Pergamon S0969-5931 (96)000204)

International Business Review Vol. 5, No. 4, pp. 395-421, 1996 Copyright © 1996 Elsevier Science Ltd

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Standardisation, Centralisation and Marketing in Multinational

Companies P. G. Quester and J. Conduit

Department of Commerce, The University of Adelaide, Adelaide SA 5005, Australia

Standardisation, Centralisation

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Abstract - - The literature on multinational companies (MNCs) seems to assume that when a company is centralised, it also implements identical marketing strategies. In other words, centralisation and marketing standardisation are assumed to be correlated. There is, however, very little empirical evidence to support this view. The study presented here investigates this issue, based on a mail survey of some 200 Australian subsidiaries of MNCs. A response rate of 52% enabled the researchers to conclude that standardisation is usually consistent across products and services within any one firm and, more surprisingly, that standardisation and centralisation are not correlated at the firm level, suggesting a review of a fundamental assumption made in the literature on multinational companies. Copyright © 1996 Elsevier Science Ltd

Key W o r d s - - Multinational Companies, Standardisation, Centralisation, Marketing Management, Mix, Host Country, Subsidiary.

1. Introduction The number of multinational companies (MNCs) emerging in many industries has increased rapidly worldwide since the 1950s and 1960s (Bureau of Industry Economics , 1993). Mult inat ional companies exploit new opportunities as world markets become alike by opening branches and/or subsidiaries in several different countries. Multinational companies are now firmly entrenched in most consumer markets as important and often dominant competitors (Terpstra and Sarathy, 1990).

The management of overseas subsidiaries is more complex than the management of a single firm. The degree to which traditional marketing practices are standardised and the extent to which decision-making in MNCs is centralised, have both emerged as areas of considerable research. However, few studies have been undertaken which examine the influence that internal factors, such as size or the level of centralisation between the parent company and its subsidiaries, have on the level of standardisation within the firm.

Dr P. G. Quester is a Senior Lecturer at The University of Adelaide. She graduated in 1985 from ESC Nantes and studied for her MA at Ohio State University before taking a position at Massey University in New Zealand where she completed her PhD in 1990. Since 1991, she has been lecturing in Marketing and Consumer Behaviour at the University of Adelaide and is actively supervising students at postgraduate level. Jodie Conduit was one of Dr Quester's Honours student in 1993. She studied multinational companies and in particular their size, degree of centralisation and standardisation. This paper is based on the data she gathered for the purpose of her thesis for which she was awarded first class.

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Although it is generally accepted that the level of guidance a subsidiary receives (centralisation) is correlated with the level of standardisation it applies (Daniels, 1987), this relationship is yet to be adequately tested. In particular, standardisation and centralisation would be expected to be correlated in relation to a company's marketing programs. Instead, studies have tended to assume this relationship and examine other relationships such as that between the level of centralisation and the size of the firm, often producing conflicting results (Gates and Egelhoff, 1986). Academic research into the concepts of standardisation and centralisation has been preceded by company practice. The limited empirical work that has been done in these areas has consisted predominantly of bivariate analysis (Cavusgil et al., 1993). The relative significance of the relationships and their practical use to gain a competitive advantage has yet to be sufficiently explored (Cavusgil et al., 1993; Waiters and Toyne, 1989). Without adequate proof of the existence of a relationship between standardisation and centralisation, no conclusions can be drawn from previous literature regarding whether the level of centralisation of a company has an impact on the level of standardisation appl ied to its market ing mix. Proof of this re la t ionship would be a fundamental step in enabling the academic research to be beneficial for management.

The objective of this study is to determine the extent of correlation between the level of standardisation for each marketing mix element and the level of centralisation. This is an important issue from a managerial perspective as marketers of MNCs and their subsidiaries, facing such decisions, aim to optimise the return on their investment and the impact of their marketing strategy on specific markets while also contributing to the overall profitability of the MNC. The development of a comprehensive model examining the standardisation concept could assist management in its decision-making processes and formulation of marketing strategies to achieve a competitive advantage (Waiters and Toyne, 1989). Corporate managers could use such a model to determine the variables that may be influenced to achieve a desired level of standardisation and/or decide on a common marketing program for managers of their subsidiaries from all over the world. As the number and economic weight of MNCs increases, the question of whether standardisation and centralisation are l inked with respect to marketing decisions becomes increasingly relevant.

The paper starts by a review of previous l i terature regarding the standardisation and centralisation concepts and amalgamates these views to propose a simple model. Then, it develops relevant hypotheses, and details the data collected and methodology implemented to test these hypotheses. The results of the empirical research are subsequently summarised and interpreted and a discussion follows of the implications of the findings. Some suggestions for future research are provided.

2. Theoretical Context and Empirical Evidence Previous research into the standardisation concept has been fragmented as

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researchers have often examined relationships and trends in isolation. It is useful, therefore, to attempt to combine these fragmented studies in an effort to develop a model of the concept of standardisation.

2.1. Standardisation Standardisation is a subjective concept and is yet to be explained by a conclusive theory. However, two predominant paradigms of standardisation prevail: market ing "programs" and market ing "processes". The term "program" refers to the various aspects of the marketing mix, while "process" implies the structures that are a pre-condition to the development and implementation of the marketing program (Cavusgil et al., 1993; Jain, 1989; Kreutzner, 1988). As most of the literature on multinational standardisa- tion addresses marketing programs (Jain, 1989; Cavusgil et al., 1993), standardisation will be defined in its extreme as "identical product lines at identical prices, through identical distribution systems, supported by identical promotional programs in several different countries" (Buzzell, 1968, p. 165). A traditional perspect ive of market ing will prevail and the literature examined will focus on the "Four Ps" rather than an expanded interpretation including "processes" and relationships. Baalbaki and Malhotra (1993) proposed segmenting the global market on the basis of these "Four Ps" to ensure the homogeneity of the segments with respect to these variables, therefore making marketing strategies easier to standardise. Regardless, it is essential to consider the impact of these marketing management indicators, "programs", when formulating international marketing strategies (Baalbaki and Malhotra, 1993).

The potential benefits of standardising a firm's activities are many and varied, but generally involve achieving a better marketing performance and lowering marketing costs to gain a competitive advantage. Proven successful ideas in one country, if transferred to another country with similar market conditions, should also lead to a larger market share and higher profits in the second country (Sorenson and Wiechmann, 1975). Standardisation may cause marketing costs to decline because resources can be focused to enable improved planning and control between headquarters and the subsidiary as they are more aware of each others' precise needs. Also, by offering the same basic product in several markets, a manufacturer can frequently achieve longer production runs and reduce product design costs as well as spread advertising production and research and development costs over a greater volume, thus reducing total unit cost and achieving greater efficiencies (Buzzell, 1968; Sorenson and Wiechmann, 1975; Yip, 1989; Cavusgil et al., 1993; Samiee, 1994).

Cost savings of standardising products may be passed onto the consumer, in order to increase market share. Levitt (1983) suggested that a standardised product would, in itself, increase market share because consumers desire what information and communication technology enables them to see as available in other countries. Therefore, any cost savings arising from the standardising of products would be seen as merely an added bonus. Standardisation is

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generally considered to be appropriate only to the extent to which it has a positive influence on financial performance (Samiee and Roth, 1992). In global industr ies, where more oppor tuni t ies for s tandardisat ion are anticipated, performance is not affected by standardisation, but, when relative intra-industry figures are considered, firms with lower standardisation have a superior performance (Samiee and Roth, 1992). Sorenson and Wiechmann (1975) found only one of 27 executives was able to offer documented evidence of specific savings from standardisation. Therefore, there may not be any financial benefit in this practice.

Even if standardisation was found to be financially rewarding, there are many variables which could restrict its complete implementation. These variables relate to the host country environment, the product and the subsidiary itself and include government opposition, differing product life- cycle stages between countries and many others (Baalbaki and Malhotra, 1993; Bartlett and Ghoshal, 1988; Quelch and Hoff, 1986; Buzzell, 1968). In opposition to standardisation, is the belief that sales and market share can be increased by adapting the product to the preferences of local consumers and the local marketing environment (Cavusgil et al., 1993; Yip, 1989). This opposit ion can be challenged on two grounds. Firstly, the belief that adaptation results in increased sales may not be conceptually sound: since consumers may be unable to actually know their preferences when they have never previously encountered a product and their preferences are inclined to change over time (Levitt, 1983). Furthermore, any increase in sales needs to cover the extra cost of adaptation in order to be profitable (Hodskins et al., 1995). Table 1 below summarises the main findings in relation to the possible outcome of standardisation.

The decision to standardise, however, may not be a dichotomous one.

Table 1. Main Research Findings in Relation to Outcomes of Standardisation

Authors Beneficial outcomes Negative outcomes

Sorenson and Wiechmann (1975) Greater profits Samiee and Roth (1992)

Buzzell (1968) Sorenson and Wiechmann (1975) Yip (1989) Cavusgil et al. (1993)

Sorenson and Wioechmann (1975) Levitt (1983) Cavusgil et al. (1993)

Waiters and Toyne (1989)

Yip (1989)

Yip (1989)

Reduced costs

Greater market share

Rapid product diffusion

Lack of adaptation to local markets

Lesser sales and market share

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According to Killough (1978), or more recently Bartlett and Ghoshal (1988) and Cavusgil et al. (1993), neither absolute standardisation (i.e. identical product, promotion, price and distribution) nor complete differentiation (no c o m m o n e lements whatsoever ) are feas ible nor desirable . Ins tead, standardisation can be conceptualised as a continuum upon which each company must find the appropriate degree to suit its local environment, the product and its current situation (Rau and Preble, 1987; Cavusgil et al., 1993). Since there are advantages and disadvantages to both standardisation and differentiation, each element of the marketing mix must be examined and tailored for the overall benefit of the company, in order to capitalise on the benefits of both (Baalbaki and Malhotra, 1993). The appropriate level of standardisation that can be attained while pursuing an overall global strategy and maximising profits must be found. To do this firms have been encouraged to "think globally and act locally" (Bartlett and Ghoshal, 1988, p. 72).

Some recent research has focused on examining the standardisation of resource allocation between marketing mix variables rather than that of the marketing variables themselves. One such study established that in Western Countries, where marketing variables influence business profits in a similar fashion, opportunities existed for standardised resource allocation amongst the elements of the marketing mix (Szymanski et al., 1993).

2.2. Standardisation Levels o f Marketing Mix Elements The level of standardisation has been found to vary for different elements of the marketing mix (Cavusgil et al., 1993; Ozsomer et al., 1991; Waiters and Toyne, 1989; Sorenson and Wiechmann, 1975; Aydin and Terpstra, 1981). Coca-Cola have very successfully standardised the brand name, concentrate formula and advertising of their products, yet, their sales and distribution programs are run in conjunction with local bottlers through franchises and loca l i sed t h roughou t the world. It is, therefore , not mean ingfu l to conceptualise marketing as a monolithic process to be standardised or not. Greater specificity is needed, with a precise identification of which particular component of the marketing mix is being addressed (Waiters, 1986). Only then can varying levels of standardisation for each element be recognised and the true impact of standardisation assessed. An examination of the level of standardisation for each of the main decision areas in the marketing mix follows.

Product-related elements such as brand names, physical characteristics and packaging usually exhibit a high degree of standardisation between MNCs and their subsidiaries (Ozsomer et al., 1991; Dawar and Parker, 1994; Sorenson and Wiechmann, 1975; Aydin and Terpstra, 1981; Martenson, 1987). Economies of scale and consumer mobility are advantages that outweigh the need for adaptation in this area (Terpstra and Sarathy, 1990). Service attributes can also be successfully standardised in the mind of the consumer if a clear positioning strategy is outlined and adhered to (Gilpin and Kalafatis, 1995).

Pricing of goods and services is usually the responsibility of the subsidiary;

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however, the parent company often provides control over the pricing strategy and product positioning (Ozsomer et al., 1991). This regulation of the price level by the parent company is justified on the reasoning that price is used as a signal of quality to the same extent across cultures (Dawar and Parker, 1994). However, external factors, specific to the country, need to be addressed before a specific price can be set. These factors can be difficult to control and include demand, competition, government regulations, taxes and tariffs, exchange rates, inflation, product line, transport costs and distribution channels (Aydin and Terpstra, 1981; Martenson, 1987, Terpstra and Sarathy, 1990).

Research on advertising and promotion has been extensive but has p roduced mixed results , ind ica t ing both high and low levels of standardisation. The basic advertising message is generally standardised (Sorenson and Wiechmann, 1975) but creative expression is often left under the control of the subsidiary (Baalbaki and Malhotra, 1993; Sorenson and Wiechmann, 1975; Killough, 1978). International coordination is desired but local adaptation is required to arouse the consumers' awareness and select the best medium because local marketing environments affect information gathering (Dawar and Parker, 1994). Although consumers state a dislike for standardised advertisements, these can also be very successful (e.g. Coca- Cola).

The results of the limited research concerning the level of standardisation of distribution channels have also been mixed (Baalbaki and Malhotra, 1993). The high standardisation often found may be attributed to similar market conditions rather than specific instructions from headquarters (Sorenson and Wiechmann, 1975). Countries with differing marketing conditions have lower standardisation of their distribution channels (Ozsomer et al., 1991; B aalbaki and Malhotra, 1993).

Adaptation is greatest in those aspects of the marketing mix which are not associated with significant economies of scale. This trend has become more pronounced over the last 20 years as firms have striven to become more efficient (Quelch and Hoff, 1986; Martenson, 1987).

2.3. Variables Affecting the Level of Standardisation The previous analysis discusses the relative standardisation of marketing mix elements but provides no insight into why firms settle upon a given level of standardisation. When similar conditions exist for the parent company and a subsidiary, a higher degree of overall standardisation is usually exhibited (Ozsomer et al., 1991; Sorenson and Wiechmann, 1975). Differences in conditions are said to affect the desirability of standardisation and promote differentiation. However, even when market conditions are significantly different, standardisation may still be apparent (Ozsomer et al., 1991; Sorenson and Wiechmann, 1975).

Ozsomer et al. (1991) studied 33 relatively small Turkish subsidiaries (31 of the 33 firms surveyed in the study accounted for less than 5% of the MNCs' total sales volume). The level of market ing s tandardisat ion

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implemented by the subsidiaries was found to be higher than would be expected under market conditions that are significantly different from those experienced by their US parents. A possible explanation for this finding is that the size of a MNC and/or its subsidiary may be determinant in explaining the degree of standardisation a subsidiary applies to the marketing mix. Smaller subsidiaries may have a tendency to standardise their operations because economies of scale will minimise any costs incurred. Also, they may not have the manufacturing capacity to differentiate their products in order to maximise sales.

Seifert and Ford (1989) examined the relationship between the level of standardisation and the size of an exporting company (as opposed to a MNC) for a small sample. While these results cannot be directly translated to MNCs, they can provide some insight. The authors found that product attributes and price were not affected by the size or the exporting experience of a company. However, they did find that larger firms spent relatively more on promotional expenditures than smaller firms which they suggested "did not appear to be consistent with the research on multinational f irms" (Seifert and Ford, 1989, p. 66).

Little research has been done directly examining the effect of size on a MNC's standardisation. This may be because a centralisation-standardised relationship was assumed and therefore only tests of correlation between the size of a MNC and centralisation were conducted.

The level of standardisation may also be influenced by various other factors. These can be categorised as relating to (1) the host country environment including climate, economic, legal or political constraints, subsidiaries and infrastructures available (Cavusgil et al., 1993; Jain, 1989; Ozsomer et al., 1991; Rau and Preble, 1987), culture (Dawar and Parker, 1995; Keegan, 1969), or competitive environment (Cavusgil et al., 1993); (2) product characteristics such as whether it is durable or not (Whitelock, 1987), positioning (Sorenson and Wiechmann, 1975), usage pattern (Whitelock, 1987), degree of innovation (Samiee and Roth, 1992; Cavusgil et al., 1993), technology orientation and cultural specificity of the product (Cavusgil et al., 1993); and (3) internal factors such as nationality of the parent company (Ozsomer et al., 1991), ownership structure (Sorenson and Wiechmann, 1975), corporate orientation, i.e. world orientated (geocentric) versus home country focused (ethnocentric) as discussed by Quelch and Hoff (1986) or adaptive (polycentric) as discussed by Martenson (1987) and Jain (1989) and, finally, the type of relationship between parent and subsidiary companies.

This introduces an important notion, as one might argue that the level of control a parent company applies to its subsidiary would influence the degree to which a product is standardised.

2.4. Centralisation-Standardisation Relationship It is generally accepted that the extent to which the decision-making authority is delegated to foreign subsidiaries influences the level of the standardisation within the marketing strategy (Jain, 1989). Where the level of interaction

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between headquar ters and subsidiar ies is high, a greater degree of standardisation would be possible. However, this relationship is yet to be adequately tested, particularly with regard to the marketing function, and uncertainty still prevails.

Kirpalani et al. (1988) found a significant relationship between the level of centralisation and the level of standardisation, yet the study only examined the advertising relationship. Ozsomer et al. (1991)also found a significant relationship between centralisation and standardisation, however, only relatively small subsidiaries were considered, causing the sample to be biased as mentioned on p. 400.

2.4.1. Central isat ion. Centralisation is one of the structural elements of an organisation. It refers to the division of the decision-making authority between the headquarters and the branches/subsidiaries of a MNC. Previous research has predominant ly examined the concept of central isat ion assuming a hierarchical organisational structure with control emanating from the parent company (Ghoshal et aI., 1994; Hall et al., 1993; Gamier, 1982; Mil ler , 1987; Hed lund , 1981; Gates and Ege lhof f , 1986). Central isat ion may also exist in a heterarchical envi ronment where subsidiaries operate as "centres" specialising in a field, often a discrete functional area of the business (Maccoby, 1991; Hedlund, 1986). As this paper is concerned with the centralisation of marketing practices, these two organisational structures are comparable, by interpreting the headquarters or parent company as that branch specialising in marketing decision-making. Traditionally, research into the central isat ion concept has examined companies ' "processes" rather than their "programs". Focusing on the various components of the marketing practices, or "programs", of firms will be beneficial from a managerial perspective when developing marketing strategies. From an academic viewpoint, an examination of the Four Ps individually would explain some of the inconsistencies found in previous research as various aspects of a marketing mix may require differing levels of centralisation.

Centralisation is not an end in itself, it simply allows the organisation to mobilise its resources in order to reach its objectives. Although these objectives are many, they ultimately relate either to the maximisation of profits or to the minimisation of risk (Prechel, 1994; Bolton and Dewatripont, 1994). Whereas MNCs standardise with the aim of maximising their profits, centralisation is often undertaken to minimise risk (Ghoshal et al., 1994). Three elements of risk are important in the headquar ters-subsidiary relationship and have varying impacts on the degree of centralisation (Gamier, 1982).

(1) The greater dependence a parent company has on its foreign operations, the greater the risk to the parent company and the stronger the tendency to centralise all decisions at headquarters. (2) The greater the degree of foreignness of the host country environment, the larger the risk of misinterpreting messages from customers, suppliers,

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or misunderstanding the technical language and so forth at headquarters, and therefore the stronger the tendency to leave decision-making to the executives within the subsidiary. (3) The greater variabil i ty and unpredic tabi l i ty of changes in the subsidiary's environment, the more important it is that they react quickly and that decisions be made at subsidiary level. Other benefits arise from centralising a MNC's decision-making authority.

Resources can be pooled, synergy among operations can be gained and, if a relationship exists between standardisation and centralisation, other benefits from standardisation are more likely (Daniels, 1987; Prechel, 1994; Bolton and Dewatripont, 1994). Decentralising various aspects of the marketing program, such as customer service, on the other hand, may be advantageous and profitable (Wils et al., 1994).

Adversaries of centralisation believe that the lack of clear cut responsibility at a subsidiary level can be detrimental. If all decisions are made by headquarters, logical thinking and rationality by the local managers will be discouraged. As decisions are not discussed, managers feel isolated and the perceived need for interact ion disappears. Al though top managers at headquarters level are free to be assertive, the lower managers have little input and this may breed resentment (Miller, 1987). Aylmer (1970) concluded that markets generally tended to be decentralised. However, in more recent times, technology and environmental volatility has facilitated a trend toward centralisation, just as it has for standardisation (Daniels, 1986; Ghoshal et al., 1994). Trends in centralisation have often reflected those in the level of standardisation: decisions related to the product itself are more centralised while adver t i s ing , pr ic ing and d is t r ibut ion dec is ions are re la t ively decentralised (Aylmer, 1970; Brandt and Hulbert, 1977). These are similar to the relative rankings found for the level of standardisation and this is why it is generally accepted that the two are correlated, even in the absence of empirical evidence.

2.4.2. Other Factors Affecting Centralisation. Similarly to standardisation, the decision to centralise is not a dichotomous one. The level of centralisation undertaken by a firm will depend on a number of factors, including the technological and organisational structure under which the company operates (Bagnara et al., 1994), with subsidiaries generally displaying a higher level of centralisation within the workplace than independent workplaces (Marsden et al., 1994). Centralisation is generally believed to have a negative relationship to the size of a company, although no conclusive evidence has been presented to support this (Hall et al., 1993; Blau and Schoenherr, 1971). Organisation theorists commonly consent that (a) increased size leads to more structuring of activities, which then facilitates decentralisation or (b) size forces managers to decentralise by overloading the company with too many decisions (Blau and Schoenherr, 1971).

The absolute size of a subsidiary, absolute size of a mult inat ional corporation, relative size of a subsidiary and size of total foreign operations

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have been previously tested to determine their impact on the level of centralisation (Picard, 1977; Goehle, 1980; Gamier, 1982; Hedlund, 1981; Gates and Egelhoff, 1986). Although this research is relatively dated, there is still no conclusive theory regarding the impact the size of an organisation has on the level of centralisation it implements. As time passes, and the absolute and relative size of the parent company and its subsidiary changes, so too does the level of centralisation appropriate to the organisation (Hedlund, 1986). Below is a brief summary of the more relevant and comprehensive previous research findings, which highlights the inconsistencies which have emerged when these beliefs have been tested (See Table 2).

The mixed results obtained when examining the effect of "size" on the level of centralisation for a MNC indicate that other factors must have an influence. These can be categorised as (1) MNC-related factors such as integration of activities of members within the group (Garnier, 1982), management culture (Grigg, 1994), corporate structure (Maccoby, 1994; Hedlund, 1986) and policy or legal dependence (Gates and Egelhoff, 1986), (2) subsidiary-related factors such as operational independence and age (Gates and Egelhoff, 1986; Garnier, 1982). Environmental factors and product-related factors have, surprisingly, been found to have little impact over the degree to which decision-making authority is delegated to foreign subsidiaries (centralisation) (Garnier, 1982; Gates and Egelhoff, 1986; Kirpalani et al., 1988). This is of particular interest as these factors are dominant in determining the level of standardisation, but not the level of centralisation. Product type (industry), country of origin and number of product lines were also among variables found to have little or no effect on the level of centralisation (Kirpalani et al., 1988; Gamier, 1982).

2.5. Summary Model Figure 1 presents a simple model developed from the literature examined above. This model summarises the concept of standardisation as it has been examined to date, showing var iables that affect the degree to which standardisation is implemented within a MNC. The degree of standardisation adopted is suggested to be influenced by the host country environment, product-related characteristics and subsidiary-related factors. The exact

Table 2. Previous Research on the

Researcher

Size of total A b s o l u t e R e l a t i v e Absolute foreign size of a size of size of

operations multinational subsidiary subsidiary

Gates and Egelhoff (1986) - mr mr + Gamier (1982) + + ns ns Hedlund (1981) incl - - Goehle (1980) incl ns ns Picard (1977) ns - ns -

Centralisation-Size mr, mixed results; -, negative relationship; ns, not significant; +, positive relationship; incl, Relationship inconclusive.

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components of these three variables have yet to be comprehensively determined. Those factors external to the firm, host country environment and product-related characteristics, were the focus of initial research into the standardisation concept. As a result, the impact of those variables on the level of standardisation is more established and widely accepted. Despite conflict over the impact of a few components, such as "product type" (Kirpalani, et al., 1988; Gates and Egelhoff, 1986), a relatively uniform perception of the relationship between the level of standardisation and external variables exists. However, while the impact which some subsidiary-related variables have on the level of standardisation is generally accepted, others are subject to personal interpretation and the overall impact of subsidiary-related factors has only been minimally explored.

Inconsistencies between previous research have left the true effect of some variables unknown and the influence of other variables has yet to be tested. Each variable is influenced by various other factors. "Centralisation variables", examples of which have been discussed and are illustrated in Fig. 1, are known to influence the level of centralisation. Thus, if an association between centralisation and standardisation exists, these variables should also have an indirect influence on the level of standardisation. There are, therefore, many variables and many relationships that have to be considered when determining the degree of standardisation that a firm follows. Some of these variables will have a greater impact than others.

The current paper only explores the assumed relationship which is shown in the model between centralisation and the degree of standardisation within marketing programs. While the model includes an extensive list of variables which influence centralisation, this study will not examine the effect of these variables, but rather, will examine the relationship between standardisation and centralisation as an unmitigated concept. When this link is established, further work can be done to examine the influence of these variables. The remaining part of this paper will now examine the hypotheses, methodology and findings of the study.

3. Hypotheses Marketing literature to date has examined in detail the relationship between host country environment variables and product-related variables. These relationships have been generally accepted and are not subject to great controversy. However, there still exists much uncertainty as to the extent of relationships between the level of standardisation a subsidiary follows and those variables referred to as "subsidiary-related". In particular, the impact that the level of centralisation applied within the marketing function of the organisation has on the degree to which the marketing mix variables are standardised, has yet to be determined.

It is important to determine the effect subsidiary-related variables, particularly centralisation, have in the overall marketing framework because, ultimately, each specific company should be able to use the model to deduce the desirable level of standardisation for their situation. Company structures,

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such as the level of centralisation, could be manipulated to achieve this des i red level of s tandard isa t ion . Wi thout being adequa te ly tested, centralisation could not be included in a comprehensive model of the standardisation concept.

It is directly pertinent to Australian marketing managers to determine whether this relationship is exhibited within Australian firms. Furthermore, as Australia is an economy particularly fertile in MNC subsidiaries, it provides a sample which is varied and broad enough to offer some representativeness at a more global level. Therefore, while this study tests for the marketing standardisation-centralisation relationship in the Australian context, its findings should be of interest to marketers and academics from further afield.

To determine whether the level of interaction between headquarters and subsidiaries is related to the degree to which their marketing mix elements are standardised, hypotheses have been developed to test for correlation.

H0: The level of centralisation is not correlated with the degree of marketing standardisation between the parent company and subsidiary.

Previous research has tended to examine marketing practices as a whole, often producing contradictory results. An explanation for these inconsistencies may be the different emphasis placed on each of the "Four Ps" - - Product, Promotion, Price and Place (Distribution). For example, it may be that where a relat ionship exists for product related factors, it does not exist for distribution-related factors. Different emphasis on these variables could result in the rejection or acceptance of a hypothesis that would not otherwise have occurred. It is therefore necessary to subdivide H 0 to examine the relationship for each of the "Four Ps".

H0: ~ The level of centralisation is not correlated with standardisation between the parent company and its product-related variables.

H0:2 The level of centralisation is not correlated with standardisation between the parent company and its promotion-related variables.

H0:3 The level of centralisation is not correlated with standardisation between the parent company and its price-related variables.

H0:4 The level of centralisation is not correlated with standardisation between the parent company and its distribution-related variables.

the degree of subsidiary for

the degree of subsidiary for

the degree of subsidiary for

the degree of subsidiary for

4. Data and Methodology The environment within the host country affects the level of standardisation a company employs (Cavusgil et al., 1993; Ozsomer et al., 1991; Sorenson and Wiechmann, 1975; Keegan, 1970); therefore, for the conclusions reached

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from this study to be useful to Australian managers, it was necessary to limit the study to exclusively Australian subsidiaries. The study examined 104 Australian companies who were multinational subsidiaries and had their parent company based overseas. This represented a 52% response rate. Another 51 companies replied but their questionnaires were either insufficiently completed or they notified their desire not to participate in the survey.

The sampling frame used for selecting these companies was obtained from "Macmillan Directory of Multinationals" (Stafford and Purkis, 1989). This directory profiles the world's 450 largest industrial corporations with sales of over $1 billion and significant world investments during 1987. Only those with Australian subsidiaries were selected for the sample. In an effort to reduce bias towards large firms and industrial corporations, these companies were supplemented with other MNCs obtained from lists provided by the Reserve Bank of Australia; the Bureau of Industry Economics and the Department of Industry; Technology and Regional Development Departments of Aerospace; Automotive; Information Industries; Marine and Forest Products; Pharmaceutical and Service Industries Development. Companies were then chosen at random from these lists.

Despite an attempt to reduce bias, the sample provided some over- representation of manufacturing industries in comparison to service industries, as only one service industry firm was amongst the respondents. Large and successful companies (sales of over $1 billion and significant world investments) were also slightly over-represented in the sample.

Any bias arising from examining only the views of subsidiaries and not that of parent companies was consistent across the sample. Since the testing of hypotheses involved correlations and comparisons rather than tests of absolute levels, the results were unaffected by such a bias. As a result, however, conclusions should not be drawn regarding the absolute levels of standardisation and centralisation in this study.

To enable the compilat ion of information on the level of both standardisation and centralisation, respondents were required to make a subjective judgement. Data was, therefore, collected through a pretested questionnaire posted to the Marketing Manager of the firms. A mail survey was used as it had proven successful in previous Australian studies. Two reminders, including prepaid return envelopes, were implemented in order to reduce non-response bias.

4.1. Questionnaire Design The questionnaire consisted of four major parts. The first part asked managers to provide general information on the company regarding its industry, parent company's country, size and product lines. This information was needed to assess the characteristics of the sample.

Parts 2, 3 and 4 concentrated on the "marketing mix variables". These variables were representative of the "Four Ps" of the marketing mix - - Product, Promotion Price and Place (Distribution). The marketing elements

409

examined were determined after a review of previous research (Baalbaki and Malhotra, 1993; Ozsomer et al., 1991; Sorenson and Wiechmann, 1975; Brandt and Hulbert, 1977; Terpstra and Sarathy, 1990; Rau and Preble, 1987), and they were representative of the major decisions made by firms in relation to the marketing mix. Table 3 below details the list of marketing variables included in this study.

These categories are not mutually exclusive. For example, "Product Positioning" is included as a product-related variable, yet, the positioning of the product will have an effect on the other marketing mix elements. The variables were surveyed in a random order to reduce any bias that may have otherwise occurred.

Part 2 required managers to express an opinion regarding the level of guidance and direction (centralisation) their subsidiary received from its parent company concerning the marketing mix variables. As presented in the appendix, a Likert-type scale was provided for each of the above marketing variables and the manager was required to indicate the appropriate level for his company between (1) "No Direction Received" and (7) "All Direction from Headquarters". A N/A option was provided for those variables that were unrelated to the specific company.

In an effort to maintain consistency, managerial perceptions were collected for both centralisation and standardisation variables within each category of marketing decisions. This measurement technique had been used by previous researchers to account for the subjective nature of the information required (Cavusgil et al., 1993; Sorenson and Wiechmann, 1975; Gates and Egelhoff, 1986; Hoffman, 1986; Ozsomer et al., 1991).

Parts 3 and 4 required identical Likert-type scales to be completed, evaluating the similarity of the marketing mix of a product sold in Australia and in the parent company's country. This provided an indication of the level of standardisation a company was implementing. In companies dealing with more than one product, it may be that different levels of standardisation apply to different products. Thus, Parts 3 and 4 required the evaluation of two extremes; Part 3 dealing with the product with the least similarities on the

Standardisation, Centralisation

and Marketing

Product Brand name Packaging Warranty Product characteristics Product positioning

Price Wholesale price Retail price Discounts given

Promotion Creative express Basic advertising message Media allocation Sales promotion

Distribution Degree of penetration Management of salesforce Role of intermediaries Type of intermediaries Role of salesforce

Table 3. Marketing Mix

Variables

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marketing mix elements above and Part 4 evaluating the product most similar to a corresponding overseas product on the same attributes. Single product finns only filled out Part 3.

To some extent, the use of the same set of variables in the last three sections of the questionnaire alleviates the potential problem which might have arisen from the use of the set of variables described in Table 3 in the manufacturing/ industr ial marketing context apparent from the sample description. It is assumed that respondents' interpretation of the meaning of those variables in their own situation would remain the same when answering all sections of the questionnaire. Therefore, comparing their responses to each section of the questionnaire should provide a basis for common analysis and the set of variables can be considered as equally applicable to all members of the sample, regardless of their sector of activity.

5. Empirical Results of Analysis Most companies develop marketing plans for more than one product, tailoring each plan to account for the market characteristics and environment that surround that product. For this reason, this study evaluated the level of standardisation between the host and the parent country as it applied to two separate products presenting the least and the most similarities on each of the marketing mix variables assessed. This was done to determine whether there was a significant difference between the extreme levels of standardisation a company would implement for different products.

The mean level of standardisation was calculated for each marketing mix variable and a t-test run on the group means, comparing those in the "least similar" section with those in the "most similar" section. The group means were not found to be significantly different, in fact, the notion that the group means of the two sections are identical was accepted at the 5% level for a one- tailed t-test (P(T < t) = 0.0927) and the 10% level for a two-tailed t-test (P(T < t) = 0.1853). The Pearson correlation value (0-978) provided support for these findings, indicating the two groups possessed a high degree of correlation.

This confirmed that there was no significant difference between the extreme levels of standardisation a company would implement for different products. It was, therefore, not necessary to conduct separate hypothesis testing on the data for products presenting "the least" and "the most" similarities on each of the marketing mix variables assessed. In order to be conservative, the tests presented in the remainder of the paper will use the data collected concerning products with "the least" level of standardisation. It was assumed that any relationship found to exist at this level would also exist as the level of standardisation increased in other products.

5.1. Centralisation-Standardisation Relationship: Mean Rankings for Marketing Mix Variables Table 4 ranks the means of both the level of centralisation a subsidiary is subjected to by their parent company and the level of standardisation they implement. Ranking the means of the variables provided support to previous

411

research findings (Sorenson and Wiechmann, 1975; Brandt and Hulbert, 1977; Ozsomer et al., 1991; Aylmer, 1970). The product-related variables were found to be highly standardised and centralised, perhaps to benefit from economies of scale, whereas distribution-related variables tended to be substantially less standardised, possibly to adjust to the differences in market characteristics. Relative rankings varied within the categories themselves. For example, within the promot ion-re la ted variables, "Basic Advert is ing Message" and "Creative Expression" ranked relatively high compared to "Media Allocation" and "Sales Promotion" which were less centralised and standardised. Although the advertising message itself and its form were dictated by the parent company, conveying the message to the consumers and arousing their awareness ("Media Allocation" and "Sales Promotion") were the duty of the subsidiary and undertaken in a different manner than those of the parent company. This characteristic is typical of promotion-related variables (Sorenson and Wiechmann, 1975).

As well as lending support to previous research, Table 4, more importantly, illustrates why an association between centralisation and standardisation is often assumed. The means of the individual marketing mix elements had similar rankings for the two measures, suggesting a linear relationship. This similarity in ranking is not sufficient to confirm a significant relationship between the two variables, however, as it merely highlighted a general trend. This general trend was emphasised when the variables were grouped together into the "Four Ps". Product-related variables tended to be substantially more

Standardisation, Centralisation

and Marketing

Centralisation Standardisation Rank Mean SD Rank Mean SD

Brand name 1 5.5096 Product design 2 5.1287 Packaging 3 4.5938 Warranty 4 4.4130 Product positioning 5 3.4700 Advertising message 6 3.2700 Wholesale price 7 3.1881 Creative expression 8 2-7857 Type intermediaries 9 2-4268 Role intermediaries 10 2-3810 Degree of penetration 11 2.3457 Sales promotion 12 2.3100 Role salesforce 13 2.2524 Retail price 14 2.2245 Discount given 15 1.9697 Media allocation 16 1.9677 Management salesforce 17 1.9515

Product 1 4.6349 Promotion 2 2.5934 Price 3 2.4664 Distribution 4 2.2561

2.0288 2 5.6117 2.2847 1.8968 1 5.7255 1.7954 2.1986 3 5.3402 2.1491 2.3115 4 5.2759 1.9384 1.6274 5 4.5152 1.7835 1.7615 6 4-1700 2.0477 2.0907 8 3.7400 2.0423 1.7326 9 3-5833 2.1507 1.3154 12 3.4675 1.7619 1.2022 14 3.3974 1.7125 1.4562 13 3.4079 1.7465 1.4652 11 3.5657 1.8338 1.4089 7 3-8544 2.0373 1.4168 15 3.3673 2.0000 1.4728 16 3.2273 1.8083 1.3309 17 3.0538 1.8490 1.3672 10 3.5686 2.0428

2.0896 1 5.2992 1.9785 1-6411 2 3.6031 1.9837 1.7544 4 3.4545 1-9481 1.3472 3 3.5596 1.8579

Table 4. Mean Rankings for

Marketing Mix Variables

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standardised and centralised than the other variables. Although similar rankings suggested a positive correlation, the level of centralisation does not always have to be correlated with the level of standardisation. For example, the "Role of Salesforce" and "Management of Salesforce" variables had substantially different mean rankings for the two measures, implying that although little guidance was given, they were relatively standardised across national borders. For these variables, external factors related to the host country environment or product-related characteristics may have a greater impact on the level of standardisation, overriding the relationship with the level of centralisation.

An analysis of the mean rankings for the levels of centralisation and standardisation suggested that there was a relationship between the two variables. Coefficient of correlation calculated for each category of marketing variables in a further statistical procedure resulted in Hypothesis Ho:~ being rejected (coefficient of correlation 0.4711) and hypothesis Ho:4 being accepted (coefficient of correlation 0.2601). The remaining hypotheses remained uncertain as some items within each of the two categories presented conflicting levels of correlation. In the case of the "Promotion" category for instance, "Media Allocation" and "Basic Marketing Message" exhibited low levels of correlation whereas "Creative Expression" and "Sales Promotion" had relatively high levels of correlation. In the case of "Price", "Discount Given" and "Wholesale Price" showed substantially higher levels of correlation than "Retail Price". No conclusion could therefore be drawn as to H0:2 and H0:3.

5.2. Relationship within the Company: Paired Test Ultimately, a model of the standardisation concept should be of use to managers at the company level. Therefore it was important to determine whether the level of standardisation undertaken by a specific fLrrn was correlated with the level of guidance that fn'm receives from its parent company (centralisation), To test for this relationship, paired tests were run, investigating the significance of the difference between centralisation and standardisation for each of the marketing mix variables. The results are shown in Table 5.

Of the marketing mix variables, only "Brand Name" and "Wholesale Price" showed significant relationships at the 10% level and 1% level, respectively, for both one-tail and two-tail tests. All other variables were found to be non-significant. These tests highlight that correlation may not be apparent when the levels of centralisation and standardisation undertaken within the individual firms are examined. The null hypothesis must, therefore, be accepted and changes should be made to the model of the standardisation concept previously presented. It appears that standardisation and centralisation are two distinct concepts which, at the individual firm level, are not related. The degree to which a marketing strategy implemented by a subsidiary resembles that of its parent company does not necessarily match or follow the degree to which the marketing decision-making process in that subsidiary is subject to the parent company's influence and directions.

413

Marketing mix variables P(T <) one-tail P(T <_) two-tail

Brand name 0.3573 0.7145 Packaging 0.0009 0.0017 Warranty 0-0001 0.0003 Product design 0.0030 0.0060 Product positioning 2.79 × 10- 6 5.59 × 10 ~

Creative expression 0.0005 0-0010 Advertising message 5.19 × 10 -5 0.0001 Media allocation 2.02 × 10 -6 4.03 × 10 -6 Sales promotion 3-05 × 10 -12 6.09 x 10 12

Wholesale price 0-0106 0.0211 Retail price 7-45 x 10 -7 1.49 x 10- 6 Discount given 2-49 x 10 -9 4.99 x l0 ~

Degree of penetration 6.61 x 10 ~ 1-32 x 10 -5 Management salesforce 1.32 × 10- u 2.65 × 10- ~ Role intermediaries 3.36 x 10- 9 6.72 x 10- 7 Type intermediaries 3.06 x l f f 6 6.11 × 10 ~ Role of salesforce 2.85 × 10-12 5.69 × 10 -12

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and Marketing

Table 5. Paired Tests on

Centralisation and Standardisation

Means

6. Conclusion The level of centralisation has often been included in preliminary models examining the concept of standardisation, without adequate proof that the two measures were, in fact, correlated (Jain, 1989). Paired tests conducted to determine whether this relationship held within individual companies proved to be insignificant and the null hypothesis could not be rejected. This suggests that previous researchers may have been hasty in assuming that a relationship between centralisation and standardisation exists in all circumstances.

The framework developed earlier represented centralisation as a contingent variable in the subsidiary-related factors component when predicting the level of standardisation. Such a model would now, of course, be subject to limitations. Firstly, it cannot be applied to individual firms and is restricted to examining aggregate levels of standardisation. Secondly, as this study only examined the correlation between the levels of marketing centralisation and standardisation, no conclusion can be drawn as to any causality between the t w o .

Finally, the model may need to be modified for each marketing mix element examined. The inclusion of the mean level of centralisation as a subsidiary-related factor in the model is most appropriate when considering product-related variables, because the correlation between the mean levels of standardisation and centralisation is strongest for these variables (Ho:l was rejected). Conversely, centralisation could almost be excluded from a model which is going to be used to examine distribution-related variables. This is because the correlation between it and standardisation is relatively weak for these variables and may be better explained by variables in the host country environment or product-related characteristics components of the model (H0:a

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was accepted). No general rule can be given regarding the inclusion of the level of centralisation in a model for price and promotion-related variables. Whereas some elements in these categories show a high level of correlation, the correlation found for others is barely sufficient to warrant inclusion in the model. Results of previous studies, such as that conducted by Kirpalani et al. (1988) and Daniels (1987), must be analysed taking into consideration the variables measured and general conclusions should not be applied to all components of a marketing mix. The conclusions found by Kirpalani, although relevant for advertising variables, may not be applicable to all other marketing variables.

Considering the results of this study and previous research, an updated model explaining the concept of marketing standardisation, similar to Fig. 2, would emerge. This model differs markedly from the original model proposed. Considering the scope of the research, this revised model is specific for relationships concerning marketing programs. The centraiisation variable, found not to be directly correlated with the level of standardisation (paired-tests), has been removed from the general subsidiary-related variables. The conclusions of researchers who assumed this relationship between the extent of marketing cenlxalisation and the level of standardisation in the marketing strategy (Ghoshal et al., 1994; Prechel, 1994; Samiee and Roth, 1992; Jain, 1989; Gates and Egelhoff, 1986; Sorenson and Wiechmann, 1975), may need to be re-evaluated considering this f'mding. However, as a general relationship was apparent (z-tests and coefficients and correlation), centralisation may affect standardisation via a relationship with other subsidiary-related factors and previous research conclusions could still be valid. This revised model does not support the previous research undertaken by Ozsomer et al. (1991), which suggested that a relationship did exist between centralisation and standardisation. As suggested previously, the Ozsomer finding was probably biased by the relative size of the subsidiaries examined (a subsidiary-related variable) and the small sample size.

6.1. Implications for Managers The development of a comprehensive model examining the standardisation concept could assist management in its decision-making process. A better understanding of standardisation would provide further insights into why the marketing mix of a company is constructed in a particular manner. Corporate managers could also use such a model to determine the variables that may be influenced to achieve a desired level of standardisation and/or decide on a common marketing program for managers of their subsidiaries from all over the world.

Even though the sample of this study was slightly biased towards successful companies, the model developed could not indicate the level of standardisation and centralisation that a MNC should undertake. It could, however, give managers an idea of a "norm" for their company to adopt. This is particularly useful for Australian managers who have not had access to a large number of research findings attained in the context of an Australian host country environment.

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m !i l,

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@

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It is also important to realise that since the level of centralisation and standardisation are not correlated at the company level, parent companies, cannot restrict the level of standardisation a subsidiary undertakes by increasing or decreasing the level of decision-making authority they allow them. In that regard, the findings of this study, while Australian-specific to a certain extent, should be considered with some interest by managers of MNCs worldwide. A model explaining the concept of standardisation would also benefit areas other than marketing. The finance and manufacturing sectors of a multinational firm, for example, would find the relationships determined in such a model very useful.

6.2. Future Research The usefulness of a model explaining the concept of standardisation could be greatly enhanced if causality was proven between some of the contingency variables and the level of standardisation. Certain variables could then be manipulated to obtain a desired level of standardisation. For example, if the standardisation-centralisation relationship was shown to be causal, a parent company could increase/decrease the level of guidance they impose upon the subsidiary, in order to obtain the desired level of standardisation. Future research should, therefore, investigate this causal relationship rather than focus on correlation. The present study, while showing no correlation between the two concepts does not preclude that a causal relationship could exist at a product or industry specific level. The relatively varied nature of the sample simply did not allow such an analysis to be conducted here.

If a desired level of standardisation is to be strived for, it may become necessary to estimate which level would enable a company to reach a specific objective. As the overriding objective of most firms is profit maximisation, future research should therefore examine the profitability of specific levels of standardisation and centralisation. In order to accomplish this, "successful" companies should be identified and their practices examined.

The revised model presented in this paper differs from the generally accepted f ramework and is therefore a building block on which future research can take place. The relationship between centralisation and the product-related and host country factors within a firm, for instance, remains to be established. The model may also incorporate many other interactions between the cont ingency variables which also should be examined, as different relationships may exist in different industries. The Japanese Electronic industry may show more correlation between centralisation and standardisation then the US Automotive industry. Size variables may actually be correlated with the levels of centralisation and standardisation in some industries but not in others, which would not have been detected in this study. It is necessary for future research to examine variables in industry-based clusters rather than individually and ultimately, the validity of the model as a whole remains to be tested.

To further support the findings of this study, a similar survey could be conducted using less subjective measures of the levels of centralisation and

417

standardisation. A sample more representative of specific industries and including different-sized MNCs in Australia could be used and results compared with that of the present study. A comparison could also be made with a similar study in which data from the parent company rather than the subsidiary is obtained in order to ensure greater internal validity of the findings.

The conclusions reached in this paper could also be expanded upon by looking beyond the marketing "programs" to examine the relationship between centralisation and standardisation within marketing "processes". This would include such activities as warehousing, transporting and storing, production activities, building relationships with suppliers, employees and other markets, financing decisions, human resource management and many other processes. The modifications suggested need to be examined in relation to non-marketing processes, as the relationship between centralisation and standardisation may differ for these variables.

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Received January 1995 Revised April and September 1995, January 1996

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(Appendix on pp. 420-421)

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Appendix

Questionnaire Sent to Marketing Managers

Part 2 This section investigates your opinion about the level of guidance and direction your subsidiary receives from its parent company. When making decisions on these marketing aspects, how much actual correspondence and input is received from overseas headquarters.

No direction All direction received from headquarters

Brand name 1 Wholesale price 1 Retail price 1 Basic advertising message 1 Creative expression (advertising) 1 Role of salesforce 1 Management of salesforce 1 Packaging design 1 Media allocation 1 Warranty/Guarantee 1 Discounts given 1 Degree of penetration 1 (Number of intermediaries/1000 people) Product design/characteristics 1 Sales promotion 1 Role of intermediaries 1 Type of intermediaries 1 Product positioning 1

2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5

2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5

6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A

6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A 6 7 N/A

421

Par t3 In this section you are required to evaluate the similarity of a product that is sold in Australia as well as in your parent company's country. In the case where several products are marketed in both countries please evaluate the one with the least similarities on the following attributes.

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and Marketing

Very different Very similar

Brand name 1 2 3 4 5 6 7 N/A Wholesale price 1 2 3 4 5 6 7 N/A Retail price 1 2 3 4 5 6 7 N/A Basic advertising message 1 2 3 4 5 6 7 N/A Creative expression (advertising) 1 2 3 4 5 6 7 N/A Role of salesforce 1 2 3 4 5 6 7 N/A Management of salesforce 1 2 3 4 5 6 7 N/A Packaging design 1 2 3 4 5 6 7 N/A Media allocation 1 2 3 4 5 6 7 N/A Warranty/Guarantee 1 2 3 4 5 6 7 N/A Discounts given 1 2 3 4 5 6 7 N/A Degree of penetration 1 2 3 4 5 6 7 N/A (Number of intermediaries/1000 people) Product positioning 1 2 3 4 5 6 7 N/A Sales promotion 1 2 3 4 5 6 7 N/A Role of intermediaries 1 2 3 4 5 6 7 N/A Type of intermediaries 1 2 3 4 5 6 7 N/A Product positioning 1 2 3 4 5 6 7 N/A

If your company is involved in marketing one single product you have now completed this survey and I thank you for your time.

P a r t 4 If several products are marketed in both countries please proceed and evaluate the product that is most similar to the corresponding overseas product on the following attributes.

Very different Very similar

Brand name 1 Wholesale price 1 Retail price 1 Basic advertising message 1 Creative expression (advertising) 1 Role of salesforce 1 Management of saiesforce 1 Packaging design 1 Media allocation 1 Warranty/Guarantee 1 Discounts given 1 Degree of penetration 1 (Number of intermediaries/1000 people) Product design/characteristics 1 Sales promotion 1 Role of intermediaries 1 Type of intermediaries 1 Product positioning 1

2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A

2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A 2 3 4 5 6 7 N/A