The internationalization of business is happening at an ever-growing pace. In the past 20 years, companies have distorted their direction from domestic to international; they have shifted from multi domestic marketing to international marketing (Boone and Kurtz 12). The appearance of international and international market has been enthused by the speedy enlargement and mixing of countries; the configuration of local trading agreements; the formation of market economies; and advances in manufacture and communications technologies. The example of Parker Pen Company vividly portrays that international marketing demands analysis of the cultural, social and economic conditions dominated in a particulate region of the world.
Miscalculations of Parker Pen Company
In spite of its strong leadership position on the market and effective marketing strategies applied to international environment, Parker Pen Company made several mistakes in strategy formulation and implementation. The main problems were caused by centralization of decision-making and unification of the marketing strategy. “in 1984, the company launched a global marketing campaign in which everything was to have “one look, one voice”, and with all planning to take place at headquarters” (Case study 1).
This strategy reflects a traditional approach to global marketing based on standardization of product features and product lines. The miscalculations were caused by the fact that Parker Pen Company neglected cultural differences and religious values followed by people in 154 countries. Parker Pen Company did not take into account that doing business in a foreign culture requires additional financial resources spent on training, language courses and adoption of cultural and advertising practices to a new environment. The company’s management did not understand the notion that culture is shared, no matter how it is defined.
The main factor in discussing culture is then how deep-seated it is. On the one hand, globalization requires unified and standardizes solutions applied to global consumers, but also it requires adaptation to unique cultural values and principle. Also, Parker Pen Company followed ineffective positioning strategy in other countries. It did not pay attention to local competition and buying potential of the market (Bearden et al 98).
Parker Pen Company has a strong brand image supported by long selling history and unique perception of buyers. The company focuses on individual customer decisions, dealing with both static and dynamic issues consumption. Similar to other companies, Parker Pen concentrates on behavior at a point in time, focuses on behavior over a period of time. The company proposes broad and diverse product lines for international consumers. Among the most relevant researches of consumption are those that focus on behavior as part of the broader sweep of problem-solving solutions. Parker’s Pen strategies are concerned with cognitive problem-solving by potential buyers and segmenting markets by attitude and behavior rather than solely on demographic factors (Brown and Eisenhardt 87).
What they could do differently?
In order to sell its products abroad, Parker Pen Company could adopt its products to local needs and cultural principles. When product is standardized it becomes established for minimum quality and features, competition shifts to a greater emphasis on cost and service. Parker Pen Company marketing strategies had to be the broad strategies intend to adopt in the longer term to achieve its marketing objectives in accordance with international marketing policies. The international strategy could take into account increased competition and local needs and perceptions of consumers. The blend of marketing factors required producing the reply wanted in the local market. The marketing mix had to include new messages, diversified prices, adaptive promotion, advertising, field sales and distribution (Brown and Eisenhardt 87).
As a privately owned company, Parker pen Company is not marred in bureaucracy, which is quite common with state-owned firms. Consequently, the making and execution of decisions is quite fast. Parker Pen Company is also a pioneer in innovations, hence has ensured that Parker Pen Company exclusively specializes in writing instruments only. As such, the company has a competitive advantage over other competitors with a large product portfolio. It can thus provide tailor-made services to the customers (Daniels et al 65).
The company is operating in the retail industry, which is very volatile, and is dependent almost entirely on the forces of demand and supply, as well as reputation. Owing to this lack of product diversity through specialization, Parker pen Company may face financial hurdles if the target market becomes saturated with competition. The other weakness is that over 80% of sales are abroad.
Owing to the increased demand in Europe and Asia, Parker pen Company can make use of its excellent management team to come up with new product lines, thus affording it the competitive advantage of having more loyal customers.
Competition from low priced products and local companies (especially Japanese manufacturers) is the main threat for Parker pen Company. Given that such propositions extends in the upwards of 20 years, this is bound to offer stiff resistance to Parker pen Company. Many buyers prefer to buy low priced products and save money on expensive writing instruments. Main competitive products are Paper Mate, Bic, Pilot and Pentel.
Today, political situation in Asia and Europe is stable marked by democratic processes and liberalization reforms. Political interference and corruption are the possible risks.
Legal Environment: Asia and Europe introduce laws and regulations in order to support foreign subsidies and attract FDI (foreign direct investments). In order to support national economy, the governmental prevents price rises, or even to rolls them back in basic industries such as steel. Governmental involvement seems to relate price increases to the impact on inflation and increased productivity. Government has the influence to block or roll back price increases (Daniels et al 65).
Is marked by low inflation rates and high income per capita. Thus, liberalization and high level of investments can be considered as opportunities for a company to enter this country. For Parker Pen Company, there are also the necessities of making long-run capital commitments, meeting the requirements of partnership with nationals, and the imposition of special income taxes and import duties on necessities, as well as differences in social legislation, location considerations, protection of home products, governmental attitudes and control, laws affecting labels and standards, transportation and communications problems, and the risks o inflation, currency devaluation, and expropriation (Bearden et al 45).
All these create many additional uncertainties to those encountered in national marketing. social-demographic factors suggest fast population growth and decreased mortality rates. Both in physical appearance and in most aspects of their culture-notably, their language, their traditional form of administration, and their religion (Daniels et al 61).
Changes in international markets, raw materials, or technology can force changes in production and distribution. Investments in plants and warehouses introduce investment “lumpiness” and new opportunities. Technological innovation and solutions appeared on the market greatly affect the value of fixed prices. International distribution facilities are clustered by market changes. But international markets are variable, unevenly distributed, and alienated from the organization in space and time. To cultivate them, Parker Pen Company requires different distribution policies (Boone and Kurtz 23).
The New Strategy of Parker Pen
The new strategy developed by Peterson and Swart, will help the company to gain market share and maintain a strong position of the international market. Aggressive advertising campaign and adaptation to local needs and preferences are the main success factors of this campaign. The new strategy is based on the idea that the degree to which a culture is conscious and open rather than non-conscious and enclosed has implications for how easily a culture can be used and, in a business management context, be managed. Parker Pen adopts its traditions and values to new cultural environment and change established views and duties.
For instance, the societal norm in the Asian type of culture is that inequality in society should be minimized. There are no generally recognized social classes; one even has ‘to work hard to “spot the differences'” among people there. Accurate analysis of demand is also critical in designing marketing systems, for they help to establish the feasibility of financial expenditures, which in turn shapes the distribution network (Bearden et al 33).
For aggressive communication and advertising, Parker Pen Company will use integrated marketing communication strategy. To capture important brand insights, IMC planners are becoming involved at an earlier and more important stage in the overall strategic planning process. For instance, improvements in sales data reporting has given media planners a source of stronger quantitative information that allows for direct media and regional sales matches. Many potential customers of the company have developed sophistication in sales and product quality. When shared with members of the account team, these data can provide sales on a market-by-market basis (Crawford 43).
If the company implemented the new strategy, the core strategy of Parker Pen Company would be based on value propositions and product differentiation is well developed. The main strengths of this strategy are clear identification of the product advantages and potential target audience. This strategy will result in a plan that can assist the company in selecting and positioning of the product. Product differentiation strategy will help to create entry barrier for other companies and creates a unique market proposition (Crawford 76).
This strategy makes sense because of a product’s perceived uniqueness. Differentiation should be achieved as a result of unique product attributes and effective marketing communications. In the case of Parker Pen, product differentiation and brand loyalty increase for would-be industry entrants who would be required to make substantial investments in R&D or advertising (Crawford 2003). As with the selling philosophy and relationship strategy, Parker Pen must include comprehension of the target market’s characteristics and the fact that prevailing needs and wants may mandate products that are different than those offered in the home country.
As the first marketing tactic element, differentiation should create a truly different and unique product for customers (Hollensen 54). Parker Pen not only has to be perceived differently by customers (positioning), it has to be really different in content, context, and infrastructure (differentiation). In addition to differentiation strategy, product positioning will help to establish trustworthiness, confidence, and competence for customers.
If the Parker Pen has those elements, customers will then have the “being” of the company within their minds. It is about earning customers’ trust to make them willingly follow Parker Pen. So positioning is not just about persuading and creating image in the consumers’ minds, it is about earning consumers’ trust and loyalty. Positioning strategy should support differentiation strategy in order to widen product potential market. It will help to occupy the consumers’ minds with unique offerings and will lead the customers’ credibly (Bearden et al 65).
The failure of Parker Pen suggests that cultural anthropology should be the core of any marketing planning and development (Kotler and Armstrong 87). Cross-cultural management helps companies to examine population and its life style, including all the learned behavior of man. Cross-cultural management investigate differences that distinguish national groups. Managers should explore the cultural and sub-cultural variations in terms of technology, language, symbols, rituals, and family behavior. Cross-cultural management should pay a special attention to differences and to understand other cultures. This is particularly applicable in dealing with international marketing.
Cross-cultural investigations of cultural dynamics, ethnic lag, assimilation, innovation, modes and standards of living, families, and social symbols have carryover for marketing. Cross-cultural management measurements have been useful in designing products such as writing instruments. Cross-cultural managers have helped marketers in developing advertising messages, introducing new products, styling writing instruments and packages, and analyzing the meaning of symbols, rituals, religious values, and colors for various subcultures (Crawford 76).
In spite of globalization processes and internationalization of the market, cultural differences still exist. The company cannot neglect these problems and standardize its products for 154 countries. Cross-cultural management is suggestive of the interdisciplinary interfaces: the influence of mass media, message content, and attitude change; the effects of promotion; the impact of group pressures on communication; symbols and symbolism in culture; behavior and interaction in message; the impact of environments on communication; subliminal and other social aspects; the diffusion of messages; communications models and theories; the perception of new brands and images; learning and communication; motivation and communications; selective exposure and selective inattentiveness; and information channels and networks (Gardiner 19).
The lessons learned form Parker Pen Company show that cross-cultural differences have offered some useful data, various theories, guides, and generalizations. Some parallels exist between current developments in ideological and marketing thought that suggest certain similarities of cultural marketing. The great focus of modern marketing on science and the marketing method is reflected in both marketing thought and practice. The growth and impact of marketing adaptations to solve marketing problems reflect the new marketing approach. Likewise, a parallel emphasis may be noted in contemporary marketing study, in which the ideology of the company occupies a prominent position.
To avoid unpleasant experience every manager should be well aware of cultural differences and traditions of the partner company. Cultural and social environment shows that there is no great cultural differences between host and national markets which create opportunities for the family owned business to compete on the national scale. The lessons learned by Parker Pen Company show that modern organizations often find themselves in a dilemma: adopt a product to local needs or standardize it. Thus, the main threat for international brands is increased competition and more power given to international businesses. International brands should take into account the fact that corporations are now becoming part of the global administrative system, and large companies can no longer be totally private.
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