The role of culture in sale of products into new markets cannot be ignored. Many companies have failed to successfully position within new markets, not because their products are unwanted but because they ignored the respective culture in their marketing initiative (Neal, Celeste, & Mark, 2004). Wal-Mart, presumably the largest corporation in the world, has not been spared either. The company’s success has mainly been attributed to its ability to sell goods at reduced costs as well as its “ten foot attitude” approach aimed at creating a friendly environment to its clients (Reid, 2001). The principle requires that every sales person who comes ten feet closer to a client must look at the client in the eye, greet him/her and inquire if he/she requires any assistance (Finney, 2009). Despite recording great milestones in the United States, this approach ahs been subjected to various challenges in other nations across the globe (Vance & Roy, 2009). Their inability to study and adopted to new cultures across the globe has inhibited their spread to newer markets as is the case in Germany and South Korea (Finney, 2009). However; they are not the only victims to failure to adapt to local culture, Pepsi has also been a victim.
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The growth and expansion of the Asian market saw many multinationals train their resources to the region. According to a Wall Street article, china offered a rich ground for business ventures more so considering its large population (Fowler, 2008). Pepsi, like other corporations focused on claiming a portion of the country’s market share. The company invested heavily on advertisements. Intent on sidelining the long term rivals coca cola; the company began an aggressive campaign to sensitize the public on its product. They signed exclusive advertisement contracts with local advertisement agencies, building large ads on subway platforms and other areas of public interest. An important factor they failed to take into consideration was that this was China and not America. Perhaps the people there just didn’t pay much attention to billboards and what they have to say. However, Chinese soft drink manufacturers new the culture and focused their efforts on activities of interest to the Chinese including martial arts. As Fowler puts it,
“Marketers eager to claim a share of Chinese burgeoning market are grappling with the reality of a nation whose citizens have no prior experience or patience for the large institutionalized advertisement undertaken by multinational firms (Fowler, 2008).”
Despite the belief by these firms that the Chinese market was large and in the deed of big sift drink manufacture, its entry ignored a major factor which is the link to the cultural practices of the Chinese people (Fowler, 2008). The case highlights the fact that Pepsi ought not to have been so eager to enter the Chinese without a prior understanding of the needs and possible responses of the Chinese people. The general fact here is that, for Pepsi to be successful in china it needed to understand and identify its brand with culture of the Chinese people. The company needs to integrate its product into the culture of the Chinese people. This would come in form of sponsorships to Chinese martial products which are popular with the locals as well other practices that identify with people’s culture. A good approach will be entry through acquisition of local soft drink companies. This would help Pepsi use the local resources in entrenching itself into the market.
Pepsi has not just faced such problems in China, in Kenya; the company has been unable to infiltrate the market which is already saturated with its rival, Coca cola. Its attempts have often been met with unwilling buyers who already find the term soft drink synonymous to Coca Cola products (Opanga, 2011). Pepsi rather than engage in grassroots activities that would help build client awareness, has focused on large advertisements as those done in Europe and America. Its fate has been similar to that of Bharti Airtel, which has been unable to successful bond with the clients. However, in nation where pricing is of cultural value, Pepsi might need to borrow a leaf from Bharti and create products that are priced as per the client’s requirements. A similar cultural hitch was witnessed by the company in India. In a nation where foreign companies are viewed with contempt and disdain as plunderers of natural resources without giving back to the community, perhaps the best entry point advertisement would not be bill boards but rather activities that give to the community. The citizens of India believe that the local companies too might not be bale to compete alongside multinational corporations. It is on basis of this belief that marketing as is the case in western countries may not find favour with the people in the region.
In conclusion, it’s important to restate that the culture of a nation cannot be ignored if an organization is to successfully infiltrate a new market. Often culture dictates what people take, how they respond to advertisements and new products and how they adopt new product usage. Multinationals must wake to the challenge; invest in understanding their new markets and come up with relevant advertisements. Otherwise all their efforts at marketing would go to waste.
Finney, D. (2009). “A giant, yes. Gentle, no: Wal-Mart stumbles into a cultural chasm.” Business and Current Affairs, 69, pp. 23-24.
Fowler, G. A. (2008). “Agencies Find China Land of Opportunity and Unhappy Clients,” Wall Street Journal, 17, pp. 456-462.
Neal, M. A., Celeste P. M., & Mark F. P. (2004). The Handbook of Organizational Culture and Climate. London: Sage Publications.
Opanga, K. (2011). Pepsi attempts to renter Kenyan market: Will they do it right this time. East African Standard. Print.
Reid, K. (2001). “The Wal-Mart Approach” National Petroleum News. Print.
Vance, S. S. & Roy V. S. (2009). Wal-Mart. ‘A History of Sam Walton’s Retail Phenomenon. New York. Twayne Publishing. 199.