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Marketing Plan-

International Markets
The case of Re- Gen in China

This report is about Fine Enviro inventions. Re-Gen


is a decomposer that enables house hold waste,
yard waste etc can be turned into natural non
chemicals fertilizers. This product is to be sold in
the China major cities.

Azrul Azli Aaron Koh Alvin Lau & Kim Han


Table of Contents
1.0 Introduction....................................................................................................................3
2.0 Target Market................................................................................................................4
2.1 Demographic Segmentation.......................................................................................4
2.2 Benefit Segmentation.................................................................................................5
2.3 Geographic Segmentation..........................................................................................5
3.0 Positioning.....................................................................................................................6
4.0 Product strategy.............................................................................................................8
5.0 Pricing for Re-Gen.......................................................................................................11
6.0 Mode of Entry..............................................................................................................13
6.1 Place Strategy..........................................................................................................13
7.0 Promotions...................................................................................................................16
7.1 Promotion Strategies in International Markets- China............................................16
7.2 Pull Strategy- Advertising.......................................................................................16
7.3 Push Strategy- Trade Shows and Sales Promotion..................................................17
7.4 Scheduling...............................................................................................................18
8.0 Conclusion...................................................................................................................20
Reference List....................................................................................................................21

2
1.0 Introduction

The company named Fine-Enviro had found that there is a need for a
decomposition product as there are problems regarding to the environmental issue is
concern in China. With a healthy economy and large population, this provides an
opportunity to cater the China market. From the cultural perspective issue, language
barriers will be the main issue as miscommunication might arise if there is a
misinterpretation of language. Additionally, business practices within the boarders of
China plays an important role as this will indicate the success or the failure of the projects
within China.
Furthermore, issues concerns on political and legal intervention which could
jeopardize on the marketing plan such as concerns on labour rights which requires a
minimal wage implemented among the Chinese workers which is a form of protective
measures to the citizens within the nation.
However, political intervention maybe of an advantage for Fine-Enviro as the
product delivers to the country encourages on the development of a much cleaner
environment. In this report, the objective is to design an implement a strategic market
plan through the 4P based on the factors of environment issue which needed to be dealt
with and to strengthen on the position of the company.

3
2.0 Target Market

In entering the Chinese Market Fine Enviro will have to refine their target market.
The target market will be explained by the potential segmentations.
Age 25-49
Income USD 3000- 40,000
Social Class Middle
Benefit Sought Promotes recycle, generate fertilizer
&generate income
Geographical Locations Major cities/ Urban areas

2.1 Demographic Segmentation

Fine Enviro needs to target the adults as those aged 25-49 years old because
according to this age demography account for 21.4% of China’s population. They are
also referred as the baby boomers generation which is a cohort that “had largely sailed
through life and consuming happily and make changes the face of
marketing”[ CITATION ACN06 \l 1033 ]. The ages of 40-49 which approximately half
of those earning over US$40,000 followed by the 30-39 year old bracket with a gross
annual income of US$2,105 followed closely by 25-29 year olds with a gross annual
income of US$2,050[ CITATION Eur09 \l 1033 ] These working group and young adults
are more willing to spend their money on household materials which is very important
because mostly are having a family. According to ACNielsen house hold product
cleaners like garbage bags, auto food processor in the Asia Pacific market has jumped up

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to 9 percent in terms of sales [ CITATION ACN06 \l 1033 ]. Even their income is
identifiable on the other hand this still depends on other variables such as the lifestyle,
taste and value, benefit sought.

2.2 Benefit Segmentation

Benefit or need based segmentation require “the findings of major benefit that
people look for in a product”[ CITATION Sch08 \l 1033 ]. Re Gen is a decomposer that
the function is to recycle organic material quickly and safely. Fine Enviro has identified
that the benefit sought is by consumers and the environment. The benefit that consumer
will obtain is that food wastage- from carrots peels to apple cores, yards and garden
wastage which the decomposer can turn it to a natural – chemical free fertilizer. The
large quantity that Re Gen can process at a time which the surplus can be use to sell to
the market and consumers will benefit by making money. In the environment perspective,
in the long run the people in China will live in a better sustainable environment. It also
will improve the soil structure, aids in water retention and neutralize soil ph level. In
other word, Re-Gen is a “green” product that promotes recycling and reduces, dumping
space of household waste. Thus from a house hold product, the benefits receive are
visible and clear which declines the fact of some marketing strategy to sell the product.

2.3 Geographic Segmentation


Geographic segmentation refers to the “division of the market into different
geographical units such as provinces or major cities” (Kotler et al. 2006). Since the bulk
of consumers targeted are from the middle income categories, Fine Enviro will be
distributing Re Gen in large cities or the urban areas. The intended cities for the
introduction stage are Guangzhou, Beijing, Shanghai and Hong Kong “due to the higher
income average in the big cities compare to the rural areas” (Shields F., 2006). People
living in cities are more willing to buy new products compare to the rural areas and to
promote awareness of Re Gen. In the growth stage of the life cycle, Fine Enviro will
penetrate to rural areas which are also a lucrative market.

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3.0 Positioning
Positioning of a product in the market is important because it is to see how the
company positions a product in the mind of consumers and potential consumers. In other
words, it is to see how the target markets define the company’s product in relation with
the competitors. If the company can stand out with a unique benefit, the companies have
a chance at getting consumer’s attention. 
Fine-Enviro position Re-Gen as a household product which can dispose
biodegradable items and produce fertilizer. These fertilizers produced can be use in
agriculture field. The product may be one of the first products in the market due to its
functions and benefits.
Consumers appear to consider few main attributes before buying anything into
their lifestyle, including quality and price (Wood & Pierson, 2006).
In this case, Re-Gen position themselves in the market by looking at their price
and the quality. Rao and Monroe (2002) suggested that unfamiliar buyers tend to use
price as an indicator of quality to a greater extent than expert or familiar buyers. Besides,
the brand can create an image of the product in the consumers’ mind that is associated
with quality, and informs the market of the product’s uniqueness in general, or in relation
to other competing products (Vranesvic & Stancec, 2003).
Thus, the perceptual map below is best to show how Re-gen position itself in the
China Market.

6
High Quality

Low Price High Price

Legend Low Quality


Re-Gen

Illustration A: Positioning (Perceptual Map) of Re-Gen in China Market

High and low price will be determined by the average price consumers pay for a
machine/equipment such as vacuum cleaners, washing machines and Photostat machines.
In other hand, high and low quality will be determined by the material used to build the
machine, and the lasting of the machine including the functions, and objective of the
machine as well as the outcome of the machine.
Besides looking at the perceptual map, it is also important to look at other factors
that might affect the positioning of the product such as benefit sought from the product.
Customer will look at benefits of Re-Gen before making any purchase for Re-Gen. In this
case, Re-Gen produces fertilizers from the biodegradable waste that can be use in
agriculture field.
In addition for positioning in target market, concentrate marketing is used because
the main target is the household users.

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4.0 Product strategy
In order to satisfy the need and the expectation of the targeted customers,
elements of the product components and an ideal mix of standardization and adaptation
are required to satisfy consumer needs and expectations.
Basically, the need for standardization and adaptation depends on the nature of
the product and degree of cultural grounding of a country [ CITATION Czi07 \p 329 \l
1033 ]. As for Re-Gen, it is technological and industrial intensive by nature. Besides
that, China can be considered to be a country of high-context culture [ CITATION
Kim06 \p 329 \l 1033 ]. Hence, there is a significant relationship between cultural and
social customs and taboo and the product dimension of global product standardization
which requires Re-Gen to adapt to [ CITATION Pow07 \p 678-679 \l 1033 ].
Firstly, the standardization of the core benefit allows Fine-Enviro to achieve
economies of scale. To be specific, core benefit here is the main function of Re-Gen
which is decomposing organic waste into fertilizers. This function is made possible by
the internal technology of Re-Gen, which will be standardized regardless of the country’s
culture.
Secondly, the tangible product will be adapted towards the China market. The
tangible product of Re-Gen consists of factors such as packaging, brand name, quality
and aesthetics of the goods [ CITATION Czi07 \p 327 \l 1033 ]. For the packaging of the
goods, it is suggested that the packaging box be filled with biodegradable Styrofoam to
avoid any high impact damage towards the product. Also, the box will be colored green
along with the company’s icon (a cute green alien) on it. Implicitly this also creates the
awareness on the importance on the environment by creating a unique packaging.
As for brand name, the suggested brand name “Regen” compliments with its
Chinese translation “Zhai Sheng”, meaning of wealth and regeneration.
Also, quality assurance of the product, the certification of ISO 9001:2008 is
needed as well. This is due to the compliance with non-tariff barriers such as product
quality standards and the government regulations of China. On the bright side, the
certification provides a sense of pride and motivation to the Fine-Enviro and guarantee of
quality [ CITATION Sta08 \l 1033 ]. However there is a downside of this effect as it will

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lead to some technical inefficiency due to the capital increment required to satisfy the
government of China (Tzelepis, Tzekouras, Skuras, Dimara, 2006).
Furthermore, Fine-Enviro will be producing 5 different colors of Re-Gen
including bright red, blue, green, cold and white. Most importantly, each Re-Gen has a
digital LCD panel which provides a heat reading meter as well as a capacity meter. The
rationale behind this development is to comply with the digital lifestyle of urban
consumers who expect technological goods to be digital.
In addition, the country of origin effect has negative effect on Re-Gen’s image.
Prior to that, country of origin can be defined as the country of manufacture or assembly [
CITATION AlS09 \p 154 \l 1033 ]. It is stated that consumers’ perception of the quality
of the product highly depends on the development status of the country [ CITATION
AlS09 \p 159 \l 1033 ]. Hence, stating “Made in Malaysia” might project an image of
low quality and induce low familiarity among consumers. Hopefully, the alignment with
Wal-Mart will make up for this weakness.
Lastly, the augmented variable of the product will mostly be handled by the
distributor, Wal-mart. Basically, Wal-Mart is user-friendly, consumers just need to plug
and use. Also, the warranty of the product will be up to 5 years. Besides that, there will
be free maintenance throughout the warranty period by Wal-Mart. There will be no
delivery or credit payments for the product as agreed between Wal-Mart and Fine-Enviro.

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5.0 Pricing for Re-Gen

Price is the amount of money charged for a product or service or the value
exchanged for the benefits of the product or service. It is an important factor at the time
of introduction as barriers to adoption may exist: the new product may be incompatible
with the buyer’s preceived values and expectation (Rogers, 2002, pp. 212-44).
According to Kotler(2003), a differentiated product with a perceived relative
advantage over competitors can be supported with an extensive skimming pricing
strategy.
Therefore, price skimming strategy is the most effective when a new product is
perceived to have a relative high competitive advantage, and is highly compatible with
the buyer’s experiences and values (Guiltinan, 1999).

The practice of this price skimming involves charging a relatively high price for a
period of time where a new, innovative, or even much improved product is launched onto
the market.
Where a highly innovative product is launched, research and development costs are likely
to be high, as are the costs of introducing the product to the market via promotion,
advertising etc. In such cases, the practice of price-skimming allows for some return on
the set-up costs (Johnson, 2006).

By charging high prices initially, a company can build a high-quality image for its
product. Charging initial high prices allows the firm the luxury of reducing them when
the threat of competition arrives. By contrast, a lower initial price would be difficult to
increase without risking the loss of sales volume. (Bovay, n.d.)

In this case, Re-Gen does not have any competitors in the market yet because of
its functions. Re-Gen is the only one that is in the market currently that does the
decomposition and recycles into fertilizers. This provides the company the competitive
advantage in China market. Re-Gen will be a very new product to most household
consumers. Setting such high price will definitely proof that Re-Gen is not just an

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ordinary household product that similar to the waste basket, but also recycles into
fertilizers that can help in agriculture.

Besides that, since Re-Gen is targeted towards the urban consumers, hence most
consumers will be able to afford to purchase Re-Gen as a household product. Some may
say the price of Re-Gen is expensive, but setting the price high is because it can give
consumer the perception of that product is hi-tech technologies and good quality that
comes with many other functions.

Although Re-Gen will be in China market starting from a high price, the price
will slowly decrease over time. The high price period for Re-Gen is to target the ‘early
adopters’ of the product and to cover back partially of the product cost. After a period of
time, the price for Re-Gen will drop gradually just to increase the market share.

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6.0 Mode of Entry

It is decided that Fine-Enviro will penetrate the China market through indirect
exporting. In other words, another domestic firm will be utilized as a sales intermediary
for Fine-Enviro [ CITATION Placeholder1 \p 426 \l 1033 ].
The push factor from utilizing other modes of entry was due to Fine-Enviro’s
inadequate experience in dealing business transactions in China. First of all, ambiguous
legal environment has prompted Fine-Enviro from taking any risks of joint venture or
direct investment. For example, until now China’s legal system does not have an exact
definition of “franchising”. [ CITATION Bug06 \l 1033 ]. Also, poor enforcement of
intellectual property rights has deterred Fine-Enviro from investing directly in China as a
precaution against counterfeiting [ CITATION Ber07 \l 1033 ]. Also, Fine-Enviro is still
not an established brand; licensing and franchising is not a viable option either.
On the other hand, Fine-Enviro is encouraged to export its product indirectly into
China because it is the least risky and least expensive mode of entry, especially towards a
firm which does not have much capital to invest. Other than that, it allows the company
to penetrate the market faster. Fast penetration is needed for technological products like
Re-gen to capture market share before counterfeit products emerge in the market.
Furthermore, Fine-Enviro is able to protect it trade secrets by producing and exporting
from its own country.
Currently, Fine-Enviro can be categorized under the exploratory stage as it is still
exporting systematically to monitor market response [ CITATION Placeholder1 \p 287 \l
1033 ].

6.1 Place Strategy


As mentioned before, indirect exporting involves dealing with another domestic
firm acting as a sales intermediary for the marketer [ CITATION Placeholder1 \p 426 \l
1033 ]. The sole intermediary that Fine-Enviro has chosen is Wal-mart Inc, the second
largest multinational direct retailing hypermarket in China with 146 stores [ CITATION
Lat09 \l 1033 ].

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One of the reason Wal-mart was chosen as the sole retailer of “Re-Gen” is due to
customer characteristics of China. Latest statistics has shown the emerging trend among
Chinese middle-urban class consumers favoring to shop in retail stores such as Wal-mart
and Carrefour than domestic department stores [ CITATION Mor08 \p 42 \l 1033 ].
From 2002 to 2007, sales of retail store have increased a compound annual growth rate of
39% [ CITATION Mor08 \p 42 \l 1033 ].
Besides that, Fine-Enviro is able to keep up with Wal-Mart’s unique distribution
culture. It is said that Wal-Mart leverages its suppliers to supply a significant amount of
its output only to itself, on-time delivery of supplies and lowest price [ CITATION Blo08
\p 387 \l 1033 ].
Also, Fine-Enviro and Wal-Mart has agreed that it will not label Re-Gen as a
private brand through the Distributor Agreement in order to promote Fine-Enviro’s
reputation in China. This is also due to the low acceptance among Chinese consumers on
private brands [ CITATION Mor08 \p 44 \l 1033 ].
Besides that, the choice of Wal-mart as the sole distributor complements the
company’s positioning objectives. Wal-mart has been identified as a retail store which
position itself as a store providing high quality, lowest price, high value added services
and most importantly, environmental friendly [ CITATION Kis06 \p 10 \l 1033 ] Hence,
aligning Re-Gen alongside Wal-Mart not only reinforces the positioning that it is a high
quality product but also identifies itself with Wal-Mart’s reputation of going green.
Other than that, the choice of Wal-Mart as a single distributor also provides many
advantages as well. For instance, complementary positioning between Wal-Mart and Re-
Gen avoids confusion among buyers and local officials[ CITATION 20180 \l 1033 ].
Also, Fine-Enviro is able to maintain a strong presence within China’s market through
Wal-mart’s established reputation in China before undertaking deeper penetration into the
market [ CITATION 20180 \l 1033 ].

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7.0 Promotions
7.1 Promotion Strategies in International Markets- China

The variety of promotional mix in use determines the promotional strategy and
Fine-Enviro has decided to use advertising strategy, sales promotion and tradeshows to
promote Re- Gen. Therefore, the strategy adopted is hybrid/combination of pull and push
strategy. “Most consumer goods manufacturers generally employ a combination of push-
pull strategy to sell their products” (Gary R., 2007). The percentage of pull to push may
differ with respect to the requirements of market situation. Distributors are used to push
the goods through the distribution channel where else advertising and sales promotion
will support personal selling to accelerate sales. This is important as a new product in the
market and to promote to a country where the attitude on the natural environment is view
negative.

7.2 Pull Strategy- Advertising

Fine-Enviro plans to use mass communication to create awareness and promote


the product through various media that is available. As stated in Duncan (2005),
“advertising is said to be ‘non-personal, paid announcements by an identified sponsor”.
Fine-Enviro will conduct four different types of paid advertisement which includes radio,
billboards, internet and newspaper. Radio is called the ‘theater of mind’, as research had
shown that “radio is a background medium: it is often on while people are doing other
things-multitasking” (Duncan, 2005). Radio has the capability of image transfer that is
the power to remind/ recall listeners on a single topic. Billboards are huge and indeed will
capture attention to consumers. Fine-Enviro plans to put up billboards in the congested
roads of China major cities such as 3D structure, spectacular arch and viaduct walls-cape
to further advertise in order to keep the brand’s name in people’s minds. Furthermore,
internet advertising will be utilized by placing ad words which is normally place on
search engines with high traffic internet users such as Google. “Google advertising can
direct more customers to the website as well as generate awareness among the target
market by which generating sales to the business” (Rudl, 2006). Also, ad words are icons
that when clicked will link to Fine-Enviro’s official website. On the website,

15
prospects/buyers can view give comments and feedback about Re-Gen. Finally,
newspaper are used to update consumers on participation in trade shows, sales promotion
and new features in Re-Gen. Newspapers are one of the most preferred media because of
its cost-effectiveness, generate high level of involvement and vast reach” (Duncan, 2005).
Thus, it’s a good tool to be used in the introductory stage of Re-Gen.

7.3 Push Strategy- Trade Shows and Sales Promotion

Also, trade shows enables Fine-Enviro of an opportunity to be in an exhibition


which enable prospects to physically feel, touch and test the product. In China, trade
shows go all year long and is a main attraction for business people all over the world will
come. For example “China Kitchen Furniture & Appliance Fair 2010 is a good starting
point for manufacturers to look for prospectors and suppliers world-wide” (Eye, 2009).
As a new player in the market, trade show will allow Fine-Enviro to develop a network of
buyers, look for distributors, able to sell the product and most importantly to meet
government officials to certify and support Re-Gen. Once the government officials see
the product and if they are interested they will purchase the product to be distribute
through out China. Therefore making the right decision to select a correct trade show is
important to ensure success in the introductory of Re-Gen.
The objective of “sales promotion programs are to enhance export performance
by improving firms’ capabilities, resources, and strategies and overall competitiveness”
(Francis J., 2006). It is a below the line activity that can be used and Fine-Enviro has
identified 3 tools that will be used for the introduction of Re-Gen. The nature of the
promotion in practice, is both monetary and non-monetary promotionss. “Non-monetary
delivers a relationship based incentives and monetary gives immediate rewards to
consumers” (Kwok S., 2006). Firstly is price reduction up to 30% discount for the first
1000 buyers/ 1st month (which ever reach first) in each Walmart stores . Eventough is for
a short term basis, it can boost up sales and increase in demands. Finally, specialities are
given to keep Re-Gen brand in the mind of the chineese consumers/ prospects. Stickers,
key chains, mugs, umbrella, T-shirt will be given during the trade shows to spread brand
awareness.

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7.4 Scheduling

The chart below shows various start dates, durations and end dates for Fine-
Enviro 3 month’s introductory promotional campaign. The campaign will start at January
and end at March.
Task Start Date Duration End Date
Product Launch 1-Jan-10 1 1-Jan-10
Newspaper Publication 1-Jan-10 5 6-Jan-10
Price Reduction 1-Jan-10 30 30-Jan-10
Internet- Adwords 5-Jan-10 86 28-Mar-10
Billboards Advertising 8-Jan-10 82 28-Mar-10
Radio Show 10-Jan-10 1 10-Jan-10
Newspaper Publication 16-Jan-10 5 21-Jan-10
Specialities 23-Jan-10 3 26-Jan-10
Trade Show- Guangzhou 23-Jan-10 3 26-Jan-10
Newspaper Publication 26-Jan-10 5 31-Jan-10
Radio Show 31-Jan-10 1 31-Jan-10
Specialities 31-Jan-10 2 1-Feb-10
Trade Show- Beijing 31-Jan-10 2 1-Feb-10
Newspaper Publication 3-Feb-10 5 8-Feb-10
Radio Show 10-Feb-10 1 10-Feb-10
Specialities 15-Feb-10 4 19-Feb-10
Trade Show- Shanghai 15-Feb-10 4 19-Feb-10
Newspaper Publication 16-Feb-10 5 21-Feb-10
Newspaper Publication 1-Mar-10 5 6-Mar-10
Specialities 3-Mar-10 4 7-Mar-10
Trade Show- Hong Kong 3-Mar-10 4 7-Mar-10
Radio Show 10-Mar-10 1 10-Mar-10
Newspaper Publication 21-Mar-10 5 26-Mar-10

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8.0 Conclusion

It is expected that the marketing plan to penetrate China will be a success. Firstly,
this is due to the target market which is the middle income group has sufficient income
level to purchase the product in the market. As for the positioning for the company, Fine-
Enviro has decided to position itself as a premium brand. Thus, projecting itself in a high
price and high quality position in the consumers mind. Other than that, Fine-Enviro has
decided to adapt their augmented and in augmented product. However, the core benefits
must be standardize to achieve economies of scales.

Additionally, pricing strategy used would be skimming but will be decreased over
time. Due to uncertainties in the financial crisis, the suggestive mode of entry of indirect
export enables the reduction of cost and reduces risks from investment. Finally, to
promote on the awareness of the environmentally friendly product by using the media
and tools that are relevant in the introduction of Re-Gen.

China is a lucrative market however, with new product developments there are
gaps which international companies can benefit.

19
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