. We do not have the same service as our British company. In our market products sold are not returned or refunded”.

Lastly, in promotional activities, the perceptual difference between UK companies and their agents is just minor. HQs scored 3.15 and agents 3.39. These differences were in areas such as advertising budget, media selection, and role of publicity. If we now turn to advertising budget, there was a slightly different view. Agents see it as a moderate deviation from UK practice. The basic advertising message is tailored to the local audience. As one marketing director of the Saudi Arabian agents of a consumer company said, “The advertising message is the same, but it is said differently. We adapt it to the local conditions”.

Turning to media selection, minor differences exist. Agents think that there is moderate variation in their media selection, whereas HQs think it is just a small variation. There seems, however, to be agreement on sales promotion. Both the agents and UK companies share the same view, as they agree that they are using the same sales promotion. For many reasons, some agents admit that they lack the experience to initiate good sales promotions. Some say that as it was successful in the UK market, why not extend the same into the GCC markets?. As one director of the Saudi Arabian agents of a food company said: “To undertake good sales promotion, we need more experience. We lack this experience, so therefore we use the British sales promotions”. But as one manager of a British company said: “Promotion is totally up to the local agent. They know the market better than we do, but if they need our help, we will provide it to them”. Another marketing director of the Saudi Arabian agent of a British company said: “We will take British ideas, and try to develop them locally to suit our market”. The role of publicity is another area where UK companies and their agents seem to have slightly different views.

As can be concluded from the aggregate view, using the grand means for firm and marketing programme variables in Table 5.1, UK companies and their agents appeared to have general agreement regarding the degree of standardisation of their marketing

programmes but differed slightly in the detailed implementation.

5.4 COMPARISON OF AN INDIVIDUAL UK COMPANY WITH THEIR AGENTS.

To compare the views for each individual UK company with their matched agent, regarding firm and marketing programme variables, Table 5.2 and Table 5.3 show clearly the main factors where the companies have agreement or disagreement. In Table 5.2, comparative views regarding firm factors between the UK and Saudi Arabia companies are presented.

Table 5.2 Comparison of individual HQ and Agent’s views on firm variables

Corporate * Orientation

Delegation of Authority * Relations * Firm factors *

Case HQ Agent HQ Agent HQ Agent HQ Agent

1 3.00 2.60 2.00 2.67 2.17 3.00 2.39 2.76

2 2.80 3.40 2.83 2.00 2.83 4.50 2.82 3.30

3 3.60 3.40 2.17 4.17 2.83 3.84 2.87 3.80

4 2.63 2.00 3.28 2.83 1.97 2.83 2.63 2.56

5 3.40 1.8 2.43 1.83 3.53 1.17 3.12 1.60

6 3.60 4.20 3.83 4.83 3.50 3.00 3.64 4.01

7 2.20 4.20 2.50 4.83 2.33 3.00 2.34 4.01

8 2.20 2.80 2.17 2.50 2.17 2.83 2.18 2.71

9 2.03 4.20 1.83 5.00 2.67 3.33 2.18 4.18

10 3.63 2.00 3.97 3.00 2.33 1.83 3.31 2.28

11 2.40 2.00 2.33 3.00 2.17 1.83 2.30 2.28

12 2.20 3.40 1.00 3.00 2.50 3.33 1.90 3.24

13 2.20 2.60 1.00 2.83 4.33 3.00 2.51 2.81

14 2.60 3.00 2.67 3.33 3.17 2.50 2.81 2.94

15 3.40 3.80 3.00 2.17 4.67 4.00 3.69 3.32

16 3.67 1.60 3.83 2.50 3.50 2.00 3.67 2.03

17 1.87 2.40 2.64 2.50 1.42 2.67 1.97 2.52

18 3.03 3.00 3.22 3.00 2.81 3.17 3.02 3.06

19 3.00 4.60 3.08 3.33 3.33 3.00 3.14 3.64

20 4.00 3.20 2.00 2.33 2.67 3.33 2.89 2.96

21 1.80 1.80 1.50 1.67 2.33 2.67 1.88 2.04

22 2.80 2.80 1.83 2.17 2.33 3.00 2.32 2.66

23 3.80 2.20 3.17 2.00 3.33 3.50 3.34 2.57

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24 2.00 2.40 1.83 1.50 2.83 2.17 2.22 2.02

25 3.20 1.60 4.00 2.17 3.33 1.33 3.51 1.70

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5:

substantial variation

Looking at Table 5.2, the majority of HQs and agents do not differ substantially in their views regarding the overall firm factors. There are minor differences but these might be ascribed to different perceptions by the respondents. When the firm factors are broken down into subsidiary factors, differences exist over delegation of authority. As regards relationship factors, most of the respondents have more or less the same views. And, for corporate orientation, the differences are again not great between HQs

and agents.

Table 5.3 Comparison of individual HQ and agents’ views on marketing programme factors

Case Product * Price * Distribution * Promotion * Programme *

HQ Agent HQ Agent HQ Agent HQ Agent HQ Agent

1 2.00 2.75 3.33 5.00 4.17 4.33 3.17 3.33 3.17 3.85

2 1.25 1.00 2.67 2.00 3.17 2.17 3.33 2.17 2.60 1.83

3 1.13 1.75 4.00 4.00 3.83 3.50 3.67 4.00 3.16 3.31

4 1.00 2.00 3.56 4.33 3.83 4.17 3.50 3.00 2.97 3.38

5 2.60 2.75 2.80 4.33 2.53 1.50 2.77 3.17 2.68 2.94

6 3.50 1.50 3.67 3.00 2.83 2.17 3.72 3.17 3.43 2.46

7 1.00 1.50 2.33 3.00 1.67 2.17 2.33 3.17 1.83 2.46

8 1.25 2.75 4.33 4.33 2.50 3.00 2.83 4.67 2.73 3.69

9 1.75 3.50 2.67 4.33 3.00 3.00 2.83 3.67 2.56 3.62

10 3.75 2.75 3.61 5.00 3.72 2.33 4.00 4.33 3.77 3.60

11 2.5 2.75 3.67 5.00 3.50 2.33 3.67 4.33 3.33 3.60

12 1.75 1.50 1.67 2.00 2.17 3.33 1.67 4.00 1.81 2.71

13 1.00 2.25 3.00 2.33 5.00 3.83 3.00 3.67 3.00 3.02

14 2.75 3.5 3.00 3.00 4.67 2.50 4.00 2.83 3.60 2.96

15 2.50 2.75 3.00 3.33 4.00 3.50 3.50 2.83 3.25 3.10

16 2.25 2.00 4.33 3.00 4.06 2.67 3.83 4.33 3.62 3.00

17 3.00 3.75 3.67 4.67 2.67 2.50 2.44 2.67 2.94 3.40

18 2.00 1.75 4.00 4.33 2.83 3.33 3.83 3.17 3.17 3.15

19 1.00 1.50 4.33 2.67 4.00 4.67 2.50 4.00 2.96 3.21

20 3.00 2.00 2.00 2.67 3.00 4.33 2.83 4.17 2.71 3.29

21 1.50 1.50 2.00 3.00 2.50 1.83 3.00 1.67 2.25 2.00

22 1.00 2.0 4.00 3.67 1.00 1.00 1.00 2.17 1.75 2.21

23 3.17 2.00 4.33 4.33 3.83 2.00 4.83 3.00 4.04 2.83

24 2.00 1.50 2.00 1.67 3.00 3.17 2.00 2.67 2.25 2.25

25 2.00 1.75 4.33 5.00 4.17 3.67 4.33 4.67 3.71 3.77

* using 5-point scale, 1: identical, 2: similar, 3: some variation, 4: moderate variation, 5:

substantial variation

Table 5.3 shows that the majority of HQs and agents do not differ in their views regarding overall marketing programme factors, but they differ slightly on the detailed variables, such as product, price, distribution and promotion. The comparisons above were made on the basis of the differences on the grand mean. More advanced techniques are needed, as follows:

5.4.1 T-TEST

This is another test to see whether there is any difference in views between HQs and agents. Due to limited space, only the observed significance level will be shown in Table 5.4. As the probability for each of the variables is greater than 0.05, therefore the differences in views between HQs and agents are not statistically significant.

Table 5.4 T-test results between HQs and agents

Variables Significance level (P)

Corporate orientation .235Marketing policies .941Distribution decisions .708Methods for analysing MKT situation .742Management thinking in terms of serving the needs and wants .671

Integration of MKT functions .657Delegation of authority .831Decision making process .962Decision making criteria .868Authority to make MKT decisions .971Control procedures .967Budget methods .479

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Control of MKT decisions .845Relationships .738Rectification of conflict .275Formalisation of relations .132Communication system .627Agreement on objectives .838Development of organisation linkage .362Manuals and guidelines .838Firm Factor .640Product activities .247Product characteristics .888Brand name .040Packaging .687Product warranties .916Price activities .130Retail price .599Pricing methods .077Offer of price discount .540Distribution activities .709Types of retail outlets .672Channels of distribution .455Role of sales force .662Management of sales force 1.000Role of middlemen .642Customer services .087Promotion activities .922Advertising budget .108Basic advertising message .705Media selection .806Sales promotion .833Creative expression .771Role of publicity .530MKT programme .676

5.4.2 DISCRIMINANT ANALYSIS BETWEEN HQs AND AGENTS.

Another technique used was discriminant analysis, in order to examine whether, overall, significant differences in views exist between UK companies and their agents in the GCC; to determine which variables contribute to most of the inter-group differences; and to evaluate the accuracy of classification (Norusis 1993 and Malhotra 1993). Running the discriminant analysis on the predicator variables, it was found that no variable was qualified for distinguishing between UK companies and their agents, which confirmed the early results of the grand mean and t-test. But when it is run using firm and marketing programme variables together, two variables differentiated HQs from agents, both related to marketing programme. One is management of the sales force and the other is role of publicity, as shown in Table 5.6. Examining these two variables, one can see that management of the sales force contributes more to the overall discriminant function, scoring the largest function coefficient, .91613. It is, generally speaking, the predictor with relatively large function coefficients which contributes most to the discriminating power of the function (Malhotra, 1993).

Table 5.5 Discriminant Analysis between UK companies and their agents

Step Variable Wilk’s Lambda Significance Function

Coefficients

1 Management of sales force .90803 .0323 .91613

2 Role of publicity .79751 .0049 -.82585

Table 5.6 shows the determination of significance of the value of the function.

Table 5.6 Canonical Discriminant Functions

Function Eigenvalue % of var.

Cumulative percent

Canonical correlation

Afterfunction

Wilks’ Lambda

Chi-square Df Sig.

1* .25391 100.00 100.00 .449923 0 .797506 10.634 2 .0049* Marks the 1 canonical discriminant functions remaining in the analysis

As can be seen in Table 5.6, the value of Wilk’s Lambda is 0.797506. This transforms to a chi square of 10.634, with 2 degree of freedom, which is significant beyond the 0.05 level. The classification result is 74 per cent. Given that the two groups are of equal size, by chance alone one could expect a hit ratio of 50 per cent. The improvement over

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chance is almost 25 per cent, indicating at least satisfactory validity. To conclude this comparison of views, there seems to be general agreement between UK companies and their agents on the overall firm and marketing programme variables, and just slight differences on less important issues.

5.5 REASONS FOR USING DIFFERENT STRATEGIES

Another objective of re-interviewing the ten UK companies and interviewing their agents was to elicit any reasons for using a high standardisation, moderate adaptation or localisation strategy. In these interviews the agents’ findings and the differences, if found, between UK companies and their agents were elaborated. In the following pages, the main findings of the UK companies and their agents will be presented. The findings will be divided into three sections: companies with high standardisation, moderate adaptation and localisation strategy, and the reasons given by the companies to be the chief explanation for using one strategy rather than another will be clarified.

5.5.1 HIGH DEGREE OF STANDARDISATION

Firms with a high degree of standardisation were interviewed in-depth. They claimed that because they own the product and have the experience and knowledge, they will use identical methods in every market, and not operate in any market if they think they would need to change their product. They argue that they use the same marketing approach in every country but with slightly different techniques. The cost of changing the product is the chief factor which stops them from developing a product to suit each culture. Second, a consistent image: they want to keep consistency in the consumers’ minds across countries. They believe that their customers are similar and there are people in different countries who will buy their product as it is. Therefore they are endeavouring to identify and target them first, and if others buy, that is an additional bonus.

They do not regard the GCC market as their top priority and only visit the region once or twice a year. Therefore, since they do not give it much attention, they will not give focused attention to their marketing effort. They will mainly use what has been used successfully, in their view, in the UK market.

It was found from the interviews with UK companies and their agents in Saudi that the agent makes the final selection from the product lines offered to suit the market, and avoids other products which are not thought to be suitable for the Saudi Arabian market. Given this, UK companies will simply offer their products as they are without changes, but still claiming they produce different products to suit different markets because of the cherry picking process described above.

The common feature of these four HQ-agency relationships is that they claim to have good relations, and agents are free to ask for help, especially in marketing because of their lack of marketing expertise. Because they lack experience and marketing knowledge, they will defer to what the UK companies recommend. They will be strongly influenced by the UK companies’ views regarding specific marketing activities. Another findings is that similarity of the markets for the products for these four companies makes standardisation possible. These four UK companies using a high degree of standardisation claim that they have effective control over the operations of their agents, although their agents do not admit to such control since they call it co-operation and influence. They are influenced by knowledge and experience as well as the resource of their UK partners. In the end, of course, nothing will make them do things against their will, since they are business entities in their own right within an agency contractual arrangement.

An interesting point is the longevity of these four relationships (more than twelve years). They use the same strategy; it works, and agents are happy with it. So why change?. In actuality, these UK companies have standardised their product, but they are helping their agents to adopt a modified marketing mix, such as one of price, distribution and promotion. There is no doubt that the HQs will retain the key decisions, but they will take inputs from their agents in order to adapt to the local conditions. These four UK companies will not allow their reputation to be harmed by the agents, and therefore they will use the standardisation approach to protect them.

The above insight, in particular, helps with the problem of defining “standardisation”. Any definition must take into account the fact that complete standardisation with no deviation is a practical impossibility.

5.5.2 MODERATE ADAPTATION

Companies using a moderate adaptation believe that they own the product and have the necessary technical knowledge about it, but they lack the local knowledge of the local agent. Therefore, they will work closely with local agents to develop marketing efforts which will not cost them much incrementally and will not require wholesale change to their marketing efforts. Therefore, they will visit the region more often and try to compose the differences. They will take local conditions into consideration when they redevelop the product and in the planning of the promotion campaign.

These companies have more open and strong relationships with their agents. They have more discussion, and more meetings. Agents can suggest change to the products, and can utilise the resources, personnel and knowledge of the UK companies for their own needs. Another occasion for using this strategy is when UK companies think the GCC market is different. Thus they have to adapt some of their marketing effort to suit the local market. There is no straight control but much influence and advice. Above

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all, there is strong mutual trust between the UK companies and their agents. One UK company argued that their products, by their very nature have to be modified to suit local conditions. There is no choice, one company admitted; working in the GCC markets was very hard, and they had to rely totally on the local agent. Another reason given for using moderate adaptation was competition in the GCC markets. In order to be competitive, you have to modify your marketing effort in any market.

5.5.3 LOCALISATION

Companies using a localisation strategy feel they have no option but to adapt their products, because they have to meet the local specifications by law, and to meet the local conditions of these markets. Hot and harsh climates require different specifications from moderate ones. Some of these companies produce a basic machine and add to it to meet each individual market’s needs. These companies claim that GCC governments require specifications not used in other countries. The practice is outdated, they observe, but they have to work with it if they want to be present in these markets. One marketing director of an industrial British company said: “We do not impose anything upon our agents. Let them do it in the way they think is right for their market. If they need our help, we will provide it”. A UK marketing director of a car company said: ”GCC governments have very strong specifications. We have to meet these specifications, to be allowed to sell our products in these markets. End of story”.

5.6 ANALYSIS OF THE FINDINGS

As explained earlier, one of the objectives of this chapter is to give more explanation and expand the findings obtained from the UK companies. To achieve this objective, the ten UK companies and their agents were asked to give their opinion about findings which needed more clarification.

From the earlier analysis of the findings for UK companies, it was found that the degree of standardisation of marketing programmes appeared to be differentiated by four country and firm factors. The three firm factors are methods for analysing marketing situation and problems, control of marketing decisions and control procedures, and the country factor is the market segment sought. Those factors contribute to the differences between these companies who are using different marketing strategies in the GCC markets.

Methods of analysing the marketing situation and problems. Different companies face different marketing situations and problems, which require different strategies. One can not expect to find the same methods used by all companies in similar situations. As one local marketing director of a consumer product said: “We are here, far away from the UK company, and having different markets, we have different methods to solve our problems”.

Control of marketing, decisions and control procedures. Agents will enjoy different degrees of freedom in their operation. All depends on the strategy of the UK company. Some will give their agents more authority to make certain decisions, some would like to retain the major decisions, especially those which involve cost, and others like to involve their agents in the decisions, to take responsibility and make joint decisions. One standardising marketing director of a British clothes company said “ We have much control over the agent operation. We do not want them to damage our product”.

Market segment sought. Companies may not be targeting the same customers. Each company has its own target market which it wants to reach and serve better than the others. In order to reach these target markets, companies may have to use a different marketing strategy, and therefore the market segment sought might in part explain the differences between companies. Sometimes UK companies are targeting a different segment in the GCC from the one they are targeting in their home market. Some are just targeting the same market at home and abroad. One UK marketing director of a children’s clothes company said, “We have the same market segment, here and in the GCC market. We are targeting children and their mothers”. Another local general manager of a car company argued that “The market segment sought is the same in the broad sense. We are trying to sell our product to similar targets”. The manager of one British consumer company said, “ Our market segment is different. In the UK we are targeting adults, whereas in the GCC we are targeting children”.

In the literature, which is supported by the findings, product variables were more standardised than other marketing mix variables. To explain this, UK companies and their agents were asked to give their views. Most of them argued that product decisions are the most important ones, since they are at the centre of any marketing strategy. They cannot be changed easily without occurring a lot of cost, and therefore they are standardised. The manager of one British company said, “ It is possible to change our product to suit each single market. Changing the product costs us a lot of money, but we might do it if the demand justifies the cost. This not always the case”. Another British company of building materials said, “ We try hard not to change the product. We do not want to produce different products, as the more we differentiate, the more the cost will be”. Another marketing director of a British consumer company said: “ Usually, product change involves more cost than other elements of the marketing mix. When the decision involves more cost, the product should be standardised, if possible”.

But other decisions, such as price, distribution and promotion, can be modified to suit local conditions, without substantial cost. Another reason is that, in terms of product, the UK companies have more technical knowledge than the agents, whereas in other marketing mix elements local agents have the knowledge. Therefore UK HQs will standardise the decisions which they have more knowledge about, and will modify decisions where they have less knowledge. A surprising result was that the discriminant analysis did not feature type of industry, whether consumer or industrial,

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as a discriminating variable between companies using high, moderate and low degrees of standardisation. Most of the companies, when asked, were surprised as well. The explanations offered might highlight some reasons. Some argue that the ultimate goal for all companies, whether consumer or industrial, is to make a profit. The marketing director of a British food company offered his opinion, that “ Either consumer or industrial companies will find people who are interested in their product in different markets, therefore they will use the same strategy”.

In the UK marketing is a comparatively new function, not taken as seriously as it should by UK companies. Therefore it is less sensible to distinguish between companies solely by marketing effort.

The results show that most UK companies are using a cluster approach in the GCC, treating all six GCC markets as one single market. They argue for the similarity of the GCC market, culturally and economically, seeing little difference, and therefore they use the same strategy. As one marketing director of a consumer food British company said “We treat the six GCC market as one big single market, using Saudi Arabia as the benchmark, because what can be sold in Saudi’s market can be easily sold in other GCC markets. In conclusion, there are more similarities than differences between the GCC markets”. Another British company has a different view. The manager explained, “ We see the GCC markets as two different markets, the Saudi Arabian market and other GCC markets. Saudi’s market is big and needs more attention than the others. Saudi is more sensitive to religion and culture, more than other GCC countries”. Another marketing director of a British consumer company said “ In the GCC market, we use the same overall strategy, with different techniques in each individual market”.

As can be seen from most arguments proposed by UK companies, the six GCC markets are mainly considered to be one single market. Taking Saudi Arabia as a benchmark, what works in Saudi’s market will work with success, more or less, in other GCC markets. With a large population, Saudi Arabia is the important market, while other GCC markets are relatively small. Therefore they put much more effort on the Saudi markets, with little attention to other GCC markets.

Some of the companies argue that Saudi Arabia has a major influence on other GCC countries. An interesting comment was made by the marketing director of a British car company in Saudi Arabia, “Many people claim that all the GCC markets are the same. That may be right for their product, but in my case I see Saudi’s market as different. In Saudi Arabia, women do not drive, which results in losing a very big market share. Consequently, we use a different marketing strategy. Saudi’s customers prefer big and manual cars. All these points and others do not encourage using the same approach”.

In conclusion, UK companies were asked about their marketing future in the GCC markets. Most of them agreed that the markets are becoming very competitive, with

more manufacturing being done locally. In the near future the local manufacturers will be very strong, which is a threat to UK companies and other importers. Therefore they will increase their marketing effort, employing more marketing people, increase the marketing budget and be present more actively in these markets. Some of them are thinking of building local factories. One marketing director of a British company said “ Our interest in the GCC markets is diminishing. The market is small, and very competitive. We cannot compete on the price, and we have not increased our prices for the last 5 years”. Some UK companies are thinking seriously of moving their production to somewhere else where cheap labour is available to meet the local competition.

This chapter has dealt with agents’ views on the degree of marketing programme standardisation. During the qualitative research we obtained a number of overall impressions: UK companies have a good reputation among Gulf businessmen and customers, but the situation is now changing as British products are becoming relatively expensive and UK companies compete less effectively with other companies from the USA, Japan and others, who provide similar products at more competitive prices. UK companies have good relationships with their agents in the Gulf, expect that agents ask for more training in marketing related areas. UK companies think that the GCC countries share the same geographical and economical environment, and therefore they are using the same marketing programme across the Gulf markets.

We compared the views of UK companies and their agents regarding marketing programme standardisation in the Gulf, using the grand mean, t-test and discriminant analysis. These show that statistically there are similar ratings between UK companies and their agents in the Gulf in their perception overall regarding marketing programme standardisation.

Our study has found different reasons for different level of marketing programme standardisation used by UK companies towards Gulf. Those companies using a standardisation strategy believe in the similarities among customers across countries, they invest in their products and will not allow agents to damage their image, and therefore they will use as identical a marketing programme as they can. Companies using moderate adaptation stress the differences among countries and the knowledge of local agents regarding marketing conditions. Therefore, they adapt their products to suit local markets. Companies using a localisation strategy adopt it because they feel they have no other option. Legal requirements necessitate meeting the local specification. The chapter concluded with the reasons why four factors, three related to firm and one related to country, differentiate between companies using different marketing programme strategies and found that companies are different in their business practices rather than types, and that they have different strategies based on their market needs.

DISCUSSION AND CONCLUSIONS

CHAPTER SIX

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6.1 INTRODUCTION

The goals of this study, as stated earlier, were to determine the degree of marketing programme standardisation of UK companies in the GCC countries; to test several detailed hypotheses and to compare the UK companies’ views with their agents’ on marketing programme strategies. In this chapter there is an examination and discussion of the findings in Chapters Four and Five to expand on the issue of international marketing programme standardisation.

In the second part of this chapter recommendations will be made affecting international companies, and UK companies in particular. The limitations of the study, the nature of the contribution offered by this research, and suggestions for further research are dealt with in the last part of the chapter.

6.2 SUMMARY AND CONCLUSIONS

The central theme of this research was to afford perspectives on the issue of international marketing programme standardisation, both conceptually and empirically. Attention was concentrated on UK companies exporting to the GCC countries. The study began with a literature review, from which more understanding of the topic was obtained, and this became the basis for the model developed. A set of general and specific research objectives were then identified and explored in four stages of empirical study. The first was the UK main sample stage, which quantitatively explored the issue of marketing programme standardisation as adopted by UK companies in the GCC countries. There followed stage two quantitatively comparing the views of UK companies and

their agents. Lastly, two qualitative stages involving, in stages Three and Four, UK companies and their agents. The objective was to gain more in-depth understanding of international marketing programme standardisation. The stages of the research thus incorporated both quantitative and qualitative elements in order to enhance and elaborate the data.

The model we have developed, augmenting Jain’s model, with more variables, has proved successful correlating variables with the degree of marketing programme standardisation among UK companies exporting to the Gulf markets. The model contains three principal factors: country, firm and marketing programme; with sixty associated variables. This model encompassed a broader framework than has normally been used in investigations into marketing programme standardisation. A theoretical foundation for the model was established. The first model (Figure 3.1) depicts the relationship between marketing programme as the dependent factor and two principal factors, firm and country, as independent factors. The detailed model, which consists of the sixty variables shown again as Figure 6.1, was generated from the literature review and pilot study and is also the basis for discriminating the variables correlating with the degree of marketing programme standardisation. The model shows that the marketing programme is influenced by forty-one variables which can be grouped under seven broad factors, three related to Country and four related to Firm. A number of these correlate with the degree of marketing programme standardisation adopted by UK companies in the Gulf States.

Figure 6.1 The sixty variables used in the study

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UK companies covered in this study tended to apply different degrees of standardisation to different marketing programme variables. The sample can be divided, according to firm’s rating scores on the marketing programme variables, into twenty-two companies having a standardisation, twenty-nine showing a moderate adaptation and twelve a localisation strategy. To determine if there was any differences among these groups, we coded companies with a high degree of standardisation as 1, those with moderate adaptation as 2 and companies with localisation as 3. Stepwise discriminant analysis was employed, the result utilising only four variables out of the forty-one in the detailed model (Figure 3.2) differentiate between the three groups. Three discriminating variables related to the firm factor, namely methods for analysing marketing situations, control of marketing decisions and control procedures. One related to the country factor, the market segment sought. These variables contributed to the differences among the three groups: the more similarity there is between the UK and the Gulf, the more standardisation will be expected. To examine these findings, agents were asked why these four variables contributed to discriminating among the three groups using different strategies. Their responses were presented in Chapter Five in more detail; here we will only summarise them. According to the agents, the organisations differed in their business practices because they were faced with different marketing situations and problems in different markets. Hence, the methods for analysing marketing situations and problems differed from market to market. As one marketing director of a consumer company put it “We are dealing with different markets in different countries. To use the same marketing analysis for every problem we face would be a wrong strategy”. For control procedures, different companies gave a different degree of authority to their agents. Some gave them more power while others kept tight control. All agents were predominantly dependent on the strategy the HQ company employed. We found that some companies delegated some decisions to the agents but retained the major decisions, especially those which involved a high cost. The market segment sought was different between the UK and Gulf for different companies. Some aimed at different segments in markets whereas others sought the same ones. These variables contributed substantially to the differences between UK companies in respect of their marketing programme standardisation strategies.

We selected the Gulf States as a focus area primarily because developing economies have been under-researched in comparison with fully-developed economies. The Gulf States also, in practical terms, represent very good business partners for UK firms.

As discussed earlier, there were different samples for each stage of the research. The main sample of sixty-three UK companies for stage one contained the great majority of larger UK companies exporting to many countries including the GCC, and with longer-term operations in the Gulf States. Approximately half the sample contained industrial product firms, and half consumer product firms. For the qualitative stage a sample of ten agents and another of ten UK companies associated with these agents

were interviewed in-depth. Four companies showed a relatively high standardisation of marketing programme, four a moderate adaptation and two a localisation strategy. For stage two (quantitative research), the views of twenty-five agents matched to their UK companies were compared, sixteen companies being consumer and nine industrial.

We postulated four hypotheses, concerning which sufficient evidence was provided to support three and contradict one. Each of the four hypotheses was tested using survey data.

H (I) Firm and Country variables will correlate with the overall degree of marketing mix programme standardisation ? by UK companies in the UK and when exporting to the GCC countries.

This hypothesis has been examined using discriminant analysis utilising forty one variables, relating to country and firm factors, as predictors. The discriminant result produced four variables, three firm and one country. The variables associated with the firm were “methods for analysing marketing situation and problems”, control of marketing decisions” and “control procedures”, while the chief country factor was the “market segment sought”. Therefore, both principal factors, country and firm, may be associated with the degree of marketing programme standardisation by UK companies between the UK and the Gulf States, Overall, firms' differing degrees of standardisation/adaptation between the UK and GCC states correlated with four variables (three associated with firm, and one with country, supporting the hypothesis.

H (II) there will on average be a greater degree of standardisation by UK companies of product-related variables than of other marketing mix variables between the UK and when exporting to the GCC.

In Chapter Four this hypothesis was tested by asking respondents in UK firms exporting to the Gulf to evaluate marketing programme variables comparing the UK to GCC markets, on a 5- point Likert scale. If the grand mean of the variables was between 1 and 2.50 the case would be considered as one of a high degree of standardisation. An average of the variables between 2.51 and 3.50 was defined as moderate adaptation, and an average of the variables between 3.51 and 5 was regarded as a localisation strategy. Table 4.5 in Chapter Four offers the simplest direct comparison of marketing programme standardisation for the sixty-three UK companies combined. In common with most other studies, ours showed product strategy to be much more standardised than other parts of the marketing programme. Within product, brand name and packaging were usually highly standardised, the qualitative interviews suggests that firms have trademark considerations and management aspire to have a recognisable brand name more globally. These outcomes were interpreted in the qualitative stage to the high cost of adapting a product compared with other marketing activities. This study compared to others however, has stressed price and distribution as being more

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frequently subject to a moderate degree of standardisation. Price showed a moderate degree of standardisation because countries differ in their cost practices, competitors, level of taxes, and local conditions, all these factors obliging UK companies to adapt their pricing. Most UK companies seemed to have a more moderate approach to adaptation rather than complete adaptation of price, distribution and promotion.

To turn to promotion, again we saw a moderate adaptation by UK companies in their approach. This appears from the qualitative interviews to be partly because GCC agents lack experience of promotion techniques, and they request help from UK companies. These findings were surprising in the emphasis because the literature suggested that price, distribution and promotion would be even more adapted by international companies. Nevertheless, these results support the hypothesis above, that there would be a much higher degree of standardisation of product between the UK and GCC and less for other marketing mix variables.

H (III) there will on average be higher degrees of standardisation in terms of marketing programme by UK companies producing industrial goods than by UK companies producing consumer goods, between the UK and GCC.

In the findings of the discriminant analysis (Chapter Four) the type of product, whether consumer or industrial, did not feature as a discriminating variable. To test this hypothesis, we needed to use another statistical technique, namely the t-test, and compared the grand means for all variables for consumer and industrial companies. The results again supported our research findings that there was no evidence to support the contention in other studies that the nature of the product industrial or consumer, was correlated with the degree of standardisation. Most standardisation studies have involved US practice and paid little attention to European companies. Therefore, one reason for there being no differences between consumer and industrial companies in their marketing programme activities may be their failure is apply the marketing concept in the same way. In the light of these results, the hypothesis that there will be much higher degrees of marketing programme standardisation between the UK and Gulf among industrial, compared with consumer, product companies is not supported.

H (IV) UK companies will in general adopt a policy of clustered standardisation of the marketing mix programme within the Gulf States, with only minor variations between Gulf countries.

Virtually all UK firms had agents in each of the six GCC countries. To test the hypothesis, part of the questionnaire used in the main sample to UK firms asked respondents to compare the degree of marketing programme standardisation in Saudi Arabia with that in other GCC markets. The results, in Chapter Four, showed that similar levels of standardisation occurred throughout the Gulf, with only minor variations between States. UK firms thus tended to treat the Gulf primarily as a single market area,

or market cluster. Most of the respondents in the qualitative stages argued that the GCC markets are similar culturally and economically and thus did not perceive any differences between them, especially in business terms. As one marketing director of a consumer company put it, “In dealing with the GCC markets, we use the overall marketing strategy, because we believe in the similarity among these markets.. but we use different detailed techniques to reach our customers..”. The hypothesis that UK companies will use the cluster approach towards the GCC countries was supported.

Part of Chapter Five presented qualitative research which clarified and enhanced the quantitative data. According to respondents from both the HQs’ and agents’ sides, many reasons could be found for using different degree of marketing programme standardisation. As explained in Chapter Five, these reasons can be summarised as follows: companies using a localisation strategy indicated a greater willingness to modify their plans to the marketing environment, to serve market needs and build effective agency relations because of the legislation from GCC governments. Highly standardising companies, in contrast, were mainly concerned with marketing control variables, more centralised authority and standardised products. On the other hand, moderately adaptive companies stressed strong relationships and the special knowledge of the local agents.

While our findings were reasonably clear, we needed to validate them. The sample comprised relatively large companies with comparatively long histories of exporting to the Gulf. Thus, smaller firms, particularly those adopting an entry strategy, should be careful in interpreting the results. Moreover, we first researched the British headquarters' perceptions of the relationship. Agent-representatives of these companies in the Gulf may have differing perceptions of these strategies. Therefore, part of the study compared the views of UK companies exporting to the Gulf with their agents in the GCC markets on marketing programme standardisation. This kind of comparison of views between HQs and their agents has been absent in most previous marketing standardisation studies.

The findings showed overall agreement rather than differences concerning the level of marketing programme standardisation, but some differences existed in a small number of variables, such as corporate orientation, where there were slight differences in perception between GCC agents and UK companies. As regards control, UK companies thought they had more control over the agent operation than did the agent, who maintained that they had more freedom.

The research found that UK companies typically sought countries which offered markets where minimal change was necessary, mainly, the qualitative stage suggested, to avoid increased costs of adaptation. This result accords with the findings of Kacker (1975) and Sorenson and Weichmann (1975). To conclude, in most studies, international companies have tended to use different degrees of marketing programme

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standardisation. Our study has also shown that overall, UK companies standardised their marketing programme to differing degrees between the UK and the Gulf. Our study was also in line with other major studies in that product, especially brand name, packaging, product characteristics and product warranties were the highly standardised elements of marketing programme. But, for other elements of the marketing programme, the research showed a relatively moderate degree of adaptation compared with other studies.

6.3 RECOMMENDATIONS TO UK COMPANIES

The long presence of UK companies in GCC markets gives them great advantages over companies from other countries, and GCC customers have a favourable attitude towards British products. According to many Gulf businessmen, the situation is now changing, and UK companies are losing their market share to other countries. UK companies seem to be becoming more interested in other European countries than in the GCC. More attention should be paid to GCC markets, which still represent a very good opportunity for UK companies. Higher levels of marketing investment and more adaptation of marketing elements should be used to regain the share lost in recent years.

Useful recommendations have been put forward by some researchers, including Tuncalp (1988a) : Tuncalp (1988b) Tuncalp and Yavas (1987): Yavas et al. (1987); Yavas and Glauser (1985); Yavas and Tuncalp (1984); Tuncalp et al. (1987); Tuncalp (1990): who help by making recommendations to international companies which are doing or planning to do business in the GCC.

1. DEGREE OF MARKETING PROGRAMME STANDARDISATION

The degree of marketing programme standardisation which companies use in the GCC market should be based on a thorough analysis of environmental and market conditions. Selling a product which does not meet the local condition and consumer expectations is always a big mistake. In other words, before deciding on the degree of standardisation, companies should fully understand the GCC market.

An understanding of the culture and the language of the target countries is major contributor to any success. UK companies should work more personally within the GCC environment to understand the language of these countries. From our meetings with the UK companies and agents working for them in the GCC, we found that few expatriates speak Arabic or understand the Arabic culture. There are cultural differences between UK and the GCC countries that require very special care and tact.

Tuncalp and Yavas (1987) argue that even though English is the business language in the GCC, it is preferable to know Arabic because that will help not only to gain respect from the local businessmen but also to keep a conversation going to aid learning. The recommendation here is that UK companies should pay more attention to the people whom they employ. They should preferably be locals who understand the culture and the language. The companies could provide much more training. In our meetings with local agents we observed that all UK companies tend to employ non-GCC nationals. A non-GCC national is unlikely to know the local customs and traditions. In particular, GCC nationals do not like to mix with expatriates.

Knowing the customs of the local people and staying within these boundaries is very important, as critical as understanding the law. UK companies should be closer to the market. To have senior marketing people resident in the Gulf markets rather than only sales people will give them a very competitive advantage. Once the local market is understood, companies are more likely to select the right combination of marketing standardisation. Many Gulf businessmen argue that UK companies should design products suitable for Gulf consumers.

The British should use the metric system instead of imperial measures. They should also provide more training to the local distributors, and avoid invoicing in British pounds FOB, which creates problems in retail pricing and currency trading (James, 1986).

2. MARKET RESEARCH

Gone are the days of easy selling in the GCC. Some British businessmen, when they visit the area, think of a seller’s market, where the product sells itself. But this is no longer true. The market is fully open to companies from all over the world. It will require much more detailed market research to understand the nuances of consumers’ needs, and to provide products at a competitive price. The chief worry facing UK companies in the GCC market has been the lack of reliable data. Carrying out marketing research in the GCC can be troublesome and complicated (Nicholls (1985) Riet, 1990)). Telephone directories are inaccurate or outdated. The mail system is unreliable, the addresses are not clear, and in some of the GCC cities street names are non-existent or misleading. The high illiteracy rate makes questionnaires unwelcome and very difficult to answer.

In Saudi Arabia, as an example, the interviewing of women or children is not allowed. A manager of a UK company dealing with children clothes told us that he could not get the birth rate of children in Saudi Arabia, which is very important for their future planning, as the country simply does not have such statistics. From our experience in the market, there are few local marketing research agencies. The problem with these agencies is that the employees are not GCC nationals, and their knowledge of the

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market is not great. Hence the recommendation is that UK companies should use the services of experienced marketing research agencies which have experience of working in the GCC. The names of these agencies will be available from the British commercial attaché in the GCC or the Department of Trade in London. Some researchers, including Tuncalp and Yavas (1987); and Tuncalp (1988a), have provided names of research agencies familiar with the Gulf markets (Appendix 7).

If UK companies are interested in secondary information, which is economic in nature rather than marketing related, they can find good deal of it in various government departments (Appendix 8).

Some of this secondary information is available in English, such as economic and industrial information, annual review of the economy, including appendices on tables about money, banking, international transaction, public finances, prices and production, etc.

3. HIGH PRICES

Most Gulf businessmen when asked what they thought of British products, said they are good but very expensive, which makes them increasingly unpopular with Gulf consumers. This results in UK companies losing their market share in the GCC. Tuncalp (1990) asked many Gulf businessmen about their attitude towards British products. The response was positive, but they regarded the prices as too high. Therefore, they prefer products from other sources such as the USA, Japan, Germany, and others, who provide similar products at a lower price and with better service. The same conclusion was reached by our study. Many businessmen and customers complain about British prices and the low level of service. UK companies are advised to review their marketing programme, including the price, to be in line with other imported products in order to maintain their presence in the GCC.

Most UK companies agree that the GCC markets have became tougher, and that customers have become more price-sensitive. As was said before, Gulf consumers have developed a price consciousness due to the diminishing disposable income arising from fluctuations in oil prices. For example, they try to extend the life of products. Therefore, UK companies should be able to provide the right kind of service, taking into consideration after-sales service, especially for consumer durables and industrial products.

4. MARKETING PLANNING

Developing insight into good business practice should not be left to chance. Tuncalp and Yavas (1987) argue that British businessmen have the old idea that time in the Gulf states does not count, punctuality is not of great importance, appointments for a meeting are not necessary and that, even if it is kept, it does not assure a face-to-face private meeting with the prospective client. Interruptions of meetings are expected. All these do not apply any longer. Gulf businessmen have been educated abroad either in UK, USA or some other European country, and have become much better businessmen. Local businessmen like to plan for the future. It is known that in the GCC markets any company may need to confront significant unforeseen costs, delays, and administrative difficulties. Therefore, British businessman should plan in detail and be patient: there is a need for good preparation, contingency planning, and risk analysis (Apgar, 1977).

5. RELATIONSHIPS

Relationships are very important in any business deal, but in the GCC they are extremely important. Without knowing the right people with the right contacts, efforts are useless. The GCC market is a club: without entering into the club there is no chance of winning a contract. To enter the club requires good contacts and not trying to separate personal and business relationships, since in the GCC they are the same. Gulf businessmen prefer long relationships, and the extension of more liberal credit terms might secure such a relationship. UK companies should assist the local partners with monitoring inventory and recording merchandise.

Many British and local businessmen admit that, once the relationship is well established with a Gulf businessman, it will take the form of friendship. It will be more secure and based on mutual trust rather than purely on commercial consideration. Most of the relationships will be influenced by Islam.

6. TECHNOLOGY

GCC governments strive to obtain up-to-date technology, and therefore UK companies should demonstrate a good way of transferring technology to the GCC markets. One way of doing this is by a joint venture with a local partner. Joint ventures have become the most effective way of doing business in the GCC, where the governments encourage multinational companies to set up such ventures with local businessmen, and provide very good incentives to those who adopt this approach. These include free land, subsidised electricity and water, freedom is bring money in and out, exemption from income and corporate taxes for up to ten years for industrial projects and five years for other projects, providing cheap finance through government fund agencies, duty free for raw materials, equipment and machinery, and spare parts.

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7. INFORMATION

Information is essential for decision making. To make the right decision, the right information is required at the right time and in the right quantity. Such reliable information is not always available in the GCC. UK companies should study this problem and try to make the required information available to the management either in house or by hiring the right agency. Sometimes the information needed is available somewhere, but nobody knows where it is. Thus UK companies need to find the right person and ask him.

8. DECISION MAKING

Normally decisions within an organisation in the GCC are taken by one individual or a few people within it. Sometimes a title in the organisation does not mean anything. For example, in some organisations the manager cannot make some decisions. For UK companies in the GCC the best advice is to know who can make a decision, and not waste time with other people. The way to find this out is by asking people, or friends in the market.

9. EXHIBITIONS

Many UK companies express their willingness to work closely with the export department in London to try to promote British products in the Gulf markets. In recent years many exhibitions have been held in GCC countries to promote British products in these markets. Therefore, UK companies are advised to take part in these exhibitions.

10. EXPATRIATES

In the GCC, there are very many expatriates. UK companies should target these individuals, including the British and other expatriate communities in the Gulf. They represent a high proportion of the work force in the Gulf countries. The percentages are shown in Table 6.1.

Table 6.1 The proportion of contracted immigrant workers in the workforce (1990)

Country The proportion of Expatriates in the total work force ( 1990)

Saudi Arabia 60.20Kuwait 90.50Qatar 98.90

Bahrain 41.00

Oman 77.80UAE 95.60

Compiled from Gulf Organisation for Industrial Consulting, 1991

This large population of expatriates in the GCC countries is drawn from almost every country in the world. In Saudi Arabia and Kuwait the majority of expatriates are Arab: 70 per cent and 90 per cent respectively. In other GCC countries Asian expatriates are the majority, especially from India and Pakistan, who represent 75 per cent in UAE, 60 per cent in Bahrain, and 85 per cent in Oman. GCC governments have to rely on foreign labour to staff their organisations and run their economies. They rely on large numbers of Arab and non-Arab workers. The expatriates number about ten million, and are not as wealthy as the natives. They spend on essential and consumer durables which they often re-export (Kassem et al. 1993). UK companies should target these expatriate communities, but also give more attention to the local people who spend their lives in these countries, unlike the expatriates who just stay till their contract is ended and go back home. UK companies doing business in Saudi Arabia should take account of almost three million Muslims visiting the holy places every year. They are usually heavy buyers of consumer durable goods. Many agents in the GCC recommend that UK companies should aim the long term marketing effort at Saudi customers not at the foreigners because these people come for only short stays.

11. IMPORTANCE OF THE GCC

Many local businessmen argue that UK companies should take GCC markets more seriously, to take account of long term rather than short-term interests. The GCC still have the highest income per capita in the world. Some companies think that because the GCC population is small (approximately twenty-three million), it is not attractive to them. The reality is that the buying power of the population is much greater than might be expected. UK companies should, however, be careful. Although the GCC makes a lucrative market, it can be very risky, for example, these can be political instability or regional rivalries.

Another point to be considered is that although the six Gulf states share a common language and religion, they can be very different from each other. UK companies should use Saudi Arabia as a stepping stone to other GCC markets, because these countries seem to follow Saudi steps. In spite of their economic and political uncertainties, GCC countries still offer great opportunities to UK companies.

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12. FAMILY STRUCTURE

Family structure in the GCC countries tends to be the extended family, where the father, mother, and their sons with their children live in the same house. This requires a particular marketing strategy, for example, in the size of the packaging and in targeting the decision-maker in the family. Some international marketers seem to under-estimate the role of women and the family structure in Gulf society. Women play a very important role in the family purchasing decisions. UK companies should understand this and direct their promotion campaign towards women.

13. ISLAM

According to Kassem et al. (1993) in the GCC countries Islam is a way of life, supposed to affect every aspect of it for the people, but local practice shows some variations in the interpretation of Islam. In Saudi Arabia, for example, Islam controls almost everything, including commercial dealings. That is because Saudi Arabia has the two holy mosques. Other GCC countries are not as restricted as Saudi Arabia. UK companies should be conscious of Islam and adopt their marketing strategy accordingly. Companies which are very careful with Islam when doing business within its borders, have a very good chance to succeed in the GCC markets. Japanese companies are very good at producing products culturally suitable for the GCC markets. Many GCC agents argue that UK companies should obey Islamic law more carefully, and accept things as they are.

14. CUSTOMER SERVICES

In the Gulf markets there is a custom that sold goods cannot be returned or replaced, which is in contradiction to consumers’ rights. UK companies, if they want to take the lead and have a competitive advantage, should allow their sold products to be returned for replacement or refund if the consumer is not totally satisfied. Mail order is rarely used in the Gulf markets and there are many reasons why it is not successful. The problem is the unreliable mail system in these markets. UK companies should think of a way to make this service available to Gulf consumers by having their own list of interested consumers; drawing their own map; using the experience of the marketing research agencies operating in the GCC. Reliable warranties provide repair and maintenance services. UK companies must assist local distributors in providing repair and maintenance services, and this should be emphasised in the promotional campaign.

17. GULF CUSTOMERS

Consumers in the GCC markets have become very sophisticated. After being exposed to a wide range of products from around the world, their marketing knowledge has increased. The growth of marketing communications has made them aware of international brands and companies and they can make comparisons between products. Most of the Gulf consumers prefer to spend their holidays and to shop in London, which makes it easier for UK companies to target them. Gulf consumers do not trust exaggerated and hyped oversell techniques (Luqmani et al. (1989) and Yavas and Tuncalp (1983)). They prefer word of mouth (Al-Sayed, 1985). Consumers in the GCC markets are exhibitionist, but they also care about the needy (Kassem and Al Modaifer, 1987). Gulf consumers like the prestige style. All these facts should be considered when marketing activities are being planned.

To conclude, a new company should choose its partners very carefully, spend time in the market, study it and talk to the local people who know it. Above all, it should not impose the British system, but think internationally.

6.4 LIMITATIONS OF THE STUDY

Every research has its limitations, and this research is no exception. Every effort was made to keep them to the minimum. In spite of that, there were limitations, of which the following are some.

1. To achieve the objectives in the time available, the sample was restricted. It could have been slightly larger if there had been no time pressure.

2. Because of time and budget constraints, the study was confined to the UK companies exporting to the GCC markets only. It could have included other multinational companies from different nations and compared the results in order to enrich the marketing standardisation debate.

3. This study is confined to a single region which is dominated by Saudi’s market. It might have covered more regions to understand the overall picture of standardisation.

4. In the companies contacted only one person responsible for the GCC markets was interviewed. If the time had been available, more people in the company could have been interviewed, to check the accuracy of the answers instead on relying on the manager’s statements.

5. Ten agents of the UK companies in the GCC markets were interviewed about their perceptions of the standardisation issue. The number could be increased, if money and time were no object.

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Even though the research has some limitations, it has contributed to the existing literature. In the following section some of the contributions are represented.

6.5 CONTRIBUTIONS

This research contributes to the existing literature on international marketing programme standardisation in several ways.

1. Most of the existing marketing standardisation studies have paid much attention to a single marketing programme element, mostly promotion, and have not dealt much with other elements, such as product, price, and distribution. This study covered all the marketing programme elements in more detail.

2. Most of the literature on the subject has been concerned with the developed world, while the developing countries were overlooked. This study dealt with the developing world, namely the Gulf states.

3. In most studies on the subject the views of the agents were absent, with reliance placed on the HQ executive’s view. This study covered the views of both the HQ executives and the agents.

4. As mentioned in the literature review, most of the discussion on marketing programme standardisation lacks thorough empirical evidence. This study utilised a broad framework and detailed empirical evidence on the issue.

5. Most of the literature on marketing standardisation concerned US companies. This study dealt with marketing standardisation from the viewpoint of UK companies.

6. Most previous research was focused on consumer goods companies with little attention given to companies from other sectors such as industrial goods. This study covered both consumer and industrial companies.

7. This study is concerned with direct exporting, which is still an important part of international marketing activity (Whitelock, 1987), particularly for trading nations like the UK. Most of the earlier studies involved the supply of goods to overseas markets through subsidiaries based in those markets.

6.6 SUGGESTIONS FOR FURTHER RESEARCH

Although the subject of international marketing standardisation has been debated for almost three decades and this study sheds some light on the topic, more empirical evidence is needed for clarification. There are a numbers of suggestions for future research:

1. We do not yet know whether standardisation of the marketing process (the necessary tools in programme development and implementation) correlates closely with to standardisation of the marketing programme or how they interact with each other. Future research on this subject will be useful (Kotabe 1990).

2. Most of the existing standardisation research deals with the outflow of products from developed to developing countries, or within developed countries. Not much work has dealt with the outflow of products from developing to developed countries or within developing countries. Empirical evidence is needed to show whether there are any differences in marketing programme standardisation between companies from developed countries and those from the developing world.

3. Most existing studies of marketing standardisation take the executive’s views from the mother companies only. Just a few consider the views of the subsidiaries or the agents. This study takes the agents’ views on the subject and compares them to those of the HQ. More research is needed on the views of agents and customers concerning standardisation .

4. It is suggested this study should be replicated in a different region of the developing world, such as North African countries, and the results compared to see whether UK companies are using a different strategy in different regions.

5. It is suggested this study should be replicated for the same companies in a different region where they have subsidiaries rather than importing agents, to see whether they are standardising or adapting their marketing programme when the kind of relationship is different.

6. Our model has been successfully tested and can be used for further research to direct attention to the key variables used by companies adopting marketing programme standardisation in other markets.

7. A useful direction for further research is to replicate this model and evaluate regions comparatively on the issue of marketing programme standardisation.

8. Many propositions can be derived from our model. The four hypotheses we originally proposed and others proposed by Jain are a fertile area of research for future validation and development of the model.

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TABLE OF CONTENTS

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LIST OF TABLES ..............................................................................................................................................................................

LIST OF FIGURES ...........................................................................................................................................................................

LIST OF APPENDICES ............................................................................................................................................................

THE AUTHOR .......................................................................................................................................................................................

ABSTRACT ................................................................................................................................................................................................

DECLARATION ...................................................................................................................................................................................

ACKNOWLEDGMENTS .......................................................................................................................................................

CHAPTER ONE .....................................................................................................................................................................................

INTRODUCTION, RESEARCH TOPIC, UK AND GCC BUSINESS

RELATIONSHIPS AND THESIS STRUCTURE. ...........................................................................

1.1 INTRODUCTION .................................................................................................................................................................

1.2 INTEREST IN THE TOPIC ...................................................................................................................................

1.3 DEFINITION OF STANDARDISATION ......................................................................................

1.4 RESEARCH TOPIC ...........................................................................................................................................................

1.5 OBJECTIVES OF THE STUDY ....................................................................................................................

1.6 GCC AS A TARGET MARKET ..................................................................................................................

1.6.1 THE AGGREGATE APPROACH ..........................................................................................................

1.6.2 THE REDUCTIONIST APPROACH .................................................................................................

1.7 UK AND GCC BUSINESS RELATIONS ......................................................................................

1.8 MAIN DESTINATIONS OF EXPORTS AND IMPORTS FOR THE

GCC COUNTRIES IN 1992 ................................................................................................................................................

1.9 UK AND GCC COUNTRIES’ TRADE ..............................................................................................

1.10 THESIS STRUCTURE ................................................................................................................................................

CHAPTER TWO ...................................................................................................................................................................................

LITERATURE REVIEW AND BACKGROUND ................................

2.1 INTERNATIONAL MARKETING STRATEGIES .........................................................

2.1.1 STANDARDISATION APPROACH .................................................................................................

2.1.1.1 BENEFITS OF STANDARDISATION APPROACH ...................

2.1.2 LOCALISED (ADAPTATION) APPROACH...................................

2.1.3 MIDDLE OF THE ROAD APPROACH ...........................................

2.1.4 CLUSTER APPROACH .........................................................................................................................................

2.1.5 INTERMARKET SEGMENTATION APPROACH ...................................................

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2.2 RATIONALE FOR STANDARDISATION OR LOCALISATION ...

2.2.1 TARGET MARKET ....................................................................................................................................................

2.2.2 TYPE OF PRODUCT ................................................................................................................................................

2.2.3 MARKET POSITION ...............................................................................................................................................

2.2.4 ENVIRONMENT .............................................................................................................................................................

2.2.5 ORGANISATIONAL FACTORS ..........................................................................................................

2.3 EMPIRICAL EVIDENCE ....................................................................................................................................

2.3.1 MARKETING PROGRAMME STANDARDISATION ....................................

2.3.1.1 PRODUCT ............................................................................................................................................................................

2.3.1.2 PRICE ...........................................................................................................................................................................................

2.3.1.3 SALES PROMOTION........................................................................................................................................

2.3.1.4 ADVERTISING ............................................................................................................................................................

2.3.1.5 DISTRIBUTION ..........................................................................................................................................................

2.3.2 MARKETING PROCESS STANDARDISATION .......................................................

2.4 CONCLUSION ..........................................................................................................................................................................

CHAPTER THREE ...........................................................................................................................................................................

MODELLING, HYPOTHESES AND METHODOLOGY .................................................

3.1 INTRODUCTION ...............................................................................................................................................................

3.2 THE MODEL ................................................................................................................................................................................

3.2.1 COUNTRY FACTORS .............................................................................................................................................

3.2.1.1 TARGET MARKET ................................................................................................................................................

3.2.1.2 MARKET POSITION ...........................................................................................................................................

3.2.1.3 ENVIRONMENT FACTORS ...................................................................................................................

3.2.2 FIRM FACTORS ................................................................................................................................................................

3.2.2.1 FIRM CHARACTERISTICS .....................................................................................................................

3.2.2.2 RELATIONSHIP BETWEEN HQ AND PARTNER ...........................................

3.2.2.3 DELEGATION OF AUTHORITY ....................................................................................................

3.2.2.4 CORPORATE ORIENTATION ............................................................................................................

3.2.3 MARKETING PROGRAMME ................................................................................................................

3.4 THE HYPOTHESES ............................................................................

3.5 RESEARCH METHODOLOGY....................................................................................................................

3.5.1 UK MAIN SAMPLE (STAGE ONE) ................................................................................................

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3.5.1.1 DATA COLLECTION FOR UK MAIN SAMPLE (STAGE ONE) ......

3.5.2 AGENTS QUANTITATIVE: COMPARISON OF VIEWS

(STAGE TWO) ........................................................................................................................................................................................

3.5.2.1 OBJECTIVES ................................................................................................................................................................

3.5.2.2 METHODOLOGY ...............................................................................................................................................

3.5.3 QUALITATIVE RESEARCH (STAGES THREE AND FOUR) ............

3.5.3.1 OBJECTIVES ..................................................................................................................................................................

3.5.3.2 TRIANGULATION ................................................................................................................................................

3.5.3.3 METHODOLOGY FOR STAGES THREE AND FOUR .....................

3.5.3.3.1 AGENTS’ QUALITATIVE RESEARCH ....................................................................

3.5.3.3.2 THE SAMPLE ..........................................................................................................................................................

3.5.3.3.3 UK SAMPLE: QUALITATIVE RESEARCH .........................................................

3.6 MEASUREMENT OF THE DEGREE OF MARKETING

PROGRAMME STANDARDISATION ..........................................................................................................

3.7 MEASUREMENT OF THE DEGREE OF SIMILARITY OF

COUNTRY FACTORS ...............................................................................................................................................................

3.8 MEASUREMENT OF THE DEGREE OF SIMILARITY OF FIRM

FACTORS........................................................................................................................................................................................................

3.9 RELIABILITY AND VALIDITY OF THE MEASUREMENT ......................

3.9.1 RELIABILITY ........................................................................................................................................................................

3.9.2 VALIDITY .................................................................................................................................................................................

4.10 STATISTICAL TECHNIQUES ...................................................................................................................

4.10.1 DISCRIMINANT ANALYSIS ................................................................................................................

4.10.2 FACTOR ANALYSIS ..........................................................................................................................................

4.10.3 DESCRIPTIVE ANALYSIS .......................................................................................................................

4.10.4 T-TEST .............................................................................................................................................................................................

CHAPTER FOUR

RESULTS: UK FINDINGS

4.1 INTRODUCTION .................................................................................................................................................................

4.2 MULTI-FACTOR DISCRIMINATING VARIABLES

EXPLAINING THE DEGREE OF MARKETING PROGRAMME

STRATEGIES BETWEEN THE UK AND GULF ..........................................................................

4.3 PRODUCT VARIABLES MORE STANDARDISED WHILE

OTHER MARKETING MIX VARIABLES MORE ADAPTED ..............................

4.4 THE TOP VARIABLES RELATED TO HIGH DEGREE OF

STANDARDISATION

4.5 THE TOP VARIABLES RELATED TO MODERATE

ADAPTATION

4.6 THE TOP VARIABLES RELATED TO LOCALISATION

4.7 THE RELATIVE IMPORTANCE OF MARKETING

PROGRAMME VARIABLES FOR ALL COMPANIES. ....................................................

4.8 COMPARISON OF MARKETING PROGRAMME VARIABLES

BY THE NATURE OF BUSINESS

4.9 THE DEGREE OF STANDARDISATION IS NOT RELATED TO

FIRM'S INDUSTRIAL TYPE

4.9.1 T-TEST ON FIRM AND COUNTRY VARIABLES ...............................................

4.9.2 T-TEST ON MARKETING PROGRAMME VARIABLES ...........................

4.10 UK FIRMS COULD BE CHARACTERISED AS TAKING A

CLUSTER APPROACH TOWARDS STANDARDISATION IN THE

GULF STATES .......................................................................................................................................................................................

4.11 UNDERLYING MARKETING ORIENTATION FACTORS

CONTRIBUTING TO THE DIFFERING DEGREES OF

ADAPTATION ........................................................................................................................................................................................

CHAPTER FIVE ...................................................................................................................................................................................

RESULT: PERSPECTIVES OF GCC AGENTS ................................................................................

5.1 INTRODUCTION ...............................................................................................................................................................

5.2 INSIGHT OBTAINED FROM QUALITATIVE INTERVIEWS ...............

5.3 AGGREGATE COMPARISONS OF VIEWS BETWEEN AGENTS

AND UK COMPANIES. ..........................................................................................................................................................

5.4 COMPARISON OF AN INDIVIDUAL UK COMPANY WITH

THEIR AGENTS ..................................................................................................................................................................................

5.4.1 T-TEST ...........................................................................................................................................................................................

5.4.2 DISCRIMINANT ANALYSIS BETWEEN HQS AND AGENTS. ..

5.5 REASONS FOR USING DIFFERENT STRATEGIES ............................................

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5.5.1 HIGH DEGREE OF STANDARDISATION ......................................................................

5.5.2 MODERATE ADAPTATION. ..................................................................................................................

5.5.3 LOCALISATION ...........................................................................................................................................................

5.6 ANALYSIS OF THE FINDINGS ...............................................................................................................

CHAPTER 6 .................................................................................................................................................................................................

DISCUSSION AND CONCLUSIONS ...............................................................................................................

6.1 INTRODUCTION .................................................................................................................................................................

6.2 SUMMARY AND CONCLUSIONS .......................................................................................................

6.3 RECOMMENDATIONS TO UK COMPANIES ..................................................................

6.4 LIMITATIONS OF THE STUDY ................................................................................................................

6.5 CONTRIBUTIONS .............................................................................................................................................................

6.6 SUGGESTIONS FOR FURTHER RESEARCH ...................................................................

APPENDICES ...........................................................................................................................................................................................

APPENDIX 1 ..............................................................................................................................................................................................

APPENDIX 2 ..............................................................................................................................................................................................

APPENDIX 3 ..............................................................................................................................................................................................

APPENDIX 4 ..............................................................................................................................................................................................

APPENDIX 5 ..............................................................................................................................................................................................

APPENDIX 6 ..............................................................................................................................................................................................

APPENDIX 7 ..............................................................................................................................................................................................

APPENDIX 8 ............................................................................................................................................................................................

BIBLIOGRAPHY

TABLE 1.1 UK ExPORTS TO THE GCC COUNTRIES (£M) .......................................................

TABLE 1.2 UK IMPORTS FROM THE GCC (£ M) ...................................................................

TABLE 1.3 ECONOMIC IMPORTANCE OF THE GCC IN 1992 .......................................

TABLE 1.4 MAIN DESTINATIONS OF ExPORTS AND IMPORTS OF SAUDI

ARABIA .......................................................................................................................................................................................

TABLE 1.5 MAIN DESTINATIONS OF ExPORTS AND IMPORTS OF KUWAIT ...

TABLE 1.6 MAIN DESTINATIONS OF ExPORTS AND IMPORTS OF QATAR .......

TABLE 1.7 MAIN DESTINATIONS OF ExPORTS AND IMPORTS FOR

BAHRAIN .....................................................................................................................................................................................

TABLE 1.8 MAIN DESTINATIONS OF ExPORTS AND IMPORTS FOR OMAN .....

TABLE 1.9 MAIN DESTINATIONS OF ExPORTS AND IMPORTS OF UAE ...........

TABLE 1.10 UK-SAUDI ARABIA TRADE BALANCE 1981-1991 (£'000) ..

TABLE 1.11 UK-KUWAIT TRADE 1981-1991 (£'000) ..................................................

TABLE 1.12 UK-QATAR TRADE 1981-1991(£'000) ......................................................

TABLE 1.13 UK-BAHRAIN TRADE 1981-1991 (£'000) ...............................................

TABLE 1.14 UK-OMAN TRADE 1981-1991 (£'000)........................................................

TABLE 1.15 UK-UAE TRADE 1981-1991 (£'000) ........................................................

TABLE 1.16 ExPORTERS TO THE GCC BY MAIN COUNTRY SUPPLIERS,

1990 (£‘000) ......................................................................................................................................................................

TABLE 3.1 SAMPLE USED IN THE STUDY .............................................................................................

TABLE 3.2 BREAKDOWN OF RESPONDENTS BY JOB TITLE ...............................................

TABLE 3.3 BREAKDOWN OF SAMPLE BY TYPE OF INDUSTRY ......................................

TABLE 3.4 BREAKDOWN OF SAMPLE BY SIzE IN TERMS OF SALES ................

TABLE 3.5 BREAKDOWN OF SAMPLE BY THE PERCENT OF ExPORT .....................

TABLE 3.6 BREAKDOWN OF SAMPLE BY NUMBER OF YEARS WORKING IN

THE GCC ...................................................................................................................................................................................

TABLE 3.7 BREAKDOWN OF AGENTS .....................................................................

TABLE 3.8 BREAKDOWN OF SAMPLE IN THE

QUALITATIVE STAGE ...............................................................................................................................

TABLE 4.1 FREQUENCY OF THE MARKETING .....................................

PROGRAMME VARIABLES FOE EACH COMPANY ...........................

TABLE 4.2 THE STEPWISE DISCRIMINANT ANALYSIS .........................................................

TABLE 4.3 CANONICAL DISCRIMINANT FUNCTIONS ................................................................

TABLE 4.4 COMPARATIVE IMPORTANCE OF DIFFERENT DEGREES OF

STANDARDISATION BETWEEN .......................................................................................................................

COMPANIES (UK VERSUS GCC) ...................................................................................................................

TABLE 4.5 LEVEL OF STANDARDISATION OF MARKETING PROGRAMME

MEAN SCORE ..........................................................................................................................................................................

FOR ALL COMPANIES. ....................................................................................................................................................

TABLE 4.6 DEGREE OF STANDARDISATION OF

MARKETING PROGRAMME VARIABLES BY UK

COMPANIES IN THE GCC....................................................................................................................

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TABLE 4.7 LEVEL OF DEGREE OF STANDARDISATION OF MARKETING

PROGRAMME MEAN ........................................................................................................................................................

SCORE OF CONSUMER AND INDUSTRIAL COMPANIES ................................................................

TABLE 4.8 LEVEL OF STANDARDISATION OF FIRM AND COUNTRY

VARIABLES BY NATURE OF .................................................................................................................................

BUSINESS (MEAN SCORES FOR DIFFERENT COMPANIES) .......................................................

TABLE 4.9 LEVEL OF STANDARDISATION OF MARKETING PROGRAMME

VARIABLES BY NATURE ............................................................................................................................................

OF BUSINESS MEAN SCORE OF DIFFERENT COMPANIES ..........................................................

TABLE 4.10 T-TEST BETWEEN CONSUMER AND INDUSTRIAL COMPANIES

ON FIRM AND COUNTRY VARIABLES ............................................................................................................

TABLE 4.11 T-TEST BETWEEN CONSUMER AND INDUSTRIAL COMPANIES

ON MARKETING PROGRAMME VARIABLES .............................................................................................

TABLE 4.12 T-TEST OF FIRM AND COUNTRY VARIABLES

FOR DIFFERENT TYPES OF COMPANY ...................................................................

TABLE 4.13 T-TEST FOR MARKETING PROGRAMME VARIABLES OF

DIFFERENT TYPES OF COMPANY ........................................................................................................................

TABLE 4.14 T-TEST FIRM AND COUNTRY VARIABLES

OF DIFFERENT TYPES OF COMPANY ......................................................................

TABLE 4.15 T-TEST FOR MARKETING PROGRAMME

VARIABLES OF DIFFERENT TYPE OF COMPANY ..............................

TABLE 4.16 COMPARISON OF FIRM AND COUNTRY

VARIABLES OF UK COMPANIES IN SAUDI ARABIA ....................

AND OTHER GCC COUNTRIES ...............................................................................................

TABLE 4.17 COMPARISON OF MARKETING

PROGRAMME VARIABLES OF UK COMPANIES IN SAUDI

ARABIA AND OTHER GCC COUNTRIES ................................................................

TABLE 4.18 FACTOR ANALYSIS FOR HIGH DEGREE OF

STANDARDISATION .....................................................................................................................................

TABLE 4.19 FACTOR ANALYSIS FOR MODERATE

ADAPTATION .............................................................................................................................................................

TABLE 4.20 FACTOR ANALYSIS FOR LOCALISATION .............

TABLE 5.1 COMPARISON BETWEEN HQs AND THEIR

AGENTS ON ALL THE VARIABLES ON THE GRAND

MEAN .......................................................................................................................................................................................

TABLE 5.2 COMPARISON OF INDIVIDUAL HQs AND

AGENT’S VIEWS ON FIRM VARIABLES .................................................................

TABLE 5.3 COMPARISON OF INDIVIDUAL HQs AND

AGENT’S VIEWS ON MARKETING PROGRAMME

VARIABLES ...................................................................................................................................................................

TABLE 5.4 T-TEST RESULT BETWEEN HQs AND AGENTS

TABLE 5.5 DISCRIMINANT ANALYSIS BETWEEN UK

COMPANIES AND THEIR AGENTS....................................................................................

TABLE 5.6 CANONICAL DISCRIMINANT FUNCTIONS ............

TABLE 6.1 THE PROPORTION OF CONTRACTED IMMIGRANT WORKERS IN

THE WORKFORCE (1990) .......................................................................................................................................

LIST OF FIGURES PAGE

FIGURE 3.1: MODELLING THE DEGREE OF MARKETING

PROGRAMME

STANDARDISATION ...................................................................................................................................................

FIGURE 3.2: THE SIxTY VARIABLES USED IN THE STUDY ..........

FIGURE 3.3: A SUMMARY OF THE RESEARCH

METHODOLOGY ..............................................................................................................................................................

FIGURE 6.1: THE SIxTY VARIABLES USED IN THE STUDY ..........

LIST OF APPENDICES

Appendix 1: The piloT sTudy ..............................................................................................................................................

Appendix 2: Letter request for interview ..........................................................................................................

Appendix 3: Questionnaire to HQs ............................................................................................................................

Appendix 4: Questionnaire to agents ......................................................................................................................

Appendix 5: Qualitative interview (Agents) ................................................................................................

Appendix 6: Qualitative interview (HQs) ........................................................................................................

Appendix 7: Name of research agencies familiar with the Gulf markets.........

Appendix 8: Marketing-related information available in various

government departments ............................................................................................................................................................

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THE AUTHOR

The author is a lecturer at the College of Industrial Management, King Fahad University of Petroleum and Minerals, Dhahran, Saudi Arabia. He worked as researcher at Umm Alqura University, Makkah, and then for a local company as assistant international marketing manager. Qualifications held are Bachelor degree of Business administration, King Abdulaziz University, Jeddah 1986; Diploma in Business Administration UWIST, 1988, Wales; MBA from Cardiff Business School 1989. He joined Manchester Business School in September 1992.

ABSTRACT

The marketing programme standardisation/localisation policies of sixty-three UK companies exporting to the Gulf states are examined, using a three-factor, sixty variable model of country, firm, and marketing programme factors. The research framework is unusually broad compared with other standardisation studies, which have also concentrated more on the developed than the developing economies. Three firm variables and one country variable are shown to differentiate the degree of marketing programme standardisation between the UK and the Gulf. The degree of standardisation of the marketing programme variables varies across the individual elements. Product strategies are much more standardised and promotion, distribution and price more moderately adapted. In the Gulf, unexpectedly, industrial product firms appear to be no more standardised in their marketing programmes than consumer goods firms. UK companies tend to treat the six Gulf states as a single market cluster with only minor variations between them in their marketing programmes. The agents’ views about the degree of standardisation are compared with the views of the headquarters, which are similar in their perceptions of the types of marketing programmes used.

DECLARATION

No portion of the work referred to in the thesis has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning.

The following notes on copyright and the ownership of intellectual property rights:

Copyright in text of this thesis rests with the Author. Copies (by any process) either in full, or of extracts, may be made only in accordance with instructions given by the Author and lodged in the John Rylands University Library of Manchester. Details may be obtained from the Librarian. This page must form part of any such copies made. Further copies (by any process) of copies made in accordance with such instructions may not be made without the permission (in writing) of the Author.

The ownership of any intellectual property rights which may be described in this thesis is vested in the University of Manchester, subject to any prior agreement to the contrary, and may not be made available for use by third parties without the written permission of the University, which will prescribe the terms and conditions of any such agreement.

Further information on the conditions under which disclosures and exploitation may take place is available from the Head of Manchester Business School.

ACKNOWLEDGMENTS

Acknowledgments can never be made to all who have nourished one’s academic life. But this thesis would not be complete without the valuable help received from many individuals and organisations. First and foremost, thanks are due to Professor Paul Michell, the Dean of Manchester Business School, for his supervision of the thesis and guidance from the beginning to the end, and for his encouragement and support. There are many organisations which provided the information needed for the thesis. Among them are the Department of Trade in London, The Arab-British Chamber of Commerce in London, and British Embassies in the Gulf Countries. In addition, I would like to thank all UK companies and their agents in the GCC countries who participated in this study without the assurance that their names would appear in this acknowledgment. Special thanks and gratitude are due to his Excellency Dr. Rashid Alrajeh, the member of Council House in Saudi Arabia and the former rector of Umm Alqura University, Makkah, for his continued moral support and for making life easier for me. I would like to give special thanks to King Fahad University of Petroleum and Minerals, Dhahran, Saudi Arabia, for providing me with a generous scholarship to finance this study. I also wish to thank the Saudi Culture attachés in London for their help during the study period. Last, and especially, I am indebted to my father, mother, brothers and sisters and give special thanks to my wife Aljoharah and my twin daughters, Lamma and Loujean, for their patience and support. It is to my three ladies that I owe so much and dedicate this work.