Marketing Integration Strategy in Nigeria′s Affiliates of British and French Multinational Corporations

1、european journal of social sciences - volume 3, number 2 (2006)european journal of social sciencesissn: 1450-2267volume 3, number 2 august, 2006editor-in-chiefadrian m. steinberg, wissenschaftlicher forschereditorial advisory boardleo v. ryan, depaul universityrichard j. hunter, seton hall universit

2、ysaid elnashaie, auburn universitysubrata chowdhury, university of rhode islandteresa smith, university of south carolinaneil reid, university of toledomete feridun, cyprus international universityjwyang jiawen yang, the george washington universitybansi sawhney, university of baltimorehector lozada

3、, seton hall universityjean-luc grosso, university of south carolinaali argun karacabey, ankara universityfelix ayadi, texas southern universitybansi sawhney, university of baltimoredavid wang, hsuan chuang universitycornelis a. los, kazakh-british technical universityjatin pancholi, middlesex unive

4、rsityteresa smith, university of south carolinaranjit biswas, philadelphia universitychiaku chukwuogor-ndu, eastern connecticut state universityjohn mylonakis, hellenic open university (tutor)m. femi ayadi, university of houston-clear lakewassim shahin, lebanese american universitykaterina lyroudi,

5、university of macedoniaemmanuel anoruo, coppin state universityh. young back, nova southeastern universityjean-luc grosso, university of south carolinayen mei lee, chinese culture universityrichard omotoye, virginia state universitymahdi hadi, kuwait universitymaria elena garcia-ruiz, university of

6、cantabriazulkarnain muhamad sori, university putra malaysiaindexing / abstractingeuropean journal of social sciences is indexed in scopus, elsevier bibliographic databases, embase, ulrich, doaj, cabell, compendex, geobase, and mosby.1european journal of social sciences - volume 3, number 2 (2006)mar

7、keting integration strategy in nigerias affiliates ofbritish and french multinational corporationsolujide jacksondepartment of business administration university ofllorin, ilorinabstractthe globalization of multinational marketing has generated a lot of debate and controversy in recent times. this p

8、aper provides empirical data and sheds light on the global marketing effort of nigerian affiliates of british and french mncs and offers specifics on which marketing-mix elements are targets for standardized approach in a multinational context. results show that nigerian affiliates of the mnc have m

9、ore autonomy than do similar subsidiaries in asia, europe or u.s.a. disparities in environmental factors and the socio-linguistic distance between affiliate and headquarter account for the different degrees of integration of multinational marketing. finally, product is the only element of the market

10、ing mix that is integrated while price, promotion and distribution are differentiated.introductionthe integration (i.e. globalization) of the marketing programme of overseas subsidiaries of the multinational corporation (mnc) has emerged as one of the most widely discussed developments of the past d

11、ecade. the growing importance of this subject has therefore stimulated a flood of comment and advice such that conferences, seminars and surveys have probed the distinctive problems of the integration of international marketing in this new breed of enterprise.to date, much of the research effort on

12、the marketing strategies of the mnc has focused on the standardization of marketing programs with a headquarters-oriented perspective (aylmer, 1970; buzzell, 1968;. effective coordination of plans, however, demands the involvement on the part of subsidiaries, (schwendiman, 1971; brandt and hulbert,

13、1977 a).secondly, the majority of research done on the standardization of marketing decisions in the mnc has been limited to european and american operations and one or two elements of the marketing mix in the low risk market environments of europe and america (aylmer, 1970; wiechman, 1974: sorenson

14、 and wiechman, 1975;. only one research has been undertaken in a moderate risk market environment covering the four elements of the marketing mix (ahn, lasserre and chandon, 1987). no research of this nature has been carried out in a high risk market environment. this geographic limitation has there

15、fore eliminated the different types of integration of marketing decisions and programmes that could exist between countries that are culturally, politically and geographically different and with different degrees of risk.thus, the question of whether to use multinational standardization or to custom

16、er-tailor marketing programmes in each country has continued to trouble practicing international managers, academicians and researchers alike, and has produced a wide array of divergent view-points (simon-miller, 1986; sheth, 1986; porter, 1986; levitt, 1983, etc).this debate on the integration of i

17、nternational marketing turns around two contradictory hypotheses about the international consumer. the first is that consumer needs are basically the same worldwide. thus, an mnc finds it economically advantageous to use identical marketing procedures in each country. this point of view is based on

18、the proposition that worldwide integration contribute to overall objectives of cost minimization, coherence of image and competitivity.67european journal of social sciences - volume 3, number 2 (2006)according to the second hypothesis, consumer needs, cultural and socio-economic factors vary widely

19、from country to country. thus, under these diverse market conditions, marketing decisions, programmes and practices must be flexible in order to meet the needs of each country. therefore, affiliates can pursue differentiated approaches in host countries.in view of this debate and the fact that up to

20、 the present, the debate has been couched in abstractions with limited empirical research, practitioners pleas for data which will show areas of convergence among countries and how companies might respond remain unanswered.thus, this study is designed to provide empirical data and to shed some light

21、 on the integration of marketing (global marketing), and offer specifics on which marketing mix elements are likely targets for a standardized approach in a multinational context.this study is distinct in that it analyzes the degree of marketing integration in british and french subsidiaries based i

22、n nigeria, a high-risk market environment, as measured by the risk scale of anderson and gatignon, (1986); and covers the four elements of the marketing mix.objective of the studythis study proposes an analysis of the two identifiable modes of integration in the mnc, the centralization and the stand

23、ardization of marketing decisions and practices.the centralization of marketing decisions is defined as the degree of influence exercised by the parent company on the marketing decisions of its foreign subsidiary, while standardization is the degree of similarity of marketing practices. in this stud

24、y, comparisons are mostly between the subsidiary, (host country) and the parent company (country of origin). three major themes are examined: i)the first is to determine the nature and degree of real influence wielded by the parent company in respect of the decisions concerning the four elements of

25、the marketing mix.ii)the second is to determine the degree of standardization versus adaptation of marketing programmes with respect to the four marketing mix elements.iii)the third is to examine the relationship between the centralization of marketing decisions and the standardization of marketing

26、procedures and practices.methodology sampleseveral sources were consulted in the process of designing the sample. these include the central bank of nigeria, abuja, the federal ministry of trade, industry and planning, abuja, the franco-nigeria and anglo-nigeria chambers of commerce, lagos.our sample

27、 is made up of 31 british and 35 french affiliates of the mnc in nigeria at the end of 2004; 66 subsidiaries are included. altogether they represent the most important private sector foreign investment in nigeria. the selection was non-probabilistic and controlled by the researcher.we have selected

28、consumer goods because of the competitive nature of its market and also because consumer goods marketing demonstrates a wide range of divergent approaches to the integration issue. we have not included companies dealing in raw materials, industrial products or services. equally important is the fact

29、 that this choice facilitated the comparison of results with sorenson and wiechman (1977) on america multinationals in europe (a low risk market environment) and that of ahn, lasserre and chandon 1987 on south korean subsidiaries of the mnc (a moderate risk market environment).data was collected by

30、means of personal interviews based on a form-type questionnaire and was complemented by a study of company records and books of account.the interviews were conducted with the marketing manager of each company and lasted about 2 to 3 hours. personal interviews seemed to be the most effective way of g

31、athering this kind of data.68european journal of social sciences - volume 3, number 2 (2006)measurement instrumentthe information gathered from the marketing managers was recorded at the ordinary-scale level for the variable centralization and at the interval-scale level for the variable standardiza

32、tion; 23 marketing decisions were drawn from the four elements of the marketing-mix. these key marketing decisions were chosen both by examining written materials by specialists in the field and by means of preliminary discussions with several managers of the subsidiaries in question through test an

33、d re-test.data analysisdata was analyzed by comparing the frequency distribution of centralization and standardization across the 23 marketing decisions. the relationship between the two variables was assessed through the significance level of spearman rank correlation coefficient, frequency distrib

34、ution.resultsdegree of centralization decisionsthe results obtained for each of the elements of the marketing mix and for each of the operational marketing decisions are presented in table 1.a global analysis of this table brings to light the great autonomy enjoyed by nigerian affiliates in making t

35、heir marketing decisions. only 5,81% of the subsidiaries have a highly centralized process of decision making with respect to the 4 elements of the marketing mix and the 23 operational decisions. 92.12% of these subsidiaries have a decentralized system of decision making. this analysis brings to lig

36、ht the great independence with which nigerian subsidiaries make their marketing decisions except, to a limited extent, the area of product policies.we note also from table 1 and figure 1 that the degree of centralization varies widely between the four elements of the mix. the marketing decisions rel

37、ating to the product are the most centralized while those regarding price, communication and distribution are decentralized. thus, the marketing decisions concerning the product are more centralized than the three others.there are several reasons for the relatively strong centralization of product d

38、ecisions. first is the fact that the modification or the creation of new products requires considerable capital outlay, which is strictly controlled by the parent company. secondly, the manufacture of international brands and the use of international brand names must receive the approval of the pare

39、nt company in order to maintain a uniform international standard. thirdly, since the parent company is the source of supply of production technology, it is relatively easy to control decisions relating to these elements right from the source.however, in the other areas of price, communication and di

40、stribution, the parent company considers marketing decisions relating to them as privileged areas of the local executives. in fact, the subsidiary is in a particularly privileged position for making such decisions and plays a unique, perhaps irreplaceable role due to its knowledge of local market co

41、nditions. most of these decisions are therefore made in nigeria by local executives.product decisionstable 1 shows that there is a substantial intervention of the parent company in the decision making process concerning the three sub- elements of the product: (physical characteristics, brand name an

42、d packaging). only 39.08% of the affiliates in our sample had complete or significant autonomy in making decisions 35.0% and concerning their products. as for physical characteristics and brand name, 37.5% had such independence whereas 46.25% control packaging decisions.the competitive edge of mncs

43、producing consumer goods for sale abroad depends heavily on their capacity for conveying an image of quality. it is not surprising then that their control over the sub-elements of the product is so strong. mncs want to protect the international reputation of their69european journal of social science

44、s - volume 3, number 2 (2006)established brand names, as well as controlling and organizing the development of new international brand names.table 1: degree of centralizationfigure 1: percentage of marketing mix highly integrated in the three market environments70european journal of social sciences

45、- volume 3, number 2 (2006)price decisionstable 1 shows that all the subsidiaries in the sample have complete or significant autonomy in making decisions concerning retail price, producers and retailers margins, rebate policies regarding price specials, credit policies, e.t.c. decisions concerning t

46、hese sub-elements of price are almost entirely taken at the level of the subsidiary. this is due to the remarkable difference in the characteristics of national markets, particularly between industrialized and developing countries as well as the fast changing market conditions in the host country.ac

47、cording to the executives of subsidiaries interviewed, autonomy in decisions concerning price allows quick reaction to local contingencies. there is an enormous difference between countries in terms of production costs, competition, legal framework for state intervention in price fixation, custom re

48、gulations and consequently local market conditions are a decisive factor in determining prices.communication decisions: advertising and promotionthe decisions concerning the sub-elements of advertising and promotion namely: target definition, advertising message, medial and copy selection, sales pro

49、motion, advertising and media budget, are significantly controlled by all subsidiaries in our sample.the managers interviewed recognize the great disparities in the market conditions and communication infrastructures between nigeria (host country), france and great britain (countries of origin). the

50、y realize how necessary it is to adapt the advertising message and its expression these must correspond to a nigerian mentality. thus, operational decisions concerning advertising and promotion must be taken at the subsidiary level in order to adapt to the market conditions of the host country.distr

51、ibution decisionsthe results of this study show that the mncs operating in nigeria have a very decentralized approach to distribution decisions and practices (see table 1). all the subsidiaries have a complete autonomy in making decisions concerning all the sub-elements of distribution.these results

52、 are similar to those of previous studies. for instance, the study of wiechman, (1997), on 27 american mncs involved in selling consumer products hi europe and that of ahn, lasserre and chandon, (1987), on nmcs in south korea, showed that most parent companies consider distribution decisions to be p

53、urely local. furthermore, keegan, (1974), concludes that in large mncs with foreign subsidiaries, the choice of distribution channels is the element of marketing which is the least controlled by the parent company. on the whole, distribution channels are an aspect of the marketing programme which ar

54、e left entirely at the discretion of the local marketing teams.degree of standardization of marketing decisionstable 2 shows the results of each of the 4 elements and 23 sub-elements of the marketing mix. according to the results, a very small proportion (5.05%) of subsidiaries constituting our samp

55、le consider the totality of their marketing practices standardized; only 1.85% recognize a flexible marketing programme while a large percentage (93.10%) consider then- marketing strategy adapted to the environmental and cultural conditions of the nigerian market. these results demonstrate that the

56、nigerian subsidiaries of the british and french mncs have a low degree of standardization in contrast to sorenson and wiechmanns study on american mncs in europe (63%) and ahn, lasserre and chandons study on south korea subsidiaries of the mnc (36%).each element of the marketing mix is standardized

57、to a different degree, (see table 2). product strategies are relatively highly standardized (38.75%), whereas price, communication and distribution programmes are significantly adapted to the conditions of the nigerian marketproduct decisionstable 2 shows that the sub- element of product: (physical

58、characteristic, brand, packaging), remain relatively highly standardized, with rates of 45%, 38.75% and 32.20% respectively.71 european journal of social sciences - volume 3, number 2 (2006)pricing decisionsthe results of this study demonstrate that marketing decisions relating to price and its sub-elements are significantly adapted to the nigerian market environment. a marketing manager in the beer industry interviewed said, among the four elements of the marketing mix,