The impact of culture in TV advertising behaviour: an exploratory study in Southeast Asia

070108

Journal for

Global Business Advancement

Volume 1, No. 4, 2008 Publisher’s website: www.inderscience.com Email: [email protected] ISSN (Print) 1746-966X ISSN (Online) 1746-9678

Copyright © Inderscience Enterprises Ltd

No part of this publication may be reproduced stored or transmitted in any material form or by any means (including electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publisher, except in accordance with the provisions of the Copyright Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd or the Copyright Clearance Center Inc.

Published and typeset in the UK by Inderscience Enterprises Ltd

070108

The aim of JGBA is the advancement of contemporary research in the field of global business from the standpoint of both western and emerging countries vigorously participating in the globalised world. JGBA is an international refereed journal dedicated to the advancement of the theory and practice of global business with an emphasis on developing countries attempting to assert themselves on the global stage. Firms, institutions, governments, organisations, agencies, and individuals are participating in the globalisation of world economy through a variety of forms, shapes, and styles, necessitating the initiation of an innovative dialogue between them with the goal of resolving conflicts, promoting world peace and harmonising relations. JGBA wishes to act as a global platform for the pursuance of dialogue between different countries at dissimilar stages of economic development. JGBA aims to inspire both new and expert researchers to submit their empirical, conceptual and applied papers and case studies for publication. Preference will be given to papers examining conflicts between western firms and developing countries’ institutions, communities and firms, papers examining struggles confronted by new multinational firms emanating from developing countries and new scholars from emerging countries, as reflected by the accreditation of business programs across the world by the AACSB–International. Subject coverage Topics covered by JGBA include but are not limited to: Political economy and trade Economic development Finance Real estate Banking Accounting Taxation Exporting and market entry Foreign direct investment Human resource management Strategic alliances and networks Mergers and acquisitions Global brands emerging from developing countries Global outsourcing Business education and training Macro- and micro-economics Tourism and hospitality Cross-cultural management Technologies and e-commerce Commercial law Non-profit organisations Marketing and consumer behaviour Industrial and B2B marketing Relationship marketing Strategic management Information management Small business development Marketing research Transition economies Supply chain management Ethics and social responsibility Environmental marketing

Healthcare management Globalisation Regionalisation NAFTA APEC ASEAN MERCOSUR CARICOM Gulf Cooperation Council SAARC Andean Pact European Union Religion and business Terrorism and business War and business

Submission of papers Papers, case studies, etc. in the areas covered by JGBA are invited for submission. Authors may wish to send an abstract of proposed papers in advance. Notes for intending authors can be found at: https://www.inderscience.com/papers

Authors of accepted papers will receive a PDF file of their published paper.

Authors are invited to submit their papers to Prof. Dr. Zafar U. Ahmed Professor of Marketing and International Business, President, Academy for Global Business Advancement, Texas A&M University at Commerce, Department of Marketing and Management, Commerce TX 75429-3011, USA Email: [email protected] A copy of the submitted paper and submission letter should also be sent via email to the IEL Editorial Office at: Email: [email protected] Fax: (UK) +44 1234-240515 Website: www.inderscience.com Neither the editor nor the publisher can accept responsibility for opinions expressed in the Journal for Global Business Advancement or in any of its special publications. Subscription orders JGBA is published in four issues per volume. A Subscription Order Form is provided in this issue. Payment with order should be made to: Inderscience Enterprises Ltd. (Order Dept.), World Trade Center Building, 29 Route de Pre-Bois, Case Postale 896, CH-1215 Genève 15, Switzerland. You may also FAX to: (UK) +44 1234 240 515 or Email to [email protected]

Electronic PDF files JGBA papers are available to download from website: www.inderscience.com Online payment by credit card.

Advertisements Please address enquiries to the above-mentioned Genève address or Email: [email protected]

INTERNATIONAL BRANDING AND MARKETING COMMUNICATIONS

Guest Editors:

Prof. Dr. Demetris Vrontis University of Nicosia, Nicosia, Cyprus

Email: [email protected]

Dr. Ioanna Papasolomou University of Nicosia, Nicosia, Cyprus


Published by Inderscience Enterprises Ltd

070108

JGBA SUBSCRIPTION ORDER FORM Volume 1, 2008

(THIS FORM MAY BE PHOTOCOPIED) Subscription price and ordering information: The Journal for Global Business Advancement is published four times a year (in one volume of four issues), in English. Subscription for hard copy OR online format (one simultaneous user only) € 470 per annum (including postage and handling). Subscription for hard copy AND online format (one simultaneous user only) € 640 Airmail option € 40 per volume extra. Prices for multi-simultaneous users are available on request. Subscription orders should be addressed to the publishers: Inderscience Enterprises Ltd (Order Dept.), World Centre Building, 29 route de Pre-Bois, Case Postale 896, CH-1215 Genève 15, Switzerland. • Payment with order:

Cheques or bankers drafts should be sent with order, made payable to: Inderscience Enterprises Ltd.

Credit card payments will be accepted and will be converted to £ Sterling at the prevailing rates.

For rush orders, contact: Fax: (UK) +44 1234 240 515 Website: www.inderscience.com or Email to [email protected]

• Please enter my subscription to the Journal for Global Business Advancement subscriptions to Volume 1, 2008 €........................

• Please dispatch my order by air mail (add € 40 per Volume): €............. • I enclose total payment of € • Name of Subscriber.........................................................................................………. • Position.............................................................................................……............……. • Company/Institution...................................................................................………….. • Address........................................................................................................………….. ..........................................................................................................…………………. ............................................................................................................…..……………. • Fax .............................................. Email ..................................................…...……… • Date..........................................….Signature .............................................….……….

I wish to pay by credit card………………………………..…………….……………….. • I authorise you to debit my account with the amount in GBP sterling equivalent to

€ ...................……….…

• Card No. ...................................................Expiry Date..................................……….

Signature..................................................Date..............................................…….…. Please tick if you would like details of other Inderscience publications

Contents

SPECIAL ISSUE:

INTERNATIONAL BRANDING AND MARKETING COMMUNICATIONS

Guest Editors: Demetris Vrontis and Ioanna Papasolomou

327 Motivators and critical factors in mobile banking communications:the case of KuwaitAlkis Thrassou and Lijo Raju Philip

350 Are net surfers ready for audio banners?Caner Dincer

362 International celebrities: worldwide surrogate salesforce?B.Z. Erdogan

370 Implicit prices of product characteristics in the milk and cheese marketPhilippos Karipidis, Stamatis Aggelopoulos and Efthimia Tsakiridou

381 Website development as a means of communication: a case study for theKolossi Grand Hotel, CyprusDespo Ktoridou and E.N. Roussakis

390 The marketing implications of the ‘undesired self’; the case of ChineseY-generationAlkis Thrassou, Demetris Vrontis and Ching-Wei Ho

409 Evaluation of the Khula enterprise in the promotion of SMMEsin South AfricaLouise van Scheers and Simon Radipere

422 The impact of culture in TV advertising behaviour: an exploratory studyin Southeast AsiaDemetris Vrontis, Andriani Susanti and Ioanna Papasolomou

433 Consumer self-construal and cross-cultural marketing communications:theory and implicationsCheng Lu Wang

445 Gathering perceptions of Soweto small business owners on advertisingin black townships in South AfricaLouise van Scheers and Simon Radipere

459 Contents Index

462 Keywords Index

467 Author Index

Journal of Global Business Advancement, Vol. 1, No. 4, 2008

260508

International Journal of Global Business Advancement (JGBA)

Editor-in-Chief: Zafar U. Ahmed Professor and Associate Dean, College of Business Administration, Prince Sultan University PO Box: 66833, Riyadh, Saudi Arabia Email: [email protected] Patron: Hal Langford Dean, College of Business and Technology, Texas A&M University – Commerce, Commerce TX 75429-3011, USA Managing Editor: Ahmad Jamal Senior Lecturer of Marketing, Cardiff University, Cardiff Business School, Aberconway Building, Column Drive, Cardiff CF10 3EU, UK Email: [email protected] Consulting Editors Subhash C. Jain Professor, Director of CIBER, School of Business, University of Connecticut, 2100 Hillside Road Unit 1041C, Storrs, CT 06269-1041, USA Email: [email protected] Ben Kedia Professor, Department of Management, Fogelman College of Business & Economics The University of Memphis, Memphis, TN 38152, USA Phone: 901-678-2038 Fax: 901-678-3901-67 Email: [email protected] (Mike) Masaaki Kotabe Professor of General and Strategic Management, Temple University, USA, 349 Speakman Hall 1810 N. 13th Street, Philadelphia, PA 19122, USA Phone: 215.204.770 Email: [email protected] C.P. Rao Professor of Marketing and Director Case Research and Teaching Unit College of Business Administration, Kuwait University, P.O. Box 5486, Safat, 13055, Kuwait Email: [email protected]

Tagi Sagafi-nejad Radcliffe Killam Distinguished Professor of International Business Director, Ph.D. Program in International Business Administration College of Business Administration, Texas A&M International University, 5201 University Blvd., Laredo, TX 78041, USA Tel: 956. 326. 2512 Fax: 956.326.2554 Email: [email protected] Rajan Varadarajan Head, Department of Marketing, Distinguished Professor of Marketing and Ford Endowed Chair in Marketing & E-Commerce Texas A&M University, Mays Business School 4112 TAMU, College Station, TX 77843-4112, USA Email: [email protected] Country Editor for Cyprus: Demetris Vrontis Dean, School of Business, University of Nicosia, Room: M207, Millenium Building 46 Makedonitissas Avenue, PO Box 24005, 1700 Nicosia, Cyprus Email: [email protected]

Country Editor for Kuwait: Adel Abdullah Al-Wugayan Assistant Dean for Consulting, Training and Labs, and Director, Center of Excellence in Management, Kuwait University, College of Business Administration, PO Box: 5486 Safat 13055, Kuwait

Country Editor for Sweden: Lars G. Hassel Professor of Accounting, Umeå School of Business, Umeå University, 901 87 Umeå, Sweden Tel: +46 (0)90 - 786 71 32 Fax: +46 (0)90 - 786 66 74 Email: [email protected]

Country Editor for Finland: Jan-Åke Törnroos Professor of International Marketing and Dean, Åbo Akademi University Faculty of Economics and Social Sciences, Henriksgatan 7, FIN-20500 Turku, Finland

Country Editor for Germany: Klaus-Peter Wiedmann Chair for Marketing and Management, University of Hannover, Königsworther Platz 1 D-30167 Hannover, Germany

Country Editor for Japan: Hiroshi Kosaka Professor of Marketing, Chuo University, College of Business, Department of Marketing, 742-1 Higashinakano Hachioji-shi, Tokyo 192-0393, Japan

Country Editor for Lebanon: Said Elfakhani Professor of Finance and Associate Dean, American University of Beirut Suliman S. Olayan School of Business, Bliss Street, P.O. Box 11-0236, Riad El-Solh Beirut 1107 2020, Lebanon

Country Editor for Malaysia: Daing Nasir Ibrahim Professor of Accounting and Dean, Universiti Sains Malaysia, School of Management 11800 Mindan, Penang, Malaysia Country Editor for Saudi Arabia: Salem Al-Ghamdi Assistant Dean and Director of E-MBA Program King Fahad University of Petroleum and Minerals, College of Industrial Management KFUPM PO Box 667, Dhahran 31261, Saudi Arabia Country Editor for South Korea: Jang Ho Lee Professor of International Trade, Sogang University, College of Business Administration C.P.O. BOX 1142, Seoul 100-611, Korea, Republic of

Members of Editorial Board

Yusaf Akbar Associate Professor Southern New Hampshire University, International Business Department 2500 North River Road Manchester, N.H. 03106-1045, USA Email: [email protected]

Syed H. Akhter Chair, Marketing Department Marquette University, USA P.O. Box 1881 Milwaukee WI 53201-1881 Phone: (414) 288-3309 Email: [email protected]

Aref Abdullah Al-Ashban Dean, College of Industrial Management King Fahad University of Petroleum and Minerals, KFUPM Box # 1570 Dhahran 31261, Saudi Arabia Phone: +966-3-860-2700 Fax: +966-3-860-2772 Email: [email protected] Yunus Ali School of Business Monash University Malaysia, Sunway Campus Jalan Lagoon Selatan, 46150, Bandar Sunway, Selangor Darul Ehsan, Malaysia Email: [email protected]

260508

Members of the Editorial Board (continued)Ilan Alon Jennifer J. Petters Chair of International Business Executive Director of Rollins - China Center Rollins College, Crummer Graduate School of Business, 1000 Holt Ave. Winter Park FL 32789, USA Tel: 407.646.1512 Fax: 407.646.1550 Email: [email protected] Ruth Ashford Executive Head of Marketing & Retail Division Manchester Metropolitan University Business School Aytoun Building, Aytoun Street Manchester, M1 3GH, UK Tel: 0161 247 6045 Email: [email protected] Lance E. Brouthers Professor of International Business Ph.D Program Director of International Business, University of Texas at El Paso College of Business Administration 500 W. University Ave., El Paso TX 79968, USA Tel: 747-8919 Email: [email protected] Shawn M. Carraher Virginia Brewczynski Endowed Chair in Entrepreneurial Studies, Director, Center for Emerging Technology & Entrepreneurial Studies, Director, Small Business Institute School of Business, Cameron University 2800 West Gore Blvd., Lawton, OK 73505 USA Email: [email protected] Piotr Chelminski Assistant Professor of Marketing Division of Business Administration Providence College, 549 River Avenue Providence, RI 02918-0001 Email: [email protected] J. Jay Choi Professor of Finance, Temple University, USA Speakman Hall 204F, 1810 N. 13th Street Philadelphia, PA 19122 Phone: 215.204.5084 Email: [email protected]

Prof. Dr. Gary M. Cunningham Jönköping International Business School P.O. Box 1026, SE - 551 11 Jönköping, Sweden Email: [email protected] Mahmoud Haddad Professor of Finance, College of Business and Public Affairs, 214 Business Administration Building, University of TN at Martin, Martin, TN 38238, USA Tel: (731) 881-7249 Fax: (731) 881-7241 Email: [email protected] John Hadjimarcou Department Chair, Associate Professor University of Texas at El Paso College of Business Administration 500 W. University Ave. El Paso, TX 79968 Tel: 747-7736 Fax: 747-5348 Email: [email protected] Wolfgang Hinck President (2006–2007), Federation of Business Disciplines, Department of Marketing College of Business, Louisiana State University in Shreveport, Shreveport, LA 71115, USA Email: [email protected] James P. Johnson Associate Professor of International Business Rollins College, Crummer Graduate School of Business, 1000 Holt Ave. Winter Park FL 32789, USA Tel: 407.646.2486 Fax: 407.646.1550 Email: [email protected] Shaista E. Khilji Assistant Professor of International Management, Department of Human and Organizational Studies, The George Washington University, 2134 G Street NW Washington DC 20052, USA Email: [email protected] Email: [email protected] Anthony C. Koh Chair of Marketing Department College of Business Administration University of Toledo, 2801 W. Bancroft Toledo, OH 43606-3390, USA Tel: 419-530-2287 Fax: 419-530-4610 Email: [email protected]

260508

Members of the Editorial Board (continued)Dana Lascu Chair, Department of Marketing University of Richmond, USA Robins School of Business 1 Gateway Road, University of Richmond VA 23173, USA Tel: (804) 289-8586 Fax: (804) 289-8878 Email: [email protected]

Gerard Mcelwee Department of Business and Finance University of Lincoln, Brayford Pool Lincoln LN6 7TS, USA Tel: 01522886423 Email: [email protected] Osman Mohamad Universiti Sains Malaysia, Malaysia Gabriel Ogunmokun Faculty of Business Department of Marketing and Tourism University of Southern Queensland Toowoomba, Queensland 4350, Australia Email: [email protected]

John A. Parnell Belk Endowed Chair of Management School of Business University of North Carolina at Pembroke, Pembroke, NC 28372, USA Email: [email protected]

Valentin H. Pashtenko Associate Professor of Management College of Business Administration Clayton State University 2000 Clayton State Blvd Morrow, GA 30260 Tel: (678)-466-4522 Email: [email protected] Anne Perry American University, USA Joanne Roberts Professor of Finance Department of Economics and Finance Durham University, University Office Old Elvet, Durham DH1 3HP, UK

Mohammad Sadiq Sohail Associate Professor King Fahad University of Petroleum & Minerals, Saudi Arabia KFUPM Box # 1570 Dhahran 31261, Saudi Arabia Tel: 966-3-860-1746 Email: [email protected] Ven Sriram Professor of Management Merrick School of Business University of Baltimore, 1420 N. Charles St. Baltimore, MD 21201, USA Email: [email protected]

Patriya Tansuhaj Professor of Marketing, IBUS Fellow PO Box 644750, Washington State University, Pullman, WA 99164-4750 USA Office: Todd 373 Tel: 509-335-0940 Email: [email protected]

Dianne H.B. Welsh James W. Walter Distinguished Endowed Chair of Entrepreneurship Director, Entrepreneur & Family Business Programs, John H. Sykes College of Business University of Tampa, Tampa, FL 33606-1490, USA Email: [email protected] Len Tiu Wright Professor, Department of Marketing Leicester Business School De Montfort University, The Gateway Leicester LE1 9BH, UK Telephone: +44 (0)116 250 6096 Email: [email protected] Xia Yang Associate Professor of Marketing College of Business, 226 Sutliff Hall Bloomsburg University of Pennsylvania Bloomsburg, PA 17815, USA Email: [email protected]

CALL FOR PAPERS

International Journal of Economics and Business Research (IJEBR)

Website: www.inderscience.com ISSN (Online): 1756-9869 ISSN (Print): 1756-9850

Special Issue on: ‘Doing Business in Developing/Emerging Economies: Cases in Management, Business and Marketing’

The purpose of this special edition is to provide much needed ‘practice’ in developing/emerging economies given the fast moving, turbulent nature of today’s business environment and the rapid emergence of ‘new economic giants’ like Brazil, Russia, India and China (BRIC).

Papers are particularly welcome from the public as well as the private sector and can either be researched based or from secondary sources. In either case, they should contain a mixture of qualitative/descriptive detail as well as essential quantitative detail such as sales data, market share and financial details.

Subject Coverage

Suitable topics include, but are not limited to: • Developing/emerging economies • Management • Business innovation and research • Entrepreneurship • Marketing • Accounting • Human resources • Strategic alliances

• Outsourcing • Business ethics • Business law • Business information systems • E-business • Finance and international finance • Business and the natural environment • Economics and business education

Notes for Prospective Authors

Submitted papers should not have been previously published nor be currently under consideration for publication elsewhere.

All papers are refereed through a peer review process. A guide for authors, sample copies and other relevant information for submitting papers are available on the Author Guidelines page.

Deadlines for Submission

Closing date for submissions: 15 January 2009

Editors and Notes

You may send one copy in the form of an MS Word file attached to an email (details in Author Guidelines) to the following:

Guest Editor Professor Steve Carter Leeds Business School

Leeds Metropolitan University Leighton Hall, Leeds LS6 3QS, UK


Motivators and critical factors in mobile banking

communications: the case of Kuwait

Alkis Thrassou*Marketing Department, School of Business, University of Nicosia,

Cyprus, 46 Makedonitissas Avenue, P.O. Box 24005,

1703 Nicosia, Cyprus


*Corresponding author

Lijo Raju Philip13A, Tzarevo Selo Street, Floor 2, ap.4, Krasno Selo, Sofia, Bulgaria


Abstract: With the effort in gaining competitive advantage shifting towards

non-price factors, new forms of communications and distribution channels are

invaluable outlets for financial institutions, since they provide the opportunity

for cutting costs without diminishing existing service levels. As customers

are demanding greater convenience and accessibility, many banks are eyeing

cost-effective alternative service delivery systems. Mobile banking, a relatively

new phenomenon, helps customers to interact with a bank via a mobile device

and makes banking virtually anywhere on a real-time basis a reality. The aim of

this research is to investigate the mobile banking competitive environment

of Kuwait, to identify the motivators underlying mobile banking adoption by

banks, and to isolate the corresponding critical factors of success. The findings

are finally integrated into a comprehensive ‘motivators and critical factors’

model. The methodology used was predominantly based on secondary data,

reinforced with primary data. The former included an extensive literature

review, as well as a range of statistical and other data, while the latter was

based on experts’ in-depth interviews.

Keywords: communications; customer relationship; electronic marketing;

Kuwait; mobile banking; services.

Reference to this paper should be made as follows: Thrassou, A. and

Philip, L.R. (2008) ‘Motivators and critical factors in mobile banking

communications: the case of Kuwait’, Journal of Global Business Advancement,Vol. 1, No. 4, pp.327–349.

Biographical notes: Alkis Thrassou, an Associate Professor, obtained his

PhD in strategic marketing management from the University of Leeds (UK).

From 1996 until 2002 he worked as a business and project manager for an

engineering and management firm in Cyprus, leading teams of professionals

through many projects of varying size and nature. In 2002 he joined the

University of Nicosia, Cyprus, involving himself in various scholarly activities,

lecturing on marketing-related subjects to both undergraduate and postgraduate

students, and undertaking research in the fields of marketing communications,

services and consumer behaviour. He has published his work in many scientific

journals and books, and in 2005 became Head of the Marketing Department

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Journal of Global Business Advancement, Vol. 1, No. 4, 2008 327

Copyright © 2008 Inderscience Enterprises Ltd.

at the University of Nicosia. He also retains strong ties with industry, acting

as a Consultant.

Lijo Raju Philip obtained a BBA in marketing from Cyprus College, and an

MBA from Intercollege Cyprus. He has worked as the Marketing Executive

of Marcus Evans Europe AG (Cyprus), a business information provider, and

has followed seminars and training on banking and information technology.

Further to his professional pursuits, he undertakes research in the field of

banking technology and customer service.

1 Introduction

1.1 Aims and value of researchWith the effort for gaining competitive advantage shifted towards non-price factors,

new forms of distribution channels are invaluable outlets for financial institutions,

since they provide the opportunity for cutting costs without diminishing the existing

service levels. As customers are demanding greater convenience and accessibility,

many banks are eyeing cost-effective alternative service delivery systems. Mobile

banking, a relatively new phenomenon, helps customers to interact with a bank via

a mobile device and makes banking virtually anywhere on a real-time basis a reality.

The aim of this research is to investigate the mobile banking competitive environment

of Kuwait, to identify the motivators underlying mobile banking adoption by banks,

and to isolate the corresponding critical factors of success, as well as potential fail

points that result from gaps in knowledge of the subject. Towards this aim, four specific

objectives were set:

� objective 1: to review existing knowledge on the subject in a comprehensive manner

and through multiple perspectives (classification, available technologies, added value

and others)

� objective 2: to investigate the mobile banking competitive environment of Kuwait

conditions as well as its related consumer behaviour, attitudes and marketing

practices

� objective 3: to identify the motivators underlying mobile banking adoption by banks

� objective 4: to isolate the corresponding critical factors of success, as well as

potential fail points that emerge from existing knowledge or result from gaps in

knowledge of the subject.

The research adds value to academic knowledge through the comprehensive review,

interrelation and integration of existing work on a new area of services marketing. The

beneficiaries of this report include academics specialising in the field, managers involved

with strategic planning, consultants, wireless technology companies, banks and financial

service providers, financial technology applications providers, and finally consumers and

consumer protection organisations. The focus on Kuwait adds further value, through the

provision of comprehensive data on the case of Kuwait, a relatively under-researched

business market, with obvious applications to similar and/or neighbouring markets.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

328 A. Thrassou and L.R. Philip

1.2 Background to the subjectIn the recent past, banks have actively provided and developed electronic retail

banking delivery systems to provide consumers with self-service options that eliminate

the need to physically visit a branch. Self-service options like ATMs, telE-banking

and internet-banking have been successfully deployed by banks to reduce branch costs,

increase customer satisfaction, retain customers and discover new revenue opportunities.

Information is the consumers’ new weapon towards achieving change in the way they

expect companies to do business. The dual aspects of interactivity and connectivity are

transforming the business models of organisations. Consequently, a new self-service

option known as mobile banking (or M-banking) has recently emerged, as a result of

the fusion of financial services and mobile technology.

Zawya (2002), a Middle East premium business and financial website, states, in its

E-banking industry publication, that initially banks in the Arab world often watched

from the sidelines how international banks adopted new technological advancements

to expand their business worldwide. Owing to the change in regional demographics

(related to the younger generation getting better educated and more tech-savvy)

many banks started fast-tracking their electronic banking strategies. This has resulted

in the introduction of new financial services and the elimination of strict demarcation

lines among different banks, thus paving the way for banks to welcome wireless and

mobile technology into their boardroom. This has eventually led to offering customers

the liberty of paying bills, planning payments while stuck in traffic jams and receiving

updates on the various marketing efforts to provide more personal and intimate customer

relationships.

According to Anurag Gupta (Zawya, 2002) mobile banking is a symbiosis of

technology and financial services. It is an innovation where an intangible service and

an innovative medium of service delivery employing high technology are both present.

Frost and Sullivan (2003) note three categories of mobile banking applications:

Information-based, Transaction-based and Relationship-based. In the past, the general

climate surrounding mobile banking ventures worldwide had become passive, due to the

low user demand contrasting expectations. Frost and Sullivan attributed this to the appeal

of mobile banking being limited to a segment of high value professionals, particularly

within the financial industry. These days, however, mobile banking is making a bold

statement, with staggering usage figures. With the information on the web pages of

different banks used as an indicator, one can confidently state that mobile banking is

being implemented as an effective delivery channel.

According to a market overview provided by MEFTEC (2006), a premier in the

Middle East financial services conferences and exhibitions, more banks are fast-tracking

their E-banking initiatives in response to growing internet usage (25 million in 2005)

and high E-banking penetration (20% in the Gulf Cooperation Council (GCC), which

is equivalent to the rate in many Western countries). Also, growing mobile phone

subscriptions at a rate of 55% p.a. and high mobile phone penetration rates (68% in

the UAE, 52% in Bahrain and 48% in Kuwait) are leading to a surge in M-banking

initiatives. Within the GCC, an example that merits attention is Kuwait. According to

the Arab Advisors Group (2002), a specialised research, analysis and consulting

company, the internet account’s penetration rate in Kuwait had grown from 7.59%

in 2001 to 16.5% in 2006, ensuring it an enviable position amongst Arab countries.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Motivators and critical factors in mobile banking communications 329

This high mobile penetration rate in Kuwait (48%) can be a boon for key banks

targeting potential M-banking customers.

According to Shaikha Khaled Al Bahar, Head of the National Bank of Kuwait’s

corporate banking ‘there are winds of change in the highly profitable and comfortable

world of Kuwaiti banking, as it is now entering a period of radical transition, with both

market and regulatory forces significantly reshaping the industry’ (The Banker, 2005).

Kuwait has ten local banks (a mixture of commercial and Islamic banks) and three foreign

banks. They are all aiming for a larger market share, largely through innovations in their

service delivery systems. Currently, there are seven local banks that provide mobile

banking (see also ‘industry analysis’, Section 5, below).

1.3 Research methodology and limitations

M-banking is a new phenomenon in Kuwait and therefore secondary data, the principal

methodological tool, demanded a multi-source document research and an enhanced

internet search to ensure reliability and most-importantly that data are as recent as

possible. Information from research publications regarding ATM usage, internet banking

behaviour and the like are studied and utilised, while banking journals are explored to

provide the market environmental conditions and trends in the banking industry within the

Middle East region. Various statistical data from Arab management and finance

consultancies are additionally utilised, as are internet sites of mobile technology vendors

that list solutions to existing difficulties in M-banking. Equally importantly, data on local

banks contribute to the understanding of existing M-banking services. Use of secondary

data adds specific knowledge to that obtained from books and academic journals that

provide the theoretical and conceptual basis of the research.

Regarding primary data, according to Gay and Airasian (1999), the differences

between qualitative and quantitative techniques mainly result from the non-positivist

perspective of the quantitative research and the positive perspective of the qualitative

research. For the purpose of this research, ten qualitative in-depth interviews are

conducted. The interviewees were individuals holding key positions within or related to

the banking sector and with specialised knowledge and experience in mobile banking. The

primary research limitation relates to the number of expert interviews conducted, that was

relatively small, also to provide statistically reliable quantitative data. This is largely a

result of the limited access to organisations, their limited absolute number, the limited

accessibility of key personnel, but also the cultural context of the market whose

perceptions, strict protocols and values differ substantially from most other countries,

making interviewing considerably more difficult as a method.

2 Banking services marketing

Towards meeting objective 1 of the research, the following two sections present the

findings of an extensive literature review and secondary data analysis. According to Bell

(1993), a review should provide the reader with a picture of the current state of knowledge

and of existing major questions in the subject area being investigated. Since M-banking is

still at an embryonic phase in Kuwait, there is hardly any literature analysing its potential

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


and development. As a result, online information had to play a disproportionately

important role in secondary data collection.

2.1 Marketing of services for profit-oriented organisationsTo study the concept of mobile banking, one first needs to comprehend the fundamentals

of service marketing theory. This section provides a very brief insight into the marketing

of services for profit-oriented organisations.

What differentiate services from goods is their distinctive characteristics, namely

intangibility, inseparability, heterogeneity and perishability (Etzel et al., 1997;

Palmer, 2006). An additional dimension of service characteristics that demands

attention is the relative importance of the client relationship (Palmer 2006; Pezzullo,

1988). For profit-oriented organisations, due to the intangible nature of services,

the psychological determinants of buying behaviour become more important when

marketing services rather than goods. In addition, the sociological factors of

social-class structure and reference groups are proportionately more significant

determinants of buying behaviour in services markets (Etzel et al., 1997; Palmer, 2006).

The differentiating characteristics of services have major implications as to how they

market themselves. Intangibility heightens the need for a direct channel of distribution

because of the importance of personal contact between the buyer and the seller. It must

communicate the benefit of the service because it is usually unable to demonstrate

or display the service in use (Palmer, 2006; Seiders and Berry, 1998). Inseparability of

production and consumption is, in fact, partially overcome by M-banking through the

‘place’ flexibility it offers (Pezzullo, 1998). Perishability severely limits the alternatives

available to the bank marketer in times of excessively high demand and necessitates

the use of direct channels (Pezzullo, 1998). Luck of Heterogeneity is another services’

limitation largely eliminated by M-banking. Through electronic channels though, such

as mobile banking, distribution of the service is homogeneous and standardised

(Pezzullo 1998). Finally M-banking’s ability to strengthen Relationship Marketing is

best described by Sheth and Parvatiyar (2000) who state that, ‘information is the life

blood of all marketing [and] having the right information in timely fashion, in the

appropriate amount, and delivering it in the right style and at the right tempo are

critical to marketers maintaining satisfying relationship with customers’.

2.2 Multi-channel service deliveryAccording to Pezzullo (1998), a distribution channel is any means of increasing the

availability and/or convenience of a service that also increases its use or the revenues from

its use. The channel may help to maintain existing users, increase use among existing

users, or attract new users. Moore and Flynn (2004) noted that the term ‘channel’ is

relatively new and increasingly commonly used, particularly in the context of multiple

channel (‘multi-channel’) service delivery. The proliferation of marketing channels

and rapid advances in technology-based systems (e.g. internet and mobile), lead to

fundamental changes in how customers and companies interact with each other. The trend

toward using multiple marketing channels has become the rule rather than the exception

(Frasier, 1999). On the one hand, companies are offered a much broader range of service

delivery options, while on the other hand, the degree of interaction has considerably

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


increased (Prabhaker et al., 1997). The future of customer service is multi-channel but,

as Hobmeier (2001) supports, it is expensive and inefficient to offer all available options,

and most companies must choose.

There is a variety of factors that affect a firm’s choice of channel selection.

According to Etzel et al. (1997), if a firm is customer-oriented, its channels are

determined by consumer buying patterns. The benefits of a multi channel approach

are many. Briefly, they cut costs, they develop deeper relationships with customers,

they increase sales, and risk is reduced by spreading it over multiple channels

(Hobmeier 2001). These benefits can also act as drivers for channel selection.

In terms of customers’ channel preferences, Skiera and Gensler (2003) outline

the primary influencers as being the nature of the product purchased, the stage of

the transaction process, and the customer’s individual characteristics. In relation to

the nature of the product purchased, Peterson et al. (1997) found that customer

preference over channel choice depends on the level of outlay, frequency, the nature

of its tangible aspects and the physical/informational nature of the service. Finally,

considering customer profiles, Rollo (2004) suggested that the demographics and

psychographics of customers also matter in channel preferences, with younger,

more educated techno-users having a natural inclination towards channels such as

M-banking.

2.3 Multi-channel service delivery for banks“No-one is ever going to move to a channel or service that is harder to use or

less beneficial.” (Colum Joyce, Global Electronic Business Strategy Manager,

DHL)

Multi-channel service delivery not only has enabled firms to broaden their service delivery

system and achieve competitive service positioning, but has also taken the commonplace

wisdom of ‘listening to the voice of the customer’ (Keen et al., 2000).

The infusion of technology in the service delivery channel has considerably increased the

degree of interaction. In an intensifying technology-infused competitive environment,

superior distribution strategies concerned with how to communicate with and deliver

products to the customer most effectively, can provide institutions with a competitive

advantage in the market place (Howcroft and Lavis, 1986).

As shown in Figure 1, there is an increasing choice of service delivery mechanisms

as customers are demanding greater convenience and accessibility (McKechnie, 1992).

Channel preferences, though, vary significantly among different customer segments and

customers unconsciously align certain transactions with specific channels (Peak, 1997).

Accordingly, Milligan (1997) explains that given the shifting demographic profile and

corresponding changes in customer behaviour due to an active and mobile life style,

many banking experts feel the reliance on bank branching will continue to reduce

over time. However, transition from a certain service delivery system to another;

especially in the banking industry, is a challenge. On the supply side, factors such

as regulations, technology, and the resultant changes in the market structure influence

the choice of service delivery systems, while on the demand side consumer preferences

and expectations are of prime importance (Delvin, 1995; Hewer and Howcroft, 1999).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Source: Meidan et al. (1997)

As competition intensifies with similar pricing on banking services, the competitive

advantage will be shifted towards non-price factors. In this context, new forms of

distribution channels are invaluable outlets for financial institutions, since they

provide the opportunity for cutting costs without diminishing the existing service levels

(Akinci et al., 2004). The use of technology has provided banks with new forms of

financial businesses, through the advent of new channels such as E-banking, internet

(online) banking and the latest development: mobile banking. A fusion of mobile

technology and financial services, mobile banking, emerged after the advent of the

portable internet and smart-chip-embedded handsets (Tae-Gyu, 2006) and provided

banks with a true one-to-one business-to-consumer channel to their subscribers, which

enables a level of customer intimacy unforeseen in the banking industry.

To conclude, with customers demanding greater convenience and accessibility,

many banks are eyeing cost-effective additional/alternative service delivery systems.

The shift is towards the distribution strategies and the multi-channels banks will opt

for to provide the basis for differentiation in an intensely competitive market

(Thorton et al., 2001).

3 Mobile banking marketing

This section completes objective 1 of the research, through additional literature review

and secondary data analysis findings.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 1 Distribution channels of a bank

3.1 Mobile banking servicesAyadi (2005) explains that M-banking encompasses managing a bank account through a

wireless internet-enabled device. A more refined definition would be ‘a channel whereby

the customer interacts with a bank via a mobile device, such as a mobile phone or personal

digital assistant (PDA)’ (Scornavacca and Barnes, 2004). The significant market potential

for mobile banking can be explained through its always-on functionality and the option

to access personal banking services virtually anywhere and at any time.

Mobile banking services can be classified in two ways. Firstly, depending on

the originator of a service session, Koeppel (2000) introduced two broad categories of

services: ‘pull’ and ‘push’ services. ‘Push’ is when the bank sends out information

based upon an agreed set of rules, (e.g. a bank sending out an alert when a customer’s

account balance goes below a threshold level). ‘Pull’ is when the customer explicitly

requests a service or information from the bank, (e.g. a request by a customer for a

statement of his/her last five transactions). Secondly, depending on the nature of the

service, Frost and Sullivan (2003) categorised M-banking services as ‘transaction-based’

and ‘information-based’. A request for the last three transactions is information-based

and a request for a fund’s transfer to some other account is transaction-based.

Transaction-based services are also differentiated from information-based services

in the sense that they require additional security across the channel from the mobile

phone to the banks data servers. In addition to the above classifications, there are also

‘relationship-based’ services which are focused around personalised service portfolios

that allow users to pre-configure preferences enabling on-click transactions, receiving

targeted promotions and ultimately ‘location-based’ services. For instance, Al-Ahli Bank

of Kuwait, a commercial bank, sends event-based alerts and notifications on the client’s

mobile phone, as per the pre-configured alerts chosen at the time of registration.

3.2 Value creation in mobile bankingAccording to Clark (2001), value propositions define the relationship between supplier

offerings and consumer purchases. The value of mobile banking rises from the mobility of

the new medium, i.e. making use of electronic services while on the move. From the

service providers’ point of view, Keen and Mackintosh (2001) explain that even though

the demand side of M-commerce is a search for value, a pure transformation of services

into mobile services does not necessarily make them value-adding from a customer’s

point of view.

Clark (2001) emphasises the importance of the value-for-time derived from the

factors of mobility. Managers seeking to exploit the opportunity should leverage the

advantages of mobility to provide superior value propositions, and potentially receive

greater satisfaction from mobile consumers. Four value propositions in M-commerce

(in this context mobile banking) identified by Clark (2001) are ubiquity, convenience,

localisation and personalisation. For the end user, ubiquity and convenience are of

paramount significance. Ubiquity is embedded in mobile banking through the fact

that mobile devices enable users to receive information and perform transactions

from virtually any location on a real-time basis. Convenience means customers will

no longer be constrained by time or place. In their qualitative mobile banking study,

Laukkanen and Lauronen (2005) found that customers perceive location-free access

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


and the ability to react immediately to the service need, as important aspects of the

creation of convenience and efficiency in service consumption.

Location-specific information leverages the key value proposition of M-commerce

over traditional E-commerce, by supplying information relevant to the current geographic

position of the user. Additionally, personalised content is paramount in operating mobile

devices, because of the limitation of the user interface (Clark, 2001). Finally, and in

comparison to electronic banking, Pouttschi and Schurig (2004) point out that the high

penetration of mobile phones reaches all social levels, and that the subjective and objective

security of the device is higher than that of a personal computer.

3.3 Determinants of success/failure in M-banking adoption among consumersThe following present some of the complexities of technology adoption related to mobile

banking, in order to gain some insight into the possible determinants of success and failure

in M-banking adoption among consumers in different markets.

Rogers (1995) formulated the theory of diffusion of innovations to explain the

adoption of various types of innovations. The theory views adoption as ‘a process

by which an innovation is communicated through certain channels over time among the

members of a social system’ (Rogers, 1995). Diffusion of innovations determines

five innovation characteristics that affect the adoption: relative advantage, complexity,

compatibility, trialability and observability.

The Theory of Planned Behaviour posits that actual, voluntary use of a technology

is determined by the individual’s behavioural intention, which in turn, is determined

by the individual’s perceptions on the ‘presence or absence of requisite resources

and opportunities’ to perform the behaviour (Ajzen, 1991). He also claims that lack

of opportunities or resources, such as knowledge or abilities, may inhibit the behaviour

even if the attitude towards or intention to perform the behaviour are positive.

In recent years, Rogers’s findings and those of the Theory of Planned Behaviour have

been combined into a general Theory of Technology Acceptance (Figure 2), including

additional factors to be considered along with Rogers’s basic five; specifically ‘image’

and ‘trust’. This theory examines the factors that influence the adoption, and diffusion

throughout a social system, of new technologies or services such as M-banking. Barnes

and Corbitt (2003) analyse the Technology Acceptance Model, to provide an interesting

framework for understanding the potential of M-banking services. In their analysis, they

suggest that an individual’s attitude towards adopting M-banking is determined by

seven key characteristics: Relative Advantage, Complexity, Compatibility, Trialability,

Observability and Visibility and Security.

As noted earlier, the theory of planned behaviour posits that an individual’s

adoption of M-banking will be affected by subjective norms toward using the

technology (Ajzen, 1991). According to Hession (2001), norms are determined by

normative beliefs that the individual attributes to significant others (friends, work

colleagues, family members and the like) with respect to adopting or continuing to

use the technology. It is now well recognised that mobile telephony plays a large role

in social interactions, and can be especially active amongst the younger age groups.

Individuals in this segment tend to be strongly influenced by their peers. Another study

by Santello (2001) reveals that users often interact with their mobiles while with groups

of friends, showing off any attractive new content.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Source: Barnes and Corbitt (2003)

Generally, by assessing the attitudes and subjective norms associated with using the

technology, managers and those involved in the launching of the mobile banking services

can be better equipped to examine aspects of the likely diffusion of M-banking in different

markets.

3.4 Motivators towards M-banking adoption by banksNowadays, customers are leading an active and mobile lifestyle pressed against time.

The mobile phone has become an ‘extension’ of the human arm and is satisfying many

daily needs. According to a study conducted by Deloitte & Touche, the global mobile

phone market grew by over two billion subscribers in 2006, fuelled by strong demand

from developing economies in Asia and Latin America. In 2004, MTC, Kuwait’s first

mobile operator in the region, estimated the mobile growth rate to be around 40% for

the next five years (MTC, 2004). With the mobile medium enjoying increasing popularity

and customers using mobile phones for personal communication or data needs, banks

are trying to exploit these consumer patterns in their favour. The major potential

benefits of mobile banking are: increased customer satisfaction, increased customer

retention, reduced costs, cross-selling of services, identification of profitable customers,

increased source of revenues and expansion and enhanced brand presence (Figure 3).

Yorulmaz and Tan (2001) list four principles for building mobile customer

relationships. The listed guidelines are in essence ‘pull marketing’ principles to guide

the process of customer acquisition, development and retention. They are:

� target your customers to build critical mass

� match products to customers

� make acquisition a positive experience

� develop customers – one at a time.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 2 Model of technology acceptance

In order to build demand for mobile banking services, banks must first learn more about

their customers. Segmenting customer needs, identifying their demographics, can lead to

a well defined customer acquisition strategy. During this stage, the innovators should

be clearly identified, as they will be the first to use the service. Secondly, banks must

match the service to customer needs. The information and transaction-based services

should match the customer’s needs. The delivery of the service should be seamless, to

provide a positive customer experience, which is crucial while adopting new technologies.

Each customer should be developed over time, using relationship-based, personalised

services. The banks should take the customers through a learning process, from simple

information based services to complex transaction services. Privacy and security must

not be overlooked by banks, to keep customers’ fears at bay (Figure 4).

With customer growth stagnating and increasing competition, it is critical for banks

to respond to, and anticipate, customer needs. The best bet is to provide ‘any time,

anywhere’ banking, through an increasingly popular medium like the mobile. With all

of the abovementioned benefits integrated in mobile banking, banks can bet on growth

in customer base by providing ubiquity and convenience to the customer and drive their

revenues through increased transactions, reduced overall costs and more cross-selling

opportunities.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 3 Potential benefits of mobile banking

Source: Yorulmaz and Tan (2001)

4 Industry analysis of mobile banking in Kuwait

This section meets objective 2 of the research, through evidence specific to the Gulf

region, towards constructing a representative picture of the evolving E-banking industry

in the area. According to the market overview presented by MEFTEC (2006), in the

Middle East region, including the GCC countries (Bahrain, Kuwait, Oman, Qatar,

Saudi Arabia and UAE), E-banking is one of the world’s fastest growing markets for

financial technology. The region’s financial services sector is in the midst of a massive

IT overhaul (Figure 5). The MEFTEC report includes a reference to a study conducted

by IDC (a global market intelligence firm), which predicts that Gulf Banks will

represent the largest single vertical in terms of overall IT investments over the next

five years. With total spending by Middle East banks exceeding $1billion, E-banking,

CRM applications and the like, currently top the wish lists of regional finance houses.

A study conduced by Zawya (2002) indicates that in the GCC region, banks are spending

25–30% of their IT budgets on internet and web-related banking technologies.

Jordan Times (2001), states that three Gulf Cooperation Council countries

(Bahrain, Kuwait and the UAE) boast adoption rates equal to, or higher than, those

in the USA; 29% in Kuwait, 21% in the UAE and 17% in Bahrain. This is because,

as the MEFTEC report (2006) reveals, more banks are fast-tracking their E-banking

initiatives, in response to growing internet usage (25 million by 2005) and high

E-banking penetration.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 4 Marketing for M-banking (see online version for colours)

Source: Khalfan and Al-Othman (2005)

With populations getting younger, better educated and more demanding throughout the

region, increasing diversity in financial products and services, E-services and E-products

are gaining momentum, as banks realise that the move into financial cyberspace can help

differentiate them from their peers. For instance, in Kuwait, in 2006, Wataniya Telecom

(a driving force in Kuwait in increasing mobile commerce to over 70% of Kuwait’s

population), opened its High Speed Downlink Packet Access network, making it the

first operator in the Middle East and Africa region to offer mobile services beyond 3G

(Mobile, 2006). Another article in AMEInfo (a leading provider of online business

information in and about the Middle East region) informs readers that ‘M-Net for

Automated Banking Services’ (the first and leading mobile-payment provider in the

Middle East), launched its cutting-edge mobile payment services across Kuwait,

establishing Kuwait as just the fourth country globally to have widely accessible

mobile payment services (Andersen, 2005).

The research of the local market has further shown that Kuwait currently has 13

local banks (a mixture of conventional and Islamic banks), and three foreign ones.

Among these, seven offer mobile banking services to their customers. These seven are:

� National Bank of Kuwait (www.nbk.com)

� Burgan Bank (www.burgan.com)

� Kuwait Finance House (www.kfh.com)

� Al Ahli Bank of Kuwait (www.eahli.com)

� Bank of Bahrain and Kuwait (www.bbkonline.com)

� Gulf Bank, Kuwait ( www.gulfbank-online.com)

� Commercial Bank of Kuwait (www.cbk.com).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 5 Total IT expenditure by country (see online version for colours)

It was found, from investigating their respective websites, that mobile banking services

offered are basically information-based mobile banking services and the most popular

medium is SMS-based. An exceptional case, the National Bank of Kuwait, has recently

started to experiment with transactional based mobile banking services. It is interesting

to note that all these banks stress the essence and advantages of mobile banking on their

websites, in an effort to make customers aware of the service and attract them to try it.

For instance, Kuwait Finance House, an Islamic bank, advertises its mobile banking

channel as ‘SMS on time’. It emphasises the benefit of customers no longer needing

to contact the branch for banking information. According to Wael Al-Sultan, Manager,

Electronic Banking Services and Cards of Burgan Bank, services via SMS enable the

customer to request financial and banking information on any of their accounts, whether

they are in Kuwait or abroad (Burgan Bank, 2006). Sami AlAli, GM (Information

Technology), of Al Ahli Bank of Kuwait commenting on the mobile banking service said

‘this service comes as part of the ABK strategy to provide customers with innovative

products that are backed by updated technology, in order to satisfy their needs and

encourage brand loyalty towards ABK (Al Ahli Bank of Kuwait, 2006).

The information published on the banks’ respective websites and the stated position

of the managers reveal that mobile banking is being pushed in Kuwait as an effective

service delivery channel. According to Barnes and Corbitt (2003), the complexity of the

IT management challenge increases considerably when IT penetrates the heart of a

firm’s (or industry’s) strategy. Thus, in order to understand the impact of M-banking,

it is necessary to first develop a comprehensive strategic framework. Porter (1980)

provides such a framework, and argues that an industry segment (i.e. as is M-banking)

is the result of five basic forces: rivalry, new entrants, substitutes, buyers and suppliers.

4.1 RivalryBanks are the major players in the provision of M-banking services. Rivalry among

banking providers differ from country to country. Comparatively, Gulf banks have

major advantages over most others in the international arena, with their profitability being

a primary difference. Martin Oldham, Fitch director for financial institutions, London,

explains that returns in the Gulf domestic banking sectors are high because they are

still fairly protected from foreign competition in most cases and there seems to be little

inclination at present to offer more banking licenses to foreign banks (Global Risk

Regulator, 2004). In Kuwait, rivalry is not at a cut-throat level, with many banks

focusing on building relationships with customers at a young age rather than trying to

lure established customers from competitors. According to Faisal Al Radwan, Managing

Director of Kuwait’s Burgan Bank, the younger generations want to be able to transact

their business wherever and whenever they want. With technology expanding rapidly,

banks need to enhance their services, considering also risks involved with having clients

using new technologies. He adds that ‘this doesn’t mean we won’t launch new channels

if we see an opportunity to serve clients better. We’re always looking at customer

needs and we look at technology as an enabler’ (Banker Middle East, 2003).

Furthermore, alliances are likely to play an important role in developing M-banking

services. For instance, Burgan Bank, the country’s leading technological bank and

Wataniya Telecom, Kuwait’s most advanced mobile operator, announced a major step in

the region towards true mobile commerce that will allow consumers in Kuwait to use

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


their mobile phones for retail purchases. Harri Koponen, CEO, Wataniya Telecom, says:

‘Customers will no longer need to carry wallets full of cash, credit cards, and so on.

Their mobile phone will become their means of payment. To the customer, the process

is simple and seamless, and takes a few seconds’ (Poropudas, 2006). Barnes and Corbitt

(2003) state that change is challenging to customers, and if a new innovation offers more

flexibility, it may be the catalyst to retaining a customer when charge differentiation and

prices become an issue for the consumer. This could be said in the case of the National

Bank of Kuwait that has introduced ‘M-Net’, the first and leading mobile-payment

provider in the Middle East. According to the Vice Chairman of the Board, Ibraheem

Al-Khuzam, ‘Our goal was always to empower people to efficiently manage their

day-to-day expenditures, and to connect merchants to their customers’ rising demand

or convenience and security in purchasing’ (Andersen, 2005).

4.2 New entrantsWith their limited retail capacity, the new banks like France’s BNP Paribas, HSBC,

Citibank, do not look particularly threatening to the domestic retail market. Deregulation

in the Kuwait banking Industry has meant increased competition for banks. This

competition also extends to the internet. According to Barnes and Corbitt (2003),

the threat of new entrants in the M-banking sector depends on the level of customer

perceptions of wireless value as M-banking is in its embryonic stage. If the customer

perceptions are strong, then there is a real threat for a suitably positioned new entrant

to build customer value. In reality and potentially, an even larger threat exists from

network operators as they already possess a powerful billing relationship with customers

that can be leveraged to provide further financial services, thereby marginalising banks.

Nevertheless, the barriers-to-entry for mobile banking are high. In order to enter the

market a potential entrant must have an excellent knowledge of the market and consumer,

the financial strength to bear the high costs of such a venture, and of course the technical

capability to do it.

4.3 SubstitutesA key threat to the viability of mobile banking is the availability of substitutes to

the consumer. In Kuwait, the retail banking market has created an array of channels

for banking services, including telephone, internet and branch banking. Almost all

banks offer their services through various electronic channels. An example is the

‘BeeBank.com’, an online banking facility of the Burgan Bank and the ‘Hala Watani’,

a telE-banking facility of the National Bank of Kuwait. Any of these or other channels

of interaction of customers with banking service providers must be considered as a

substitute for M-banking services. These established services have already built up

considerable customer bases. Barnes and Corbitt (2003) point out that, quite often in

business, alternative technologies are seen as substitutes for each other.

4.4 BuyersThe banking sector tends to be based on a customer-centric model, where the emphasis

is on managing customer relationships and meeting consumers’ increasing levels of

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


sophistication. Customers in banking are generally very localised and although switching

costs are not particularly high, banks create extra costs by making such a move difficult

(for example, difficulty in closing bank accounts or transferring automatic payments).

On the other hand, if a service is perceived to provide significant value to the consumer,

customers tend to be drawn to it without a significant push from the banks (Barnes and

Corbitt, 2003). The banking sector though, is usually a buyers’ market essentially.

4.5 SuppliersThe main suppliers of wireless banking services are the parent banks. However, Barnes

and Corbitt (2003) state that the companies involved in operating mobile services,

providing the infrastructure and developing content, are also an important part of the

value chain. Without appropriate competencies in the development and supply of mobile

services, banks cannot reach the consumer market. Although many banks are aligning

with telcos and though they are substantial contributors to the success of the M-banking

service provision, they are also regarded by banks as potential competition in this sector.

The above are incorporated into a model (Figure 6) based on Porter’s framework

(Porter, 1980).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 6 A mobile banking competitive forces analysis for Kuwait

To conclude, the M-banking sector in Kuwait is, in effect, at an emergent stage.

Currently there are seven banks in Kuwait that provide M-banking information-based

services. The only bank to provide both information-based and transaction-based services

is the National bank of Kuwait (M-Net). Presently, the focus is on building relationships

with customers at a young age, rather than trying to capture established customers

from competitors. As the sector develops, competition is likely to be created through

rivalry from banks, potential new entrants from finance and telecommunications, and the

increasingly powerful role of suppliers (especially operators and infrastructure providers).

5 Conclusions – motivators and critical factors

5.1 General findingsIn the banking industry, distant channels of distribution are increasing (ATM, internet,

mobile phones, PDA, etc.), but they do not seem to meet the same needs. Every channel

offers different value creation opportunities to customers. The main reason mobile

banking is perceived as superior in meeting customer needs to internet banking is its

‘any time, anywhere’ attribute and its elimination of the need for an infrastructure, as

required for internet banking (computer, fixed lines). Potential benefits of mobile banking,

such as an increase in sales through improved image, customer acquisition, customer

retention, cross selling, and reduction in costs through elimination of teller or phone

transactions, should encourage banks to go mobile. Factors such as relative advantage,

complexity, image and trialability that influence the adoption, and diffusion throughout

a social system, of new technologies or services such as M-banking must be considered

to determine the success/failure of M-banking adoption.

In order to build demand for mobile banking services, banks must first learn more

about their customers. Privacy and security must be treated as primary objectives and

improvements in usability and accessibility need to take into consideration the customer

experience. Banks must also keep in mind the limitations of the mobile phone, such as

limited screen and small display size. In Kuwait, information-based mobile banking

services through the SMS medium are provided by seven banks and their major goal is

to repeat and build on the success of electronic banking in mobile banking. Pouttschi

and Schurig (2004) though, point out that banks have to keep in mind that the usage

of mobile banking is taking place under completely different circumstances and under

the application of mobile commerce rules. The whole system as such is an integration or

unification process of all our daily requirements of wallet, phone, money and information.

The very competitive nature of the present business environment has forced banks to go

for multi-channel marketing and better customer relationships to enhance the life time

value of customers. The keys to success are all in the management of expectations and

delivery to the end users. Experts suggest that the mobile technology should be used to

deepen the relationships with customers by providing them with services and information,

at the convenience of the customer.

The findings provide only a broad picture of the topic, as the field is still in a

developing phase. Hence nothing concrete emerges that has a common platform among

the various authors. Most of the authors have a very different perspective on the topic,

but it can be seen that they converge on the position that M-banking will be a key player

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


in the future of banking services. Furthermore, a large gap appears to exist between

the studies and control of the customer. Additionally, though M-banking is a two-way

interactive process, there is little mention about the various cultural issues involved.

Another gap in existing knowledge relates to the financial viability of macramé

applications, in spite of the fact that revenue increment is a main reason why this

process exists. As this is an evolving topic, no specific literature on customer perceptions

regarding M-banking usage appears to exist. The above naturally and consequently

demands further primary research, specific to the subject. In terms of current M-banking

practice, there is an additional large gap between customer expectations and branch

performance in today’s branch banking environment. Given the shifting demographic

profile and corresponding changes in customer behaviour, due to an active and

mobile life style, the reliance on bank branching will continue to reduce over time.

At the same time, there seems to be a void in the knowledge in terms of the nature of

the M-banking-based customer relationship.

Overall, customers are increasingly mobile nowadays and banks are striving to

find simplified means of supporting their customers’ banking needs. Increasing mobile

penetration helps banks to provide 24 hour availability and access to vital banking

information through a mobile device. To reduce the workload faced by branches and

existing staff for servicing customer needs, banks are leaning on mobile banking as a cost

effective alternate delivery channel to reduce staff costs and branch space. Relieving the

bank’s human resources will also help banks to focus more of their efforts on providing

financial consulting services and cross-selling housing loans, mortgages, etc. As a result,

the potential for cross-selling and customer management is improved. In addition,

increasing revenues can be derived from charges applied for branch transactions if

the mobile banking channel takes off. Due to the convenience of the mobile channel,

customers have the opportunity to conduct transactions more frequently and banks can

gain increased revenue from transaction fees. Regarding the M-banking market in Kuwait

specifically, it was found that it was important for banks to retain their strategic focus

and to analyse what segments they should target. The key is in educating customers

and making them feel comfortable and safe in dealing with technology directly.

5.2 Motivators and critical factorsFurther to the above findings nevertheless, and further to the competitive analysis

components presented in Figure 6, the research has provided a number of additional

and specific elements relating to M-banking. These elements are classified into three

categories:

� the underlying motivators that push banks to adopt and constantly develop

M-banking

� the critical factors influencing the successful adoption of M-banking, as they arise

from established knowledge on the subject

� the potential critical factors as they arise from gaps in knowledge concerning

M-banking.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 7 A mobile banking adoption forces model

Regarding the adoption motivators, the most important ones have been found to be:

diversity of services and channels, innovation, brand and customer loyalty, improved

targeting, service flexibility, customer empowerment, focus on more profit-oriented

practices, increased transactions, customer retention and acquisition, cross-selling, cost

minimisation, and enhanced service value added. Regarding the critical factors arising

from existing knowledge on the subject, the most important ones have been found

to be: privacy and security of data, reliability, convenience and usability, customer

education, true added customer value, trialability, accessibility and technological

limitations. Finally, regarding the critical factors as they arise from gaps in knowledge,

the most important ones have been found to relate to knowledge gaps: in studies versus

control of the customer, concerning adaptation, in measured financial viability, in

customer perceptions and attitudes, in customer expectations versus service performance,

and in M-banking-based CRM. The complete list of the above three categories is

presented in Figure 7.

Incorporating the motivators underlying M-banking adoption as well as its

corresponding critical factors into the above-developed competitive forces model,

provides a comprehensive and multi-perspective outlook on the forces and elements

comprising M-banking adoption (Figure 7).

It is a time of increasing business, cultural and technological transformation

and integration. Banking services have largely proved themselves praiseworthy for

understanding their environment, themselves and their customers, and keeping up with

the pace of change dictated by modern global evolutions. With long strides leading

from ‘selling’ to ‘marketing’, to ‘customer relationship’, to ‘electronic banking’, to

‘internet banking’ and now to ‘mobile banking’ the industry has successfully sought

to utilise all available means and resources towards true customer service. Becoming

a pioneer in such applications nevertheless, and moving from reactive to proactive

technology application, does require a ‘leap of faith’ into the unknown. The courage to do

it and, more importantly, the ability to do it stems from the capacity of banks to correctly

analyse and interpret their industry and markets, to bridge the worlds of business and

technology, to commit minds and resources to the cause, and to sustain the very delicate

balance between the company, its stakeholders and society. It is a challenging task, but one

that ultimately separates the leaders from the followers.

References

Ajzen, I. (1991) ‘The theory of planned behaviour’, Organizational Behaviour and HumanDecision Processes, Vol. 50, pp.135–211.

Akinci, S. and Atilgan, E. (2004) ‘Adoption of internet banking among sophisticated consumer

segments in an advanced developing country’, International Journal of Bank Marketing,

Vol. 22, No. 3, pp.212–232.

Al Ahli Bank of Kuwait (2006) ‘SMS Press’, [Online], available at, http://www.eahli.com/

abk/smsbanking_en.pdf [accessed on 14-02-06].

Andersen, C. (2005), ‘M-Net, NBK, and MTC-Vodafone lead mobile payment evolution’,

AMEInfo, [Online], available at, http://www.ameinfo.com/53316.html [accessed on 08-02-06].

Arab Advisors Group (2002) ‘Solid internet growth pillars insure Kuwait’s leading ranking among

the Arab countries’, available at, http://www.arabadvisors.com/Pressers/presser-020502.htm

[accessed on 28-01-06].

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Ayadi, A. (2005) ‘Value creation in mobile banking’, Development and Comp Systems 0508010,

Economics Working Paper Archive EconWPA, [Online], available at, http://econwpa.wustl.

edu:80/eps/dev/papers/0508/0508010.pdf [accessed on 27-02-06].

Banker Middle East (July 2003), ‘Back on track and looking to grow’, Cover Story, Issue 37,

[Online], available at, http://www.bankerme.com/bme/2003/jul/cover_interview.asp [accessed

on 10-03-06].

Barnes, S.J. and Corbitt, B. (2003) ‘Mobile banking: concept and potential’, International Journalof Mobile Communications, Vol. 1, No. 3, pp.273–288.

Bell, J. (1993) Doing your Research Project: a Guide for First-time Researchers in Educationand Social Science, 2nd edn, Buckingham, UK: Open University Press.

Burgan Bank (2006) ‘Burgan Bank provides its service via Arabic/English SMS’, [Online],

available at, http://www.burgan.com/SMSpress.htm [accessed on 14-02-06].

Clarke, I. III (2001) ‘Emerging value propositions for m-commerce’, Journal of Business Strategies,

Vol. 18, No. 2.

Delvin, J.F. (1995) ‘Technology and innovation in retail banking distribution’, International Journalof Bank Marketing, Vol. 13, No. 4, pp.19–25.

Deutsche Bank Research (2005) ‘Five online trends in 2005’, in E-banking Snapshot, No. 13,

Online, available at, http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD

0000000000185427.pdf [accessed 04-02-06].

Etzel, M., Walker, B. and Stanton, W. (1997) ‘Services marketing by for-profit and non-profit

organizations’, in: Marketing, 11th edn, USA: McGraw Hill, pp.352–356, 518–533.

Frasier, G.L. (1999) ‘Organizing and managing channels of distribution’, Journal of the Academyof Marketing Science, Vol. 27, No. 2, pp.226–240.

Frost and Sullivan (2003) ‘Mobile Banking still waiting for clearance’ [Online], available at,

h t tps : / /www.f ros t . com/prod / se rv le t /marke t - ins igh t - top .pag?doc id=BDOY-

5NLDGC&ctxixpLink=FcmCtx5&ctxixpLabel=FcmCtx [accessed on 28-01-06].

Gay, L.R. and Airasian, P. (1999) Educational Research: Competencies for Analysis andApplication, 6th edn, NJ: Merril.

Global Risk Regulator (2004) ‘Lifting the veil on Gulf states’ Basel II aims’,[Online], available at,

http://www.globalriskregulator.com/archive/September2004-06.html [accessed on 10-03-06].

Hession, E. (2001) Booty Call: How Marketers Can Cross Into Wireless Space, Dublin: Puca.

Hewer, D. and Howcroft, B. (1999) ‘Consumers’ channel adoption and usage in the financial

services industry: a review of existing approaches’, Journal of Financial Services Marketing,

Vol. 3, No. 4, pp.344–358.

Hobmeier, M. (2001) ‘Professional multichannel management’, CEO, No. 3, pp.36–38.

Howcroft, B. and Lavis, J. (1986) ‘A strategic perspective on delivery systems in UK retail banking’,

Services Industries Journal, Vol. 6, No. 2, pp.144–158.

Jordan Times (2001) ‘Arab banks facing the challenge of online banking’, [Online], available at,

http://www.jordanembassyus.org/06112001003.htm [accessed on 08-02-06].

Keen, C., De Ruyter, K., Wetzels, M. and Feinberg, R.A. (2000) ‘An empirical analysis of

consumer preferences regarding alternative service delivery modes in emerging electronic

service markets’, Quarterly Journal of Electronic Commerce, Vol. 1, No. 1, pp.31–47.

Keen, P. and Mackintosh, R. (2001) The Freedom Economy: Gaining the M-commerce Edge inthe Era of the Wireless Internet, Berkeley, CA: Osborne/McGraw-Hill.

Khalfan, A. and Al-Othman, A. (2005) ‘Recent ICT diffusion trends within the State of Kuwait’,

PPT. [Online], available at, http://www.isesco.org.ma/act/culture/inter.htm [accessed on

29-02-06].

Koeppel, I. (2000) ‘What are location services? – from a GIS perspective’, [Online], available at

http://www.jlocationservices.com (accessed on 27.02.2006).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Laukkanen, T. and Lauronen, J. (2005) ‘Consumer value creation in mobile banking services’,

International Journal of Mobile Communications, Vol. 3, No. 4, pp.325–338.

McKechnie, S. (1992) ‘Customer buying behaviour in financial services: an overview’,

International Journal of Bank Marketing, Vol. 10, No. 5, pp.4–12.

Meidan, A., Lewis, B. and Moutinho, L. (1997) Financial Services Marketing: A Reader,

London: Dryden Press.

Middle East Financial Services & Technology Exhibition and Conference: Market Overview,

[Online], available at, https://meftec.com/expo/market.shtml [accessed on 28-01-06].

Milligan, J.W. (1997) ‘What do customers want from you? Everything’, US Bankers Magazine,

December, Vol. 107, No. 12, pp.38–45.

Mobile Monday (2006) ‘Wataniya Telecom opens HSDPA network in Kuwait’, [Online], available

at, http://www.mobilemonday.net/mm/story.php?id=4617 [accessed on 08-02-06].

Moore, T. and Flynn, P. (2004) ‘The changing role of multi-channel service delivery’, in: FutureChallenges for E-government, discussion paper no.4, Australian Government Information

Management Office [online], available at, http://www.agimo.gov.au/publications/2004/05/

egovt_challenges/delivery/role/basic [accessed on 02-02-06].

MTC (2004) ‘MTC leads debate at telecommunications forum in Qatar’, [Online], available at,

http://www.mtc.com.kw/ [accessed on 10-02-06].

Palmer, A. (2006) Principles of Services Marketing, 4th edn, McGraw Hill.

Peak, M.H. (1997) ‘Back to the future of phones’, Management Review, Vol. 86, No. 6, p.9.

Peterson, R., Balasubramanian, S. and Bronnenberg, B. (1997) ‘Exploring the implications of

the internet for consumer marketing’, Journal of the Academy of Marketing Services, Vol. 25,

No. 4.

Pezzullo, M. (1988) ‘Distribution strategy: physical distribution’, in: Marketing for Bankers,

American Bankers Association, pp.191–205.

Poropudas, T. (2006) ‘Wataniya Telecom opens HSDPA network in Kuwait’, Mobile Monday,

[Online], available at, http://www.mobilemonday.net/mm/story.php?id=4617 [accessed on

10-03-06].

Porter, M. (1980) Competitive Strategy, New York: The Free Press.

Pousttchi, K. and Schurig, M. (2004) ‘Assessment of today’s mobile banking applications

from the view of customer requirements’, Proceedings of the Thirty-Seventh Annual HawaiiInternational Conference on System Sciences 2004, Hawaii, 2004, pp.1–10, [Online],

available at, http://csdl2.computer.org/comp/proceedings/hicss/2004/2056/07/205670184a.pdf


Prabhaker, P.R., Sheehan, M.J. and Coppett, J.I. (1997) ‘The power of technology in business

selling: call centers’, Journal of Business and Industrial Marketing, Vol. 12, pp.222–235.

Rogers, E.M. (1995) Diffusion of Innovations, 4th edn, New York: Free Press, pp.5, 212–251.

Rollo, C. (2004) ‘Seniors, teens, and everyone tween: selecting service channels to fit customer

demographics’, in: Benefits of Using Multi-channels as Drivers for Channel Selection, [Online],

available at, http://www.the-dma.org/dmef/proceedings04/6-Schijns.pdf [accessed on 02-02-06].

Santello, P. (2001) Direct Experience Marketing, San Francisco, CA: Lot 21, Inc.

Scornavacca, E. and Barnes, S.J. (2004) ‘M-banking services in Japan: a strategic perspective’,

International Journal of Mobile Communications, Vol. 2, No. 1, pp.51–66.

Seiders, K. and Berry, L. (1998) ‘Service fairness: what it is and why it matters’, Academyof Management Executive, Vol. 12, No. 2, pp.8–20.

Sheth, J. and Parvatiyar, A. (2000) Handbook of Relationship Marketing, California, USA:

Sage Publications.

Skiera, B. and Gensler, S. (2003) ‘Multi-channel management and its impact on customers

purchase behaviour’, in: Heidelberg et al. (Eds) Managing Enterprises of the New Economyby Modern Concepts of the Theory of the Firm, pp.122–138.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Tae-Gyu, K. (2006) ‘Korea leads world in mobile banking’, The Korea Times, [Online], available

at, http://times.hankooki.com/lpage/biz/200601/kt2006013013175911860.htm [accessed on

08-02-06].

The Banker (2005) ‘A transformed terrain for banks’, [Online], available at, http://www.thebanker.

com/news/fullstory.php/aid/2953/A_transformed_terrain_for_banks.html [accessed on

29-01-06].

Thorton, J. and White, L. (2001) ‘Customer orientations and usage of financial distribution

channels’, Journal of Services Marketing, Vol. l5, No. 3, pp.168–185.

Yorulmaz, T. and Tan, S.P. (2001) ‘‘Killer app’ to ‘killer process’: achieving mcommerce success

through strong customer relationships’, Accenture, [Online], available at, http://www.

accenture.com/Global/Research_and_Insights/Outlook/By_Alphabet/FromStrong.htm


Zawya (2002) ‘State of the industry, banking on E’, [Online], available at, http://www.zawya.com

/special/ebanking/ebanking_page_one.cfm [accessed on 28-01-06].

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Are net surfers ready for audio banners?

Caner DincerGalatasaray Üniversitesi, I

..I..B.F,

Çìragan Cad. No: 36 34357 Ortaköy,

I.stanbul, Turkey


Abstract: The internet is the fastest growing medium of all time. In this

research, the potential effects of advertising music on net surfers’ attitude

and recall are investigated by means of an online experiment that took place on

the internet, using audio banners and a banner without music, placed

on existing websites. The results showed that, even though the net surfer of

today is still stimulated insufficiently, from a musical point of view, in online

advertisements, the presence of music, and particularly the presence of music

with an expected tempo, has a positive affect on the click-through rate of the

banner, as well as the attitude towards the advertising and the recall rate of the

net surfer. The research aims to take a further step in the comprehension of

online advertising music and its fundamental effects.

Keywords: advertising music; audio banners; internet advertising; net surfers.

Reference to this paper should be made as follows: Dincer, C. (2008) ‘Are net

surfers ready for audio banners?’, Journal of Global Business Advancement,Vol. 1, No. 4, pp.350–361.

Biographical notes: Caner Dincer realised his doctoral work at Université

Paris-Est, EGEE, France. He also works as a Research Assistant at Galatasaray

University, Faculty of Economic and Administrative Sciences, Department

of Business Administration, since his graduation from the same department

in 2000. While working on subjects such as advertising effectiveness, online

advertising and music in online advertising for his doctoral work, his research

also focuses on corporate social responsibility, green marketing and sales

force management. Some of his work in these areas has appeared in SocialResponsibility Journal and Review of Social, Economic and Business Studies.

In addition, his short articles have appeared in weekly marketing magazines.

1 Introduction

Since the 1970s, academic research has been paying increasing attention to the atmosphere

of sale and the atmospheric elements first described by Kotler in 1973. Among these

elements used to produce an emotional effect and to increase the probability of sale,

the music occupies an important place and it is also used in commercial communication.

From the very start of the1980s, the idea that music can influence the answers to

advertising caught the interest of several researchers. The presence of music in advertising

was then the subject of several studies. Music plays an important role in the success

of advertising campaigns as it helps persuade customers to try advertised products and

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

350 Journal of Global Business Advancement, Vol. 1, No. 4, 2008


Are net surfers ready for audio banners? 351

services by altering their perceptions (Shimp, 2000). However, the music’s mode of

action and its effects on the advertising effectiveness studied in this research do not

enable us to arrive at operational conclusions. In particular, there are a very limited number

of academic studies on advertising on the sixth medium: the internet. Advertising on the

web has greatly increased since 1994, due to the considerable potential of the internet in

terms of audience quality, precise targeting and costs. Moreover, today, the development in

communication technologies enables the agencies and producers to insert animated audio

banners without affecting the website, thus the music can be used in online ads. Firstly, in

order to grasp the subject, the literature on the effects of music in other media will be

studied, which will also help construct a framework for this research on online advertising.

Then, according to chosen variables as a result of the literature review, the objectives will

be elucidated on both theoretical and practical levels. Finally, the principal concepts for

the analysis and the methodology will be clarified to discuss the reported results.

2 Literature review

Even if there is a consensus between the experts and the researchers concerning the

advantages offered by the presence of music (Alpert and Alpert, 1991; Bruner, 1990;

Gallopel, 1998; Gomy, 1995; Gorn, 1982; MacInnis and Park, 1991; Park and Young,

1986; Stout and Leckenby, 1988); it still remains difficult to understand its influence

since divergences, even contradictions, in the results of academic work are noted.

This situation has directed a great number of works towards the identification of the

elements responsible for the influence of the music and comprehension of their

action mechanisms. The sixth medium: the internet, presenting a new ground of work,

inevitably, got involved in this research stream, due to the growing interest in research

on the influence of music on the individual’s behaviour.

The net surfer of today is not sufficiently stimulated by music in advertising, though

music could be used for its multiple functions as in the other media, in order to increase

the satisfaction of the net surfer and to direct his/her behaviour. These problems appear

very interesting, especially considering the technological projections. These projections

show that problems related to the use of music on the internet will be solved soon and will

authorise a more widespread use of music, as in the other media, since it creates a

real commercial advantage by the energy added to the message increasing its recall

rate (Yalch, 1991), the stimulation of the listener (Hecker, 1984), or by the means of

favourable associations with the product or the brand (Gorn, 1982).

The advertising music literature shows us that, considered from an emotional point

of view, music appreciated by consumers means a more favourable attitude towards

advertising (Aad) and also the music itself. This suggests that advertising music can

inadvertently benefit music, as it can enhance the product and brand value (White, 2002).

This prospect suggests that the music can have a direct effect on the answers and the

attitude towards advertising. Thus, many researchers have focused their attention on the

study of the musical elements capable of directly affecting the answers to advertising

and advertising effectiveness. Consequently, the studies have attempted to manipulate

elements of the musical structure, one by one, in order to observe the answers to

advertising (Oakes, 2000). From the 1990s, following the divergent results of preceding

work, several researchers suggested that the music also exploits cognitive processes.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Thus the significance of the music and its symbolic dimension (Gallopel, 1998; Kellaris

et al., 1993; Kellaris and Mantel, 1996; Olsen, 1995; Scott, 1990; Zander, 2006) took

its place in the literature, demonstrating the importance and the richness of music. Other

research stresses the meanings that music can bring to the mind (Boltz, 2001; Hung, 2001).

In spite of the divergences between the results in this field of work, and the various

suggestions on the influence of advertising music, there is a sufficient amount of work to

formulate working hypotheses on some of its dimensions, such as its presence and tempo.

The comprehension of perception and persuasion mechanisms on the sixth medium will

be improved by investigating the part played by music in advertisements. In order to

understand the effects of the music, the net surfer’s attitude towards advertising, their

recall and the click-through rate will be used.

3 Research aim, scope and hypotheses

Previous research exploring the effects of music on advertising has not presented

a consistent and coherent perspective. The effects of music, therefore, remain poorly

understood. In this research, in order to understand the main effects of music, the effects

of its presence and tempo are tested in an online environment to provide insights about

the responses which music creates in the net surfer’s attitude.

This work aims to take a further step in comprehension of the music. This exploratory

approach to the musical stimulus is clearly not sufficient to understand the integrity of the

musical phenomenon, but it will make it possible to determine more precisely the effects

of the music on the audio banners. Although, the research, by its methodology, takes into

consideration only the net surfer in hedonic research clicking the banners, this random

sample seems to be relevant to the aims of the research.

3.1 On the theoretical levelFirstly, the research will be added to the extant literature on the effects of advertising

music.

Secondly, this research intends to contribute to the existing knowledge by taking

online advertising music into account. The previous works on similar subjects show that,

in spite of the importance of the subject, there are a limited number of studies even

on the effects of non-advertising online music. In this way, it should be stressed that

concerning the effects of the music in online advertising, there is a study, carried out by

the researchers Rae and Brennan (1998), having no significant results.

Finally, by taking advertising music into a new medium, the research offers new

tracks of thinking for future research. The investigation of the effects of music according

to used media may be of interest to researchers. Its theoretical contributions may also

be interesting for the applications on other media.

3.2 On the practical levelThe consideration of the effects of online advertising music will help experts improve

their advertising communication by the choice of the most suitable music for this

new environment.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

352 C. Dincer


The research will enrich knowledge of the banners and will help improve their

creation and form a better base of negotiation for their pricing. It will also provide

additional information concerning the debates on the measuring criteria of effectiveness,

by emphasising the qualitative aspects and the identification of the determinant variables

in the influence process of online advertising music. Thus, the research will provide

recommendations to advertisers for their online advertising strategies and show them

the important musical variables.

In future research, the investigation of a net surfer’s expectations, in terms of online

advertising music, can be useful in order to increase the advertisement’s effectiveness.

The agencies may also try to change the advertising music according to the website’s

user profile.

As mentioned earlier, this research will take a further step in the comprehension of

online advertising music by a limited exploratory approach, as only the effects of the

presence of music and the effects of its tempo are hypothesised as follows:

The presence of music:

Hypothesis H1a. The presence of music affects the click-through rate positively.

Hypothesis H1b. The presence of music affects the attitude towards the advertisement

positively.

Hypothesis H1c. The presence of music affects the recall rate positively.

The tempo: as a result of the pre-test, the expected tempo of the music was the faster one,

so the second hypothesis is as follows:

Hypothesis H2a. A faster tempo affects the click-through rate positively.

Hypothesis H2b. A faster tempo affects the attitude towards the advertisment

positively.

Hypothesis H2c. A faster tempo affects the recall rate positively.

4 Principal concepts

No previous research has investigated the impact of the audio banner on the attitude

and behaviour of the net surfer. Thus, it was practical and logical to work on the subject

by transposing the analysis frame provided by previous studies on music and online

advertising; various opinions of the professionals of the sector are also taken to help

construct the analysis frame.

Recent studies have shown that music can play a central part in advertising

communication and that it is not only one decorative element. However, this work will

still have a limited approach by taking into consideration the presence and the tempo

of the music, in order to have a general idea of the music’s effects on the net surfer’s

attitude and recall. The relationship of the net surfer with the music, the representations

which he has made of it or the meaning that he gives it, will not be explored in this

research.

Following a literature review, the structural characteristics of the music, its presence

and tempo, have been isolated in order to test their effects. Firstly, the initial effects of

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

these variables on activation and the perception of the net surfer in hedonic research will

be inspected and then the necessary data to analyse the net surfer’s attitude towards the

advertising will be collected by the means of an online questionnaire.

The selected variables are the presence of the music, and its tempo. The effect of

the presence of music is measured in the literature via recall. Concerning this variable,

positive (Yalch, 1991), neutral (Sewall and Sarel, 1986; Stout and Rust, 1986) or negative

results are observed (Cole et al., 1995; Macklin, 1988). Regarding the data processing

(Brooker and Wheatley, 1994; Park and Young, 1986) there are still negative effects of

the presence of music; the researchers explain this effect by the use of the cognitive

resources of the individual by the music. On the other hand, music is a good tool to

attract attention. Stewart et al. (1990) noticed that the individuals recalled their exposure

to advertising better if it contained music. Then, in the internet environment, as the

goal is to draw attention and to make the net surfer interact with the banner, this point

becomes more important. Tempo, the second variable, which has already been the

subject of many studies, (Alpert and Alpert, 1989; Anand and Holbrook, 1986; Blair and

Shimp, 1992; Brooker and Wheatley, 1994; Bruner, 1990; Galan, 2002; Kellaris, 1992;

Kellaris and Kent, 1991; Kellaris and Rice, 1993; Rieunier, 2000; Sibéril, 2000;

Stout and Leckenby, 1988) seems relevant to the research. In general, energetic, fast

tempo music evokes thoughts related to excited frivolity, whereas slow tempo music

brings to mind thoughts of calm, contemplative activity (Gabrielsson and Lindstrom,

2001). The tempo also offers advantages because its linear characteristic makes it an

easily quantifiable variable, measured in a number of beats per minute (Rieunier, 1998).

The activation (Sanbonmatsu and Kardes, 1988) by the music within the framework of

online advertising can appear as an increase in the influence of this peripheral element

followed by a click, thus, this concept can be studied by the click-through rate (CTR).

5 Methodology

In this research, new possibilities offered by internet are utilised for the data collection.

This online experiment and the online questionnaire seem to be the best way to understand

the net surfer’s attitude towards online advertising music. This method does not have

the disadvantages of a traditional questionnaire and makes data collection very easy.

Since, the influence of the music on perception and activation can be easily quantified

by the click–through rate of a banner. By using an online questionnaire, identification,

verification and analysis became very easy to realise (Costes, 1999). By using some

special programmes, the online data-collection method also gives the possibility of

direct observation of the behaviour of the users in a non-intrusive way (Galan, 2002).

Moreover, an entire series of individual characteristics can be recorded and crossed

with the behaviour of the net surfer. However, this method takes into consideration

only the net surfer in hedonic research clicking the banners.

Accordingly, a new website is used to apply the questionnaire to the net surfers

clicking the banners prepared for the experimentation. These banners and musical

extracts are prepared according to the results of pretests.

In order to make the choice of the musical stimuli to be used on audio banners,

six musical extracts were prepared using the software Sonic Foundry ACID Music v1.0

Copyright © 1997–1999 Sonic Foundry Inc. These extracts, prepared with the help of

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

354 C. Dincer


professionals, are representative of the first six most evoked types of music following

the question ‘Could you tell us the first type of music that comes to your mind?’ put to

200 university students. This simple method (Benavent and Ladwein, 1993) also makes

it possible to draw up a list of the known types of music.

Then, to specify the music to be used in the advertisement, a second questionnaire

was given to 180 young students. This questionnaire included questions to determine

the musical expertise and the musical preference of the individuals, as well as the

suggested tempo of the most evoked music in the previous test (played at 100 bpm).

The questionnaire included questions and items prepared on the basis of the works

of Kellaris and Cox (1989), Kellaris and Kent (1991), MacInnis and Park (1991),

Tom (1995) and Hahn and Hwang (1999).

The choice of students for the pretest is justified by data from TUIK (Statistics

Institute of Turkey) which shows that individuals from 18 to 25 years are the greatest

consumers of music. In addition, according to several studies on the internet made by

agencies and advertisers, they (those people aged from 18 to 30 years) spend much

more time on the internet compared to the remainder of the population. Therefore, this

sample seems to be a good reflection of the population and to be relevant to this

research. Finally, according to the results of this test, the music was played at two

different tempos (slow, 85 bpm and fast, 115 bpm) for the audio-banners and a banner

without music was placed on websites directing the net surfer to the final questionnaire.

The tempo choice is also justified, with tempos used in similar work shown in the

table below (Table 1):

The effects of three dimensions of the banner (Galan and Fontaine, 2002) (morphological,

rhetorical and aesthetic) and the effects of its place in the websites, are isolated by

inserting the same audio banners on the same page and at the same place on these

websites. Moreover these banners had no common visual characteristic with any existing

banner and they made the advertising of a new, unknown website to direct the net surfer

towards the online questionnaire. Furthermore, the site, having an unknown URL address

until the first day of the experiment, attracted only these net surfers via the banners.

In the final stage, having set the tempo and other parameters, according to the results

of the pre-tests, the banners were ready to broadcast. Banner advertisements, both audio

banners and the one without music, were placed (468 × 60 pixels) on five entertainment

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 1 Tempo rates in similar work

Slow Medium Fast

Milliman (1986) – 73 Bpm + 91 Bpm

Kellaris and Kent (1991) – 60 Bpm 120 Bpm + 180 Bpm

McElrea and Standing (1992) – 54 Bpm + 132 Bpm

Dubé et al. (1995) – 76 Bpm 77 to 107 Bpm + 108Bpm

Sibéril (2000) – 70 Bpm + 112 Bpm

Hahn and Hwang (1999) – 80 Bpm 90 Bpm + 120 Bpm

Caldwell and Hibbert (1999) – 72 Bpm + 94 Bpm

Rieunier (2000) – 70 Bpm 80 to 100 Bpm + 110 Bpm

websites during a period of one week. The ads were placed on the top of the first page

in the middle as the user entered the site. We employed systematic sampling without

replacement, so the same surfer clicking the banner could not fill the questionnaire in

more than once. The sites lodging the banners were sites at hedonic ends in order to attract

the net surfer in hedonic research who will have a weak implication, as it was aimed by

this research. However, the sampling was random and the implication of the respondents

was not measured so it was just limited via the website’s features.

6 Results

Following the advertisement period of three banners in different sites during one week,

a total number of 1,492,812 pages seen with advertising (impressions) is attained. The

total number of clicked banners was 10,509 (click–through rate 0.703%) and there

were a total of 498 filled questionnaires (filled questionnaires/impressions ratio 0.033%).

Hence, it was decided to use the software SPSS for Windows 11.5.0 © 1989–2002

SPSS Inc. to realise the analysis and the necessary tests of hypotheses concerning the

presence and the tempo of online advertising music.

Three measures were used to assess the attitude towards the advertisement and two

questions were used to test the recall. The click-through rates were obtained from the

advertising agency’s log files.

The audio banners had a total click-through rate of 0.5% (7464 clicks), whereas the

banner without music had a mere click-through rate of 0.2% (2985 clicks). Overall, the

audio banners received more than double the click-through rate of the same banner

without music. As the click-through rates are only percentages given by the advertising

agency, they can only be commented on without any statistical test and the numbers show

that the presence of music affects the click-through rate positively. Hence, hypothesis H1a

is supported.

In order to test the effects of the presence of music on the net surfer’s attitude towards

an advertisement, independent samples, t-test and mean comparisons were performed.

For all attitude measures the p values (sig. two-tailed) are higher than 0.05 (0.152, 0.211

and 0.196) so the null hypothesis cannot be rejected and it proves that the means of two

groups are not significantly different from each other (95% confidence level). This result

shows that the presence of music does not affect the attitude of the net surfer towards the

advertisement, so hypothesis H1b is rejected.

Next, the recall effects of the presence of the music are considered. As the recall

rate is measured with two open ended questions concerning the colour and the message

of the banner scored dichotomously (1 for good recall 0 for bad recall), A chi-square

test is conducted for this hypothesis. Surprisingly, the chi-square test shows (Pearson

Chi-Square, Sig. (two-sided) 0.82 and 0.786) that the recall rates of two groups of

internet users bear no relation to the presence of the music. Therefore, hypothesis H1c

is not supported.

Hypothesis H1a is supported, as the presence of music affects the click-through rate

positively. Unfortunately, there is no support for the attitude towards the advertisement

and the recall rate, thus hypotheses H1b and H1c are not supported. The present result

shows that the audio banners are better at attracting the net surfer and the presence of

music makes them click. Therefore, if the goal is awareness or attracting the net surfer

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

356 C. Dincer


to a website at least once, the presence of music seemed to be useful. This result, in an

online environment, is in coherence with the findings of Stewart et al. (1990) who

suggested that music was a good tool to draw attention to other media.

In order to investigate the effects of tempo, as in the first hypothesis, t-test and

chi-square tests are applied. The results indicate that the faster tempo, which is

more aligned to the chosen music according to previous tests, has more positive

effects on all measures. The banner with faster music received more clicks (0.71%

against 0.32%).

The t-test also provided significant results (p values of 0.020 and 0.023), confirming

that a faster tempo has a positive affect on the attitude towards the advertisement.

Finally H2c is also supported, as the chi-square test displayed that, for the recall items,

the p value is less than 0.05 (0.01 and 0.03). Consequently there is a relationship between

the tempo and the recall rate. In order to study this relationship the analysis proceeded

with the phi value, indicating that a faster tempo affects the recall rate positively but its

impact is limited at 7%, as shown in Table 2 below.

Accordingly, hypotheses H2a, H2b and H2c are all supported. The results concerning

the tempo show that a faster tempo increases the click–through rate and affects the

attitude towards the advertisement and the recall rate positively. This result can be

helpful for advertisers who want to increase the effectiveness of their advertisement.

They should choose the music with a faster tempo but it should be noted that the

net surfers are young and the website’s user profiles are also important. Table 3 below

summarises the results:

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 2 Tempo-Recall rate, Phi value

Value Approx. sig.

Recall item 1 Phi 0.062 0.003

Recall item 2 Phi 0.068 0.008

Table 3 The results

The presence of music Results

H1a. The presence of music affects the click-through rate positively. Supported

H1b. The presence of music affects the attitude towards the advertisement positively. Rejected

H1c. The presence of music affects the recall rate positively. Rejected

The tempoH2a. A faster tempo affects the click-through rate positively. Supported

H2b. A faster tempo affects the attitude towards the advertisement positively. Supported

H2c. A faster tempo affects the recall rate positively. Supported

7 Conclusions and discussion

In this present exploratory research, some of the effects of online advertising music

are taken into account according to two different factors, the presence and the tempo of

the music. The above findings clearly show that online advertising music does influence

how a respondent reacts to an audio banner and to its tempo. The tempo is also important

as it reinforces the attitude, the recall and the click-through rate if it meets expectations.

On the theoretical level, it must be emphasised that this research is very limited, as it

takes into consideration only the presence and the tempo of the music as a musical variable.

However, there are other musical variables, such as musical type, that should be examined

and there are also personal variables (an individual’s musical and internet expertise and

his musical preferences) that affect the net surfer’s attitude; thus those variables should

be used in future research in order to better understand the mechanisms that influence

the net surfer’s attitude. Comparison of the results with research on other media, to see

if the medium is making a difference to the perception of music, is also important.

On the practical level, the above findings also have significant implications for

advertisers, agencies and advertising researchers. Taking all the effects into account,

the conclusion is that a musical file should be added to the banners. Since the internet

is an information rich medium, it is expected that net surfers will react more immediately

to audio banners that are still not used frequently.

The advertisers can add simple music files to the advertisements just to enhance the

reputation or announce a new campaign, but if they want to attract the net surfers and

make them click in order to support the recall and attitude, they have to create or choose

music with a fast tempo, to attract young surfers.

These results can be useful for advertising agencies and advertisers, as today it is

very easy to compress an audio file without losing its quality, and to place it in a banner.

Moreover, data transmission capabilities are getting greater every day so it is becoming

easier to add real music files. The tempo of the music also plays an important role

and shows that music should be played at the expected tempo for better appreciation.

Thus, the advertisers must take this finding into consideration when preparing their

advertising campaign on the internet and with other media.

The research reminds us that, to be effective, advertising is something people

should see and like listening to it, in order to be more activated. In this way, advertising

receives more positive attitudes which, in turn, render advertising messages and

characteristics to be better received and recalled. By keeping this in mind as they

develop new advertisements, advertisers and agencies should try to avoid negative

attitudes and improve response.

References

Alpert, J.I. and Alpert, M.I. (1989) ‘Background music as an influence in consumer mood

and advertising responses’, in: T.K. Srull (Ed.) Advances in Consumer Research, No. 16,

Provo, UT: Association for Consumer Research, pp.485–491.

Alpert, J.I. and Alpert, M.I. (1991) ‘Contributions from a musical perspective on advertising

and consumer behavior’, in: R.H. Holman and M.R. Solomon (Eds) Advances in ConsumerResearch, No. 18, Provo, UT: Association for Consumer Research, pp.232–248.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

358 C. Dincer


Anand, P. and Holbrook, M.B. (1986) ‘Chasing the Wundt curve: an adventure in consumer

esthetics’, in: R.J. Lutz (Ed.) Advances in Consumer Research, No. 13, Provo UT: Association

for Consumer Research, pp.655–657.

Benavent, C. and Ladwein, R. (1993) ‘Segmentation et catégories cognitives dans l’étude des

marchés complexe: le cas de la consommation musicale’, Rapport de Recherche au Ministèrede la Culture et de la Communication des Grands Travaux.

Blair, M.E. and Shimp, T.A. (1992) ‘Consequences of an unpleasant experience with music:

a second-order negative conditioning perspective’, Journal of Advertising, Vol. 21, No. 1,

pp.35–43.

Boltz, M.C. (2001) ‘Musical soundtracks as a schematic influence on the cognitive processing

of filmed events’, Music Perception, Vol. 18 (Summer), pp.427–454.

Brooker, G. and Wheatley, J. (1994) ‘Music and radio advertising: effects of tempo and placement’,

in: C.T. Allen and D.R. John (Eds) Advances in Consumer Research, No. 21, Provo, UT:

Association for Consumer Research, Vol. 21, pp.286–290.

Bruner, G.C. (1990) ‘Music, mood and marketing’, Journal of Marketing, Vol. 54, No. 4, pp.94–104.

Caldwell, C. and Hibbert, S. (1999) ‘Play that one again: the effect of music tempo on consumer

behaviour in a restaurant’, European Advances in Consumer Research, Vol. 4, pp.58–62.

Cole, C.A., Castellano, N.M. and Schum, D. (1995) ‘Quantitative and qualitative differences in

older and younger consumers’ recall of radio advertising’, in: M. Sujan and F. Kardes (Eds)

Advances in Consumer Research, No. 22, Provo, UT: Association for Consumer Research,

pp.617–621.

Costes, Y. (1999) ‘La mesure d’audience sur internet: un état des lieux’, Recherche et Applicationsen Marketing, Vol. 13, No. 4, pp.53–67.

Drèze, X. and Zufryden, F. (1998) ‘Is internet advertising ready for prime time?’, Journal ofAdvertising Research, Vol. 38, No. 3, pp.7–18.

Dubé, L., Chebat, J.C. and Morin, S. (1995) ‘Background music and consumers desire to affiliate

in buyer–seller interactions’, Psychology and Marketing, Vol. 12, No. 4, pp.305–319.

Ducoffe, R.H. (1996) ‘Advertising value and advertising on the web’, Journal of AdvertisingResearch, pp.21–35.

Gabrielsson, A. and Lindstrom, E. (2001) ‘The influence of musical structure on emotional

expression’, in: P.N. Juslin and J.A. Sloboda (Eds) Music and Emotion: Theory and Research,

Oxford: Oxford University Press, pp.223–248.

Galan, J.P. (2002) ‘L’analyse des fichiers log pour étudier l’impact de la musique sur le

comportement des visiteurs d’un site web culturel’, XVIIIe Congrènternational de l’AFM,

Lille, pp.255–271.

Galan, J.P. and Fontaine, I. (2002) ‘Le placement des bannières publicitaires sur le web’,

Décisions Marketing, No. 26, pp.71–80.

Gallopel, K. (1998) ‘Influence de la musique sur les réponses des consommateurs à la publicité:

prise en compte des dimensions affective et symbolique inhérentes au stimulus musical’,

Thèe en Sciences de Gestion, Centre de Recherche Rennais en Economie et en Gestion,

Institut de Gestion de Rennes.

Gomy, P. (1995) ‘L’utilisation de la musique dans la communication publicitaire’, Actes du 10thCongrèès International de l’Association Française du Marketing, Vol. 11, pp.187–215.

Gorn, G.J. (1982) ‘The effects of music in advertising on choice behavior: a classical conditioning

approach’, Journal of Marketing, Vol. 46, No. 1, pp.94–101.

Hahn, M. and Hwang, I. (1999) ‘Effects of tempo and familiarity of background music on message

processing in TV advertising: a resource-matching perspective’, Psychology and Marketing,

Vol. 16, No. 8, pp.659–675.

Hecker, S. (1984) ‘Music for advertising effect’, Psychology and Marketing, Vol. 1, Nos. 3/4,

pp.3–8.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Hung, K. (2001) ‘Framing meaning perceptions with music: the case of teaser ads’, Journal ofAdvertising, Vol. 30 (Fall), pp.39–49.

Kellaris, J.J. (1992) ‘Consumer esthetics outside the lab: preliminary report on musical field study’,

in: J.F. Sherry Jr. and B. Sternthal (Eds) Advances in Consumer Research, No. 19, Provo, UT:

Association for Consumer Research, pp.730–734.

Kellaris, J.J. and Cox, A.D. (1989) ‘The effects of background music in advertising: a reassessment’,

Journal of Consumer Research, Vol. 16, No. 2, pp.113–118.

Kellaris, J.J. and Kent, R.J. (1991) ‘Exploring tempo and modality effects on consumer responses

to music’, in: R.H. Holman and M.R. Solomon (Eds) Advances in Consumer Research, No. 18,

Provo, UT: Association for Consumer Research, pp.243–248.

Kellaris, J.J. and Mantel, S.P. (1996) ‘Shaping time perceptions with background music: the effect

of congruity and arousal on estimates of ad duration’, Psychology and Marketing, Vol. 13,

No. 5, pp.501–515.

Kellaris, J.J. and Rice, R.C. (1993), ‘The influence of tempo loudness, and gender of listener

on responses to music’, Psychology and Marketing, Vol. 10, No. 1, pp.15–29.

Kellaris, J.J., Cox, A.D. and Cox, D. (1993) ‘The effect of background music on ad processing:

a contingency explanation’, Journal of Marketing, Vol. 57, No. 4, pp.114–125.

Kotler, P. (1973) ‘Atmospherics as a marketing tool’, Journal of Retailing, Vol. 49, No. 4,

pp.48–65.

MacInnis, D.J. and Park, C.W. (1991) ‘The differential role of characteristics of music on high

and low-involvement consumer’s processing of ads’, Journal of Consumer Research, Vol. 18,

No. 2, pp.161–173.

Macklin, M.C. (1988) ‘The relationship between music in advertising and children’s responses: an

experimental investigation’, in: S. Hecker and D.W. Stewart (Eds) Nonverbal Communicationin Advertising, Lexington, MA: Lexington Books, pp.225–243.

McElrea, H. and Standing, L. (1992) ‘Fast music causes fast drinking’, Perceptual and Motor Skills,

Vol. 75, p.362.

Milliman, R. (1986) ‘The influence of ancienne music on the behavior of restaurant patrons’,

Journal of Consumer Research, Vol. 13, pp.286–289.

Oakes, S. (2000) ‘The influence of the musicscape within service environments’, Journal ofServices Marketing, Vol. 14, No. 7, pp.539–556.

Olsen, G.D. (1995) ‘Creating the contrast: the influence of silence and background music on recall

and attribute importance’, Journal of Advertising, Vol. 24, No. 4, pp.29–44.

Park, C.W. and Young, M.S. (1986) ‘Consumer response to television commercials: the impact

of involvement and background music on brand attitudes formation’, Journal of MarketingResearch, Vol. 23, No. 1, pp.11–24.

Rae, N. and Brennan, M. (1998) ‘The relative effectiveness of sound and animation in web banner

advertisements’, Marketing Bulletin, Vol. 9, pp.76–82.

Rieunier, S. (1998) ‘L’influence de la musique d’ambiance sur le comportement du client: revue

de la littérature, défis méthodologiques et voies de recherché’, Recherche et Applicationsen Marketing, Vol. 13, No. 3, pp.57–73.

Rieunier, S. (2000) ‘L’influence de la musique d’ambiance sur le comportement des consommateurs

sur le lieu de vente’, Thèse en Sciences de Gestion, Centre DMSP, Université Paris

IX-Dauphine

Sanbonmatsu, D.M. and Kardes, F.R. (1988) ‘The effects of physiological arousal on information

processing and persuasion’, Journal of Consumer Research, Vol. 15, No. 3, pp.379–385.

Scott, L.M. (1990) ‘Understanding jingles and needle drop: a rhetorical approach to music

in advertising’, Journal of Consumer Research, Vol. 17, No. 2, pp.223–236.

Sewall, M.A. and Sarel, D. (1986) ‘Characteristics of radio commercials and their recall

effectiveness’, Journal of Marketing, Vol. 50, No. 1, pp.52–60.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

360 C. Dincer

Shimp, T.A. (2000) Advertising, Promotion, and other Supplemental Aspects of IntegratedMarketing Communications, 5th ed., Hinsdale, IL: Dryden Press.

Sibéril, P. (2000) ‘Effets de la musique d’ambiance sur le comportement des acheteurs en

supermarché’, Actes du XVIème Congrès International de l’Association Française duMarketing, Montréal, pp.773–786.

Stewart, D.W., Farmer, K.M. and Stannard, C.I. (1990) ‘Music as a recognition cue in

advertising–tracking studies’, Journal of Advertising Research, Vol. 30, No. 4 , pp.39–48.

Stout, P.A. and Rust, R.T. (1986) ‘The effect of music on emotional response to advertising’,

in: E.F. Larkin (Ed.) Proceedings of the 1986 Conference of the American Academyof Advertising, University of Oklahoma, R82–R84.

Stout, P. and Leckenby, J.D. (1988) ‘Let the music play: music as a nonverbal element in television

commercials’, in: S. Hecker and D.W. Stewart (Eds) Nonverbal Communication inAdvertising, Lexington, MA: Lexington Books, pp.207–233.

Tom, G. (1995) ‘Classical conditioning of unattended stimuli’, Psychology and Marketing, Vol. 12,

No. 1, pp.79–87.

White, J. (2002) ‘Advertisers make a song and dance about music’, Campaign, Vol. 24, p.17.

Yalch, R.F. (1991) ‘Memory in a jingle jungle: music as a mnemonic device in communicating

advertising slogans’, Journal of Applied Psychology, Vol. 76, No. 2, pp.268–275.

Zander, M.F. (2006) ‘Musical influences in advertising: how music modifies first impressions

of product endorsers and brands’, Psychology of Music, Vol. 34, No. 4, pp.465–480.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


International celebrities: worldwide surrogate

salesforce?

B.Z. ErdoganBilecik Universitesi, Ikt. Id. Bil. Fakultesi,

Bilecik 11010, Turkey


Abstract: The paper discusses the rationale for the international

celebrity endorsement strategy and proposes a formal definition of ‘celebrity

endorsement’ before reporting the findings of a formal, large-scale research

study. This consisted of exploratory interviews with 12 managers in

top-ranking British advertising agencies, followed by a postal questionnaire

distributed to 414 named individuals in 148 more agencies. Conclusions are

drawn from the responses of 131 respondents, all of whom had had experience

of working on advertising featuring celebrities. Analysis of the postal

questionnaires yielded nine factors influencing the degree of transferability.

The celebrity’s familiarity to the target audience accounted for four answers

in five. Also important were the audience’s liking for the character, their

familiarity with the brand, and the celebrity’s stock-in-trade. The other five

factors collectively accounted for only a third of all responses. Two main

conclusions are drawn from these findings, and the implications briefly

discussed.

Keywords: celebrities; effectiveness; endorsement; international.

Reference to this paper should be made as follows: Erdogan, B.Z. (2008)

‘International celebrities: worldwide surrogate salesforce?’, Journal of GlobalBusiness Advancement, Vol. 1, No. 4, pp.362–369.

Biographical notes: B. Zafer Erdogan is an Associate Professor of

Marketing at Bilecik University, Turkey. His research interests include

controversial advertising, advertising complaining behaviour, social marketing,

celebrity endorsement and research methods.

1 Introduction

Advertising was once famously described as ‘the silent salesman’ (or woman).

Today’s advertising messages are sometimes delivered to the target audience by

personalities from other walks of life, who to some extent, act as surrogate members of

the advertiser’s actual sales force. In the process, their presence helps advertisements

to stand out among the noise and clutter of contemporary marketing communications

(Atkin and Block, 1983; Sherman, 1985) and may generate useful publicity leverage

for brands (Erdogan, 2005).

British and American literature gives the clear impression that this strategy is both

widespread and increasingly common, though precise figures are elusive. Shimp (2000)

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



International celebrities: worldwide surrogate salesforce? 363

estimates that about a quarter of all American television commercials feature

endorsements by well-known personalities. The findings of our own research suggest

a figure of one-in five for all forms of advertising in Britain (Erdogan et al., 2001).

Informal soundings among past and present students and colleagues indicate that the tactic

is commonplace in Denmark, France, Germany, Greece, Hungary, India, New Zealand,

Panama, Poland, Singapore and Turkey. We may safely conclude that it is a truly global

feature of advertising strategy.

The examples collected from our informal survey suggest that campaigns which

have been effective by the yardstick of spontaneous recall are more likely to feature

locally or regionally familiar personalities (79 cases) than bona fide global celebrities

(16 cases). Nevertheless, the research reported in this paper was concerned with the latter,

and especially their use by multinationals to promote relatively undifferentiated brands,

via more or less standardised advertising messages, across national borders.

An extended abstract of this paper is published in the proceedings of the AIB-UK

2000 conference.

In our informal survey, those were typically sports, pop and movie stars: for

instance, Cristiano Ronaldo, David Beckham, Roberto Carlos, Rivaldo, Iker Cassillas,

Mikka Hakkinen, Michael Schumacher, Steffi Graff, Andre Agassi, Brad Pitt, Michael

Jackson, Gérard Depardieu and Pierce Brosnan. The issue raised is the transferability

of such individuals from culture to culture.

De Mooij (1994) has asserted that one of the most difficult aspects of global

marketing is to cope with social, cultural, demographic, economic, political and legal

‘roadblocks’, standing in the way of effective communication with audiences in host

countries abroad. Kaikati (1987) had already proposed that marketers should recruit

celebrities with world-wide appeal to help their international advertising campaigns

circumnavigate those obstacles.

2 Defining key terms

Previous authors have routinely described our surrogate salespeople as ‘celebrity

endorsers’, a description which raises two important questions of definition.

Firstly, what turns a personality into a celebrity? In general, dictionaries resort to neutral

descriptions such as ‘well known’ or ‘much publicised’, both of which can define notorious

figures as well as famous ones. Assuming that advertisers would not normally choose to

associate themselves with notoriety, a first qualifier in the advertising context must be

that the celebrity’s public persona is generally sympathetic for the majority of the target

audience. Logically, a second will be that the great majority both recognises the person in

question and knows on what basis he or she is famous. Celebrity is thus a vector quantity,

possessing both direction (positive attributes) and magnitude (majority recognition).

The second question is whether or not explicit endorsement of the brand is in fact

crucial to the success of the strategy. Kamen et al. (1975) argued that, in practice,

personalities fulfil one of four roles: giving a testimonial (which requires personal

experience of the brand), endorsing the brand (which does not), being a ‘spokesman’

for the advertiser, or acting as a simple ‘presenter’ of the sales message. We would add

a fifth: by simple association, lending his or her ‘culturally-acquired meanings’

(McCracken, 1989) to the advertiser or the brand.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Thus, it is by no means axiomatic that such personalities must be famous or that

they must give an explicit endorsement, for the strategy to be effective. With that

proviso, our working definition of the phenomenon is:

“An advertising campaign featuring an individual, held in high regard by the

majority of the target audience, who stands as an icon for the brand or actively

proselytises on the advertiser’s behalf.”

This adds the direction vector and specification of the role to an otherwise compatible

definition by McCracken (1989). The criteria it contains deliberately exclude anonymous

presenters or endorsers, named experts not otherwise familiar to the audience, actors

playing vaguely familiar stereotypes (such as Maureen Lipman’s ‘Beaty’ for BT), or

individuals more notorious than famous.

3 Rationale for the strategy

It is, of course, very difficult to separate the effect of advertising from that of

collinear influences on sales volume and profitability. With that proviso, several

authors have claimed to detect a positive correlation between the introduction of

celebrities and improved marketing performance: for example, Agrawal and Wagner

(1995) and Mathur et al. (1997). The most startling claim is that Michael Jordan’s

association with eight major brands has contributed about $10 billion to the US economy

during his 14 year career as a basketball player (Fortune, 1998).

It is obviously vital to such success that celebrities remain famous rather than

notorious for the whole duration of the campaign. Not only can they disappear from

the public mind disturbingly quickly (Ziegel, 1983), but their images may undergo

sudden transformations from positive to negative, in which case revised perceptions

are likely to transfer to the brand (Klebba and Unger, 1982; Till and Shimp, 1998).

However obvious this caveat may seem, high-profile advertisers have persisted in

the face of undeniable reversals. The most notable international examples are

PepsiCo’s experience of Michael Jackson, Mike Tyson and Madonna, and Hertz’s

with O.J. Simpson.

Lastly, celebrities may experience the equivalent of advertising ‘wearout’ as a

result of over-exposure. That can compromise their relationship with a given brand

(Mowen and Brown, 1981) and reduce their credibility in the role of surrogate

salesperson (Cooper, 1984; Graham, 1989; Tripp et al., 1994).

4 The study

We now report selected findings from an extensive field study of the process by

which British advertising agencies recruit celebrities as ‘surrogate salesforces’ for their

clients (Erdogan et al., 2001). One part investigated factors affecting the international

transferability of celebrity campaigns, and the extent to which practitioners believed

such campaigns were in fact transferable.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

364 B.Z. Erdogan


4.1 MethodologyThe first phase of the research design aimed to ensure that the hypotheses later stated and

tested would derive from a broader base than the published literature alone. Face-to-face

interviews were conducted with 13 board-level managers from 11 advertising agencies

and one speciality research agency. All had extensive experience of celebrity campaigns.

The agency sample was drawn from the Campaign’s definitive list of the country’s

300 largest agencies, on the basis that the large clients of major advertising agencies were

most likely to use celebrities in practice, since they come at a high price. (This assumption

was later proved correct).

In due course, a postal questionnaire was sent to a sample drawn from a list of

206 agencies in membership of the Institute of Practitioners in Advertising. Though those

account for only about 10% of total numbers, they transact more than 80% of total national

expenditure (IPA, 2000). Preliminary enquiries by telephone and e-mail found that four

had not used celebrities at any time, and that 24 were media buying specialists not

involved in creative strategy decisions. The final sample frame thus became 414 named

managers in 148 full-service advertising agencies, 66% defined as small-to-medium

and 44% as large. After two waves, 32% of the questionnaires had been returned by

representatives of 54% of the agencies. This response rate closely matches that obtained

from American advertising agencies by Ferrell and Krugman (1983). When compared

with the much lower figures prevalent in studies of other types of business, it says

something for the openness of senior advertising people in both countries.

Almost two thirds of the eventual respondents worked in client service (‘account

handling’), though the sample included chairmen, managing directors, creatives and

planners. This apparent imbalance in fact reflects a finding in the first-phase interviews,

that those were the people most likely to manage the process of choosing and using

celebrities. All had been involved in at least one campaign involving a celebrity,

and 40% in six or more.

5 Findings

5.1 Factors influencing effectivenessTable 1 shows the factors influencing the international effectiveness of celebrities.

As would be intuitively expected, the most important of these (by a huge margin)

was the actual familiarity of the celebrity among target audiences away from home.

Consider, for example, Michael Jordan in a country such as Britain where basketball

is a minority interest. If it is in fact low, the result will in effect be an instant version

of the wearout mentioned earlier, and it would make no sense to launch the strategy in

the first place.

The remainder of the factors identified are far behind the first, and relatively close

to one another. Second is the degree of liking for the celebrity among the target audience,

a difficult dimension to measure in practice. It is reasonable to argue from the

general principles of ‘source effect’ that a celebrity should be both recognised and liked,

to be effective (Kelman, 1961). The combination is traditionally labelled ‘popularity’.

It is in precisely this area that PepsiCo exhibits apparent misjudgement.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

The third-ranked factor is the familiarity of the brand in the countries concerned.

An obvious underpinning logic is that the more global it is, the easier it will be in general

to transfer campaigns promoting it. More specifically, there is the risk that a global

celebrity will overshadow a local brand, with the predictable outcome that the former is

recalled to mind at the expense of the latter. This is often called the ‘vampire effect’.

The only other factor to be suggested by more than 10% of the sample was the

stock-in-trade which had conferred celebrity status in the first place. Surprisingly, only

one respondent, in the preliminary interviews, was thinking of the extent to which that

equipped the individual to be ‘expert’ in any sense, as source-effect theory (Kelman, 1961)

implies that it should. He contended that a German audience would expect the link to

be clear: Michael Schumacher would be very effective for automotive brands celebrity,

but simply would not work as a surrogate salesman for clothing. Other respondents

seemed to be looping back to the familiarity dimension, reasoning that celebrities were

most likely to be recognised across borders if their stock-in-trade was something that

gained them repeated exposure around the world. General categories mentioned were

film stars, pop stars, characters from syndicated soap operas, record-breakers in sport

and athletics, and ‘supermodels’.

Native language and national culture are both clear and unavoidable barriers

to globalised advertising, yet account for less than one answer in ten. The reason is

perhaps that respondents were already thinking in terms of familiar, well-liked

personalities who transcended troublesome foreign stereotypes.

Unexpectedly, only eight respondents suggested that perception of a celebrity’s

personal values was an significant factor: what he or she ‘stands for’. This perhaps

reflects an unspoken assumption that the key rationale is to cut through media clutter,

rather than to transfer celebrities’ values to brands in global celebrity campaigns.

A similarly low-ranking factor is the nature of the message, while budgetconsiderations are at the very bottom of Table 1. One can only remark that both

of these seem intuitively significant considerations, but are less important than

seven others in the collective expert opinion of 131 leading advertising professionals

in Britain.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

366 B.Z. Erdogan

Table 1 Factors influencing the transferability of celebrity campaigns across borders

Factors Number of responses Percent of total

Familiarity of celebrity 105 80.2

Liking for celebrity 23 17.6

Familiarity of brand 17 13.0

Celebrity’s stock-in-trade 13 10.0

Language 12 9.2

Culture 10 7.6

Celebrity’s values 8 6.1

Message 8 6.1

Budget 6 4.6


5.2 Making the choiceEight of the 12 agency managers interviewed during the first phase said they would

always carry out formal research before making a recommendation to a client, because

the price of an effective celebrity was bound to be high. The remainder admitted to relying

on collective executive judgement, and going to research only if a particular choice

presented an obvious risk: an alternative comedian, for example. Surprisingly, none

suggested recourse to an available independent agency offering celebrity selection and

management services. It is not clear whether the reason was ignorance or a deliberate

decision to keep the process in-house.

The usual procedure was, firstly, to carry out desk research by monitoring existing

celebrity campaigns, and then to conduct small-scale qualitative studies of the general

strategy and specific personalities among representatives of the target audience.

Focus groups were particularly popular. Several participants in the preliminary study

were aware that an American commercial research firm produces quantified ‘Q-ratings’

for about 1500 familiar public figures, generated from questionnaires completed

annually by a demographically representative national panel (Solomon, 1996).

Rossiter and Percy (1987) argue that these ratings help practitioners to avoid the

potentially costly consequences of a mismatch between celebrity and target audience.

They can thus be a useful filter in the process of celebrity selection. Nevertheless,

our respondents dismissed them on the grounds that they have an unduly positivist

approach to the task, and would tend, in practice, to yield the kind of brash celebrity

who would not necessarily work effectively outside the USA.

5.3 Expectations of successIt had become very clear during the exploratory interviews that the number of factors

influencing the transferability of celebrities across borders could be an inhibiting force

in practice. Figure 1 shows that approximately 40% of the 131 participants in the main

survey thought it unlikely that any more than one celebrity campaign in 20 would be

internationally transferable intact. The average estimate derived from the notably irregular

distribution is that one in six (16%) might be.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Figure 1 Proportion of celebrity campaigns thought to be internationally transferable

6 Conclusions and implications

Two firm conclusions can be drawn, and implications for strategy identified. It is

important to consider them in the context of the fact that almost half our respondents

thought only one celebrity campaign in 20 would transfer readily across national

borders.

Firstly, if the examples collected in our informal survey are representative of current

international practice, strategists evidently prefer not to ‘think global, act local’, where

this particular marketing communications strategy is concerned. In the great majority of

cases, the personalities chosen were celebrities within a relatively restricted geographical

area. Particularly noticeable was the minority of American superstars whose fame rests on

achievements in aspects of sport and popular culture which appeal to quite small audiences

elsewhere. The advertisers have evidently judged that soccer is the real world sport

and that home-grown television stars are the best liked. Thus, multinational advertisers

must interrogate their own world view closely before making a decision to extend an

existing campaign. Yet our findings indicate widespread reluctance to commission the

necessary market research. If a foreigner with widespread appeal is eventually chosen,

a logical precaution would be to keep campaign execution as free as possible from such

‘para-personal’ features as, for example, word-play or humour. We suggest that he or

she will be most effective as a silent brand icon.

Secondly, there is clear evidence that sophisticated multinational advertisers

have persisted with endorsers whose fame has turned to notoriety, or threatens to do so.

One can only assume that careless contracts are the reason. The implications are clear:

users of celebrities must balance short-term sales impact against long-term brand equity.

Let alone doing market research before choosing an icon or endorser, they need to conduct

tracking studies throughout the life of the campaign, and make sure that the contract

includes escape clauses in their favour. The aim must be to minimise risk, not to rely on

the widely cited ‘death and disgrace’ insurance after the event.

With these provisos, we conclude that well-chosen celebrities in suitable advertising

campaigns may act as effective ‘surrogate salespeople’, especially for international

brands.

Acknowledgement

I would like to thank Keith Crosier of the University of Strathclyde who has helped shaping

an earlier version of this paper presented in the AIB-UK Chapter Conference.

References

Agrawal, J. and Wagner, A.K. (1995) ‘The economic worth of celebrity endorsers: an event

study analysis’, Journal of Marketing, Vol. 59, No. 3, pp.56–62.

Atkin, C. and Block, M. (1983) ‘Effectiveness of celebrity endorsers’, Journal of AdvertisingResearch, Vol. 23, No. 3, pp.57–61.

Campaign, (1997) ‘Special report: top 300 British advertising agencies’, Campaign, (February 28).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

368 B.Z. Erdogan

Cooper, M. (1984) ‘Can celebrities really sell products?’, Marketing and Media Decisions,

September, pp.64–65, 120.

De Mooij, M. (1994) Advertising Worldwide: Concepts, Theories and Practice of International,Multinational and Global Advertising, 2nd edn, London: Prentice-Hall.

Erdogan, B.Z. (2005) ‘Reasons for using celebrity endorsers’, Admap, Vol. 40, No. 3, pp.38–40.

Erdogan, B.Z., Baker, M.J. and Tagg, S. (2001) ‘Selecting celebrity endorsers: the practitioner’s

perspective’, Journal of Advertising Research, Vol. 41, No. 3, pp.39–48.

Ferrell, O.C. and Krugman, D. (1983) ‘Response patterns and the importance of the follow-up

duplicate questionnaire in a mail survey of advertising managers’, European Research,

October, pp.157–163.

Fortune (1998) ‘The Jordan effect’, Fortune, (June 22), pp.60–68.

Graham, J. (1989) ‘Sponsors line up for rocking role’, Advertising Age, (December 11), p.50.

IPA (2000) Annual Report 1999, London: Institute of Practitioners in Advertising.

Kaikati, J.G. (1987) ‘Celebrity advertising: a review and synthesis’, International Journalof Advertising, Vol. 6, No. 2, pp.93–105.

Kamen, J.M., Azhari, A.C. and Kragh, J.R. (1975) ‘What a spokesman does for a sponsor’,

Journal of Advertising Research, Vol. 15, No. 4, pp.17–24.

Kelman, H.C. (1961) ‘Processes of opinion change’, Public Opinion Quarterly, No. 25 (Spring),

pp.57–78.

Klebba, J.M. and Unger, L.S. (1982) ‘The impact of negative and positive information on source

credibility in a field setting’, in: R.P. Bagozzi and A.M. Tybout (Eds) Advances in ConsumerResearch, Provo, Utah: Association for Consumer Research, Vol. 10, pp 11–16.

Mathur, L.K., Mathur, I. and Rangan, N. (1997) ‘The wealth effects associated with a celebrity

endorser: the Michael Jordan phenomenon’, Journal of Advertising Research, Vol. 37, No. 3,

pp.67–73.

McCracken, G. (1989) ‘Who is the celebrity endorser? Cultural foundation of the endorsement

process’, Journal of Consumer Research, (December), No. 16, pp.310–321.

Mowen, J.C. and Brown, S.W. (1981) ‘On explaining and predicting the effectiveness of celebrity

endorsers’, in: K.B. Monroe (Ed.) Advances in Consumer Research, Ann Arbor: Michigan:

Association for Consumer Research, Vol. 8, pp.437–441.

Rossiter, J.R. and Percy, L. (1987) Advertising and Promotion Management, London: McGraw-Hill.

Sherman, S.P. (1985) ‘When you wish upon a star’, Fortune, (August 19), pp.66–71.

Shimp, T. (2000) Advertising, Promotion and Supplemental Aspects of Integrated MarketingCommunication, 5th edn, Fort Worth, TX: Dryden Press.

Solomon, M.R. (1996) Consumer Behavior, 3rd edn, London: Prentice-Hall.

Till, B.D. and Shimp, T. (1998) ‘Endorsers in advertising: the case of negative celebrity

information’, Journal of Advertising, Vol. 27, No. 1, pp.67–82.

Tripp, C., Jensen, T.D. and Carlson, L. (1994) ‘The effect of multiple product endorsements

by celebrities on consumer attitudes and intentions’, Journal of Consumer Research, Vol. 20,

No. 4, pp.535–547.

Ziegel, V. (1983) ‘Mark Spitz: eleven years and seven gold medals later’, Advertising Age,

(February 7), p.32.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Implicit prices of product characteristics in the milk

and cheese market

Philippos Karipidis* and Stamatis AggelopoulosDepartment of Farm Management, School of Agricultural Technology,

Alexander Technological Educational Institute of Thessaloniki,

57400, Sindos, PO Box 141, Greece

Email: [email protected] Email: [email protected]


Efthimia TsakiridouFood Marketing at the Aristotle University of Thessaloniki,

Department of Agricultural Development, Thessaloniki, Greece


Abstract: Building a competitive advantage, which is based on differentiation,

is more attractive to firms when many product characteristics are not perceptible

prior to a purchase, as in the case of most food products. The hedonic price

analysis is used in this paper to investigate the influence of food differentiation

on consumer prices and to identify the implicit prices of product characteristics

related to the milk and cheese market in Greece. Its results will help those

involved in the milk and cheese industry to adopt the appropriate product

development and product differentiation strategies on a national and international

scale. The analysis results reveal that milk retail prices are influenced by fat

content, production and processing conditions, product enrichment, and the size,

type or form of packaging. Cheese prices are influenced by the origin of the

milk (domestic, sheep or goat), packaging size and the protected designation of

origin element.

Keywords: cheese; hedonic; implicit prices; market; milk; product

differentiation; quality characteristics.

Reference to this paper should be made as follows: Karipidis, P.,

Aggelopoulos, S. and Tsakiridou, E. (2008) ‘Implicit prices of product

characteristics in the milk and cheese market’, Journal of Global BusinessAdvancement, Vol. 1, No. 4, pp.370–380.

Biographical notes: Philippos Karipidis is an Associate Professor of

agricultural marketing and quality management at the Alexander Technological

Educational Institute of Thessaloniki. His work has mainly focused on buying

preference and quality decisions’ analysis. He has published peer-reviewed

articles in the Agricultural Economics Review, Journal of Food DistributionResearch, Journal of Food Agriculture and Environment, NewMedit and

Agricoltura Mediterranea, among others. His teaching includes agricultural

marketing, total quality management, and standardisation and food

distribution.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



Implicit prices of product characteristics in the milk and cheese market 371

Stamatis Angelopoulos is an Assistant Professor of financing at the

Alexander Technological Educational Institute of Thessaloniki. He has

published peer-reviewed articles in the Journal of Food Agriculture andEnvironment, NewMedit, EuroMed Journal of Business, Journal ofEnvironmental Planning and Management and Agricultural Systems. He

has over 11 years’ financial and related work experience. His teaching

includes agricultural financing and policy.

Efthimia Tsakiridou is a Lecturer in food marketing at the Aristotle University

of Thessaloniki. Her work has mainly focused on consumer behaviour and

food marketing. Her teaching includes agricultural and food marketing. She

has published peer-reviewed papers in various academic journals.

1 Introduction

The differentiation strategy, especially in relation to quality, attracts all firms, whenever

consumers appear to be willing to pay a significant price premium for higher quality

products (Besanko et al., 1996; Ferrel et al., 1998). Firms implementing this strategy

create (added) value by offering products that deliver greater perceived benefits to

prospective buyers. The perceived benefits depend on the attributes (or characteristics)

that consumers value and these attributes form the basis upon which each firm can

differentiate itself.

Building a competitive advantage, which is based on superior differentiation, is more

attractive for firms, when the product characteristics become perceptible immediately

after the buying action (search) or a long time after purchasing the product (credence),

as is the case with most food products. Thus a study of food differentiation can contribute

towards identifying the factors and product attributes that influence the formulation of

food prices. Such information is useful for food producers and marketing managers

when taking decisions linked to quality improvement and new product development.

It is also useful for the state, as regards planning an appropriate policy that will raise the

competitiveness of the food sector, improve market performance and protect consumer

interests.

Milk and cheese are two major food commodities for the markets of the European

Union (EU) and Greece, since they constitute important components of the consumers’

diet (Eurostat, 2005). The monthly expenditure of a Greek family on cow’s milk and

cheese is equal to 13.5% of its total food expenditure (National Statistical Service).

Total (cow) milk consumption in Greece amounts to approximately 724 million litres,

a high percentage (26%) of which is imported from other EU and non-EU countries.

Total cheese consumption amounts to approximately 282 million kgs; it is produced from

cow, sheep and goat’s milk (primary material). Semi-hard and hard cheeses account for

37% of this amount, while 55% of it is imported from other EU and non-EU countries

(National Statistical Service).

Various studies have focused on milk and cheese differentiation structure analysis.

Lenz et al. (1994) studied three milk component values (protein, fat and calcium) in

relation to socio-demographic variables of consumers. Bernard and Mathios (2005)

studied people’s willingness to pay for certain milk attributes by introducing some

additional product characteristics into their model, such as organic methods of

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

production and the packaging material (plastic or carton). Santos and Rebeiro (2005)

studied some cheese attributes, like the origin of the primary material (milk) and the

method of production (cured or non-cured cheese). The aim of the present study is

to identify the retail price structure of milk (cow’s) and cheese (semi-hard and hard)

in relation to most of the product characteristics and to estimate the implicit prices of

these characteristics by applying the hedonic approach in the Greek market.

The present paper is organised as follows: Firstly, methodological background

information is provided, followed by the model specification. Next, the econometric

estimation results for the product attributes are presented and, finally, certain conclusions

are drawn.

2 Model

The hedonic pricing approach introduced by Rosen (1974) facilitates the analysis of the

price structure of a commodity in relation to its specific characteristics or attributes by

giving us the possibility to estimate the implicit prices of these attributes. The implicit

prices are determined by regressing the price on the bundle of characteristics and demand

and supply forces (conditions). Regression coefficients represent the implicit prices of each

characteristic. In this way, valuable information is collected that can be used for an effective

product differentiation strategy, also involving the aspects of quality and communication.

The specific approach under discussion has been widely used. It appears to be a

suitable and reliable tool for the analysis of product characteristics, seller and buyer

attributes, and market conditions. The methodology in question was used in numerous

studies concerning markets for products and services, and in studies for production and

consumption goods. It was also applied in some agricultural markets pertaining to primary

agricultural products, such as rice, cotton, milk, fruit, grapes and eggs (Bowman and

Ethridge, 1992; Brorsen et al., 1984; Golan and Shalit, 1994; Karipidis et al., 2005a;

Karipidis and Galanopoulos, 2000; Mishra and Bondurant, 2000; Uri and Hyberg, 1995).

Another application regarded markets for processed agricultural products and food/drink,

such as frankfurters, wine, tea and olive oil (Deodhar and Intodia, 2004; Harris, 1997;

Karipidis et al., 2005b; Schamel and Anderson, 2003).

In previous studies, the estimation of implicit prices focused on an analysis of price

structure in relation to a small number of selected characteristics for each market: natural

products, packaging, nutritious content, region of origin, production conditions and

time of year. The specific contribution of the present paper is that it adopts the hedonic

methodology in order to find most of the elements that create the differentiation between

(two) food products through a rather holistic approach.

According to Rosen, the hedonic supply function can be expressed as follows:

(1)

where Pi is the price of product i on the market and Z1, Z

2, , Zn the product attributes.

Y is an exogenous supply shift variable, like the firm’s cost conditions (input prices,

technology, management). In cases where no cost differences exist among firms, Y can

be dropped from Equation (1), otherwise a probability supply differentiation factor must

be considered (Besanko et al., 1996; Rosen, 1974).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

372 P. Karipidis, S. Aggelopoulos and E. Tsakiridou


In long-run equilibrium, the hedonic function represents the maximum price at

which attributes can be purchased and the minimum price at which they can be supplied.

This means that the marginal price of an attribute will be identical for all firms, if all

other factors remain constant. The hedonic function also represents the minimum supply

marginal cost of the attribute at the same level. This equilibrium helps us understand

how sellers determine the value of the products they offer and how consumers value the

products they buy.

3 Model specification

According to Stanley and Tschirhart (1991), consumers gain utility from the services (S)

provided by the product attributes. Such services for milk and cheese come from the

quality of the physical product, packaging form and size, production and/or processing

conditions and product origin. A product attribute can have either a positive or negative

effect on the product service. The attributes whose services are positively or negatively

evaluated on the market, constitute the factors that influence price structure and the

differentiation of a product.

Let us examine a retail firm, which supplies differentiated milk or cheese to the

market. The services a consumer receives from each product attribute may be grouped into

several clusters: consumer health and safety, consumer facilitation and pleasure,

protection of the environment and product image (Besanko et al., 1996; Ferrel et al., 1998;

Stanley and Tschirhart, 1991). The services affecting health and safety are those derived

from the quality of the physical product and the applied production or processing

conditions. These services mainly refer to organic production, region of origin, thermal

processing (pasteurisation at lower temperatures or sterilisation at higher ones), product

enrichment and skimming (low fat content). Services related to facilitation and pleasure,

may be those derived from smaller-size packaging, from the product’s origin (domestic,

mountainous areas, etc.), from the hardness of the cheese. Services related to the

protection of the environment are eco-packaging and milk pasteurisation, while the

services related to product image refer to the appearance of the product (packaging

material and design).

According to Rosen (1974), three preconditions are required for the application of

the hedonic price method. Firstly, the product must be differentiable into market-oriented

attributes, so that the distribution of consumer taste and income and the productive

capabilities of firms to supply various combinations of characteristics, determine the

market price. As indicated below, this precondition is provided, since milk and cheese

markets include many individual products produced under various conditions that can

be differentiated into market-oriented characteristics supplied at various costs. The second

precondition implies that products and services cannot be split or merged without an

additional cost, like skimming or non-skimming, enrichment or non-enrichment,

packaging design and size. The third precondition involves being able to describe the

product using a large number of attribute combinations in order for the choice of

attributes to be continuous and regular. This precondition is met by the existence of a

large number of product attribute combinations (including various product quality types

and packaging sizes which satisfy different consumer needs).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Most product characteristics (experience or credence) are either recorded on the

product label and packaging (transformation to search) or can be observed prior to

buying. All characteristics were examined in a preliminary study (60 per product),

but only the most interesting ones were singled out for this paper, i.e. those related to

physical quality (fat content, milk enrichment by minerals or vitamins, cheese hardness,

sheep/goat or cow’s milk), which are recorded on the product label, and those linked

to the type of packaging (size, design, material), which are observable characteristics.

Table 1 shows 17 product characteristics, which may be considered to be differentiation

factors and may affect product price. The expected signs are also presented in the same

table.

According to some research findings – available to consumers at no cost- a high fat

content in milk and milk products may increase the probability of cardiovascular disease

in adults. Such products with a high fat content are expected to have a lower implicit

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 1 Milk and cheese differentiation attributes, services and expected signs

Clusters Variable Services provided Expected signs

Physical characteristics Fat content (Z1) Health and safety ±

Enrichment (Z2) Health and safety +

Hardness (Z3) Pleasure +

Sheep/goat milk (Z4) Pleasure +

Production or Organic (Z5) Health and safety +

processing conditions and environment

Pasteurised milk (Z6) +

Domestic milk (Z7) +

Mountainous character (Z8) Pleasure +

Traditional character (Z9) Pleasure +

Packaging Size of packaging (Z10

) Facilitation –

Innovative package (Z11

) Image +

Eco packaging (Z12

) Image and +

environment

Glass packaging (Z13

) Image and +

environment

Quality assurance system ISO 9001, HACCP (Z14

) Safety/pleasure +

Protected designation Safety/pleasure +

of origin (Z15

)

Vertical integration Supermarket (Z16

) Cost –

– marketing via:Cooperative (Z

17) Cost –


price for adult customers but a higher implicit price for children, since a rather

high fat content is positively evaluated for this market segment. Milk enrichment with

minerals or vitamins affects people’s health positively and is expected to have a higher

implicit price. The hardness of cheese and its production from sheep/goat’s milk (primary

material) affects product taste and pleasure. Thus, these characteristics are considered

to be of a higher quality and are expected to have a higher implicit price.

The organic character of a product presupposes environmentally-friendly production

conditions (with no synthetic agrochemicals), which positively affect food safety

and consumer health. It is, therefore, expected to have a higher implicit price.

Low-temperature processing conditions (pasteurisation, no sterilisation) provide a

higher physical quality to the product, in addition to a lower energy consumption level

(implying environmental friendliness), and are expected to have a positive effect on

product price. The domestic origin of the primary material (non-imported milk) which is

used for cheese production may contribute to higher consumer satisfaction and is also

expected to have a positive effect on product price. Since most products originating from

mountainous areas are tastier, it is expected that the milk and cheese products which

originate from such regions will have higher implicit prices. The same stands for

the traditional character of the products, which may reflect production and distribution

conditions that provide a higher quality.

When pricing various packaging sizes, we find that larger quantities correspond to a

lower price per product unit. This can be attributed to the fact that small sizes provide

more facilitation and also require higher packaging costs. It is therefore expected that the

smaller sizes will share a higher implicit price. Showing an interest in better-looking,

innovative packaging, which improves the image of the product, is also expected to affect

product price positively. The same stands for packaging which is environmentally-friendly

and glass packaging.

Information on the application of a quality system, like ISO 9001, HACCP and the

Protection of Designation of Origin, which is conveyed to customers via the mandatory or

voluntary labelling of products, is expected to affect the demand function, since it leads to

lower buying uncertainty and affects product safety and customers’ health and pleasure.

Thus, the implementation of a quality system can attract customer interest (Capmany et

al., 2000). It also increases production costs, leading to a higher price level and

consequently to a higher implicit price.

A vertical integration of production (starting from the farmer) or marketing (starting from

the retailer) brings about substantial cost cuts, due to the decline in transaction, transport and

storage costs and due to economies of scale (Besanko et al., 1996; Kotler et al., 2002). Thus

a supermarket with more marketing operations (product identification, wholesale, retail)

can reduce the product price for the same set of attributes. Identical savings can be achieved

when the production, processing and distribution (including identification) is provided by

a farmers’ cooperative. In this case, the implicit price is also expected to be lower.

4 Estimation of implicit prices

The data were obtained from observing product labels or packages on the shelves of

representative retail shops in the metropolitan areas of Athens and Thessaloniki, between

the summer of 2004 and the spring of 2005. In the end, 1012 and 607 sets of observations,

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

gathered from milk and cheese products respectively, were considered reliable and were

used in the estimation. The estimation of a linear form of Equation (1) was introduced for

each product market, using the ordinary least square method (OLS). The final model

includes nine independent variables for the milk market and ten for cheese. The variables

representing price, fat content and packaging size are continuous, while the remaining

independent variables are dummies.

The results of the econometric estimation (variable coefficients, t-statistics and

probability values) are provided in Table 2 for the milk model and in Table 3 for

the cheese model. The hypothesis for homoskedasticity in error terms was rejected

and a proper correction was applied (White consistent estimators) on both models.

The significant effect of each independent variable on the dependent one was tested

with a t-statistic. In the milk model, at 5% significance level, the hypothesis of zero

coefficients is rejected for eight variables, whereas at a 10% significance level, the

relevant hypothesis is rejected for one variable. In the cheese model, at 5% significance

level, the hypothesis of zero coefficients is rejected for four variables, whereas at 10%

significance level, the relevant hypothesis is rejected for two variables.

The remaining variables presented in Table 1 were not found to affect the dependent

variable significantly. The results of the F-test (F = 166.238 for milk and F = 56.324 for

cheese) indicate that all the independent variables significantly affect the dependent

variable (probability value lower than 1%). The value of the adjusted R-square (0.595)

for the milk model indicates that a high percentage of retail milk price variability is

explained by the considered independent variables; nevertheless, this percentage is lower

than in most previous hedonic studies. The lower value of the adjusted R-square (0.393),

for the cheese model, indicates that a lower percentage of retail cheese price variability is

explained by the considered independent variables compared to the milk model. This fact

implies that there is a high percentage of price variability that may be caused by factors

other than those included in Table 1. Such factors may involve consumers’ characteristics

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 2 Econometric estimation results of the milk model

Clusters Variable Coefficient t-Statistics P-value

C 1.439 37.367 0.00

Physical characteristics Fat content (Z1) – 0.010a – 2.545 0.01

Enrichment (Z2) 0.532a 21.306 0.00

Production/processing conditions Organic (Z5) 0.290a 8.268 0.00

Pasteurised (Z6) 0.054a 3.914 0.00

Mountainous (Z7) 0.040a 1.967 0.05

Packaging Size of packaging (Z8) – 0.200a –15.683 0.00

Innovative package (Z9) 0.112a 8.013 0.00

Eco packaging (Z10

) 0.054b 1.666 0.09

Glass packaging (Z11

) 0.151a 8.068 0.00

Notes: R Squared = 0.599; Adjusted R Squared = 0.595; F – statistics = 166.238; N = 1012

aSignificant at a = 0.05; bSignificant at a = 0.10


and certain subjective product characteristics which are not included on product

abels, like taste, aroma, texture, local values, specificity, product and supplier image.

These conditions may also lead to a low market performance, a fact which indicates

the necessity for further research into the factors that may affect product price.

The quality of the physical product, reflected by the fat content and product enrichment

in the milk market and by milk type (sheep/goat) in the cheese market, affects product

price, negatively in the first case and positively in the others. Sellers (farmers, processors,

wholesalers, retailers) may get a higher price for the product if they offer a low fat content,

enriched milk, and cheese produced by sheep/goat’s milk (primary material).

In the milk market, the packaging size affects retail price negatively, while the other

characteristics (organic character, pasteurisation, mountainous origin, product packaging

innovativeness, eco-packs and glass-packs) affect it positively, as expected. This fact

implies that attributes like the pasteurisation of milk at a lower temperature, innovative

packaging etc., are attractive for the typical customer. Farmers and marketers should

decide to adapt their communication strategies (labelling or advertising) and inform

customers about product characteristics, in order to retain or alter the related consumer

interest. The government could also intervene in the market by increasing awareness

through education, information provision, mandatory labelling, etc.

Implicit prices help the seller (farmer, cooperative, processor, wholesaler, retailer)

achieve maximum efficiency and effectiveness. They can create a competitive advantage

by providing added value based on these coefficients. It is also possible for the seller

to gain a competitive advantage by offering a new form of the product, which delivers

greater perceived benefits to customers than the competitors’ products or by offering

the same bundle of characteristics (same product) at a lower price than the competition.

For example, the coefficient b of innovative packaging in the case of milk is equal

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 3 Econometric estimation results of the cheese model

Clusters Variable Coefficient t-Statistics P-value

C 9.611 22.124 0.00

Physical characteristics Fat content (Z1) – 1.637 – 1.573 0.11

Hardness (Z3) 0.258 1.502 0.13

Sheep/goat milk (Z4) 2.014a 7.286 0.00

Production conditions Domestic (Z7) 0.342b 1.841 0.06

Traditional character (Z9) 0.160 0.852 0.39

Packaging Size of packaging (Z10

) – 0.176a – 3.594 0.00

Quality assurance system ISO 9000, HACCP (Z14

) 0.256 1.385 0.16

Protected designation 0.318b 1.700 0.08

of origin (PDO) (Z15

)

Vertical integration Supermarket (Z14

) – 1.956a – 3.416 0.00

– marketing via:Cooperative (Z

15) – 2.435a – 14.626 0.00

Notes: R Squared = 0.397; Adjusted R squared = 0.393; F – Statistics = 56.324; N = 607

aSignificant at a = 0.05; bSignificant at a = 0.10

to 0.112. This means that if the percentage of innovative packaging in the market

increases by 100% (duplication), the increase in the product’s mean retail price will be

equal to 11.2%. The same also stands for eco- and glass-packaging. Another possibility,

is for the seller to combine these two strategies.

In the cheese market, packaging size affects retail price negatively, while the

remaining characteristics (domestic origin of milk, protected designation of origin)

affect it positively, as expected. This fact implies that attributes like the domestic origin

of milk and the protected designation of origin, are attractive for the typical customer.

The results also indicate that the price for the same bundle of product characteristics

is lower, when vertical integration exists as a result of the farmers’ cooperative actions

or of the retailers’ actions.

5 Conclusions

In the present study, the hedonic price approach was applied in the milk and cheese

market, in order to identify the implicit prices for product-specific characteristics or

attributes. By collecting data from the Greek milk and cheese market, the retail price

structure was estimated in relation to some physical characteristics of the product, the

production and processing conditions, the origin of the primary product, quality system

implementation and packaging characteristics.

The relevant findings suggest that the price structure in the milk market is influenced

by several attributes, such as fat content, product enrichment, organic production methods,

pasteurisation, mountainous origin, packaging size and design. The price structure in the

cheese market is influenced by the type of milk (sheep/goat’s milk), the domestic origin

of the milk and the protected designation of origin. In addition, the size of packaging and

the vertical integration of production or marketing (by farmers’ cooperatives or retailers)

are identified as factors conducive to product price.

The estimated implicit prices help producers and marketing managers rank the product

characteristics in order to implement an efficient quality strategy or to develop new food

products. The results also help farmers and marketing managers to invest in relevant

communication strategies, in order to retain the customers’ interest in certain product

attributes or change them, consequently affecting the related implicit prices. Since there

is a high percentage of price variability which is not explained by the included variables,

the public authorities must pay rather more attention to market performance, especially

in the case of cheese, by funding some related research, by supporting the provision

of information to consumers, by demanding increased efficiency from the public quality

control system, by product labelling, etc.

The explanatory capacity of the two models reflected by the adjusted R-square

is smaller than in most previous studies, especially as regards the cheese market. This is

a limitation of the present hedonic methodology application, which implies that some

factors exist which affect product price variability but are different from those included

in this study. Such factors may concern some consumers’ characteristics and subjective

product attributes or characteristics not included on the product labels, like taste, aroma,

texture, local values, specificity, product and supplier image. It is, therefore, concluded

that although the hedonic methodology provides an implicit price for each food

characteristic, it is less efficient as a scientific or marketing tool, when there are

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


many subjective or non-labelled product characteristics. It is considered necessary for

such subjective or non-labelled factors to be incorporated in future related research,

in conjunction with consumers’ characteristics, attitudes and perceptions.

References

Bernard, D. and Mathios, A. (2005) ‘Factors affecting consumer choice and willingness to pay

for milk attributes’, in the Proceedings of the American Agricultural Economists AssociationAnnual Meeting, Providence, Rhode Island, 24–27 July.

Besanko, D., Dranove, D. and Shanley, M. (1996) The Economics of Strategy, New York: John

Wiley and Sons, Inc.

Bowman, K.R. and Ethridge, E. (1992) ‘Characteristic supplies and demands in a hedonic

framework: US market for cotton fiber attributes’, American Journal of AgriculturalEconomics, Vol. 74, No. 4, pp.991–1002.

Brorsen, W.B., Grant, W.R. and Rister, M.E. (1984) ‘A hedonic price model for rough rice

bid/acceptance markets’, American Journal of Agricultural Economics, Vol. 66, pp.156–163.

Capmany, C., Hooker, N.H., Ozuna, T. and Tilburg, A. Van. (2000) ‘ISO 9000 – a marketing tool

for agribusiness’, International Food and Agribusiness Management Review, pp.41–53.

Deodhar, S.Y. and Intodia, V. (2004) ‘What’s in a drink you call a chai? Quality attributes and

hedonic price analysis of tea’, Journal of International Food and Agribusiness Marketing,

Vol. 6, No. 1, pp.43–58.

Eurostat (2005) Europe in Figures, Eurostat Yearbook 2005, Luxemburg: Office for Official

Publications of the European Communities.

Ferrel, O.C., Hartline, M.D., Lucas, J.G.H. and Luck, D. (1998) Marketing Strategy, Philadelphia,

PA: The Dryden Press.

Golan, A. and Shalit, H. (1994) ‘Quality differentials in hedonic grape pricing’, Journal ofAgricultural Economics, Vol. 42, No. 2, pp.311–321.

Harris, M.J. (1997) ‘The impact of food product characteristics on consumer purchasing

behaviour: the case of frankfurters’, Journal of Food Distribution Research, Vol. 28, No. 1,

pp.92–97.

Karipidis, P. and Galanopoulos, K. (2000) ‘Food market value analysis: product quality

improvement, product origin protection, and timing decisions in the apple market’,

Agricultural Economics Review, Vol. 1, No. 1, pp.49–56.

Karipidis, P., Tsakiridou, E., Tabakis, N. and Mattas, K. (2005a) ‘Hedonic analysis of retail

egg prices’, Journal of Food Distribution Research, Vol. 36, No. 3, pp.69–73.

Karipidis, P., Tsakiridou, E. and Tabakis, N. (2005b) ‘The Greek olive oil market structure’,

Agricultural Economics Review, Vol. 6, No. 1, pp.64–72.

Kotler, P., Jain, D.C. and Maesincee, S. (2002) Marketing Moves, Boston, MA: Harvard Business

School Press.

Lenz, J.E., Mittelhammer, R.C. and Shi, H. (1994) ‘Retail level hedonics and the valuation of

milk components’, American Journal of Agricultural Economics, Vol. 76, pp.492–503.

Mishra, S.K. and Bondurant, J. (2000) ‘The role of product and market characteristics in determining

cottonseed prices’, Agribusiness, Vol. 16, No. 3, pp.357–366.

Rosen, S. (1974) ‘Hedonic prices and implicit markets’, Journal of Political Economy, Vol. 82,

pp.34–55.

Santos, J.F. and Rebeiro, J.C. (2005) ‘Product attribute saliency and region of origin: some empirical

evidence from Portugal’, in the Proceedings of the 99th Seminar of European AgriculturalEconomics Association, Copenhagen, Denmark, 24–27 August.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Schamel, G. and Anderson, K. (2003) ‘Wine quality and varietal, regional and winery reputations:

hedonic prices for Australia and New Zealand’, The Economic Record, Vol. 79, pp.357–369.

Stanley, L.R. and Tschirhart, J. (1991) ‘Hedonic prices for a nondurable good: the case of

breakfast cereals’, The Review of Economics and Statistics, Vol. 63, pp.537–541.

Uri, N.D. and Hyberg, B. (1995) ‘The market value of quality characteristics for US wheat exports’,

Oxford Agrarian Studies, Vol. 23, No. 2, pp.133–153.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Website development as a means of communication:

a case study for the Kolossi Grand Hotel, Cyprus

Despo KtoridouDepartment of Management and MIS, School of Business,

University of Nicosia, PO Box 24005, 1700 Nicosia, Cyprus


E.N. Roussakis*Department of Finance and Real Estate,

College of Business Administration, Florida International University,

11200 SW 8th Street, Miami, FL 33199, USA



Abstract: The case explores the use of internet technology as a marketing

communication tool by the new management team of a medium sized hotel in

Cyprus. The issues raised are typical of internet promotion in the hotel industry.

The objective of the case is to acquaint the student with considerations that

benefit businesses and marketers in the design, development, implementation

and evaluation of a successful website, to be used as an effective online

marketing communication tool.

Keywords: diversification; e-promotion; holding company; marketing

communications; subsidiaries; website design.

Reference to this paper should be made as follows: Ktoridou, D. and

Roussakis, E.N. (2008) ‘Website development as a means of communication:

a case study for the Kolossi Grand Hotel, Cyprus’, Journal of Global BusinessAdvancement, Vol. 1, No. 4, pp.381–389.

Biographical notes: Despo Ktoridou is an Associate Professor of MIS at the

University of Nicosia. She earned her BSc in computer engineering in 1991,

MSc in computer engineering in 1993 and PhD in the field of expert systems in

education in 1999 from Saint Petersburg Electrotechnical University in Russia.

She is currently an Associate Professor at the MIS Department of the University

of Nicosia, Cyprus. Her research and teaching interests concentrate on the areas

of e-learning and wireless technologies and information technology. She has

presented papers in numerous refereed international conferences and has

published many papers in refereed journals. She has participated in EU and

locally funded programmes and given lectures in many EU countries, and has

also been invited by many universities as a Guest Lecturer.

Emmanuel N. Roussakis is Director of the downtown Master of Science

in Finance (MSF) and MBA programmes, and of the Graduate Certificate

Programs in Banking, for the College of Business Administration at Florida

International University. He has been associated with FIU since 1976, except

for a three-year interval (2003–2006) when he served as Dean of the School of

Business at Intercollege (now University of Nicosia), Cyprus. He has taught at

universities in the USA and Europe, worked for American and European banks,

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



and served in an advisory capacity to government agencies, both in the USA

and abroad. He has published widely and his record includes seven books and

over 60 articles and case studies in academic and professional journals in the

USA, Europe and Latin America. In recognition of his academic contributions,

during his tenure at FIU, he was awarded Professor Emeritus status.

1 Introduction

Lucas Papageorgiou is a recent university graduate and a new hire as a web developer in

a software company in Nicosia, Cyprus. His supervisor has asked him to meet with the

Marketing Officer of the Kolossi Grand Hotel, a client firm interested in the design and

development of a website for the web-marketing of its facility. Further, he must train

the hotel’s staff to perform several tasks. Specifically, he must demonstrate how to access

the database and follow through with customer reservations and e-mails. In addition,

he needs to explain how to maintain the site and use it to promote new offers (such as

seasonal packages and special events), and any new facilities.

To better prepare for the assignment, Lucas thought it appropriate to follow a three

step approach:

1 to prepare for the forthcoming meeting by familiarising himself with the

background of the client company – its ownership and management, location and

facilities

2 to review his college textbook on marketing communications to get a better

perspective on the use of websites as a promotional tool

3 to research current literature regarding website optimisation – that is, developing a

website that would be both attractive and user friendly, and would, therefore,

encourage repeat visits.

2 Client profile

2.1 The Kolossi Grand Hotel: ownership and managementOverlooking the Curium Bay, the Hotel Mouflon was built in 1990 with a 200 room

capacity. With the death of the owner and general manager in 2005, the hotel experienced

extensive losses which prompted his family to put the property up for sale. This was

a prime opportunity for Chrismaren SA to enter the Cyprus market, and in particular,

its hotel industry.

Founded by Andreas Philotheou in 1960, Chrismaren SA started as a family owned

venture in Egypt. The company owned and operated three restaurants in popular tourist

sites in Cairo. Twenty five years later, the company owned a chain of ‘Andreas’

restaurants in the major cities of Egypt, capitalising on the country’s rising importance

as an international tourist destination. Moreover, to facilitate further growth, Chrismaren

SA was reorganised into a holding company and broadened its scope of activities,

with investments in farming and livestock. The company has also pursued investment

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

382 D. Ktoridou and E.N. Roussakis

opportunities outside Egypt, with the acquisition of supermarkets in Jordan and

Kuwait. At the end of 2007, its assets totalled $1.2 billion and its equity $344 million.

Its year-end consolidated revenue amounted to $905 million and its net profit $36

million. Overall, Chrismaren employs a total of 12,300 people, in ten companies, in all

three countries.

Although at the age of 72, Andreas remains chairman of the board, the management

of the company is carried out by his son Christos Philotheou, an experienced and well

educated professional with degrees in hospitality management. Expansion to Cyprus and

entry into the hotel business has been one of his long sought objectives. The sale of

Hotel Mouflon offered him the opportunity to attain this objective while strengthening

the firm’s regional expansion, and diversification. The intention of Christos Pilotheou

is to build a chain of hotel subsidiaries in both Cyprus and Greece, key markets of

international tourist destinations.

3 Hotel information

Standing in extensive grounds on the beach, in the western environs of the colourful

city of Limassol, the Kolossi Grand Hotel is about 50 kilometers from both Larnaca

and Paphos International Airports. With convenient access to the island’s modern road

network, the hotel is hardly more than an hour’s drive from any other coastal town,

mountain village or tourist attraction.

The hotel facilities and accommodation are luxurious and consistent with its four-star

status. Public areas, rooms and suites are finished to the highest visual standards and

feature beautiful colour-coordinated fabrics, wood and marble. Guests can choose from

four different types of accommodation. The hotel has 200 rooms and suites, including

54 inter-connecting rooms with either mountain, garden, sea or pool and sea view.

All the rooms have a balcony or terrace, and are equipped with every comfort and

the latest conveniences, to high European standards.

The hotel is a world of leisure in itself. It boasts a number of coffee lounges, bars

and restaurants, each with its own special character and overlooking the sea. Guests may

enjoy the landscaped gardens, sun-drenched terraces, a swimming pool, a spa and a gym.

The more adventurous sports enthusiasts will find every type of water sport on the hotel’s

seafront. Families can take advantage of the children’s mini-club, kids’ pool, games room

and playground. There is wheelchair access to all floors, restaurants and bars.

3.1 Local attractionsNamed after one of the most important castles of medieval Cyprus in the area, the Kolossi

Grand Hotel lies in the heart of one of the richest valleys in the south of Cyprus.

This fertile valley, at the mouth of the river Kouris, was often mentioned by the sightseers

of the Middle Ages because of its immense sugar-cane, olive, cotton, locust-tree and cereal

plantations, as well as its vineyards. It constituted one of the most important feuds of

the noble Franks during their rule in Cyprus. Granted originally to the friars of the Order

of Saint John (1210), it became the seat of the activities of the Knights of St. John of

Jerusalem after the fall of Acre (1291). The construction of a fortress in Kolossi

provided for the military administration (commanderie) of the area. Rebuilt later on its

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Website development as a means of communication: a case study 383

present site (1454), the castle served as a residence and an administrative seat, controlling

60 villages and exploiting the production of the big plantations. The Order promoted

the mass production and marketing of a wine, known until nowadays under the name

of Commanderie, the traditional sweet Cypriot wine.

With convenient access to the island’s modern road network, the hotel is within

reasonable proximity to the country’s major places of interest. The nearby cities of

Limassol and Paphos offer a number of tourist attractions, as is true for that matter

for the various other localities on the island. Historical and archaeological sites, small

traditional towns, and colourful cities complement each other to render Cyprus a

fascinating land for tourists of all tastes.

4 Highlights of marketing communications

In designing a promotion campaign for the Kolossi Grand Hotel, marketing communications

and website development would play a vital role. A favoured term among academicians and

professionals, marketing communications is a broad concept that encompasses a number

of promotional tools. Marketing communications is defined by Fill (2002) as the process of

presenting an integrated set of stimuli to a market, with the intent of evoking a desired set of

responses within that market set, and setting up channels to receive, interpret and act upon

messages from the market for the purposes of modifying present company messages and

identifying new communication opportunities. Marketing communications is a management

process through which an organisation enters into a dialogue with its various audiences.

Based upon an understanding of the audience’s communications environment, an

organisation develops and presents messages for its identities’ stakeholder groups, and

evaluates and acts upon the responses received. The purpose of the process is to position

or reposition the organisation and its products in the minds of members of the target

market, by influencing their perception and understanding.

The marketing communication mix is critically important in achieving the above.It

consists of a set of tools which can be used in different combinations and to different degrees

of intensity, in order to communicate with a target audience. The marketing communications

tools include advertising, sales promotion, public relations, direct marketing, personal

selling, internet, word of mouth, sponsorship, exhibitions and packaging.

The pace at which technology has advanced over the past decade has had a tremendous

impact upon advertisers, media owners, marketing research and advertising. It should be

noted that this rise of new technology, together with the sophistication of customers,

have given rise to the importance of well trained and educated marketers (Kitchen, 2001;

Pickton and Broderick, 2001; Smith and Taylor, 2002).

5 Website development: an effective online marketing communication tool

Many companies around the world rely extensively on the use of the internet as a

means of communicating with their specific audiences. As a result, the development of an

effective website has emerged as an increasingly important tool of contemporary

marketing communication. Whether providing product-based information (e.g. brochures,

sales-based inquiries, demonstrations and endorsements) or corporate-orientated data

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


(e.g. financial statements, and employment opportunities), a company’s website is now

viewed as an integral part of an organisation’s overall communication activity.

The use of information technology has spread into many industries, including the

hotel industry. E-commerce is preferred by hotel businesses as it is cheaper to sell and

promote their hotels around the world. Furthermore, it is easier to advertise and sell

their services through the internet, and they can cover a larger spectrum of customers.

From the perspective of consumers, use of e-commerce is also advantageous as it

provides fast, easy, convenient, and flexible interaction.

5.1 Design, development, implementation and evaluation of a websiteHotel websites vary enormously in content, quality, and flow. Some of the hotel sites

are actually hotel guides sponsored by entrepreneurs or tourism associations. Others are

maintained by free standing hotels or hotel chains. Typically the opening screen of a

hotel’s website displays several features, such as travel information, an e-mail address

for direct communication between the hotel and the cyber-guest, the means to make

reservations and effect payment over the internet, promotions (special or seasonal),

and links to other online partners (websites).

Because of the impressive array of available features, it is of great significance for

the website designer to determine, under the guidance of the hotel’s marketing officer,

the desired content, considering margins (costs versus benefits), and maintenance

requirements (ongoing construction and improvement). Careful planning will avoid a

poorly designed, slow-to-download, boring site which results in little, if any, repeat

business, with ramifications for the company’s bottom line.

To have an effective website and realise the potential of this marketing tool, certain

key issues must be addressed. Specifically, for the successful design, development,

implementation and evaluation of a website, it is of paramount importance to define the

site’s main objectives; design the site by applying principles of best practice usability;

track visitor activity; and maximise site visibility.

5.1.1 Defining a website’s main objectivesThe first step for the development of the communication programme is defining the

website’s objectives (and constituencies). Marketing and web developers alike must

work together to identify the main objectives for building a particular website. A firm’s

website is often seen as the single most visible and used resource by prospects, customers

and partners. It is the general belief that all print and media advertising, direct mail,

sales promotions and events, should complement e-marketing by directing customers to

the website for further information, or to make a reservation. The effective development

and use of internet marketing can also assist the hotel in its relationship marketing

approach.

The website must therefore be viewed as a supporting component of the hotel’s

marketing communication campaign. Consistent with the desired marketing initiatives,

the website must include some additional functions, such as exploring a demo (interior

and exterior spaces), downloading promotional coupons (special offers), or registering

for events (excursions all over the island). To meet the organisational, marketing and

website objectives, multiple action options for visitors are essential. Action options

would encourage visitors to give contact information (which would assist in the creation

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


of a database), urge them to make a reservation, and express their needs and complaints.

Action options could also include the registration for a newsletter, conducting immediate

reservations, referring a friend to the website, or completing a questionnaire survey (on the

hotel’s services). Many customers and prospects hesitate to provide personal information,

especially online. The hotel’s management could therefore promise confidentiality by

including a privacy policy on their website.

Maximising the site’s marketing effectiveness is equally important. Websites should

attract visitors’ attention and encourage them to spend some time on the site, share contact

and need information, bookmark the site for future return and/or refer the site onwards

(http://www.blueminegroup.com/online.asp?source=google&kw=SEM).

5.1.2 Designing a website by applying principles of best practice usabilityAn effective way to attract and engage the site visitors, is to deliver real value by

becoming truly marketing oriented. Applying usability practices provides the user with

an easy and enjoyable way of finding and doing what he needs on the site. The term

‘usability’ refers to the ease for someone to use a site in the way it was intended. To verify

how usable a site is one must determine who the intended users are, their levels of skill

and knowledge, why they want to use the site and what is the primary purpose of the site.

Usability best practices include considering load time, navigation, page size, hierarchy

and links. All these usability specifications define the measure of success for a website

and can indicate whether the development efforts are on the right track. Customers and

prospects become annoyed, frustrated and impatient when they feel the system does

not respond quickly enough, thus not allowing them access to the desired information.

Load time is a key aspect of a site’s usability. Indeed, the site must be simply designed

to allow a quick load time for most of the functions, even on very slow connections.

Graphically-heavy pages, such as the pages that include live videos of the interior and/or

exterior spaces of the hotel, might need some optimising.

Another key aspect of a site’s usability is navigation (choosing a path through a

website). A user needs a clear, consistent, and intuitive navigation system, accompanied

by a site search function that makes it easy to understand where he/she is and where

he/she wants to go, at all times.

The size of a page is still another usability best practice because of its importance

for the customers’ page site view. Eliminating horizontal scrolling and minimising

vertical scrolling offers customers an easy way to have quick access to all the page

information.

Hierarchy, too, is a usability best practice, because it presents summarised information

with the ability to click through to more detail. Nielsen (1993) suggests avoiding

hierarchical menus because they hide options from the user and require the introduction of

an extra set of interaction techniques for navigating the hierarchy. Therefore for a system

that does not include so many features, loading a non-hierarchical menu is better that

splitting it into hierarchy.

5.1.3 Tracking website visitor activityTracking website visitor activity is vital for understanding customers’ interests, improving

website design and navigation, and increasing online sales.

Analysis of a site’s traffic enables the management to better understand customers’

needs and adjust the site according to their requirements. Site analytic packages are

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


considered to be an essential tool for a site’s design and further development, and also

for the effectiveness of a hotel’s marketing communication initiatives.

There are many inexpensive site analytic packages that offer massive amounts of

tracking data, including primary measures of marketing effectiveness, such as amount

of new, returning and total site visitors, most popular pages, key entry and exit points,

movement through each stage of key site paths and referring sites, as well as referring

search engines and key words.

There should be an ongoing controlling system in place, in order to allow the hotel

management to monitor, evaluate, review, update and modify its approach to meet

customer needs and wants.

5.1.4 Maximising site visibilityThe search engine can maximise online visibility for a particular site. The use of search

engines is one of the most popular ways to identify specific information or products.

However, the biggest problem people face when they get the results of their search is the

rankings.

According to Van Duyne et al. (2003) there are several content writing strategies

that could be followed during the development of a site, to improve site ranking and

therefore site visibility. This is achieved when descriptive titles are included for every

page, keyword-filled descriptive text is written near the top of each page, META Tags

are used, and the site is accessible to web crawlers.

Promoting the website means promoting the business itself. It is therefore important

that potential customers are informed about the existence of the business and the web

address (http://www.webdesignscotland.net/web-site-marketing.htm).

6 Practical recommendations for website optimisation

6.1 Logical navigation and consistent linksGood logical navigational sequence and consistent page links are necessary for website

optimisation.

Search engine compatibility with the hotel website is of the utmost importance for

navigational purposes. As search engines do not interpret graphic images, it is the text on

a site which will attract searches. More specifically, important key words and phrases

should be evident in the first few lines of the text, for searching purposes.

Consistent page links allow for more efficient and easily accessible information.

Not only do they allow the user to navigate in a user-friendly manner, but when the site is

linked to other more popular sites, it is another means of improving a site’s popularity,

thereby improving its site ranking.

6.2 Hotel marketing guidelinesIn addition to the navigational aids and links which add to a site’s optimisation, an

effective hotel website should be based upon basic hotel marketing principles.

To begin with, text is the basis upon which to ‘sell’ the hotel to potential online

bookers. Although graphics and photographs are key features for any website, it is the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


text that endorses the images. For this reason, the text on the site should be meaningful,

concise and highly relevant.

The basic selling principles, location, facilities and entertainment, are then taken

into consideration. Due to the fact that the majority of hotels are searched according

to destination, it is therefore necessary for the hotel website to include their location,

distances to and from major airports, attractions and business and shopping centres.

Accessibility and location are the key selling points when searching for hotels on the

internet and therefore need to be emphasised clearly in the text.

Although facilities and entertainment are essential hotel information for the online

user, it is important to keep all textual information pertinent. For that reason, addressing

the potential guests’ wants and needs in order of importance will minimise meaningless

information, yet highlight key features.

In addition to the textual information offered by the hotel website, graphics and

photographs are also a significant concern. When utilised conservatively, graphics

and photographs can augment a site’s effectiveness and make it more attractive to the

visitor. However, the underlying purpose of the hotel website – to sell rooms – must

remain at the forefront of any website design criteria and therefore any additional

non-textual features should be carefully considered.

6.3 Online reservationsDue to the ever-increasing use of e-commerce, potential hotel guests are using the

internet for quick, instant and convenient real-time reservations.

Website booking engines have thus taken on a two-fold dimension. They offer visitors

a choice in their booking preference as well as offering hotels, whether independent or

franchised, the ability to compete by providing the same public coverage to both.

6.4 An overview of website designA highly productive hotel website needs to be designed with two aspects in mind.

The first, intended for visitors, is that it should be visually attractive with textual

and graphic content that is based upon the fundamental principles of hotel marketing.

The other is the technical facet which includes the integral features of a site – the

navigational aids, consistent links and tags.

A hotel website needs to be designed well in order to be functional. The designer

should be aware that the success of the hotel website is based on the number of

reservations being booked and not solely reliant on the site’s popularity or number

of visitors it may be attracting.

Finally, a website must be designed as a product to be sold in order for hotels to

attract their fair share of business from this medium. The business potential from the

internet is vast and should be considered seriously.

7 Issues and considerations

The case of the Kolossi Grand Hotel raises a number of key issues that deserve further

consideration. These are identified below:

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


� the significance of e-promotion and website development as marketing

communication tools

� the relative importance of e-promotion in the hotel industry and any possible

problems and/or difficulties arising from its use

� the hotel’s website target market; consideration of geographic, demographic,

psychographic, and financial segmentation criteria

� taking into account the case guidelines for successful website design, development,

and implementation, the evaluation of the effectiveness of alternative hotel websites

as online marketing communication tools.

References

Fill, C. (2002) Marketing Communications: Contexts, Strategies and Applications, 3rd edn,

Harlow, UK: Pearson Education.

Kitchen, P.J. (2001) Marketing Communications – Principles and Practice, London: Thomson

Learning.

Nielsen, J. (1993) Usability Engineering, San Francisco, CA: Morgan Kaufmann.

Pickton, D. and Broderick, A. (2001) Integrated Marketing Communications, Harlow, UK:

Pearson Education.

Smith, P.R. and Taylor, J. (2002) Marketing Communications – An Integrated Approach, 3rd edn,

London: Kogan Page.

Van Duyne, D.K., Landay, J.A. and Hong, J.I. (2003) The Design of Sites: Patterns, Principlesand Processes for Crafting a Customer-Centered Web Experience, Boston: Addison Wesley.

(http://www.blueminegroup.com/online.asp?source=google&kw=SEM)

(http://www.webdesignscotland.net/web-site-marketing.htm).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


The marketing implications of the ‘undesired self’;

the case of Chinese Y-generation

Alkis Thrassou* and Demetris VrontisSchool of Business, University of Nicosia, Cyprus,

46 Makedonitissas Avenue, PO Box 24005, 1703 Nicosia, Cyprus




Ching-Wei HoTourism, Hospitality and Events School,

Leeds Metropolitan University, Civic Quarter, Leeds, LS1 3HE, UK


Abstract: This research develops a framework of the ‘undesired self’ by

investigating what values are considered to be ‘undesired’ amongst Chinese

young men and women, as well as their attitude towards marketing/brand

images. The research uses the findings to uncover the marketing implications of

the group’s consumer attitudes and to make proposals within the strategic

marketing context. The research’s methodology comprises both qualitative

and quantitative tools, and concludes that the group associates the individual’s

self-image with brand-image; that it has developed its own independent set of

attitudes and perceptions; that these attitudes and perceptions, both regarding

the wider self and marketing-specific images, are better considered as an

amalgam incorporating elements from both cultures, frequently in their absolute

form, and that a specially developed strategic marketing and marketing

communications mix should be sought, when targeting this segment.

Keywords: attitudes; brand image; branding; China; consumer behaviour;

culture; marketing; perceptions; self-image; undesired self.

Reference to this paper should be made as follows: Thrassou, A., Vrontis, D.

and Ho, C-W. (2008), ‘The marketing implications of the ‘undesired self’;

the case of Chinese Y-generation’, Journal of Global Business Advancement,Vol. 1, No. 4, pp.390–408.

Biographical notes: Alkis Thrassou, an Associate Professor, obtained his

PhD in strategic marketing management from the University of Leeds (UK).

From 1996 until 2002 he worked as a Business and Project Manager for an

engineering and management firm in Cyprus, leading teams of professionals

through many projects of varying size and nature. In 2002 he joined the

University of Nicosia, Cyprus, involving himself in various scholarly activities,

lecturing on marketing-related subjects to both undergraduate and postgraduate

students, and undertaking research in the fields of marketing communications,

services and consumer behaviour. He has published his work in many scientific

journals and books and in 2005 became Head of the Marketing Department

at the University of Nicosia. He also retains strong ties with industry, acting as

a Consultant.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



The marketing implications of the ‘undesired self’ 391

Demetris Vrontis is a Professor in marketing and the Dean of the School

of Business at the University of Nicosia, Cyprus. He is also a Visiting

Teaching Faculty for Henley School of Management in the UK, a Visiting

Professor for Vorarlberg University in Austria, a Visiting Research Fellow

at Manchester Metropolitan University in the UK, a Visiting Fellow at

Leeds Metropolitan University in the UK and an External Examiner for

Cape Peninsula Technological University in South Africa and Nottingham

Trent University in the UK. His prime research interests are international

marketing, marketing planning, branding and marketing communications,

areas that he has widely published in over 45 refereed journal articles,

contributed chapters and cases in books/edited books and presented papers to

conferences on a global basis. He is also the author of eight books, mainly

in the areas of international marketing and marketing planning, the Founder

and Editor of the EuroMed Journal of Business and the Editor of the WorldJournal of Business Management.

Ching-Wei Ho obtained his Bachelor degree in Business Administration

from Soochow University, Taiwan, in 2000 and studied in the UK for an MA

in strategic marketing at Manchester Metropolitan University (2003/2004).

He has completed his PhD and his research topic is in the field of

international retail branding with consumer behaviour issues. He is, currently,

a Research Assistant and a Part-Time Lecturer at Leeds Business School.

His research and teaching area is around retailing, marketing and consumer

behaviour.

1 Introduction

This research’s aim is to develop a framework of the ‘undesired self’ by investigating

what values are considered to be ‘undesired’ amongst Chinese young men and women,

as ‘sexual identity is an important component of a consumer’s self-concept’ (Solomon,

2002). Towards this aim, four objectives are set and met as follows:

� to investigate the concept of the ‘self’ in the Chinese Y-generation

� to establish the undesired values in the different genders of this generation

� to develop a framework of the undesired self for young Chinese males and females

� to present the marketing implications of the framework towards further theoretical

development, but also practical implementation within the strategic marketing

context.

The value of the research lies in its presentation of a less visible side of Chinese

consumer behaviour, often not recognised, not understood, or not considered, especially

by foreign companies penetrating the Chinese market. While they appear to gain

increasing understanding of the functional and economic aspects of doing business in

China, companies appear less able to truly comprehend the drive behind young Chinese

people’s consumer behaviour. This research adds a valuable piece of knowledge in

this area, paving the way for further work on the subject.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

2 Literature review

2.1 The self-concept frameworkThe self-concept refers to the beliefs a person holds about his or her own attributes,

and how s/he evaluates these qualities. The self-concept is a very complex

structure, which is composed of many attributes that can be described along such

dimensions as their content (e.g. facial attractiveness versus mental aptitude), positivity

or negativity (i.e. self-esteem), intensity, stability over time, and accuracy (i.e. the

degree to which one’s self-assessment corresponds to reality) (Solomon, 2002).

James (1890/1950), often referred to as the ‘founding father’ of self-concept,

postulated that:

“a man’s Self is the sum total of all that he can call his, not only his body and

his psychic powers, but his clothes and his house, his wife and children, his

ancestors and friends, his reputation and works, his lands and horses, and yacht

and bank account.” (James, 1890/1950)

Statt (1997) said that ‘the concept of self has long been of great interest to

marketers because of its subjective element. People’s self-image is composed of

their view of themselves, all that they are and all that they have, physically, mentally,

emotionally, socially and in terms of material possessions’. Thus, it is imperative

that marketers improve their understanding of their consumers’ concept of self,

and endeavour to make them perceive themselves as positively as possible in

their roles (desired self). On the other hand, it is correspondingly important to

understand their negative self-concept (undesired self), in order to avoid all

negative associations and related marketing adversities. Todd (2001) has also

supported the view that:

“a negative self-concept, or feeling badly about oneself, will mean that

the behaviour that elicited such a reaction will not be willingly repeated.

Conversely, feeling positive about one’s self will reinforce the relevant

behaviour and lead to its repetition.” (Todd, 2001)

The ‘ideal’ self-concept contains imagery of a desired future (a novel one, or one existing

over time, or one continually forming and revisited). This image is the articulation or

realisation of the person’s dreams and aspirations. It is of a cognitive nature, yet

fuelled by the affect resulting from one’s values and other individual characteristics

(Boyatzis and Akrivou, 2006). Furthermore, the ‘ideal’ self-concept is emotionally

fuelled by hope, and most researchers agree that hope is caused by the degree of

the person’s optimism. Also, it is the expression of their degree of self-efficacy

which determines their perceptions of possibilities (Groopman, 2004). The political

and consequent economic changes in China are mirrored in the self-concept changes

of young Chinese.

Grubb and Grathwohl (1967), who looked at the purchase of products and brands

as a means of self-enhancement, depicted a framework (Figure 1) which sought to

identify the means by which consumers attach undesirable qualities to items and the

likely negative influence of these on their purchasing decisions.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

392 A. Thrassou, D. Vrontis and C-W. Ho


The framework illustrates the means by which product and brand meanings are interpreted

by consumers in the context of (negative) possible selves, and the product and brand

user imagery that these negative selves activate. The three spheres on the left show the

probable influences on the individual consumer’s (negative) possible selves and the

stereotypes that are important to them. These influences reflect the fact that different

consumers interpret products and brands in different ways, as well as social forces and

their psychological make up (Banister and Hogg, 2001a). Hence, within this research,

the framework is a valuable tool towards the investigation of Chinese young people’s

‘undesired selves’.

2.2 The undesired self and gender rolesIn the above framework (Figure 1), possible selves, which include both hoped for and

feared possibilities, are presented in the self-concept section as a set of imagined roles

or states of being that can be either positive or negative (Markus and Nurius, 1986).

This research has undertaken an extensive literature review, which surfaced numerous

works relating to how individuals use their identities and the positive images of products

and brands to affect their consumption decisions. The research, in addition, reviewed the

potentially equally important subject of understanding the elements and patterns which

are not attractive to consumers, and the ‘undesired self’ has consequently been identified

as one of the negative selves (Banister and Hogg, 2001b; Ogilvie, 1987). Ogilvie defined

the concept of the undesired self as the self that a person hopes never to be. Banister

and Hogg (2001a, p.196) argued that “the undesired self represents those images that

consumers consider to be the most alien to their identity, that is ‘so not me’.” It is

postulated that the content of the undesired self is more experience-based and less

abstract than the content of the ideal self (Ogilvie, 1987). Negative images are often

formed on the basis of previous experience, which might be defined by an image that

individuals had in the past. For younger consumers the ‘past image’ will often have been

affected by their parents (Banister and Hogg, 2001b).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Figure 1 A conceptual framework of consumers’ interpretation of (negative) possible selves

‘Sexual identity is a very important component of a consumer’s self-concept.

People often conform to their culture’s expectations about how those of their

gender should act, dress, speak, and so on’ (Solomon, 2002). Furthermore, a society’s

assumption about the appropriate roles of males and females is communicated in terms of

the ideal behaviours that are stressed for each gender (Solomon, 2002). In accordance with

Meyers-Levy (1998), men are controlled by ‘agentic goals’, which stress self-assertion

and mastery in many societies, whilst women are taught to value ‘communal goals’,

such as affiliation and the fostering of harmonious relationships. The ‘classical’ elements,

comprising the role requirements and prohibitions of genders, are well listed in a study

presented by Alreck (1994):

2.2.1 Sex role requirementsWhat one must do to be a ‘real woman’ or ‘real man’ in society’s eyes – fall into two

categories for each sex.

To be a ‘real’ man:

� A man must be strong. He must be tough-minded, decisive, and independent.

He is the leader in the family, makes the major decisions and must insist on having

the final word. He may never be dependent on others, and especially on women,

for strength, direction, or support. He must be his own man.

� A man must be a ‘breadwinner’. He must be able to earn a living and support his

family, if he has one. He is the chief source of income and he must earn more than

his wife or companion. He may never be economically dependent on a woman,

and he must be a steady, reliable source of financial support.

To be a ‘real’ woman:

� A woman must be nurturing. She must always and in every circumstance, put the

home and family first. She has the main responsibility for raising the children and

looking after the home. She may work or have other interests and commitments

outside the home and family, as long as they are secondary.

� A woman must act like a lady. She must maintain her feminine, lady-like

comportment and demeanour at all times and in all circumstances. She must not use

vulgar language, nor tell ‘dirty’ jokes. She must display a sense of dignity and

modesty, and avoid dress and behaviour that is too sexually suggestive.

2.2.2 Sex role prohibitionsIn traditional sex role prescriptions there are many things that are permitted or advocated

for one sex and prohibited for the other (Table 1).

In China, the shift in the Chinese economy from state owned collective enterprises

to a more market economy, its entrance into the WTO and the subsequent globalisation

in Chinese trade, the development of technological connections to the rest of the world

through the growing use of the internet and other technologies, have cumulatively and

significantly affected gender roles and self-concept (Granrose, 2007).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



Furnham and Mak (1999) further found that Chinese women in Hong Kong were more

often portrayed at home than men, in dependent roles, and less in occupational settings.

They suggested that there is no general pattern between different cultures; sex-role

stereotyping appears to have declined in the Western world, but this might not be

the case in some Asian countries. However, Sin et al. (2001) also argued that:

“A recent survey conducted by A.C. Nielsen discovered that female

professionals represent the fastest growing segment of Asian ‘elite’. Nielsen

defines ‘elite’ as people over 25 years old and currently employed in senior

positions in business, government or education. The study included Hong Kong,

Singapore, Taipei, Bangkok, Manila, Jakarta and Kuala Lumpur. The study

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 1 Sex role prohibitions

No ‘real’ man would: No ‘real’ woman would:

Enjoy such things as knitting Go to a restaurant or theatre by

or flower arranging herself

Become a nurse, beautician Eat or drink more than the man she

or secretary is with

Cry or display tender emotions Choose a career in science

in public or engineering

Prefer fruits and vegetables to Prefer hard liquor to wine or sweet

red meat cocktails

Reject sexual opportunities with Be as aggressive as a man in sports

attractive women or games

Hug or kiss another man when Have hobbies devoted to mechanics

they meet or electronics

Be more interested in the arts than Ask a man out on a date or pay her

in sports own way on one

Take responsibility for caring for small children Smoke cigars or a pipe

Be sexually submissive rather than Fail to wait for a man to open the door

aggressive for her

Be outwardly romantic or sentimental Go out in public without makeup

Let a woman take him out on a date Want to supervise male subordinates

Become interested in cooking Display more intelligence then her

or decorating husband or date

Prefer sweet, foamy cocktails to Take much interest in business or

straight liquor political news

Use cosmetics to improve his Defeat a male opponent in sports

appearance or athletics

Undertake such women’s work as laundry Prefer meat and potatoes to salads

or cleaning or desserts

Have jobs such as flower arranging or Display talent or ability greater than

or hairdressing her husband’s

Source: Alreck (1994)

further stated that in 1988, there were 168,000 females which made up 18.5% of

all Asian ‘elite’, the number grew to 591,000 or 30% in 1997 and was forecast

to rise to 800,000 by 2000.” (Sin et al., 2001)

Therefore, even though the traditional concept of the ideal female has existed, the

evolution of new sex roles for women is still taking place, and this is also the case

with those of men. Men are ‘allowed’ to be more compassionate and to have close

friendships with other men nowadays (Solomon, 2002). Also in Taiwan, these types

of men are called ‘sin hao nan ren’ (New Good Men), who are good at cooking and

taking responsibility for caring for children.

The review of the literature on gender leads to the first research proposition to

explore, namely:

Proposition 1: Gender differences exist in the undesired self for Chinese

Generation Y.

3 The Chinese self

Kropp et al. (2005) found that personal values and self-image are important

factors in many consumer purchases. Consequently, their better understanding will

provide valuable insights into consumer purchasing behaviour. They additionally

and importantly find cross-cultural differences in their study, that differentiate

Far-Eastern consumer values and self-image from those of the West, largely explained

on the basis of differences on the individualism-collectivism dimension.

With regard to the self, both Chinese and Western cultures see the self as

divided into an inner, private self and an outer, public self. But where they differ is

in terms of which part is seen as the ‘real you’. The West tends to subscribe to an

independent construal of the self, which emphasises the inherent separateness of each

individual. Chinese culture, in contrast, tends to focus on an interdependent self, in

which one’s identity is largely defined by the relationships one has with others

(Solomon, 2002). For example, a Confucian perspective stresses the importance of

‘face’ – others’ perceptions of the self and maintaining one’s desired status in their

eyes (Wong and Ahuvia, 1995). With reference to the concept of the self and

others, Usunier (1996) divides the area into four major categories, which are

discussed in the context of Chinese culture by Schutte and Ciarlante (1998):

� Concept of human nature: good or bad? For the Chinese, it is bad. The Chinese are

extremely hesitant to trust or depend upon anyone outside their kin group, revealing

a less positive view of human nature. Americans, in contrast, meet strangers and feel

comfortable and familiar with them. This leads to the second research proposition to

explore:

Proposition 2: Chinese Generation Y avoid business relationships with strangers.

� Appraising others: that age is a criterion for appraising others reflects the emphasis

that Confucius places on respecting and caring for one’s elders. The Chinese also

regard social class as belonging, not to an individual, but to the family or kin group.

This leads to the fourth research proposition:

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



Proposition 3: Chinese Generation Y’s avoided self is age related.

� Appraising oneself: the Chinese describe themselves in less positive terms than

Americans, as Chinese children are taught the value of modesty and self-effacement.

This leads to the fifth research proposition

Proposition 4: Chinese Generation Y is fearful of appearing conceited.

� One’s relationship with the group: the individualism/collectivism orientation as a

model of interaction between people. The thoroughly collectivist orientation of

the Chinese is reflected in the way in which they describe themselves by using

group-related traits and roles. Their ideal ‘self’ is closely involved in social

relationships. Some people believed that individualism, which is in the Western

cultures, has come to be considered a natural component of a ‘modern’ society.

However, Chinese culture is now challenging that assumption. Hong Kong and

Taiwan are thoroughly modern societies that continue to have firmly entrenched

collectivist orientations. Of course, as in rapidly modernising societies, there exists

much concern that young people are becoming ‘too’ individualistic and losing

traditional morals and virtues. This leads to the fifth research proposition

Proposition 5: Individualism is an avoided self for Chinese Generation Y.

4 Generation Y

Generation Y, as a sizeable population cohort, is an important age group but it

has different definitions in each region and for each researcher. According to Michael J.

Weiss, writing in American Demographics Magazine, Generation Y is the 72 million

Americans who are the children of the baby boomers, born between 1977 and 1994

(Growth Strategies, 2003; Kotler and Armstrong, 2003; Shepherdson, 2000). Klewin

(2003) also argued that Generation Y members were born between 1979 and 1998.

On the other hand, in Australia, Salt (2003) defined Generation Y as born from 1977

to 1991, whilst in the UK, they were between 1978 and 1984 (Brand Strategy, 2003),

which is the same definition as in Taiwan (www.pchome.com.tw).

Furthermore, Generation Y lives in a multicultural, lifestyle-diverse, individually

empowered, high-tech world. They prize independence, flexibility, choice, connectivity

and equality of the sexes (Growth Strategies, 2003). Thus, ‘marketers have to be aware

that this age demographic doesn’t like to be hit over the head with advertising’, says

Sgro, president of EdVenture Partners, an Orinda, California-based youth-marketing firm.

‘Most research says Generation Y doesn’t want to be marketed in your face’, he says.

‘They’re highly mistrustful and can tell good advertising from bad’. Therefore, he pointed

out that ‘lifestyle-based marketing is the correct way to hit the youth market now’

(Martin, 2003). They are also believed to be less brand loyal than earlier groups – a

consequence of heavy exposure to promotions at the expense of brand advertising

(Ritchie, 1995). Morton (2002) describes Generation Y as critical consumers who resent

the ‘hard sell’, are mistrustful of the mass media and value privacy. Studies have also

shown that Generation Y consumers are smart, aware and fair-minded. They like to be

entertained in advertisements directed at them, but do not like those that make fun of

people. Making connections now with Generation Y will pay dividends to marketers

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

beyond capturing their current spending. In future years, as they begin working

and their buying increases, this segment will more than rival the Baby Boomers in

spending and market influence (Kotler and Armstrong, 2003). The above lead to

the final proposition:

Proposition 6: The Chinese Generation Y feel that they have different avoided selves

from their parents/grandparents.

5 Methodology

5.1 Theoretical basisIn this study, the deductive approach, ‘in which you develop a theory and hypothesis and

design a research strategy to test the hypothesis’ (Saunders et al., 2003, p.85), has been

adopted as there are six propositions which surfaced from the literature review to be tested

by a series of designed questions. The data collection for this study encompasses the

use of interviews, which can help to gather valid and reliable data that are relevant to

the research questions and objectives (Saunders et al., 2003). According to Moser and

Kalton (1971), there is formal and informal interviewing, and Fink (1995) indicated that

interviews could take place on the telephone or face-to-face. In this case, the informal

face-to-face interviewing technique was deemed appropriate, due to the fact that

‘the research subject is highly complex or emotional and the greater flexibility of

the informal approach succeeds better than set questions in getting to the heart of the

respondent’s opinion’ (Moser and Kalton, 1971). Furthermore, Chrzanowska (2002)

indicated the strengths of qualitative interviewing as a data collection method, as it

allowed people to tell their own stories/experiences in their own words. Once trust

between the interviewer and respondents has been built up, interviewees are willing to

share thoughts and feelings which they may not have spoken of before. However, there

may be a gap between respondents’ perceptions and explanations, and interviewers

have to be aware of their own judgemental positions and biases, which are the limitations

of qualitative interviewing.

5.2 Research strategy and approachBoth quantitative and qualitative methods are used with the same propositions. In order

to obtain quantitative data, a questionnaire with yes/no and agree/disagree questions

has been used and the results are presented in statistical form. Qualitative data have

been obtained through semi-structured interviews, with the results presented through

the interrelationship of statements and quotations.

The population of this research is the Chinese-speaking (China, Taiwan and Hong

Kong) members of Generation Y, who were born between 1978 and 1984 (20–26 year-old

young people) and who study in the UK. Although the three areas currently have different

political and economic conditions, the cultural values and social context are very similar.

Moreover, the individual financial position of the sample is also similar, in view of

the fact that they all live and study in the UK, bearing the costs themselves. Using

convenience or haphazard sampling (Saunders et al., 2003) the sample was chosen

to include Chinese-speaking students between the ages of 20 and 26 years old, by gender,

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



in universities in the Great Manchester Area (UK). There were 20 semi-structured

questionnaire interviewees in this research, which included six males and 14 females.

Seven of the 20 were from China (including Mainland China and Hong Kong) while

the other 13 were from Taiwan. The oldest was 26 years old and the youngest was

20 years old and the mean of age was 24. Forty to 60 minutes were spent with each

interviewee. A sample of 100 interviewees was chosen, with the same profile and

similar demographics, for the quantitative part of the research.

6 Research limitations

The major limitation of the research is the fact that due to practical difficulties the

sample included only those who live and study in the UK and specifically Manchester.

Consequently the degree of accuracy when assuming that the results apply to the whole

population of Chinese-background markets is reduced. Furthermore, the quantitative

results were obtained after simple statistical analysis, in terms of percentages, which

also diminishes their accuracy. Finally, both the qualitative and quantitative data

were obtained through interviews conducted in Chinese. Their translation into English,

therefore, as one would expect, contains some minor inaccuracies.

7 Findings and discussion

Proposition 6: Gender differences exist in the undesired self for Chinese

Generation Y.

The results in relation to the sex role prohibitions, based on the agree/disagree answers

are as follows (Table 2):

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 2 Summary of the sex role prohibitions

Genders Males Females

No ‘real’ man will Agree Disagree Agree Disagree

1. Enjoy such things as knitting or flower arranging 50% 50% 64% 36%

2. Become a nurse, beautician or secretary 33% 67% 46% 54%

3. Cry or display tender emotions in public 67% 33% 29% 71%

4. Prefer fruit and vegetables to red meat 0.0% 100.0% 7% 93%

5. Reject sexual opportunities with attractive women 67% 33% 7% 93%

6. Hug or kiss another man when they meet 33% 67% 21% 79%

7. Be more interested in the arts than in sports 0% 100% 0% 100%

8. Take responsibility for caring for small children 0% 100% 0% 100%

9. Be sexually submissive rather than aggressive 33% 67% 57% 43%

10. Be outwardly romantic or sentimental 17% 83% 57% 43%

11. Let a woman take him out on a date 33% 67% 36% 64%

There are many views relating to traditional sex role prescriptions which are agreed upon

by Generation Y Chinese males and females. These indicate differences both in the culture

and the generation. Regarding ‘culture’, sex role prescriptions often appear to relate to

Western culture. Thus some of them, e.g. eating behaviour, are different from Chinese,

but others, e.g. psychological reactions and behaviour, are the same as Chinese. Regarding

‘generation’, in Generation Y’s view, the entire sex role prohibitions still strongly-rooted

during the 1980s and 1990s, have changed. The purpose of sex role prohibitions,

according to Alreck (1994), is to investigate whether the gender differences actually

exist in the undesired self, rather than testing whether or not they are true.

To sum up, Chinese Generation Y’s thinking of gender roles is changing considerably.

The interviewees all accept women’s rights and women’s increasing socio-economic

power, as well power within the family. This conforms to the research by Barletta (2003)

which finds that the things women enjoy are the same as men’s: working, challenge and

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 2 Summary of the sex role prohibitions (continued)

Genders Males Females

No ‘real’ man will Agree Disagree Agree Disagree

12. Become interested in cooking or decorating 0.0% 100.0% 7% 93%

13. Prefer sweet, foamy cocktails to straight liquor 17% 83% 43% 57%

14. Use cosmetics to improve his appearance 17% 83% 93% 7%

15. Undertake such women’s work as laundry or cleaning 17% 83% 7% 93%

16. Have jobs such as flower arranging or hairdressing 0% 100% 0% 100%

No ‘real’ woman will Agree Disagree Agree Disagree

1. Go to a restaurant or theatre by herself 0% 100% 7% 93%

2. Eat or drink more than the man she is with 33% 67% 7% 93%

3. Choose a career in science or engineering 0% 100% 7% 93%

4. Prefer hard liquor to wine or sweet cocktails 33% 67% 29% 71%

5. Be as aggressive as a man in sports or games 50% 50% 7% 93%

6. Have hobbies devoted to mechanics or electronics 0% 100% 36% 64%

7. Ask a man out on a date or pay her own way on one 0% 100% 29% 71%

8. Smoke cigars or a pipe 100% 0% 64% 36%

9. Fail to wait for a man to open the door for her 0% 100% 0% 100%

10. Go out in public without makeup 17% 83% 0% 100%

11. Want to supervise male subordinates 17% 83% 0% 100%

12. Display more intelligence then her husband or date 0% 100% 14% 86%

13. Take much interest in business or political news 0% 100% 0% 100%

14. Defeat a male opponent in sports or athletics 33% 67% 7% 93%

15. Prefer meat and potatoes to salads or desserts 0% 100% 0% 100%

16. Display talent or ability greater than her husband’s 0% 100% 57% 43%


achievement; but, in addition, this research finds that they also want to keep a partially

traditional feminine behaviour and temperament and do not really want to be business

‘superwomen’.

“I think it is very important for women to have both elegant temperament and

deportment. Whilst, nowadays, the undesired self for a woman, the one of the

traditional Chinese daughter-in-law (siao si fu) who is dependent and ‘wimpish’

in public, these traits can exist in private between her intimate friends.”

(P.C. Chai, aged 24, female)

“I am afraid to be considered as a strong woman who is an eager and ambitious

businesswoman (nyu ciang ren) that is not my ideal real woman.” (X.Y. Zhang,

aged 25, female)

Men’s social and family roles are found to be considered to be less powerful and

prestigious than in the past. In the words of an interviewee:

“I think an ideal real man has to do both traditional male work, such as repairing

electronic devices and female work like cooking and cleaning.” (Y.J. Lee, aged

26, male)

In conclusion, this research finds that gender differences do exist in the undesired self

for Chinese Generation Y and therefore the proposition is accepted.

Proposition 2: Chinese Generation Y avoid business relationships with strangers.

Most Chinese young people conceive of human nature as bad (67% of males and 64%

of females) and they only tend to believe and trust their kin group (83% of males and

71% of females). These results are consistent with Usunier’s (1996) research results on

the subject.

“I will trust a person who is recommended by my family or friends, as I can’t

judge a stranger whether he is good or bad by myself. I do trust and believe my

family and friends and they are a primary factor in the relationships I build with

strangers.” (C.T. Liu, aged 26, female)

“I tend to trust a stranger depending on how familiar s/he is to my family and

friends. If s/he is my friend’s best friend, I will trust her/him more, but still have

to prove of my own of how good s/he is.” (C.W. Ho, aged 26, male)

Meanwhile, although 66% of males believe themselves to be ‘social animals’, none of

them actively try to build their own ‘guanxiwang’ (relationships network). For females,

the results are not clear on whether they think of themselves as being sociable or not

(yes for 36%, no for 43%), but 79% of women build their ‘guanxiwang’ passively and

21% actively. It is worthy of note that women are more active than men in building

their net of relationships nowadays. Though the rate is still low, it might be a new trend

in this generation.

“In this era social activities are necessary. I think everyone should be active to

contact strangers and to make new friends and I encourage myself to do just that.

Sometimes though, whether interpersonal relationships can be built or not

depends upon ‘yuan fen’ [a kind of feeling of affinity].” (Y.J. Huang, aged 24,

female)

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

In conclusion, most Chinese young people avoid relationships with strangers, especially

when alone, while the influence of family and friends is important and significant in

their socialisation. They will enlarge their relationships with others mainly through

existing friends and family. This also reinforces the findings of Schutte and Ciarlante

(1998), who state that ‘Chinese regard social class as belonging not to an individual but

to the family or kin group’. The proposition is therefore accepted.

Proposition 3: Chinese Generation Y’s avoided self is age related.

Chinese Generation Y agrees that the elders should be respected but disagree that they

have more authority. ‘Respect’ therefore in their perception does not equate to ‘power’.

Chinese youth still inherit the traditional thinking of family as it exists in the context

of Confucianism. It has, nevertheless, changed slightly with time. Generation Y does

respect elders but the opinion of the latter is not always endorsed.

“I do disagree with this traditional Chinese family style. We can respect elder

members of a family but they do not necessarily have more authority and power.

My family is democratic and we may consult each other on decisions that affect

the whole family, but if the decision is related to the individual, we have the

freedom to act independently.” (M.L. Chan, aged 24, female)

Although most Chinese young people believe that it is necessary to have a seniority-based

system in society (83% of males and 93% of females), they do not believe that senior age

is associated with higher ability and/or performance in business. At the same time, they do

view the seniority-based system as an effective means of enlarging their ‘guanxiwang’

(relationships network).

“When I was in school the seniority-based system had been strongly in place and

I support it, as through it I was able to make strangers be familiar with/to us

easily.” (Y.H. Ho, aged 23, female)

“There was a seniority-based system in both my school and company, and I

think it is necessary to have it in society in general. It is a form of undefined

norm which can assure an organisation’s stability and solidity. On the other

hand, it is does need to be modified. Frequently age is not related to ability.”

(P.F. Huang, aged 26, male)

Hence Chinese Generation Ys’ avoided self is not age related. This proposition, therefore,

is not true and therefore rejected.

Proposition 4: Chinese Generation Y are fearful of appearing conceited.

When respondents were asked to appraise themselves in five adjectives/sentences,

both males and females used positive terms to describe themselves, but males were less

comfortable about saying positive things than females. That is to say, even though both

Y-generation genders appear self-confident and with a positive self-image, women easily

admit it, whilst men are more apprehensive and choose more conservative wording

in their self-description. Reinforcing the above, the interviews have shown that young

Chinese are still fearful of appearing conceited. This is evident through two findings.

The first is the fact that, in their self-assessment, both males and females graded

themselves at around six out of ten, which in Chinese terms is barely above ‘pass-mark’.

The second is the finding that when publicly praised, almost all of the men and women

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



feel happy and proud, but they do not allow these feelings to surface and/or to be shown

through verbal communication or even facial expressions. The proposition overall has

been shown to be true and is therefore accepted.

Proposition 5: Individualism is an avoided self for Chinese Generation Y.

The young Chinese are quite individualistic, with female individualists being almost

twice as many as males (64% vs 33%). This finding corroborates the findings of Schutte

and Ciarlante (1998), who stated that ‘young people are becoming ‘too’ individualistic

and losing traditional morals and virtues’. On the other hand, there is some evidence

of a negative reaction to the phenomenon that has arisen from the interviews.

Some respondents did express their wish for a more traditional, collectivistic social

direction, but they were the minority. Whether individualistic or not, nevertheless,

the majority of respondents did state that they cared about other people’s views (83% of

males and 71% of females). This is also consistent with the finding that ‘miazi’ wasalso shown to be very important to Chinese people (100% of males and 86% of females).The latter two results additionally reinforce the result of the original question concerning

individualism, by showing the ratios of females to be lower. Young Chinese therefore,

especially women, are individualistic and consequently the proposition is rejected.

Proposition 6: Chinese Generation Y feel that they have different avoided selves from

their parents/grandparents.

Chinese Generation Y believe themselves to be completely different from the Boomer

Generation, in terms of both positive and negative qualities. This supports the position,

held by Klewin (2003), that ‘Generation Y is a special group’. Noted also is the

fact that 17% of males and 21% of females do not believe themselves to conform

to the Generation Y profile of attributes.

“Personally thinking, I am too old to be Generation Y. I think this generation is

suitable for under 22-year-old young people, not for me.” (Y.J. Lee, aged 26,

male)

“I really do not like the term of ‘Generation Y’, which presents more negative

meanings, and I don’t think I do not identify myself with it.” (X.Z. Wang, aged

22, female)

Some of interviewees believe the period of Generation Y is still too wide to represent

a behaviourally homogenous group. They support the view that it should be separated

into two groups, 20 to 23 and 24 to 26. Although the age-groups have a short span, they

believe they are more representative of the fast-changing realities of the corresponding

markets of recent years. The same position appears to be held by both ends of this

research’s age spectrum, and both genders.

“I think ‘Generation Y’ should be divided more specifically into two levels; one

from ages 20 to 23 and the other 24 to 26. For example, in my family my young

brother who is 21-years old now, is totally different from me in both thinking

and behaviour. His dressing style is very strange and unusual, whilst mine is

normal. But I still believe both he and me belong to generation Y.” (M.L. Chan,

aged 24, female)

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

With regard to the avoided self between Generation Y and the Boomers, Chinese young

people feel that they are substantially different. The Boomers are more collectivistic

and family-oriented while Generation Y are more individualistic and liberal.

“I think Generation Y people just want to ‘stay’ in this generation and don’t

want to be similar to either Generation X or the Boomers who are traditional and

conservative, or the next generation (we call it ‘Generation Z’ in Taiwan) who

are too newfangled. But the Boomers themselves, they do not want to abolish

traditional norms and have a high level of moral standards.” (P. Chao, aged 24,

female)

Overall, proposition 6 has been shown to be true and is therefore accepted.

8 Further findings

Regarding generation differences, it is also interesting to note that there appear to be

intra-generation differences amongst the interviewees, depending on their place of

origin. Especially noted are the differences between mainland Chinese youths and those

from Taiwan. The differences are traced back to the different political past of the areas,

with Deng Xiaoping’s era dominating the differences between generations in mainland

China (Website 1) and the economic boom of the 1980s (Website 2) and the political

turbulence dominating in Taiwan (Website 3).

Of further interest is the finding that, in terms of the branding and advertising images,

Generation Y dislikes those which are immutable and without innovative images.

They also find it difficult to associate themselves with the marketing communications’

images that are supposed to have them as the target audience.

“The images of both Marks and Spencer and Debenhams are too old-fashioned

for me, and McDonald in the UK has a ‘dirty’ image. I don’t like brand image

like that. For the product image, I think the package is important. For example

the own-label brands (e.g. ASDA) without any designed package, and Burberry

which is typically plain style is gaudy for me, so I do dislike them.” (S.S. Zhao,

aged 20, female)

As Ritchie (1995) noted, they are less brand-loyal than older groups. The Boomers,

although they do not have the sense of brand loyalty, they do always purchase and

consume the same product as part of a primarily habitual behaviour.

Summarising the findings with regard to the individual propositions:

� Proposition 1: Gender differences exist in the undesired self for Chinese generation

Y: ACCEPTED.

� Proposition 2: Chinese generation Y avoid the relationships with strangers:

ACCEPTED.

� Proposition 3: Chinese generation Y’s avoided self is age related: REJECTED.

� Proposition 4: Chinese generation Y is more fearful of appearing bigheaded:

ACCEPTED.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



� Proposition 5: Individualism is not an avoided self for Chinese generation Y:

REJECTED.

� Proposition 6: Chinese Generation Y feel that they have different avoided selves

from their parents/grandparents: ACCEPTED.

9 Conclusions and marketing implications

The qualitative part of this research (interviews) has provided an insight into the

relationship between Generation Y consumers’ self-concept and their perception of and

attitude towards brand images. The findings have shown that brand images are much

stronger among this group compared to the Boomer generation. Consequently, branding

should carry a greater relative weight in the wider marketing strategies of companies.

Table 3 summarises the ‘undesired-self’ elements for both males and females of the

Generation Y consumers and makes a similar gender comparison in relation to the

‘undesired brand images’, the latter largely being a result of the former.

The above elements provide marketers with functional information towards the

design of the appropriate marketing mix that will target the segments of Y-Generation

Chinese consumers. The findings are especially valuable towards the development of

the marketing communications mix that targets this group as its audience. Compiling the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Table 3 A summary of the undesired self and undesired brand images’ elements by gender

Males Females

Undesired selfWell-behaved youth (guai bao bao) Indiscrete, using vulgar language,

and portraying improper public behaviour

Without imperturbable thinking and sentiment Unreasonable

Cowardly and risk-avoiding Depending on others

Too feminine or too chauvinistic Old-fashioned, conservative

Similar to parents’ generation A traditional Chinese ‘daughter-in-law’

(siao si fu)

Lacking a sense of responsibility A dynamic/powerful woman (nyu ciang ren)

Undesired brand imagesImmutable Posh, luxurious

Conservative Dull

Negative image and too direct advertising Decadent

Without innovation, common Gaudy, loud

Abstract or complex image Violent, bloody

Repeated Stereotypical, old-fashioned

Lacking stylish designing or packaging

various findings into a more comprehensive picture, therefore, it is possible for this

research to reach a number of conclusions concerning their marketing implications:

� Largely as expected, it is evident that the group’s self-perception, as well as their

undesired-self attributes, are reflected into their undesired brand images. This also

indicates the natural association between the individual’s self image and the image

of the brand.

� Although there is a stereotypical belief among marketers that this group is gradually

shifting from the traditional Far East consumer attitudes to Western ones, this

research has shown that the situation is more complicated than that. It appears that

the group does not exist at a passive transitional point in between the two ends.

It has developed its own independent set of attitudes and perceptions which are not

necessarily simply a more ‘moderate’ version of what one would meet in traditional

East or West.

� These attitudes and perceptions, both regarding the wider self and marketing-specific

images are better considered as an amalgam of the two ends, incorporating elements

from both cultures, frequently in their absolute form. Females for example include

images such as ‘dependent’, ‘old-fashioned’ and ‘conservative’ among their

undesired-self images. At the same time though, they also reject the images of the

‘dynamic/powerful’, the ‘posh’ and the ‘loud’ woman.

Consequently, marketers should not be impulsive in the development of marketing

strategies aiming at this group. Neither the existing Chinese marketing communication

approaches appear to be appropriate, nor the Western ones. Most importantly,

the ‘something in-between’ approach is equally inappropriate. A specially-developed

strategic marketing and marketing communications mix should be sought.

This research is just a step towards understanding the true nature of the Chinese

Y-Generation. A wider and deeper multi-dimensional and multi-perspective study is

required to ensure a valid and reliable understanding of the motivators and intricacies

underlying the consumer behaviour of this increasingly lucrative segment. The Chinese

Y-Generation’s rising strength, both in terms of size and actual buying power, will

continue to attract companies that will beg for its attention, preference and loyalty.

The ones that will be successful primarily need to understand it and be able to

communicate with it. This research has taken a significant step towards this aim.

References

Alreck, P.L. (1994) ‘Commentary: a new formula for gendering products and brands’,

Journal of Product and Brand Management, Vol. 3, No. 1, pp.6–18.

Banister, E.N. and Hogg, M.K. (2001a) ‘Dislikes, distastes and the undesired self: conceptualizing

and exploring the role of the undesired end state in consumer experience’, Journal ofMarketing Management (UK), Vol. 17, Nos. 1–2, p.73.

Banister, E.N. and Hogg, M.K. (2001b) ‘Mapping the negative self: from ‘so not me’ to

‘just not me’, in: M.C. Gilly. and J. Meyers-Levy (Eds) Advances in Consumer Research,XXVIII, Association for Consumer Research Conference (in press), Utah.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



Barletta, M. (2003) Marketing to Women: How to Understand, Reach, and Increase Your Shareof the World’s Largest Market Segment, USA: Dearborn Trade Publishing.

Boyatzis, R.E. and Kleio Akrivou, K. (2006) ‘The ideal self as the driver of intentional change’,

Journal of Management Development, Vol. 25, No. 7.

Chrzanowska, J. (2002) Interviewing Groups and Individuals in Qualitative Market Research,

London: Sage.

Fink, A. (1995) The Survey Handbook, London: Sage.

Furnham, A. and Mak, T. (1999) ‘Sex-role stereotyping in television commercials: a review and

comparison of 14 studies done on five continents over 25 years’, Sex Roles, Vol. 41, Nos. 5/6,

pp.413–437.

Granrose, C.S. (2007) ‘Gender differences in career perceptions in the People’s Republic of China’,

Career Development International, Vol. 12, No. 1.

Groopman, J. (2004) The Anatomy of Hope: How People Prevail in the Face of Illness,

New York: Random House.

Grubb, E.L. and Grathwol, H.L. (1967) ‘Consumer self-concept, symbolism and market behavior:

a theoretical approach’, Journal of Marketing, No. 31, Oct, pp.22–27.

James, W. (1890/1950) The Principles of Psychology, 3rd edn., USA: Dover Publications Inc.

Klewin, B. (2003) ‘Tuning in generation Y’, Credit Union Magazine , Madison, Vol. 69, No. 8, p.30.

Kotler, P. and Armstrong, G. (2003) Principles of Marketing, 10th edn., New Jersey: Prentice Hall.

Kropp, F., Lavack, A.M. and Silvera, D.H. (2005) ‘Values and collective self-esteem as

predictors of consumer susceptibility to interpersonal influence among university students’,

International Marketing Review, Vol. 22, No. 1.

Markus, H. and Nurius, P. (1986) ‘Possible selves’, American Psychologist, Vol. 41, No. 9,

pp.954–969.

Martin, Z. (2003) ‘Hands-on brand building’, Credit Card Management, Vol. 16, No. 8,

New York, p.54.

Meyers-Levy, J. (1998) ‘The influence of sex roles on judgment’, Journal of Consumer Research,

Vol. 14 (March), pp.522–530

Morton, L.P. (2002) ‘Targeting Generation Y’, Public Relations Quarterly, Vol. 47, No. 2,

pp.46–48.

Moser, C.A. and Kalton, G. (1971) Survey Methods in Social Investigation, 2nd edn.,

London: Heinemann Educational Books.

Nurko, C. (2003) ‘Nostalgia branding: out with the old and in with the – old’, Brand Strategy,

Vol. September, London, p.6.

Ogilvie, D.M. (1987) ‘The undesired self: a neglected variable in personality research’,

Journal of Personality and Social Psychology, Vol. 52, pp.379–385.

Ritchie, K. (1995) ‘When Generation X buys Brand X’, Brandweek, May 15, pp.23–31.

Rodrick, D. (2003) ‘New lifestages, generations, market segments’, Growth Strategies,Oct., (958), Santa Monica, p.1.

Salt, B. (2003) ‘Baby boomer culture gets its comeuppance’, Review – Institute of Public Affairs,

Vol. 55, No. 2, Jolimont, p.10.

Saunders, M., Lewis, P. and Thornhill, A. (2003) Research Methods for Business Students,

3rd edn., Essex: Prentice Hall.

Schutte, H. and Ciarlante, D. (1998) Consumer Behaviour in Asia, London: Macmillan Business.

Shepherdson, N. (2000) ‘New kids on the lot’, American Demographic, (January), pp.44–47.

Sin, L.Y.M., Fernandez, S.R. and Bonilla, I.M.A. (2001) ‘Chinese women at the crossroads:

an empirical study on their role orientations and consumption values in Chinese society’,

Journal of Consumer Marketing, Vol. 18, No. 4, pp.348–367.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Solomon, M.R. (2002) Consumer Behavior, International Edition, New Jersey: Prentice Hall.

Statt, D.A. (1997) Understanding the Consumer: A Psychological Approach, London: Macmillan

Press Ltd.

Todd, S. (2001) ‘Self-concept: a tourism application’, Journal of Consumer Behaviour, Vol. 1,

No. 2, London, pp.184–197.

Usunier, J. (1996) Marketing Across Cultures, Hertfordshire: Prentice Hall.

Website 1, www.news.bbc.co.uk/…/china_50/deng.htm, accessed 30 June, 2006.

Website 2, www.lib.ncu.edu.tw/kuo/nomiracle.htm, accessed 30 June, 2006.

Website 3, www.news.bbc.co.uk/…/taiwan_2000/1972_1986.stm.

Wong, N. and Ahuvia, A. (1995) ‘A cross-cultural approach to materialism and the self’,

in: D. Bouchet (Ed.) Cultural Dimensions of International Marketing, Denmark: Odense

University, pp.68–69.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Evaluation of the Khula enterprise in the promotion

of SMMEs in South Africa

Louise van Scheers* and Simon RadipereSchool of Business Management, University of South Africa,

PO Box 329, Unisa 0003, South Africa




Abstract: The research indicated that accessing funds for SMMEs is not a

problem but the procedures and the requirements to be met for the banks such

as 10% contribution is acting negatively towards them. Although much has been

written on the causes of failures on SMMEs, however, the most worrying factor

from this research is the lack of basic skills in executing business and shortage

of funds. The research established that for Khula Enterprise to meet SMMEs

requirements, it must have an information management system that is effective

in the promotion of the customer center strategy. It must also specialise in the

provision of finance to a particular sector as each enterprise needs differ from

the other enterprise. The peculiarity of South African history requires a unique

solution for the society’s unique problem.

Keywords: black economic empowerment; business failure; business skills;

educational background; entrepreneur; Khula Enterprise; managerial skills;

SME sector; SMME; types of business.

Reference to this paper should be made as follows: van Scheers, L. and

Radipere, S. (2008) ‘Evaluation of the Khula enterprise in the promotion of

SMMEs in South Africa’, Journal of Global Business Advancement, Vol. 1,

No. 4, pp.409–421.

Biographical notes: Louise van Scheers is a Senior Lecturer at the School of

Business Management, University of South Africa. She is actively involved

in HIV and AIDS projects as part of community service. Her research interests

include marketing, project management, small businesses of the informal and

formal sector and distance education.

Simon Radipere is a Lecturer at the School of Business Management, University

of South Africa. He has earned his Master of Commerce from Vista University

and he is currently busy with his Doctor of Commerce at Unisa. His current

research focuses on small business development and entrepreneurship.

1 Introduction

The strategic importance of Small, Medium and Micro Enterprises (SMMEs) is

acknowledged around the world for a variety of reasons, such as the creation of

employment, raising of living standards and the reduction of poverty. South Africa is

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



following the trend of a bargaining SMME sector and the pace has accelerated, unlike

over recent years, as both the private sector and the public sector restructure and retrench.

Now the recognition of the significant contribution of SMMEs to national economic

development has led to a prominent position of these enterprises in the policy agendas

of many developing countries, including South Africa.

This paper provides information on how SMMEs came into existence. The following

section provides the detail on the background of SMMEs and their contribution in terms

of employment and type of sector.

2 Background

Political arguments pertaining to SMME sector promotion deserve to be mentioned or

addressed, as today developing countries are subject to much unemployment, poverty

and crime. Such issues might be addressed properly if governments attended to SMME

problems in order to improve their economies. Poverty is caused by inadequate income.

Incomes result, in most industrial societies, from employment; employment creation is

perceived as the main goal of most poor countries, and SMMEs are perceived to be

a fruitful source of job creation. The fact is that employment is not the only way of

relieving poverty, and those who have jobs are not necessarily no longer poor as a

result. In essence SMMEs have displayed a remarkable capacity to absorb labour,

therefore it is reasonable for governments and other stakeholders to promote this sector

and desist from destroying them. According to the White Paper (DTI, 1995) the promotion

of SMMEs is a key element in the government’s strategy for employment creation and

income generation. The programmes have already been established to give effect to the

strategy, including the Ntsika Enterprise Promotion Agency to provide non-financial

assistance, Khula Enterprise Finance Limited for wholesale loans and the Small Business

Centre attached to the Department of Trade and Industry (DTI) and Growth, Employment

and Redistribution (GEAR) as a macro economic strategy (DTI, White Paper, 1995).

The support is strengthened by the belief that stagnation in the economy and creation

of jobs can be overcome by concentrating on the formal sector.

3 Problem identification

SMMEs face problems such as financial access, especially the micro enterprise (start-ups),

because they cannot produce a track record and do not have enough collateral and lending

them money is considered risky by financial institutions. The problem with the Khula

Enterprise is that it has been acknowledged that it has failed to reach the entrepreneur

from the disadvantaged background, which is the bulk of those in need of financial

assistance (African Centre for Investment Analysis, 24 April 2002). However, the

researcher is trying to assess the support given to SMMEs through the Thuso Mentorship

Programme, as there is an outcry from secondary sources that SMMEs are not given

enough support in the promotion of their business. Information is not readily available

to the entrepreneurs on how Khula is operating, in terms of supporting SMMEs.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

410 L. van Scheers and S. Radipere

4 Aims of the research

The aim of the research is to evaluate the role played by the Khula Enterprise and its

impact in the promotion of SMMEs in South Africa. The other point is to identify factors

that contribute to the failure of SMMEs and reflect that access to finance is easy when

there is a loan guarantee. It is also aimed at showing how the government, through

their national economic strategy especially on policy issues, has tried to make SMMEs

sustainable and how targeting groups such as women, youth and the disabled need to

be included in the development of the economy.

5 Methodology

The researchers used the survey method to produce quantitative information by

asking SMMEs and mentors about the Khula Enterprise through the Thuso Mentorship

Programme This method will also be used to find reliable numerical information about:

� the number of loans the bank has approved

� the number of jobs created and procedures followed to access the loan

� the criteria used for selecting suitable candidates for mentorship.

Qualitative methodology in this report will help interview Khula Enterprise staff,

in order to retrieve information on their service through Thuso Mentorship. In this

research, self administered and interview administered questionnaires will be used.

SMMEs and mentors will have self-administered questionnaires, with an explanation,

and will be delivered at the Khula Enterprise (Mentorship office) in Midrand. For

Regional Coordinators, interviewed, administered questionnaires will be used for the

interviewer to interact with them in getting more information and use it to get their views

on how the Khula Enterprise can improve its services, to achieve its core objective

in creating employment through the establishment of SMMEs. In this research, the

researchers used purposive sampling from the non-probability sampling and systematic

sampling with 70 respondents. Of these respondents 45 will be SMMEs from the Khula

Thuso Mentorship Programme, 15 mentors and two Thuso regional coordinators.

6 Literature review

6.1 Background of the SMME sectorAn analysis of the South African economy is required, in order to understand fully the

conditions in which small business operates and major economic indicators that have

impacted on SMMEs. It is clear that SMMEs are the most appropriate vehicle for both job

creation and job retention. In recognition of this statement, the South African government

has pursued, since 1994, policies to actively promote the growth of the SMME sector.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Evaluation of the Khula enterprise in the promotion of SMMEs 411

7 The nature of Khula enterprise finance

Khula Enterprise Finance Limited was established in 1996. It is an agency of the DTI in

South Africa. Khula is a wholesaler of small business finance. In other words, it does not

work directly with small business people, but provides access to credit to SMMEs through

various delivery mechanisms. These organisations include banks and small business loan

organisations.

7.1 Khula’s main activitiesKhula, which helps entrepreneurs with guarantees to secure loans, initiated the Thuso

Mentorship network in order to help provide entrepreneurs with pre loan (business plan)

and post loan services (support in the form of management and technical expertise).

Mentorship is a method for advancement that provides support and training through

relationship building. It is about matching business and mentor with a similar personal and

professional interest in a process of support, sharing and learning, to help entrepreneurs

who want to start up, or successfully run their existing business and reach full potential.

8 Analysis and interpretation of the results of the quantitative survey

The questionnaires were divided into seven themes i.e.:

� general information

� business information

� financial assistance

� non financial assistance

� the government’s role in SMME support

� economic and business environment

� expansion of business using close ended questionnaire for easy analysis as debated

above.

However, at the end of the questionnaire there was space for comments for those with

information which needed to be addressed or be used as recommendations to develop

SMMEs and improve Khula services. Customers were requested to respond to the entire

question, based on the service they had received from the Khula Enterprise. The following

section is the presentation of the results of each theme investigated, together with tables,

followed by a discussion.

8.1 Analysis of Khula SMMEsThe SMMEs analysis will provide information on how entrepreneurs have started

their business, the support they receive from government, skills which they have received

and desire, their business status and any constraints that act negatively towards their

development.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


8.1.1 GenderGovernment has shown its involvement in small business by emphasising that target

groups such as women must be seen or be involved in SMMEs development, in order

to reduce discrimination against women. Question A1.1 solicited from the SMMEs,

the owner’s background. The responses are summarised in Figure 1.

Looking at Figure 1, only 37% of women and 63% men are involved in the SMMEs.

The statistics confirm what has been suggested or motivated by government, that there

is a need for more women to be involved in small business (DTI, White Paper, 1995).

With regard to the gender issue, there was no direct discrimination against women in

any of the Khula products. The reality is that the number does not mean that women

are denied the right to start their business, but that they are still left behind. Much has

been written in recent years about the role of women in developing countries, as they are

all too often bearers of children and their maternal responsibilities cut them off from

whatever benefits are gained from the wage employment sector. Due to equity, today

women have access to business equal to that of men, and their trading enterprises have

a long history in many parts of the world, such as West Africa.

8.1.2 Type of business

In the research it was found that SMMEs are involved in sectors which range from

services, retail, manufacturing, catering, construction and transport. SMMEs are in a

myriad of sectors and it is a sign of how fast they are developing in comparison to large

business. Different sectors make a different contribution to employment and contribution

to the GDP.

Figure 2 indicates that SMMEs are involved in different types of sectors, such as

the services, catering and construction. This confirms some of the findings that SMMEs

are involved in many sectors, thus they can be viewed as contributors to our country’s

economy and it is where their significant role is remarkable.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 1 The distribution of enterprises by gender

8.1.3 Educational backgroundEducation is very important in terms of comprehending what is supposed to be done in

executing business. According to studies conducted by Bruno and Tyebjee (1982) and

Gartner (1985), a well educated and technically skilled labour force can make a substantial

impact on entrepreneurial development.

Looking at Table 1, entrepreneurs were found to be well educated. Thirty per cent

had gained skills through training, 25% had degrees when they started running a small

business, 18% had gained some experience through technical training and 28% had had

a high school education. In their comments it was revealed that the majority had gained

skills through experience from a previous employer and others reported having had former

business training experience. However, others did not have experience of the business and

learned on their own. Several SMME owners indicated many years of experience in a

managerial position at a state owned enterprise, prior to starting their own business.

Technical education was low, as they started working without any formal education in the

business, and were trained without the benefit of any qualification. The following theme

will be based on the information pertaining to the business.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 2 Distribution of SMMEs by sector

Table 1 Distribution of SMMEs by education status

Education level Number Percentage

Degree 10 25

Training 12 30

Technical 7 18

High school 11 28

Total 40

8.1.4 Business informationInformation plays an important role in making people aware of what is available to the

public, for example if they are interested in starting a business. The Promotion of Access

to Information Act 2000 stressed the importance of the dissemination of information.

From the results shown in Table 2, there is a clear indication that entrepreneurs

are ignorant about Khula services. Eighty per cent knew about Khula through the banks,

8% from the media and 13% heard about it from friends. It is now the duty of Khula to

advertise itself in order to create a good brand to the public and to market its services

intensively.

8.1.5 Legal status of businessOf the 40 small businesses in the survey, 3% were sole proprietor status of ownership;

while friends and family partnerships constitute 10%, and 88% were close corporations

(Table 3).

The large number of business registered as close corporation provides a barometer of the

measurement of economic activity.

8.1.6 Financial resources/start up capitalThe primary financing method used for start up (see Table 4 below) was personal

savings, which constituted 58%. Borrowing from friends and family tended to be the

second source of funding capital among respondents, at 28%, and 15% of SMMEs used

bank loans.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 2 Knowledge of Khula

Education level Number Percentage

Bank 32 80

Media 3 8

Friends 5 13

Table 3 Distribution of the enterprise by ownership status

Status of

Business Number Percentage

Sole proprietor 1 3

Partnership 4 10

Close corporation 35 88

Total 40

The above findings confirm the findings of other researchers, that the majority of start ups

use personal savings to execute their business. Due to the limited financing options for

start up capital, the only solution was to use personal savings, because banks still regarded

them as risky businesses. Mohr et al. (1995) also shared the same sentiments as above,

by describing the SMME sector (especially the start up) as something called a shadow,

unrecorded, underground and part of the hidden economy.

8.1.7 Employment historyThe history of SMMEs has demonstrated that this sector is indeed viable and that its

development and promotion are of the utmost importance. Irrespective of the SMMEs’

importance in terms of their contribution to GDP, the biggest contribution to the South

African economy is in terms of employment. The contribution of SMMEs to employment

in the respective enterprises is portrayed in Table 5 below.

It is evident from the results shown in Table 5 that, from the outset, an important trend

was emerging, with small enterprises as more important, in terms of employment, with

about 65% employees, than micro enterprises with 27% employees and medium sized

enterprises with 11% of the employees. Table 5 indicates a much higher level of small

enterprises, making them the most dominant of all the institutions. It is in the services

and construction sectors that the number of small enterprises is the greatest, whilst

transport tends to be the lowest in employment, comprising 4%. The construction and

manufacturing sectors consist solely of small enterprises.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 4 Start up capital

Financial assistance Number Percentage

Bank loan/overdraft 6 15

Borrowing from friends and relatives 11 28

Personal savings 23 58

Company assisted funds

Total 40

Table 5 Distribution of SMMEs’ employment by enterprise by percentage

Type of sector Micro Small Medium

Services 8 31 11

Manufacturing 0 6 0

Catering 9 5 0

Construction 0 21 0

Transport 4 0 0

Information technology 6 2 0

Total 27 65 11

8.1.8 Reasons for starting a businessTypical reasons given for venturing into business were:

� recognised market opportunity

� to supplement family income

� unemployment

� family business

� retrenchment.

From Table 6 below we can see that 35% started a business due to unemployment

and 25% of the entrepreneurs indicated a strong desire for independence, due to a

market opportunity that ultimately turned them into entrepreneurs. Thirteen per cent

of respondents wanted to augment their salaries, 20% were retrenched and 8% were

running a family business. However, in their comments, an overwhelming majority of

SMME owners seemed to make a deliberate choice to start a business.

Evidence from other SMME surveys confirms that the establishment of a micro

business is triggered by unemployment. Today there are more people who are retrenched.

Large companies are no longer capable of absorbing formal labour and the seizure of a

business opportunity becomes the motivation for establishing a business. Becoming an

entrepreneur is no longer a wish, but a ‘must’, to help in the reduction of unemployment

and to curb poverty. SMMEs in South Africa are no exception, as they are well known

as the providers of jobs and must be promoted, because the future depends on their

sustainability.

8.1.9 Skills training and developmentThe bad performance and high failure rate of many SMMEs, suggests that the scarcity

of competent managers is a more serious constraint on economic development than the

shortage of finance.

Table 7 presents the results that a majority of SMMEs reported management

training (25%), information system (23%) and market studies (10%) as desirable. All of

the above needs, if implemented properly in business, could help SMMEs to expand,

attract and retain customers in their business.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 6 Reasons for starting a business

Reasons Number Percentage

Bank 32 80

Unemployment 14 35

Market opportunities 10 25

Increase income 5 13

Retrenched 8 20

Family business 3 8

8.1.10 Reasons for SMMEs failure in operationSMMEs are the vehicles of job creation, but they are faced with a myriad of problems

that have to be addressed before they collapse or face closure. In this research mentors

were asked to identify three reasons for failure (Table 8).

The three main reasons for failure, mentioned by respondents in this research, are a

poorly motivated business plan, lack of management skills, lack of information and cash

flow problems. Thirty per cent of mentors mentioned failure due to a poor business

plan. A business plan is valuable to the bank and other stakeholders to help in assessing

the viability of the business, to assess the objectives and undertake an environmental

analysis of the industry and administrative procedures. It is essential that all businesses

produce a detailed plan of how they are going to run their business, to motivate financial

institutions to provide loans. The majority of respondents (50%) gave management skills

as the reason for failure and 10% cited information and poor market research as other

reasons that cause SMMEs to fail. The above reasons mentioned for failures are also

echoed by advocates who are interested in the promotion of SMMEs and they have to be

tackled in one way or the other to make the SMME sector sustainable.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 7 Entrepreneurial and business skills for SMMEs

Skill training Desirable Available

Entrepreneur training 8 10

Management training programme 25

Technical training 18

Marketing studies 10

Advisory services 18

Information system development 23

Advertising skills 0 0

Table 8 Reasons for failure

Reasons Number Percentage

Lack of managerial skills 5 50

Insufficient capital 0 0

Lack of information 1 10

Lack of collateral 0 0

Poor market research 1 10

Cash flow problems 0 0

Business plan 3 30

8.1.11 Skills required in businessGood skills are of vital importance in business management. The provision of service,

if combined with skills and education, will enhance the success of the business. Abdullah

(1999) wrote that skills, if combined with a better educational level, led to an increased

tendency to pursue entrepreneurial activities and a greater probability of starting a new

venture that progresses through the start up phase.

Looking at Table 9, 40% of the mentors agreed on the provision of management skills,

20% comprised mentors who recommended customer service skills, 30% were interested

in the provision of training to SMMEs and 10% comprised marketing skills.

The majority of mentors noted the fact that SMMEs do not have the necessary skills to

execute their businesses. SMMEs often lack the managerial skills that are the basic

requirements for running a business, and a majority of banks look at those skills in the

assessment of the approval of the loan. They also shared the same view that the provision

of these skills to SMMEs could increase the ability of the entrepreneurs to continue with

enterprise. This comment also supports the idea, mentioned by other authors, that training

is a must for entrepreneurs interested in running a business and that the government

has to be fully supportive in the initiation of courses that will enhance the sustenance

of business. For example, in Japan, the extent of training for SMMEs far exceeds that

of other countries. Offers of on the job training, job rotation and training through group

participation are customary in Japanese SMMEs.

8.1.12 Problems in accessing fundsAccessing funds by SMMEs is a difficult task compared to that of a large business.

SMMEs comprise different enterprises that require different services, especially in

addressing the funds and their constraints.

Seventy per cent of mentors agreed that access to finance was no longer a problem and

30% said financial access was a problem. It is important to recognise that the majority

of mentors in this sample reported that there was no lack of financial access. This is a

significant finding, given the general opinion that most entrepreneurs provided with a

Khula guarantee are from a disadvantaged background and it is often echoed that financial

access is problematic. These statements also support some of the findings by that skill

shortage is the main problem, rather than a lack of finance. Accessing funds is not a

problem, because the banks and government are working hand in hand in helping

entrepreneurs to access funds. Khula provides a guarantee and the banks approve the plan,

with the request of appointing a mentor to look after the client. The mechanisms are there

to access funds, but the only problem is lack of skills and information on how to go about

getting funds.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Table 9 Skills for improvement of service

Number Percentage

Management skills 4 40

Marketing skills 1 10

Customer service skills 2 20

Training 3 30

9 Recommendations

The promotion of the SMME sector had to be addressed, in order to make progress

in eliminating the scourge of unemployment that afflicts a large segment of our South

African labour force, and increase economic growth. However, putting South Africa on a

developmental and employment absorbing growth path through SMMEs is a long term

challenge which needs to discussed with a shared vision by the government, corporate

and banking institutions working together.

9.1 Financial assistanceThe survey has shown that SMMEs have received financial assistance through the banks

but the micro enterprises, especially the start-ups, still face some difficulties in accessing

funds. The financial institutions not only have complicated procedures, but also the

mechanisms and criteria used to select elegible entrepreneurs, makes it difficult to cater

for all enterprises. The perception of the SMMEs by the banks has to change and must

have a new style of dealing with the entrepreneurs. Advocates for the promotion of

SMMEs have also argued that some of the entrepreneurs have non-tangible forms of

collateral and banks do not even consider using debt owed to them from stockvels

to assist in accessing funds. Sofute (1996) wrote that it is high time that banks

move away from an impersonal relationship between banker and customer and this

requires a change in the corporate culture of banking institutions. In order to resolve

such problems, Khula, together with the government, must follow the Bank Rakyat

Indonesia (BRI) plan established in the early 1970s to help SMMEs in the development

of a full rural banking system.

9.2 Idea generation to start a businessSMMEs are also struggling to sustain themselves in business and they often fail within the

first two to three years of their operations. They do not last longer because some of them

lack the knowledge of how to run a business, even if they have good ideas. In order to

reduce the business failure rate, SMMEs must be screened through a test involving the

answering of certain questions, because the provision of loans for start-ups is considered

to be a risky exercise, given the size of the amounts required.

10 Conclusion

The importance of SMMEs to the South African economy cannot be overstated. Their job

creating ability, role in the promotion of black economic empowerment, the empowerment

of women and entrepreneurship development are all invaluable. Acknowledging the

importance and the need for the development of the SMME sector, Khula is committed to

supporting this sector and transforming its members into effective industrial competitors.

Although the government is committed, through its national strategy, to develop SMMEs,

it does not have to be the sole provider promoting this sector. It must act collectively with

the private sector as a facilitator in the creation of a conducive environment for business

to thrive. The private sector should be proactively interacting with forces, shaping their

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


present and future operating environment, with a view to creating conditions conducive

not only to their continuation, but the improvement of the economy through SMMEs

support.

References

Abdullah, M.A. (1999) Small and Medium Enterprise in Malaysia, Policy Issues and Challenges,

Ashgate: Anthaneum Press Ltd.

Africa Centre for Investment Analysis (2002) Microfinance Best Practices: Essential Growth Pathin Africa, One day seminar, April 24, 2002.

Bruno, A.V. and Tyebjee, T.T. (1982) ‘The environment for entrepreneurship’, in: C.A. Kent,

D.L. Sexton and K.H. Vesper (Eds) The Encyclopedia for Entrepreneurship, Englewood

Cliffs, N.J: Prentice Hall, pp.288–307.

Department of Trade and Industry (1995) White Paper on The National Strategy for TheDevelopment and Promotion of Small Business in South Africa, Pretoria: Government Printer.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


The impact of culture in TV advertising behaviour:

an exploratory study in Southeast Asia

Demetris Vrontis*School of Business, University of Nicosia, Cyprus,

46 Makedonitissas Avenue, PO Box 24005, 1700 Nicosia, Cyprus



Andriani SusantiINTI College Indonesia, Jl. Arjuna Utara No 35, Duri Kepa,

Jakarta Barat, Indonesia


Ioanna PapasolomouMarketing Department, School of Business, University of Nicosia,

Cyprus, 46 Makedonitissas Avenue, PO Box 24005,

1700 Nicosia, Cyprus


Abstract: With the growth of globalisation, marketing activities are bound to

become more complex, as they are significantly influenced by environmental

factors that differ from one country to another. These factors, and especially

culture, create opportunities and threats to multinational companies’ behaviour

in relation to TV advertising in different markets. This study investigates cultural

diversity in Southeast Asia and its influence on TV advertising behaviour

adopted by multinational companies operating in the region. A deductive

approach to study was undertaken, supported by secondary and primary data,

using e-mail questionnaires sent to 150 multinational companies operating in

Southeast Asian countries. This study identified that the influence of culture on

TV advertising effectiveness is very profound. Interestingly among the cultural

elements, language and religious differences seem to greatly affect the decision

on the degree of adaptation and standardisation of advertising in Southeast

Asian countries.

Keywords: culture; international; marketing; TV advertising.

Reference to this paper should be made as follows: Vrontis, D., Susanti, A. and

Papasolomou, I. (2008) ‘The impact of culture in TV advertising behaviour: an

exploratory study in Southeast Asia’, Journal of Global Business Advancement,Vol. 1, No. 4, pp.422–432.

Biographical notes: Demetris Vrontis is a Professor of marketing and

the Dean of the School of Business at the University of Nicosia, Cyprus.

He is also a Visiting Faculty for Henley School of Management in

the UK, a Visiting Professor at Vorarlberg University in Austria, a Visiting

Research Fellow at both Manchester Metropolitan University and Leeds

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



The impact of culture in TV advertising behaviour: an exploratory study 423

Metropolitan University in the UK and an External Examiner for Cape

Peninsula Technological University in South Africa and Nottingham Trent

University in the UK. His prime research interests are international marketing,

marketing planning, branding and marketing communications, areas in which

he has been widely published in over 45 refereed journal articles, contributed

chapters and cases in books/edited books and presented papers to conferences

on a global basis. He is also the Author of eight books, mainly in the areas of

international marketing and marketing planning. He is also the Founder and

Editor of both the EuroMed Journal of Business and the World Journal ofBusiness Management.

Andriani Susanti received her BBusCom from Monash University. She obtained

her MSc in International Business from Manchester Metropolitan University

Business School. Her dissertation was published by the Global Business

and Technology Association and was presented at the GBATA International

Conference, Cape Town, South Africa. Her research interests lie in the field

of international marketing, international business, services marketing and

consumer behaviour. Currently she is Head of the Commerce Programme at

INTI College, Indonesia.

Ioanna Papasolomou is an Associate Professor in the Department of Marketing,

School of Business at the University of Nicosia, Cyprus. She has teaching and

research experience in the UK, where she worked as a Lecturer in marketing

at the Department of Management at Keele University and at Chester Business

School. She holds an MBA, an MPhil in Management, a postgraduate certificate

in teaching and learning in higher education and a PhD in management from

Keele University. She has contributed papers to several international journals,

and has also contributed chapters and case studies to several academic books, as

well as published papers in conference proceedings.

1 Southeast Asia: a cultural ‘shatterbelt’

For the most part we live our lives relatively unaware of the tremendous impact culture

has on us (Mueller, 1996). The growth of international businesses and the importance of

culture have urged many practitioners and academics to examine the effect of culture on

marketing operations. Advertising behaviour may differ from one country to another,

which will have an impact on how multinational companies determine and establish

their advertising effectiveness and tactics with regard to cultural diversity within the

Southeast Asian market.

With the existence of ASEAN and the establishment of AFTA (ASEAN Free Trade

Area), there has been an increasing growth in trade between the Southeast Asian member

countries with non member countries. This has given rise to economic growth and has

strengthened the Southeast Asian existence in the international economy. Despite the

severe economic difficulties faced by less developed countries in Southeast Asia, many of

these countries are developing into attractive consumer markets. Cities such as Bangkok,

Ho Chi Minh City, Manila and Jakarta are now among the most crowded and fastest

growing cities in the world, characterised by a high market potential.

Hofstede (1994a) defined culture as the collective programming of the mind, which

distinguishes members of one category of people from another, while Terpstra and

Sarathy (2000) define culture as an integrated pattern of behaviour and the distinctive

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

way of life of a people. Deresky (2000), indicates that the culture of a society comprises

the shared values, understanding, assumptions, and goals that are learned from earlier

generations, imposed by present members of a society, and passed on to succeeding

generations. Despite some similarities that groups Southeast Asian countries together,

the different cultures, beliefs and environmental factors that exist between them makes

every country unique.

The movement of people and mass migration during the 18th and 19th centuries in

Southeast Asia has instigated the mixture of races within the region. People maintained

their culture (inherited ideas, values, beliefs and attitudes).

This ethnic diversity is also one of the reasons for the existence of different

religions and languages in the region. Religion is known to have an influential role on

people’s beliefs and lifestyle. For example, even though Malaysia has a multicultural

population with different religions, it is a Muslim country with Islamic law affecting

its legal system. In contrast, where 88% of its population are Muslim, the Indonesian

government acknowledges four major religions including Buddhism, Christianity,

Muslim and Hinduism, representing its whole population.

Language has become an important tool in communication. In advertising language

blunders often create a failure in advertising and the introduction of a brand, goods or

services. Consisting of many cultures and subcultures, Southeast Asian countries have

different national languages. English is widely used in some of them, such as Singapore

and Malaysia, but less in countries such as Indonesia, Thailand and Cambodia. Singapore,

known as one of the Asian ‘Tigers’, has Chinese, Tamil and English as official languages,

while Malay is considered to be both the national and official language. In Malaysia,

where the population represents a blend of ethnic backgrounds, the country has its local

media such as newspapers and television programmes, tailored to satisfy the existing

cultures.

All of the differences mentioned above might be necessary to be considered for foreign

businesses operating in these markets. This diversity may influence marketing decisions,

especially when it involves communication with potential customers and consumers.

It affects how people perceive advertising messages and convey them into purchases.

As part of the promotion mix strategy, advertising is considered to be a ‘pull’ strategy

in attracting customers’ preference for specific goods, services or brands over others.

The ability to anticipate these differences is crucial as it influences the overall success of

the company (Cateora and Graham, 1999). What works in one country may or may not

work in others. An effective advertising campaign might not be effective when used in

different countries with different cultures. The question is what works and how do we

implement it effectively in different countries? Around the 1980s, Levi’s introduced a type

501 jeans through its ‘laundry’ advertisement. The advertisement shows a man going to a

laundry stripping to his boxer shorts to wash his 501 jeans. This advertisement campaign

was powerful in the USA and it increased sales for two years. However, the campaign

may not have the desired results in a country with different cultural characteristics. For

example, in Southeast Asia, the use of stripping and nudity in mass media is perceived to

be offensive and can lead to negative attitudes towards the advertisement and the brand.

Of course there are factors other than culture that need to be considered in terms

of advertising in Southeast Asia. These factors may include the political, economic

and technological environments. The economic environment is crucial in international

marketing, as it affects the way a company markets its products in targeted countries.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

424 D. Vrontis, A. Susanti and I. Papasolomou


The level of a country’s economy begets consideration of the approach to advertising

goods or services in that particular country. Moreover, the political environment of

international marketing includes any national or international political factor that can

affect its operations which is derived from the government sector (Terpstra and Sarathy,

2000). The legal issues are equally important, as the ignorance of a host country’s legal

system may have a detrimental impact on a company’s operation. Finally, technological

factors influence the type of media used and the effectiveness of the media in enabling

the organisation to achieve its targets.

2 International TV advertising

One of the main issues to be considered by multinational companies intending to enter

a new market is the marketing mix strategy which refers to designing, developing and

implementing the product, price, place and promotion elements. Within the service

sectors, another 3Ps: people, physical evidence and process factors are taken into

consideration, to compete with others in the market.

Specifically related to this research, and as one of the 4Ps, promotion, plays an

essential role in communicating the goods or services to customers, attracting their

attention, and building a preference towards them. Promotion may utilise a number of

promotional tools such as sales promotion, public relations, personal selling, direct

marketing, advertising and point-of-sale promotion. Each has its own advantages and

disadvantages, which need to be considered when businesses make their selection and

evaluation. Advertising is commonly used by businesses in marketing goods and services

across international boundaries. Wells et al. (2003) defined advertising as communication

used to persuade or influence an audience. It is also often used to influence brand

development by providing information, familiarising a brand, adding value to a brand and

inciting consumers to purchasing behaviour (Riezebos, 2003). Advertising and other

forms of marketing communication activity have become powerful and pervasive forces

all around the world (Schultz and Kitchen, 2000).

How a message is communicated through advertising, and its execution, depends on

the media used. Advertising media utilise a number of communication channels, such as

electronic (television and radio), print (newspapers and magazines), and out-of-home

advertising. With technological advances, new and improved forms of advertising emerge,

such as internet advertising. Contemporary and traditional forms of advertising are often

used in tandem, depending on the environmental or market conditions. Advertising is

also often used in conjunction with other promotional methods, such as direct marketing

and public relations.

In most Southeast Asia countries, TV advertising is perceived to be an effective means

of marketing communication. Its total use touches 25% for Indonesia, 41% for Malaysia,

61% for Philippines, 30% for Singapore and 46% for Thailand. Further, a recent study

revealed that consumers share favourable perceptions towards TV advertising, more so

today than in the late 1980s (Mueller, 1996). It is also highly valued for entertainment and

information. Advertising has the potential to reach a large audience with a message that

can appeal to the needs and characteristics of a group of people and subsequently, motivate

them to act. Persuasion is at the head of advertising, even if a message appears to be

primarily informative in nature. As it crosses national boundaries, however, it becomes

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

a complex matter, as it is influenced by different environmental factors that may

differ from one country to another.

According to Wells et al. (2003) advertising can only survive and grow if it focuses on

being effective. Advertising needs to be effective to successfully meet the objective of

the advertiser and satisfy consumers by engaging them and delivering relevant messages.

He argues that in achieving these objectives, advertising has to connect three elements:

strategy, creativity and execution.

Strategy may include the decision on target audience, media and message to be

used to reflect the local market characteristics. Throughout the process of implementing

and developing the strategy, creativity should be considered to grab the customer and

consumer’s attention, preference and wants, and appeal to their self-interest by linking

the product’s features/benefits with the target audience’s characteristics. While strategy

looks at ‘what is said’ in an advertisement, execution focuses on ‘how it is said’.

As one of the execution decisions, advertising appeals need to be carefully studied and

selected, as they form the basis of attracting consumers’ attention and interest, as well as

influencing their feelings towards the goods or services (Belch and George, 1993). This is

especially the case when it crosses national borders, where perception, values and taste

of target audience may differ.

Execution should be well planned, involving how the message will be presented.

As they are interrelated, all three elements (strategy, creativity and execution) have to be

carefully considered. Furthermore, the characteristic of effective advertising is that it

should satisfy the consumer’s objectives by engaging them and delivering a relevant

message, and they should also achieve the advertiser’s objectives (Wells et al., 2003).

Advertising strategy, creativity and execution might need to be altered to suit the

different cultures that exist within the countries. This is important, in order to increase

the effectiveness of the message, and avoid any embarrassing mistakes.

Nevertheless, good creativity alone is not enough without a planned strategy. As

businesses cross national boundaries, strategic choice is crucial to look at for the right

TV advertising behaviour.

3 Strategic choices

The increasing trend towards globalisation has given rise to business competition

internationally and locally. George and Jones (2002) stated that some of the factors that

have led to globalisation include gaining access to valuable resources found throughout

the world and obtaining inputs from foreign suppliers who possess certain skill, allowing

them to make high quality input. On the other hand, many other companies go global

in the hope of attracting more customers (both local and international). Over the years,

academics and international companies alike, have become aware that economies of

scale and enhanced competitiveness are greater if they can manage to integrate and

create marketing strategies on a global scale (Jeannet and Hennessey, 2004). The rapidly

emerging global economy creates opportunities for businesses to expand their revenues,

drive down costs, and boost their profits (Hill, 2002). This has led many multinational

firms to seek the adoption of the best marketing and promotion strategy when operating

in foreign markets. In marketing and advertising specifically, the strategic choices

lie between the adaptation (specialisation) and the standardisation (globalisation) of the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



advertising message or strategy. While the standardisation approach offers uniformity,

by promoting a global image in achieving economies of scale and scope, the adaptation

approach on the other hand, focuses on customising marketing strategy to fit the

unique characteristics and substantial differences that exist within different markets

(Vrontis, 2003).

Globalisation has also affected advertising agencies. The trend today is for

advertising agencies to join forces and merge, forming ‘mega’ agencies with local

offices or representatives in foreign markets. Global advertising agencies have been

formed in order to serve the needs of their international clients.

The terms ‘global village’ and market homogenisation are often used to define the

unifying international market. The global debate alluded to by Levitt (1983) dates as far

back as 1960. Levitt (1983) suggested that technology was driving the world toward a

converging commonality. In the same argument, relating to branding, Randal (2000)

has suggested that markets are becoming the same. In the three areas that make up the

so called ‘triad’ – the USA, Europe and South Asia – this is arguably true to an extent.

However, it is questionable whether we can assume that all the consumers in the world

are the same, and respond similarly to the same advertising strategy and execution in

culturally diverse markets.

Regional advertising has been suggested as an option whereby a single advertising

approach is taken to a few groups of countries or regions which share some similarities.

The argument put forward is that each country in the world is sovereign and unique,

but there are similarities among countries in the same region that make a regional

approach to marketing planning useful (Keegan and Schlegelmilch, 2001). It has been

observed that there is a trend for adopting a regional advertising approach in Asia, as

regional segments can be developed by identifying regions with similar characteristics

in terms of economies of scale (Tai, 1997). Some multinationals argue that a regional

approach is inappropriate, due to different consumer tastes and requirements among Asian

countries (Tai, 1997). He also added that since the culture, language, advertising rules and

regulations are significantly different in some Asian markets, such as Malaysia, India,

Korea and the Philippines, regional strategy with local adaptations are necessarily

important. The key question about the regionalisation of advertising strategy in Asian

markets is not merely whether or not to regionalise but, more importantly, to decide what

elements should be regionalised (Tai, 1997). Companies adopting regional advertising

may benefit from market knowledge by being closer to their customers. Jeannet and

Hennessey (2004) stated that regional strategies are also encouraged when customer

requirements in one region are substantially different from customer requirements in

others. They also suggested that, although an improved strategy for some firms, regional

marketing strategies may only be a stopgap on the way toward a more completely

global direction. Whilst there are studies on regional advertising in Asia, few have

identified the diversity of culture that exists within Asian countries, and Southeast Asia

in particular. Southeast Asia is a region of tremendous diversity and a great deal of

confusion still surrounds its consideration by the outsider who looks for simple

answers (Spencer et al., 1971). A single advertising campaign may work in one area,

but might not work in another, even though they seem alike.

There is also the debate about ‘adaptation’ or ‘specialisation’ as a strategic and tactical

direction. This argument suggests that markets are diverse and unique, thus requiring

marketers to adapt their advertising strategies and tactics to meet local needs and wants,

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

in order to succeed. Not only are cultural and other differences still very much in evidence,

but marketing a single product one way, everywhere, can scare off customers, alienate

employees, and blind a company to its customers’ needs (Lipman, 1988). Vrontis (2003)

noted that the most important source of constraints by far, and the most difficult

to measure, are cultural differences rooted in history, education, religion, values and

attitudes, manners and customs and aesthetics, as well as differences in taste, needs

and wants and economic and legal system. The more you know about a country, the more

you think it is unique (Keegan and Schlegelmilch, 2001). This affirms that knowledge

is power and it puts an end to ignorance (Vardar, 1992).

There is no one best, overall approach to adopt. The decision of whether or not to

use an adapted or standardised campaign depends on the recognition by managers of the

trade-offs involved (Keegan and Schlegelmilch, 2001). There are trade offs that need to

be carefully considered, since each has its own benefit and limitation and it is not

impossible to adopt both views at the same time. The term ‘glocal’ suggests that

marketers and managers should think global and act local to be able to enjoy the

benefits of cost efficiency, as well as catering for local market needs and preference, in

accordance with marketing orientation. Vrontis (2003) introduced the ‘AdaptStand’ model

where international companies both adapt and standardise their marketing activities

to a certain level. In TV advertising, this involves how a message is transferred and

communicated and how creativity manifests itself.

4 Research methodology

As already discussed, this study investigates the cultural diversity in Southeast Asia and

its on towards TV advertising behaviour, as adopted by multinational companies operating

in the region. It seeks insight and analysis from the ‘real world’ not just a technical

domain.

In contrast to the social constructionism viewpoint, which stems from the view that

‘reality’ is socially constructed and given meaning by people (Easterby-Smith et al., 2000)

the research philosophy of this study sways more towards the other side of the continuum,

which is the positivism side. The key idea to positivism is that the social world

exists externally, and that its properties should be measured through objective

methods, rather than being inferred subjectively through sensation, reflection or intuition

(Easterby-Smith et al., 2000).

The deductive approach was adopted within the study, to seek exploration of the issue

via a causal relationship. It commences with generalisations, and seeks to see if these

generalisations apply to specific instances. Also referred to as the scientific approach,

Hussey and Hussey (1997) suggested that this approach occurs when laws provide the

basis for explanation, permit the anticipation of phenomena, predict their occurrence and,

therefore, allow them to be controlled.

Both secondary and primary data were collected to achieve the aim and objectives

of this study. The literature review was based on secondary research through books,

online references and academic journals. Additionally, some country related information

was gathered from government agencies and private sources.

It is important to note that, where secondary data do not provide adequate information,

primary data collection will be required (Craig and Douglas, 1999). Primary research was

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



conducted by sending 150 electronic questionnaires to multinational companies operating

and advertising their products in Southeast Asian countries. This was done in the hope

of gaining insight into the advertising behaviour and tactics undertaken by multinational

companies that best suit the Southeast Asian market, with regard to cultural diversity.

A pilot study was deemed necessary to make sure that questions were well perceived

and understood by respondents. The pilot study was carried out among ten members of the

target population. The questionnaire was considered adequate and the research continued

as planned.

The actual research consisted of 150 online questionnaires that were sent to marketing

managers of multinational companies. These questionnaires consisted of 15 questions

which were divided into three categories including: company data, TV advertising

approach and cultural influence. Of the 150 questionnaires sent, 50 were returned.

This represents a 33% response rate. Owen and Jones (1994) suggested that, for postal

surveys (including e-mails), a response rate of approximately 30% is reasonable. Follow

up e-mails sent to non-respondents identified that non-response was due to confidentiality

issues on their advertising behaviour, while others noted that the busy schedule of the

year did not allow them to reply to each individual questionnaire received.

5 Analysis and findings

Companies participating in the survey included those in electronics, department stores and

hypermarkets. The companies were American, European and Southeast Asian, with an

international presence. The majority of respondents operate in Indonesia, Singapore and

Malaysia and a smaller number in Thailand, the Philippines, Vietnam and Cambodia.

This research revealed that companies viewed culture as important, as was evident

from the data collected. Out of 16 respondents, 77.8% strongly agreed with the statement

that culture is important in determining the advertising approach across national

boundaries. In terms of adaptation and standardisation, no company was thought to be

completely standardised or adapted. This is in line with Vrontis (2003), who suggested

that, even though international adaptation and global standardisation of marketing tactics

do take place, and can bring benefits, their extreme use is not necessarily an optimal

approach in international markets. Therefore, global standardisation is not an all or

nothing proposition but a matter of degree (Kotler, 1997).

Having said that, this research identified that adaptation was favoured most strongly

in Indonesia and Malaysia, 41 and 26%, respectively, followed by Thailand (13%),

the Philippines (10%), and Vietnam (7%). Singapore on the other hand, required the

least adaptation (3%) of all the other countries investigated.

Theory illustrated that the diversity of ethnicity, race, religion, language and other

cultural elements that exist in the Southeast Asian region, affects how goods, services and

brands are advertised on the local TV. The degree of modification depends on different

cultural elements present within different countries, including: language, religion, values,

beliefs, reference group and aesthetics. Interestingly, for Southeast Asian countries,

the results of this study demonstrated that language and religious differences affect

multinational companies’ advertising decisions in relation to the degree of adaptation or

standardisation. According to the respondents, this is mostly the case with Indonesia,

where the English language is not commonly used. Being the largest archipelago nation

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

in the world and with its multi-ethnicity, Indonesia has hundreds of local language and

dialects. On the other hand, the racial and cultural diversity in Malaysia, requires that

multinational companies need to advertise in four different languages (i.e. English, Tamil,

Mandarin and Malay) to cater to the diverse market.

In the case of religion, it was identified that religious influences on advertising are

more evident in Malaysia. Unlike the Philippines and Thailand, which are more open to

foreign cultures, Malaysia has its own advertising codes designed to safeguard advertising

and the consumers against the influence of foreign cultural values. Additionally, as

discussed earlier, Malaysia also holds Islamic principles that have a strong influence on

people’s perceptions and behaviour. In some cases, TV advertising communication

needs to be adapted and modified accordingly.

Another important problem in international TV advertising is how to communicate

the message of goods, services or brands, and how to make that communication work

effectively in a particular foreign market or markets with different or similar cultures.

Some advertisements communicate the message explicitly, while others do so implicitly;

some use words, while others use symbols and music. In this case, creativity has an

influential role in making TV advertising effective in a foreign market. This affects

multinational companies’ decisions on what advertising aspect or element does or

does not need to be modified. It involves looking at language used, plot or storyline

to communicate the message, models or actors, background and music used in the

advertisement.

These findings suggest that language appears to be the most important element

and also the aspect of advertising most often requiring modification in Southeast Asia.

This is followed by plot, storyline, models /actors, background and music.

There is an increasing need to appreciate the existence of foreign cultures,

understanding their individual characteristics, and developing advertising strategies that

reflect specific traits. Advertising that fails to tune into the nuances of national character,

and of the subgroup within the culture that is being targeted, will, by definition, be

suboptimal (Jones, 2000). While specific approaches might have been appropriated in

the past, the environment changes over time and so do preferences and trends that may

affect, or are affected by, culture. The complexity and uncertainty of the international

market environment and culture brings up the importance and necessity for continuous

environmental scanning and market research, in order to keep informed of the ever

changing dynamics of the market place. There is a paramount need to be sensitive towards

the market environment and its complexities. There is also a need to have a balance

between minimising the gains of standardisation and the competitive advantage that

can be gained through adequate adaptation to local culture and market conditions.

The latter can enable an organisation to maximise market share by appealing directly

to the individual wants of specific market segments.

6 Main conclusions and managerial implications

This study stressed to marketing practitioners and managers who wish to market and

advertise their goods and services in Southeast Asian countries, that they need to be

aware of the importance and influence of cultural diversity towards the design of an

effective TV advertising campaign.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



Instead of viewing the scene as one where markets can be generalised and

regionalised, one has to appreciate that there are still similar countries that are culturally

diverse, and hence require a careful examination prior to making a decision regarding

their advertising approach. Culture can impact on consumers’ behaviour, needs, wants

and preferences that are targeted by marketers. There is also a need to recognise that

diversity exists not only between regions but also between countries and cultures.

Different cultural elements including language, religion, values, beliefs, reference groups

and aesthetics have a different impact on the decision making process regarding the

TV advertising approach to be adopted. Through an understanding of critical cultural

differences, one may be able to be more successful in one’s marketing approach in a

particular country or region. It will mean that businesses need to pay particular attention

to identifying and designing the most suitable approach to marketing. The elements of

the marketing mix, the targeting of potential customers, the positioning of products and

the accompanying promotional messages need to be examined with care for maximum

impact to be achieved.

Where cultural differences require advertisements to be modified, marketers may

need to make various important decisions. These may include: whether to use a local

or multinational agency, whether to use global advertising, or to adapt the advertising

campaign or message to local market needs, and how to communicate the cultural

dimensions of the goods or services. The choice will depend on factors such as the

type of goods/services, availability of resources, creativity and the culture itself.

The appropriate choice of an advertising agency can also help in dealing with the

cultural diversities.

Either way, market research, which involves local knowledge, is required to generate

the right strategy and tactic for effective advertising. Careful market research can also

help practitioners to determine which advertising aspects (language, plot, storyline, actors,

illustration, slogan, background or music) will need to be modified, in the light of key

differences in the cultural elements of the foreign market.

Consequently, it should be highlighted that the level of influence and the impact of

culture upon TV advertising should be identified through thorough market research.

The findings should then be considered fully, and incorporated, to develop a sound and

creative strategy, a well thought tactical and execution plan that will optimise companies’

chances in delivering an effective outcome.

References

Belch, M.A. and George, E. (1993) Introduction to Advertising and Promotion: An IntegratedMarketing Communication Perspective, Homewood: Irwin.

Cateora, P.R. and Graham, J.L. (1999) International Marketing, 10th edn, Boston: McGraw-Hill.

Craig, C.S. and Douglas S.P. (1999) International Marketing Research, New York: John Wiley and

Sons.

Deresky, H. (2000) International Management: Managing Across Borders and Cultures, 3rd edn,

New Jersey: Prentice-Hall.

Easterby-Smith, M., Thrope. R. and Lowe, R. (2002) Management Research: An Introduction,

2nd edn, London: Sage.

George, J.M. and Jones, G.R. (2002) Organisation Behaviour, 3rd edn, New Jersey: Prentice Hall.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Hill, C.W.L. (2002) International Business: Competing in the Global Marketplace, 3rd edn,

New York: McGraw-Hill.

Hussey, J. and Hussey, R. (1997) Business Research: A Practical Guide for Undergraduate andPostgraduate Students, Basingstoke, UK: McMillan Business.

Jeannet, J. and Hennessey, H.D. (2004) Global Marketing Strategies, 6th edn, Boston: Houghton

Mifflin.

Jones, J.P. (2000) International Advertising: Realities and Myths, California: Sage.

Keegan, W.J. and Schlegelmilch, B.B. (2001) Global Marketing Management. A EuropeanPerspective, Harlow, England: Pearson Education.

Kotler, P. (1997) Marketing Management: Analysis, Planning and Control, 9th edn,

London: Prentice Hall International.

Levitt, T. (1983) ‘The globalisation of markets’, Harvard Business Review, May–June,

pp.92–102.

Lipman, J. (1988) ‘Marketers turn sour on global sales pitch Harvard guru makes’, Wall StreetJournal, May 12, Princeton, NJ.

Mueller, B. (1996) International Advertising: Communication Across Cultures, USA: Wadsworth.

Owen, F. and Jones, R. (1994) Statistics, 4th edn, London: Pitman Publishing.

Randal, G. (2000) Branding: A Practical Guide to Planning Your Strategy, 2nd edn, London:

Kogan Page.

Riezebos, H.J. (2003) Brand Management: A Theoretical and Practical Approach, Essex:

Prentice Hall.

Schultz, D.E. and Kitchen, P.J. (2000) Communicating Globally: An Integrated MarketingApproach, New York: Palgrave.

Spencer, J.E. (1971) Asia East by South: A Cultural Geography, 2nd edn, New York: John Wiley

& Sons.

Tai, S.H.C. (1997) ‘Advertising in Asia; localise or regionalise?’, International Journal ofAdvertising, Vol. 16, pp.48–61.

Terpstra, V. and Sarathy, R. (2000) International Marketing, 8th edn, Orlando, FL: Dryden Press.

Vardar, N. (1992) Global Advertising Rhyme or Reason?, London: Paul Chapman Publishing.

Vrontis, D. (2003) ‘Integrating adaptation and standardisation in international marketing: the

adaptstand modelling process’, Journal of Marketing Management, Vol. 19, Nos. 3–4,

pp.283–305.

Wells, W., Burnett, J. and Moriarty, S. (2003) Advertising Principles and Practice, 5th edn,

New Jersey, Prentice Hall.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Consumer self-construal and cross-cultural

marketing communications: theory and implications

Cheng Lu WangDepartment of Communication and Marketing, School of Business,

University of New Haven, 300 Orange Avenue, West Haven,

Connecticut 06516, USA


Abstract: This article provides an overview of the connectedness-separateness

(C-S) self-schema theory and its implications for cross-cultural marketing

communications. Because consumers tend to be more sensitive to perceiving,

remembering and judging schema-relevant information and tend to be

motivated to behave in accordance with their respective self-schema,

consumer behaviours can be understood and explained by their C-S schema.

Consumers from different cultures also differ in their attitudinal responses

to C-S advertising appeal. Consequently, marketers should identify and/or

segment their markets in terms of different aspects of self-construal to determine

promotion strategies.

Keywords: advertising appeal and promotion strategies; connectedness-separateness

self-schema; consumer behaviour, cross-cultural; marketing communications.

Reference to this paper should be made as follows: Wang, C.L. (2008)

‘Consumer self-construal and cross-cultural marketing communications: theory

and implications’, Journal of Global Business Advancement, Vol. 1, No. 4,

pp.433–444.

Biographical notes: Cheng Lu Wang is Professor of Marketing at the

Department of Communication and Marketing, College of Business, University

of New Haven. His research areas include consumer behaviour and

international marketing. He has published in a number of refereed journals,

including Journal of Consumer Psychology, Psychology and Marketing,

Journal of Consumer Affairs and Industrial Marketing Management.

1 Introduction

Researchers have long noted that one’s perception of the self and of other objects

or people are often connected, and as such, an individual may perceive other objects or

people as a part of the self or the extended self (Belk, 1988, 1992; James, 1890/1950;

Krech and Crutchfield, 1948; Rosenberg, 1979). The notion of the extended self

recognises the fact that one’s self is the sum total of all that he can call his, including his

body and psychic powers, material belongings and family members (James, 1890/1950).

The more an object (person) is self-relevant, the more it tends to connect to one’s self

(Markus and Sentis, 1982) and the more an object (person) has emotional significance

to the self, the more likely it is to become the extended self. Sometimes, the self may not

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



have a fixed and rigid boundary between me (the self) and mine (other objects or people)

and, thus, it is even difficult to draw a clear line between me and mine (Belk, 1988;

James, 1890/1950; Rosenberg, 1979).

Chu (1985) suggests that the self develops out of interactions with three broad entities

in one’s environment. They are:

� significant others with whom an individual constantly interacts in the self’s social

environment

� material and objects which an individual relies on for his or her survival in the

physical environment

� ideas, beliefs, and values which influence the way an individual perceives and

responds to his or her social and physical environment.

Based on the notion that one’s self will extend to other objects or persons, these

three entities will become different aspects of one’s extended self, when an individual

is emotionally attached to them: the social-extended self (significant others and

relationships with others), the mental-extended self (e.g. beliefs, ideas and values), and

the material-extended self (material objects or possessions).

Consumer researchers have shown an increasing interest in the role of material

possessions in explaining consumer behaviour. In particular, possessions are proposed

to play a role in maintaining and supporting the consumer’s self-concept and sense of

identity and thus a wide range of consumer behaviours can be explained by the concept

of the material extended self (Ball and Tasaki, 1992; Belk, 1988, 1992; Hirschman and

Labarbera, 1990; Myers, 1985; Schultz et al., 1989). For instance, researchers suggest

that higher materialistic individuals tend to acquire and protect material possessions

in order to extend the self (Belk, 1985; Richins and Rudmin, 1994; Rudmin, 1988).

Therefore, understanding the notion of possessions as the extended self and consumers’

emotional attachment to possessions should help in predicting purchasing behaviours,

as well as postpurchase behaviours, such as the disposal, repurchase and replacement of

a product (Ball and Tasaki, 1992).

The research stream on the process of self-extension, through acquiring, maintaining

and protecting material possessions, largely reflects observations from societies that hold

an individualistic concept of self (Belk, 1988; Wallendorf and Arnould, 1988). In societies

that hold a collectivistic concept of self, the extended self may express more interpersonal

relations than material possessions (Chu, 1985; Hsu, 1985; Triandis et al., 1988; Wang et

al., 2000). According to Triandis et al. (1988), individualistic values, rooted in Western

cultures, tend to emphasise elements of identity that reflect possessions – what do I own,

what experiences have I had and what are my accomplishments, etc. In non-Western

cultures, which are more likely to hold a collective concept of self, one’s relationships

with significant others tend to be highly emphasised. As such, in collective cultures, one’s

identity is likely defined more in terms of relationships with reference groups. The present

paper provides an overview of the connectedness-separateness self-schema theory and its

implication to cross-cultural consumer research. The focus is on the social extended self,

or connected self-schema, which impacts consumer behaviours differently across cultures

(Markus and Oysermen, 1988; Wang et al., 2000).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

434 C.L. Wang

2 Individual differences in the social extended-self

Chu (1985) suggests that one’s relationship with significant others is of crucial importance

to the formation of an individual’s self, because it is largely through interaction with

significant others that an individual comes to perceive and internalise the ideological

content and learns to manage and manipulate his material environment. Significant others

will become part of one’s self when one emotionally attaches to the relationship and when

one develops a relational schema that significant others internalise into one’s self-schema

(Baldwin, 1992). The nature of one’s identifications with significant others, to some

extent, determines the nature of the community we call the self (Cavell, 1985). In the

psychology literature, relationships with others have been recognised as an important

aspect of human development (Jordan and Surrey, 1986; Josselson, 1988). The term

‘connected self’ has been used to indicate the fact that significant others and social

relationships may be integrated into one’s definition of the self (Markus and Oysermen,

1988; Wang and Mowen, 1997).

Different ways of self-construal exist in people’s perceptions of other persons and/or

relationships with other persons. As such, there are significant individual differences in

the social extended self. While some people tend to define themselves by considering

the WE identity (Nobles, 1976) – a connectedness self-schema, other people tend to

define themselves by emphasising the individuality – a separateness self-schema. For an

individual with a connectedness self-schema, the self is perceived as the continuation of

others (i.e. I am a part of others) or others as an extension of the self. When connected

people talk about themselves, they frequently think and talk about those people who are

attached to them or who are ‘with’ them internally (Josselson, 1988). The self-identity

is embedded in the relationship networks to which they belong. Therefore, they tend

to be equally sensitive to stimuli relevant to others, as to purely self-relevant stimuli

(Markus and Oysermen, 1988). In contrast, for an individual with a separateness

self-schema, the self is perceived as distinct from others (i.e. I am an independent

identity). He or she will make a clear boundary between ‘me’ and others, and will

focus on the self-other differences (Wang and Mowen, 1997). According to Markus and

Kitayama (1991), the independent (separated) versus interdependent (connected) construal

of self is among the most general schemata of the individual’s self-system.

Wang and Mowen’s (1997) empirical study defined and delineated the domain

and dimensions of the separateness-connectedness construct, which was described as

a personality variable that can differentiate individuals along a continuum. They also

developed a S-C Scale, to measure these individual differences. These differences can

be further examined in terms of gender. For example, research on gender has found that

women reveal a greater capacity for empathy, sensitivity and responsiveness to others

(Chodorow, 1987). In contrast to men, women are more likely to be ‘connected knowers,’

who begin with an interest in other people and learn through empathy with others

(Belenky et al., 1986). For women, the loss of an important relationship may be

experienced as a loss of the sense of self. This occurs because women’s sense of self

may be organised around affiliations and relationships (Miller, 1986). Further, studies

from gender differences in emotional attachment to possessions, have suggested that

men tend to emphasise material possessions more than women, whereas women tend

to emphasise social relationships more than men (Dittmar, 1991; Kamptner, 1991).

In other words, while men tend to see possessions as important mainly because of

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Consumer self-construal and cross-cultural marketing communications 435

their instrumental, pragmatic and self-referent symbols of achievement, women tend

to regard possessions as important because they symbolise interpersonal integration,

relatedness and emotional attachment. In general, research suggests that women are more

likely than men to perceive the self as connected with significant others and to incorporate

those significant others in self-definition (Lang-Takac and Osterweil, 1992; Markus and

Oysermen, 1988; Wang and Mowen 1997; Wang et al., 2000).

3 Cross-cultural differences in self-construal

In a cross-cultural study, psychologist Ellsworth presented a chart showing a single fish

swimming away from a group to American and Chinese subjects. Americans tended to

view this chart positively – as a sign that the single fish was striking out on its own.

But the most common Chinese interpretation was that the single fish was being expelled

from the group. The more dramatic differences emerged with a chart that showed a group

of fish converging on a single fish. American participants interpreted the converging

fish as a threat to the individual while Chinese participants saw the situation as a

happy one, with a friendly group coming to join an isolated fish. In general, Chinese

respondents were much better at answering questions on how the group felt about

a situation. The Americans often said that they could not answer because a group does

not feel anything (Kleiner, 1996). This study demonstrates how people from different

cultures tend to have different perceptions and judgements about the same social

situations regarding the self and others. In particular, Chinese people are geared toward

considering the feelings of the group (others), while Americans tend to focus on the

individual (the self). These differences in the perceptions and interpretations of self-other

relations reflect cross-cultural differences in self-construals, conceding that the self

is the frame of reference in terms of which all other perceptions gain their meaning

(Combs and Snygg, 1959).

Indeed, psychologists and anthropologists have observed that people in different

cultures have different self-concepts in terms of the relation between self and other

people (Chu, 1985; Geertz, 1984; Johnson, 1985; Markus and Kitayama, 1991;

Triandis et al., 1988). For instance, Geertz (1984) argues that the Western conception

of the person as a bounded, unique identity which distinguishes the self from others

and natural background, is a rather peculiar idea within the context of world cultures.

Non-Western cultures have distinct conceptions of the individual that insist on the

fundamental relatedness of individuals to each other.

A Western self may be characterised by self-contained individualism, which

exhibits a firm self-other boundary, independence, autonomy, detached or separated,

self-sufficient, and personal control (DeVos et al., 1985; Geerts, 1984; Markus and

Kitayama, 1991). A non-Western self, however, is extended to include a wide variety

of significant others, such as the family and the community (Chu, 1985; Tu, 1985),

and therefore, the non-Western self tends to have richly elaborated information about

others or about the self in relation. More interpersonal information is processed that guides

one’s attention and perception. In Confucian cultures, for example, to involve others in an

individual’s self-cultivation is required for his or her own self-development (Tu, 1985).

Likewise, Nobles (1976) used the term ‘extended-self’ to describe the African conception

of the self, which is composed of WE instead of I. Nobles (1976) distinguished the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

436 C.L. Wang

self-concept of Euro-Americans from that of Africans. The Euro-Americans’ self is

believed to develop through the process of establishing one’s uniqueness and separateness

by setting one’s self off and away from others. The African view of self, however, takes

into account the notion of interdependence and the ‘oneness of being’. The WE, in

accordance with the extended definition of self, becomes the most fundamental and

critical identity. In a more comprehensive discussion of cross-cultural differences in

self-construal, Markus and Kitayama (1991) further contrasted Western and non-Western

self-schema. According to Markus and Kitayama, the independent (separated) view of self

is most clearly exemplified in some sizable segments of American culture, as well as

in many western European cultures. The interdependent (connected) view of self is

exemplified in Asian cultures, as well as African, Latin-American, and many southern

European cultures.

The distinction between the self-as-separate and the self-as-connected roughly

matches the distinction between individualist and collectivist selves and between Western

and non-Western selves (Markus and Oysermen, 1988; Wang et al., 2000). As such,

different ways of self-construal may direct consumers in different cultures to seek

different aspects of the extended self. Belk’s (1992) conceptualisation of the extended self

posits that material possessions are likely to be in the centric layers surrounding the core

self and that collective possessions such as family, communities and societies are in the

out layer to material possessions. This is likely to be true in the Western individualistic

culture but may not be applicable to non-Western cultures (Wallendorf and Arnould,

1988). In contrast, the collective self has been proposed to be structured in concentric

circles in non-Western collective cultures (Hsu, 1985). People from many Asian

cultures, for example, tend to insist on the fundamental relatedness of individuals

to each other. Hsu (1985) has observed that the Chinese personality consists of a

much broader interpersonal layer than that of an American. This social orientation of

the Chinese personality would presumably have some impact on the relative frequency

with which other persons are used to describe the self.

4 Separateness-connectedness self-schema and consumer behaviour

Self-construal plays a major role in regulating various psychological processes and

in mediating consumer behaviour. The self-schema theory (Fiske and Taylor, 1984;

Markus and Sentis, 1982) posits that an individual’s self-schema sensitises one’s

information processing and motivates schema-consistent behaviours. Understanding

the role of the separateness-connectedness self-schema in consumer information

processing and motivation will help marketers to better predict and explain consumer

behaviours. Moreover, revealing the individual differences in terms of gender and

culture may have important managerial implications to market segmentation,

differentiation and positioning.

4.1 Consumer information processing People tend to seek and recall information that confirms or affirms their self-concept

(Steele 1988; Swann and Read 1981). Self related information becomes more salient

and, therefore, the referent in one’s attention, perception, memory, judgement, emotion,

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


motivation, attitude formation and behaviour intention (Markus and Sentis 1982).

Evidence showed that individualists tend to perceive the self as a distinct entity from

the in-group, and collectivists tend to perceive the self as an extension of the in-group

(Triandis et al., 1988). Likewise, a person with a connectedness self-schema will be

extremely sensitive to stimuli related to significant others. Further, he or she will process

information centring on the relationships with other people. On the other hand, an

individual with a separateness-self schema will be sensitive to information relating to his

or her inner attributes that define the independent identity and will process information

regarding other people only in a situation that relates to other people. Self-schema also

relate to the manner of information processing. For example, Woike’s (1994) study found

that individuals who had more concern about separateness tend to use more differentiation

processing and individuals who had more concern about connectedness tend to use more

integration processes.

Given that self-schema plays an important role in consumer information processing,

Shavitt and Brook (1984) argue that traditional measurements of advertising effectiveness,

based on recall and persuasion, have neglected the role of the self in message processing.

They suggest that the self should be viewed as a key component in the analysis of

consumer persuasion, because a message will be most effective when it evokes a

consumer’s self thought or when a consumer can think about himself or herself as

he or she processes the message. Desarbo and Harshman (1985) also suggest that

advertising which appeals to the self-concept of consumers reduces irritation, and is

also likely to be more effective.

4.2 Consumer motivationThe search for self-worth is one of the strongest motivating forces in human behaviour.

Individual differences in preferred strategies for establishing self-worth play a major role

in producing individual social behaviour (Greenwald, 1988). Motives that are linked to

the self, such as self-enhancement, self-consistency, self-verification, self-affirmation, and

self-actualisation, may assume a very different form, depending on the nature of the self

that is being enhanced, verified, affirmed and actualised (Markus and Kitayama, 1991).

According to Maslow (1956), since self-actualising people are propelled by growth

motivation rather than deficiency motivation, they are dependent for their own

development and continued growth upon their own potentialities and latent resources,

rather than having other people available. Growth-motivated people ‘may actually be

hampered by others’ since ‘they have become strong enough to be independent of the

good opinion of other people, or even of their affection’ (p.177). Maslow’s notion of

self-actualising people is rooted in Western individualist cultures, in which the

conception of the self assumes that all psychological matters pertain to the single

person (Kirkpatrick and White, 1985). In non-Western cultures, however, one’s

personal goals may be subordinate to one’s group or collective goals. Feeling good about

one’s self tends to derive from motivations of belonging to, and fulfilling the tasks

associated with, relevant others or reference groups (Markus and Kitayama, 1991).

Researchers have observed that the Chinese need hierarchy may be quite different

from what was proposed by Maslow, in that social needs, rather than individual

aggrandisement, are at both the top and the bottom of the hierarchy (Nevis, 1983;

Tse et al., 1989). A distinctive feature of Confucian ritualisation is an ever-deepening

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

438 C.L. Wang

and broadening awareness of the presence of the other in one’s self-actualisation

(Tu, 1985).

Differences in self-extension motivations may provide some explanations of

differences in certain consumer behaviours, such as organ donations, symbolic

consumption and gift giving. For an individual with a separated self-schema, his or

her self-extension may focus on personal growth and self-aggrandisement, rather than

to the WE identity, or the collective self. Barnett et al.’s (1987) study of American

subjects’ response to promotion messages found that subjects responded more favourably

to a message that emphasised benefits to the self, than to a message that emphasised

benefits to the other. The self-oriented message was more persuasive to subjects,

because it emphasised an enhancement, rather than a diminution, of the self.

For individuals with a connected self-schema, however, their self-extension may be

through other people using ‘vicarious experience’ (Belk, 1988). Consumers may seek to

ensure that their selves will extend beyond their deaths through their children, heirs

and dependents (Lifton, 1973; Veblon, 1899). As such, gift giving and the donation

of possessions may be motivated by this vicarious experience of consumption, in which

the giver wishes to see the gifts or organs transferred to the receiver (Belk, 1988).

The awareness of the connection of the self-other boundary or collective aspects of the

self motivates a ‘connected person’ to donate body organs to significant others, given

that other persons and groups are perceived as a part of one’s extended self.

Since consumers with a connectedness self-schema tend to be more sensitive to social

influences, symbolical consumption can also be motivated by the need to enhance one’s

self, by identifying the celebrities or reference groups with the fashion they adopt, the

product they use, the club they join and the way they behave. As such, for consumers

with a connected self-schema, adopting or purchasing a product may be motivated

to express the ‘we identity’ of the reference group or the aspiration group. Marketing

communications employing connectedness appeals will, thus, be more effective for

consumers with a connectedness self- schema.

4.3 Implications of cross-cultural marketing communicationsWhile consumer research on the extended self has focused predominantly on material

possessions or the material extended self, the present paper has discussed the role of the

social extended self or the connected self-schema in consumer behaviour. According to

the self-extension theory, other people in one’s social environment will become one’s

extended self when these persons are important in one’s self-definition (Belk, 1988).

While a person with a separateness self-schema tends to emphasise individuality, a person

with a connectedness self-schema tends to appreciate the ‘we identity’. Individual

differences in separateness- connectedness self-definition or self-schemata are proposed

to influence consumer information processing, motivation and behavioural response.

Because consumers tend to be more sensitive to perceiving, remembering and judging

schema relevant information, and tend to be motivated to behave in accordance with

their respective self-schema, consumer behaviours can be understood and explained by

their social extended self.

Several theories have suggested the advantage of self-relevant information in

perception and memory, because of the emotional importance to people (Ferguson et al.,

1983; Fiske and Taylor, 1984; Greenwald, 1988; Markus, 1977; Markus and Sentis, 1982).

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


For those with a separated self-schema, a self-relevant stimulus would include information

relevant to one’s self-defining attributes. For those with a connected self-schema,

however, a stimulus would include information about significant others with whom the

person has a relationship or information about the self in relation to other people.

Such a distinction between a separated and a connected self-schema would

have important implications in understanding and explaining consumer attitudinal and

behavioural responses to marketing communications (Wang, 2000; Wang et al., 2000).

Research suggests that the effectiveness of message appeals in marketing communication

is often mediated and/or moderated by individual differences (Wang and Mowen, 1997).

From the consumer research perspective, the self-image/product-image congruence

theory (Sirgy, 1982) may explain the mechanism through which the C-S construct acts as

a moderating variable in consumers’ responses to marketing communications. Because

an individual tends to seek and recall information that confirms or affirms his or her

self-concept, a communication message that is consistent with the self-schema of the

target market will be more effective. One would expect that consumers would prefer

an advertising theme or a brand if the advertising theme and/or product/brand cue is

congruent with his or her self schema. Consistent with these ideas, Hong and Zinkhan

(1995) found that an ‘introvert appeal’ targeted towards consumers with a self-concept

consistent with introversion resulted in more favourable brand attitudes, than when an

‘extrovert appeal’ was used. The effect of advertising appeals was reversed, given

consumers with a self-concept consistent with extroversion. Thus, using an advertising

appeal that presents the brand in a way that is consistent with consumers’ self-concepts

appears to result in higher brand attitudes.

Wang and Mowen’s (1997) study provided evidence of the utility of the

connectedness-separateness construct as a moderating variable and/or a message

appeal variable in advertising effectiveness. They suggest that a connectedness theme

or a separateness theme may be developed for different consumer market segments.

The ‘separated advertising appeal’ refers to advertising themes that emphasise one’s

uniqueness, individuality, and self-other boundary, that focus on one’s inner attributes

and feelings, and that highlight one’s autonomy, independence and self-reliance. The

‘connected advertising appeal’, in contrast, refers to advertising themes that emphasise

one’s natural ties with significant others in particular and with society as a whole,

that value one’s interpersonal relationships, one’s role expectation and social aspect of

the self, and that highlight one’s interdependence and mutual reliance on others. Wang and

Mowen’s (1997) experimental study found that advertising employing ‘separated themes’

held greater appeal for consumers with a separated self-schema and advertising employing

‘connected themes’ held greater appeal for consumers with a connected self-schema.

Consumers from different cultures also differed in their attitudinal responses

to ‘connectedness’ or ‘separateness’ advertising appeals (Wang et al., 2000). These

differences can be explained by the mediating effect of the connectedness-separateness

self-schema. A number of observations from cross-cultural advertising research have

indicated that quite different advertising themes and execution styles are emphasised

in Western cultures and non-Western cultures. For instance, Han and Shavitt (1994)

demonstrated that advertising appeals emphasising collectivistic appeals are more

effective in collective cultures, and advertising appeals emphasising individualistic

appeals are more effective in individualistic culture. The separateness-connectedness

self-schema theory has been applied in cross-cultural advertising research and supported

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

440 C.L. Wang

by empirical evidence (Wang et al., 2000; Wang and Chan, 2001). For instance,

Wang et al. (2000) developed a three-dimensional scale measuring the C-S construct

and empirically tested hypotheses generated from the C-S theory, in a cross-cultural

setting. Their experimental results demonstrated that, while American subjects respond

more favourably to advertising with separated appeals, Chinese subjects respond more

favourably to advertising with connected appeals. Given that advertising often reflects

cultural values, it is expected that advertisements in China should show more

connectedness themes and advertisements in the USA should show more separateness

themes. Such conceptualisations have been corroborated by Wang and Chan’s (2001)

content analysis of print advertisements in the USA and China (PRC). Their results show

that US advertisements reflected a significantly higher proportion of separated themes

than those of Chinese advertisements. On the other hand, PRC advertisements reflected

a significantly higher proportion of connected themes than those of US advertisements.

Understanding cross-cultural differences in the construal of the self as

separated/independent, or as connected/interdependent, may provide guidelines for

developing advertising themes for consumers of different cultures (Wang, 2000).

Although both ‘separated theme’ and ‘connected theme’ are employed in Western

and non-Western cultures, it is expected that Western consumers tend to respond

more favourably to separated appeals and non-Western consumers tend to respond more

favourably to connected appeals. Consequently, marketers should identify and/or segment

their markets in terms of different aspects of self-concept, to determine promotion

strategies. Separated versus connected advertising themes can be developed to appeal

to different consumer segments across cultures.

References

Baldwin, M.W. (1992) ‘Relational schemas and the processing of social information’,

Psychological Bulletin, Vol. 112, pp.461–484.

Ball, A.D. and Tasaki, L.H. (1992) ‘The role and measurement of attachment in consumer

behaviour’, Journal of Consumer Psychology, Vol. 1, pp.155–172.

Barnett, M.A., Klassen, M., McMinimy, V. and Schwarz, L. (1987) ‘The role of self- and

other-oriented motivation in the organ donation decision’, Advances in Consumer Research,

Vol. 14, pp.335–337.

Belenky, M.F., Clinchy, B.M., Goldberger, N.R. and Tarule, J.M. (1986) Women’s Way of Knowing:The Development of Self, Voice, and Mind, New York: Basic Books.

Belk, R.W. (1985) ‘Materialism: trait aspects of living in the material world’, Journal of ConsumerResearch, Vol. 12, No. 3, pp.265–280.

Belk, R.W. (1988) ‘Possessions and the extended self’, Journal of Consumer Research, Vol. 15,

No. 2, pp.139–167.

Belk, R.W. (1992) ‘Attachment to possessions’, Human Behaviour and Environment, Vol. 12,

pp.37–62.

Cavell, M. (1985) ‘The self and some related issues: a philosophical perspective, Part 1’,

Psychoanalysis and Contemporary Thought, Vol. 8, pp.3–27.

Chodorow, N.J. (1978) The Reproduction of Mothering, University of California Press.

Chu, G.C. (1985) ‘The changing concept of self in contemporary China’, in: A.J. Marsellar,

G. DeVos and F.L.K. Hsu (Eds) Culture and Self: Asian and Western Perspectives,

New York, NY: Tavistock Publications, pp.252–277.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Combs, A.W. and Snygg, D. (1959) Individual Behavior, New York: Harper, 2nd edn.

Desarbo, W.S. and Harshman, R.A. (1985) ‘Celebrity-brand congruence analysis’, i: J.H. Leigh

and C.R. Martin, Jr. (Eds) Current Issues and Research in Advertising, Ann Arbor, MI:

The University of Michigan.

Devos, G., Marsella, A.J. and Hsu, F.L.K. (1985) ‘Introduction: approaches to culture and self’,

in: A.J. Marsella, G. Devos and F.L.K. Hsu (Eds) Culture and Self: Asian and WesternPerspectives, New York: Tavistock Publications, pp.1–23.

Dittmar, H. (1991) ‘Meanings of material possessions as reflections of identity: gender and

social-material position in society’, Journal of Social Behaviour and Personality, Vol. 6,

No. 6, pp.165–186.

Ferguson, T.J., Rule, B.G. and Carlson, D. (1983) ‘Memory for personally relevant information’,


Fiske, S.T. and Taylor, S.E. (1984) Social Cognition, Reading, MA: Addison-Wesley.

Geertz, C. (1984) ‘From the natives’ point of view: on the nature of anthropological understanding’,

in: R.A. Shweder and R.A. Levine (Eds) Culture Theory, Cambridge: Cambridge University

Press, pp.123–136.

Greenwald, A.G. (1988) ‘A social-cognitive account of the self’s development’, in: E.K. Lapsley

and F.C. Power (Eds) Self, Ego And Identify: Integrative Approaches, New York:

Springer-Verlag, pp.30–42.

Han, S.P. and Shavitt, S. (1994) ‘Persuasion and culture: advertising appeals in individualistic

and collectivistic societies’, Journal of Experimental Social Psychology, Vol. 30, No. 4,

pp.326–350.

Hirschman, E.C. and Labarbera, P.A. (1990) ‘Dimensions of procession importance’,

Psychology and Marketing, Vol. 7, No. 3, pp.215–233.

Hong, J.W. and Zinkhan, G.M. (1995) ‘Self-concept and advertising effectiveness: the influence

of congruency, conspicuousness, and response mode, Psychology and Marketing, Vol. 12

(January), pp.53–77.

Hsu, F.J.K. (1985) ‘The self in cross-cultural perspective’, in: A.J. Marsella, G. Devos and

F.L.K. Hsu (Eds) Culture and Self: Asian and Western perspectives, New York:

Tavistock Publications, pp.24–55.

James, W. (1890/1950) Principles of Psychology, New York: Dover.

Johnson, F. (1985) ‘The Western concept of self’, in: A.J. Marsella, G. Devos and F.L.K. Hsu (Eds)

Culture and Self: Asian and Western Perspectives, New York: Tavistock Publications,

pp.91–138.

Jordan, J.V. and Surrey, J.L. (1986) ‘The self-in-relation: empathy and the mother-daughter

relationship’, in: T. Bernay and D.W. Canter (Eds) The Psychology of Today’s Women:New Psychoanalytic Visions, Hillsdale, NJ: Lawrence Erlbaum Association.

Josselson, R. (1988) ‘The embedded self: I and thou revised’, in: D.K. Lapsley and F.C. Power (Eds)

Self, Ego and Identity, New York: Springer-Verlag.

Kamptner, N.L. (1991) ‘Personal possessions and their meanings: a life-span perspective’,

Journal of Social Behaviour and Personality, Vol. 6, pp.209–228.

Kirkpatrick, J. and White, G.M. (1985) ‘Exploring ethnopsychologies’, in: G.M. White and

J. Kirkpatrick (Eds) Person, Self, and Experience: Exploring Pacific Ethnopsychologies,

Berkeley, CA: University of California Press, pp.3–23.

Kleiner, K. (1996) ‘West bows to psychology’s cultural revolution,’, New Scientist, Vol. 149,

No. 24, p.2018.

Krech, D. and Crutchfield, R.S. (1948) Theory And Problems of Social Psychology, New York:

McGraw-Hill.

Lang-Takac, E. and Osterweil, Z. (1992) ‘Separateness and connectedness: differences between

the genders’, Sex Roles, Vol. 21, pp.277–289.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

442 C.L. Wang

Lifton, R.J. (1973) ‘The sense of immorality: on death and the continuity of life’, AmericanJournal of Psychoanalysts, Vol. 33, pp.3–15.

Markus, H.R. and Kitayama, S. (1991) ‘Culture and the self: implications for cognition, emotion,

and motivation’, Psychological Review, Vol. 98, pp.224–253.

Markus, H.R. and Oysermen, D. (1988) ‘Gender and thought: the role of the self-concept’,

in: M. Crawford and M. Hamilton (Eds) Gender and Thought, New York: Springer-Verlag,

pp.100–127.

Markus, H.R. and Sentis, K.P. (1982) ‘The self in social information processing’, in: J. Suls (Ed.)

Psychological Perspectives on the Self, Hillsdale, NJ: Erlbaum, Vol. 1, pp.41–70.

Maslow, A.H. (1956) ‘Self-actualizing people: a study of psychological health’, in: C.E. Mousetakas

(Ed.) The Self: Exploration In Personal Growth, New York: Harper and Brothers Publishers.

Miller, J.B. (1986) Toward a New Psychology of Women, 2nd edn, Boston: Beacon Press.

Myers, E. (1985) ‘A phenomenological analysis of the importance of special possessions: an

exploratory study’, in: E. Hirschman and M. Holbrook (Eds) Advances in Consumer Research,

Provo, UT: Association for Consumer Research, Vol. 12, pp.560–565.

Nevis, E.C. (1983) ‘Cultural assumptions and productivity: the United States and China’,

Sloan Management Review, Vol. 24, pp.17–29.

Nobles, W.W. (1976) ‘Extended self: rethinking the so-called negro self-concept’, The Journalof Black Psychology, Vol. 2, pp.5–24.

Richins, M.L. and Rudmin, F.W. (1994) ‘Materialism and economic psychology’, Journal ofEconomic Psychology, Vol. 15, pp.217–231.

Rosenberg, M. (1979) Conceiving the Self, New York: Basic Book, Inc.

Rudmin, F.W. (1988) ‘Dominance, social control, and ownership: a history and a cross-cultural

study of motivations for private property’, Behaviour Science Research, Vol. 27, pp.130–160.

Schultz, S.E., Kleine, R.E. and Kernan, J.B. (1989) ‘These are a few of my favourite things:

toward an explication of attachment as a consumer behaviour construct’, in: T.K. Srull (Ed.)

Advances in Consumer Research, Provo, UT: Association for Consumer Research, Vol. 16,

pp.359–366.

Shavitt, S. and Brock, T.C. (1984) ‘Self-relevant responses in commercial persuasion’, in: K. Sentis

and J. Olson (Eds) Advertising and Consumer Psychology, New York: Praeger.

Sirgy, M.J. (1982) ‘Self-concept in consumer behaviour research: a review’, Journal of ConsumerResearch, Vol. 9, pp.287–300.

Steele, C.M. (1988) ‘The psychology of self-affirmation: sustaining the integrity of the self’,

i: L. Berkowitz (Ed.) Advances in Experimental Social Psychology, Vol. 21, San Diego, CA:

Academic Press, pp.261–302.

Swann, W.B., Jr. and Read, S.J. (1981) ‘Acquiring self-knowledge: the search for feedback that fits’,


Triandis, C.H., Bontempo, R., Villareal, M.J., Asai, M. and Lucca, N. (1988) ‘Individualism and

collectivism: cross-cultural perspectives on self-ingroup relationships’, Journal of Personalityand Social Psychology, Vol. 34, pp.323–338.

Tse, D.K., Belk, R.W. and Zhou, N. (1989) ‘Becoming a consumer society: a longitudinal and

cross-cultural content analysis of print ads from Hong Kong, the People’s Republic of China,

and Taiwan’, Journal of Consumer Research, Vol. 15, pp.457–473.

Tu, W.M. (1985) ‘Selfhood and otherness in Confucian thought’, in: A.J. Marsella, G. Devos and

F.L.K. Hsu (Eds) Culture and Self: Asian and Western Perspectives, New York: Tavistock

Publications, pp.231–251.

Veblen, T. (1899) The Theory of Leisure Class, New York: Macmillan.

Wallendorf, M. and Arnould, E. (1988) ‘My favorite things: a cross-cultural inquiry into

object attachment, possessiveness and social linkage’, Journal of Consumer Research, Vol. 14

(March), pp.531–547.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Wang, C.L. (2000) ‘Right appeals for the ‘right self’: connectedness-separateness self-schema

and cross-cultural persuasion’, Journal of Marketing Communications, Vol. 6, No. 4,

pp.1–13.

Wang, C.L. and Chan, A. (2001) ‘Content analysis of connectedness vs. separateness themes

used in US and PRC print advertisements’, International Marketing Review , Vol. 8, No. 2,

pp.145–159.

Wang, C.L. and Mowen, J.C. (1997) ‘Separateness-connectedness self-schema: scale development

and application to advertising message construction’, Psychology and Marketing , Vol. 14,

No. 2, pp.185–207.

Wang, C.L., Mowen, J.C., Bristol, T. and Chakraborty, G. (2000) ‘Alternative modes of

self-construal: dimensions of connectedness-separateness and advertising appeals to the

cultural and gender-specific self’, Journal of Consumer Psychology, Vol. 9, No. 2,

pp.107–115.

Woike, B.A. (1994) ‘The use of differentiation and integration processes: empirical studies of

‘separate’ and ‘connected’ ways of thinking’, Journal of Personality and Social Psychology,

Vol. 67, No. 1, pp.142–150.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

444 C.L. Wang

Gathering perceptions of Soweto small business

owners on advertising in black townships in

South Africa

Louise van Scheers*School of Business Management, University of South Africa,




Simon RadipereSchool of Business Management, University of South Africa,



Abstract: As more money is invested in the redevelopment of Soweto, a black

urban residential area in South Africa there has been a growth in the number

of small businesses starting up in the area. This increase in small businesses

has seen an increase in competition amongst businesses. Advertising has

been seen as a means to aid these small businesses to differentiate them from

the competition. Results from this investigation revealed new ways in which

small businesses operating in changing the Soweto business environment can

advertise and which advertising mediums are most effective.

Keywords: advertising mediums; door to door; internet; newspapers; pamphlets;

radio and poster; signboards; small business owners; Soweto; wall painting.

Reference to this paper should be made as follows: van Scheers, L. and

Radipere, S. (2008) ‘Gathering perceptions of Soweto small business owners

on advertising in black townships in South Africa’, Journal of Global BusinessAdvancement, Vol. 1, No. 4, pp.445–458.

Biographical notes: Louise van Scheers is a Senior Lecturer at the School of

Business Management, University of South Africa. She is actively involved

in HIV and AIDS projects as part of community service. Her research interests

include marketing, project management, small businesses of the informal and

formal sector and distance education.

Simon Radipere is a Lecturer at the School of Business Management, University

of South Africa. He earned his Master of Commerce from Vista University and

is currently busy with his Doctor of Commerce at Unisa. His current research

focuses on small business development and entrepreneurship.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8



1 Introduction

Advertising for small businesses in Soweto, a black urban residential area in South

Africa, is becoming increasingly important. As infrastructure improves and more funds

are invested in Soweto, an increasing number of small businesses will emerge. If these

businesses wish to survive, it is imperative that they have an effective advertising

campaign in place and the correct means to implement it. It is also important

that the businesses utilise effective, low-cost advertising mediums to market their

products/services successfully. With the development of Soweto underway, the

township’s large population and the increase in tourism to the area, great potential

exists for small businesses to emerge, survive and grow. It is for this reason that small

businesses are emerging, and will continue to emerge in Soweto as it becomes a

commercial hub. This will result in greater competition amongst businesses and a flexible

and destabilised business environment. Knowledge of advertising mediums, and the

means to successfully implement such mediums, is imperative for maintaining a

competitive advantage and achieving overall success in the business environment.

Advertising helps to build a business identity and also helps people identify and

remember the value and function of a product or service (Du Plessis et al., 2003, p.34;

Maravilla, 2000). Small businesses will have to consider cost effective advertising

mediums, due to the size of these businesses and lack of finances when starting a

business.

Due to the increasing number of small businesses in Soweto, increased competition

occurs, resulting in a greater need for differentiation in order to survive. Advertising

provides the means to accomplish this. Therefore it is important for these businesses

to be able to identify, select and implement effective advertising programmes.

2 Aim and objectives of the research

This research report aims to determine the advertising mediums that small businesses are

using in Soweto to promote sustainable development and to achieve the aims of the study.

The objectives of this study were:

� to gather perceptions of small business owners concerning advertising mediums

which are currently used

� to identify key success factors that make advertising in Soweto effective.

3 Literature review

Advertising is any form of mass communication about a product or service which is paid

for by an organisation, or an identified sponsor (Du Plessis et al., 2003, p.31). Advertising

helps sell products and helps companies build a product brand. Advertising also builds

business identity, as Maravilla (2000) observed. Du Plessis et al. (2003, p.56) define

media as a communications channel or a group of channels used to convey information,

news, entertainment and an advertising message to an audience. Two major advertising

media types exist: broadcast media and print media. Television and radio are broadcast

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


media, while newspapers, magazines, billboards, direct mail and leaflets are examples of

print media (Du Plessis et al., 2003, p.41). A small company in Soweto would probably

need to use different advertising from a larger company in more developed areas, such as

advertising in taxis and various outdoor advertising mediums.

4 Soweto

Soweto was established in 1904 as a township to house mainly black labourers and

has grown into the most populated black urban residential area in South Africa

(Anon, 2003). Soweto stretches across a vast area, 20 kilometres from the Johannesburg

CBD (Davie, 2001). The township’s population is estimated to be between one and

three million people (Davie, 2001; Smith, 2004, p.43). Despite its continuing problems

of over-crowding, high unemployment and lack of infrastructure, Soweto is being

reinvented as a feasible centre of commercial and cultural activity (Anon, 2003;

Thale, 2003). The government has made attempts to upgrade the overall standard of

living in Soweto by planting trees and providing basic amenities to parts of the township

(Anon, 2003). Thale (2003) explains that the Baralink project is an example of such a new

development, promising to improve the overall infrastructure of the area and encourage

the growth of a viable business environment. This activity, according to Thale (2003),

will lead to the emergence of a multitude of small businesses in the area and therefore

a comprehensive advertising campaign is vital for these new businesses to survive

and succeed.

Soweto is fast becoming a commercial hub, with an increasing number of small

businesses opening every year. This has led to increased competition in the area and

it has, therefore, become increasingly important for Sowetan businesses to differentiate

themselves from their competitors. This can be done effectively through the use of

advertising; therefore it is necessary to be able to identify relevant advertising

opportunities for these businesses.

5 Advertising

Advertising is a tool that can be used for companies to differentiate themselves and

their product from their competition. Since Soweto is becoming a commercial hub with

more business starting up, companies will need to use these tools to gain an advantage

over other companies. It is important for business owners to understand the meaning

of marketing, marketing communication and advertising, before they implement any

changes.

5.1 Advertising objectivesAdvertising objectives are important to a company, because they will encourage the

introduction and selection of consistent advertising alternatives, and they offer the firm

a standard against which the results of the advertising can be evaluated (Cohen, 1999,

p.123). Advertising can also be used to support other elements in the marketing mix.

This can improve the effectiveness of the firm’s total marketing strategy, with the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Gathering perceptions of Soweto small business owners on advertising 447

ultimate objective of increasing sales. Advertising objectives are specific outcomes

that are to be accomplished through advertising (Russel et al., 1996, p.24). The following

different objectives which a firm may want to obtain from its advertising campaign are

(Cohen, 1999, p.123):

� Increasing the number of customers: advertising can help a company to be able to

turn non-users into users, attract users from competitors’ brands and help former

users to become interested in a particular product again.

� Increasing total demand: a company may use an advertising campaign in order to

increase the total demand for a product so that the company’s share will generate

sales volume.

� Attracting non-users: a company’s advertising campaign’s objective may be the

attracting of non-users in an effort to increase the number of customers.

5.2 Advertising mediaAccording to Morris (1992, p.92) radio is one of the few mediums that actually reach

the majority of the black population at any one time. Radio is effective as an

advertising medium in both urban and rural areas and has a very cost effective reach.

Radio advertising is very flexible. It offers businesses the best mix of formal

advertising, infomercials and sponsorships (Du Plessis et al., 2003, p.92). Radio has

become a very viable media option for companies to advertise, both locally and

nationally (Du Plessis et al., 2003, p.92). In comparison to television, radio is a

relatively low cost medium. Compared to other media, radio has a fairly low cost per

thousand listeners (Cohen, 1999, p.419). Radio is generally inexpensive in terms of

investment costs, as well as cost per thousand. Because of its low cost and the ability

radio has to contact specific target markets, radio can often be used as a supporting

medium to round out a media plan. Radio can give a business personality through the

creation of advertising campaigns that make use of sounds and voices (Pleshette, 2003).

6 Key factors to making advertising successful

The placement of advertisements, especially outdoor advertisements, close to the point of

sale, serve as a reminder to consumers of the product or service before entering a shopping

centre (Reiter, 1990). Colour is very important when advertising, especially when it

comes to outdoor advertising. Bright, eye-catching colours should be used to attract

the customer’s attention and differentiate the message from surrounding advertisements

(Reiter, 1990). Frequency and repetition is very important when advertising as the more a

potential customer sees an advertisement in a short period of time, the greater the chance

of their remembering the product or service in the future (Anon, 2004). If a company’s

adverts are placed all over a selected area, they will be seen repeatedly by potential clients,

increasing the chances of the potential client remembering and purchasing the product.

According to Anon (2004) most people need to be exposed to an advert an average of

13 times before remembering and responding to the advertisement. Dupont (2002)

states that repeated viewing of an advertisement increases peoples perception of the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


advertised product. Through repeated viewing of the product through advertising, people

recognise the brand and come to like the product.

6.1 Key factors when advertising in black townshipsWhen advertising in a black township, black and white people should be used in the

advert, or even blacks only (Morris, 1992, p.95). One should not use only white people

in advertisements for the black market. This representation helps the black consumer

appreciate that the product is a universal product, used by all. Situations and humour must

be used that black people can relate to (Morris, 1992, p.95). Sporting personalities

should be used with care, since biases could result from opposing team supporters.

English should be used when advertising to people in the townships, because most

black people do understand English. There are so many different black languages that

they can become confusing, even for the black consumer.

By reviewing various literature on advertising opportunities for small businesses,

with specific reference to Soweto, it can be seen that although there are many different

forms of advertising, not all such mediums are necessarily suitable. This is due to factors

such as cost, specific target markets and illiteracy.

7 Research methodology

From the study of the literature on the proposed topic, to determine the advertising

mediums that small businesses use in Soweto to promote sustainable development,

it was evident that the information and knowledge related to this topic is limited. For this

reason, a qualitative research method is proposed. Due to limited research on the topic,

exploratory research is necessary to determine which advertising mediums are used by

small businesses in Soweto and which are most effective in that business environment.

It is therefore suggested that a qualitative research orientation be used.

Personal in-depth interviews are a viable method in order to conduct exploratory,

qualitative research. Personal, in-depth interviews, using open-ended questions, are

proposed to collect data on the topic. Since the suggested research problem requires

high participation, this type of interview provides the opportunity for feedback as well as

the reach of respondents whom have busy lifestyles. This method also eliminates the

chance of misinterpretation of the questions, which is vital in order to collect reliable data.

The purpose of this research is to determine advertising mediums that small businesses

use in Soweto. The population from which the sample was selected was thus small

businesses in Soweto that use a form of advertising. Judgement (purposive) sampling was

used; this is a non-probability sampling technique in which the sample that is selected is

based on personal judgement about some appropriate characteristic of the sample member.

Interviewees considered were business owners and managers of small businesses

in Soweto or business owners of successful businesses located in Soweto. One hundred

small businesses were selected and their owners and managers interviewed to ensure a

full range of perspectives. The businesses were chosen based on convenience as well as

monetary restraints.

The research was conducted during the period 9 to 19 October 2005. Interviews were

conducted at the businesses where the selected sample was situated and when the selected

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8

Interfaces for electronic voting: focus group evidence 449

sample was available. The business owners and managers were interviewed at their

relevant businesses using personal in-depth interviews, aided by open-ended questions.

These questions were based entirely on the research questions stated previously in order

to probe the business owners and managers about the phenomenon of interest.

8 Analysis of research results

8.1 Advertising mediaThe questionnaire was designed to include the aims and objectives of the research.

These questions have been specifically formulated by the researchers to find detailed

information that would justify the research report. Four open-ended questions were

used in the questionnaire to obtain from respondents, who own or manage current

small businesses in Soweto, information about the advertising mediums currently used

in Soweto, the most successful advertising mediums for small businesses in Soweto,

and the key success factors that make advertising successful in Soweto.

8.2 Advertising mediums used in SowetoQuestion one of the questionnaire asked respondents what advertising mediums were

currently used by small businesses in Soweto. Identifying the different advertising

mediums small businesses in Soweto use is the basis of the report. It is, therefore, very

important to ascertain what advertising mediums current small businesses in Soweto

are using. Figure 1 shows which advertising mediums were chosen by small businesses

owners and managers interviewed for the research report.

Source: Question three of the questionnaire

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 1 Advertising mediums used by small businesses in Soweto (see online

version for colours)

Figure 1 indicates the results of question one of the questionnaire. This shows the

advertising mediums used by small businesses in Soweto by counting the number of

respondents which have chosen each advertising medium. According to Figure 1, the

most commonly utilised advertising mediums by small businesses include: brochures, the

internet, pamphlets, signboards, door-to-door, local newspapers, radio, shopping centre

information boards, company cars, posters, directional signboards, product displays, word

of mouth and wall painting.

One respondent found the internet especially useful to reach external target markets,

such as tourists, as it allows anyone in the world with a computer and an internet

connection, to have access to information about the business. This is essential, as tourists

allow these small businesses to expand their consumer base, thereby increasing profits.

This agrees with the literature of Anon (2001) and Stirling (2003, Section 2.9.6), that the

internet allows a company to target a worldwide audience.

According to one respondent, brochures are a widely used advertising medium

utilised by small businesses in Soweto. Brochures are usually made available at locations

that are most likely to be frequented by the target market, ensuring that the correct type

of consumer is targeted and money is not wasted. The respondents indicated that

brochures were made available at various tourist sites in Soweto, such as the Hector

Petersen Memorial, due to the large number of tourists who visit the area. This allows

for a wider consumer base to be targeted.

The survey indicates that a substantial number of small businesses in Soweto make use

of wall painting in order to advertise their businesses. This is attributed to the fact that

wall painting is inexpensive and if placed in the right area can be seen by a large amount

of people. Wall paintings can be seen on a variety of walls and surfaces all over the area.

Some large walls have been specifically earmarked for advertising, for example the

Bara Advertising Wall which is situated on the Old Potchefstroom Rd. This sentiment

is echoed by the literature presented by Morris (1992, p.103) that suggests that wall

painting is an outdoor advertising medium that is widely used by businesses in Soweto.

Figure 1 illustrates that one respondent reported that door-to-door promotions

and signboards are a favourite advertising method used by small businesses in Soweto.

This is in agreement with Morris (1992, p.106), as mentioned earlier in the article, who

states that this form of advertising occurs when a business employs ‘runners’ who can

conduct door-to-door sampling and hand out pamphlets with information about their

product. Door-to-door provides an effective way of ensuring that a company’s product

sample gets to the consumer. Signboards can be made by hand or professionally made, and

are erected outside companies, not only to serve as a form of advertising, but also to

indicate to possible clients where the business is situated. The survey indicated that

signboards are a reasonably cheap advertising medium for small businesses in Soweto

to use.

According to Figure 1, three of the respondents regarded community newspapers

and pamphlets as advertising mediums available to small businesses in Soweto. However,

newspapers were not widely utilised by small businesses in Soweto as other forms of

advertising, due to the expense of advertising in them. In the literature, Morris (1992,

p.92), mentioned earlier in the article, observes that newspapers are an effective way of

advertising in townships, because they enjoy a fairly high penetration rate. This agrees

with the findings of Du Plessis et al. (2003, p.59), that pamphlets are cheap to produce

and to distribute. Pamphlets are flexible in design and easy to modify to display the

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


latest specials. The respondents added that the individuals who handed out the

pamphlets could be given tee shirts, or wear display boards over their shoulders,

displaying the company’s details and product. This is an effective way to increase

awareness of the company’s brand around the townships.

Figure 1 also shows that two respondents considered word of mouth to be an

advertising method used by small businesses in Soweto. Word of mouth is a cost effective

advertising medium which is suited to small businesses, especially in areas such as

Soweto. Soweto is a densely populated community in which positive information about

a business can easily be communicated amongst people. This agrees with the literature

of Foxall et al. (1998, p.27) that word of mouth communication is an excellent form

of advertising and can be more effective than formal advertising. According to the

respondents, for word of mouth to be a successful advertising medium, a small

business needs to offer a high quality product or service. Satisfied consumers who

spread positive information about the business are seen as more credible and are

trusted by other potential clients.

8.3 Successful advertising mediums in SowetoThe second question in the questionnaire asked respondents what they considered the

most successful advertising mediums in Soweto. Due to the large amount of advertising

mediums mentioned by the respondents in the previous question, it was important to find

out which of the advertising mediums selected were viewed by the respondents as the

most successful. Another reason for finding out which advertising mediums were the most

successful is the fact that advertising is expensive for small businesses and, therefore,

it is very important to discover which advertising mediums are the most effective in

a particular environment. Figure 2 indicates which are the most successful advertising

mediums used by small businesses in Soweto.

Source: Question two of the questionnaire

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 2 Successful advertising mediums used in Soweto (see online version for colours)

Figure 2 indicates the most successful advertising mediums used by small businesses

in Soweto, according to the survey. There are numerous different advertising mediums

indicated, due to the vast diversity between the small businesses interviewed. According

to Figure 2, 25% of the respondents believed that wall painting was a very successful

advertising medium for small businesses in Soweto. This is possible, as wall painting

is not a very expensive advertising medium; this is valuable as small businesses often

do not have huge advertising budgets, so cost becomes an important factor when

considering advertising mediums. Wall painting is useful as it gives a business creative

freedom and allows advertisements to include bold, bright, eye-catching designs,

making for very effective advertising. This sentiment is echoed by the literature

presented by Russel et al. (1996, p.341) in the literature review section.

The respondents also pointed out that a company’s name, telephone number, and

product or service can also be painted on the facia of the small business. This provides

a cost effective method for the business to stand out and differentiate itself from

its competitors. It also assists consumers, in that it allows them to easily identify the

business, which is imperative. In the literature review section, Morris (1992) notes

similar requirements for a business to stand out against its competitors.

Figure 2 shows that only 5% of the respondents believed that directional boards

provided an effective method for small businesses in Soweto to advertise. This form of

advertising can prove to be a viable option for small businesses because the boards can

be homemade and therefore extremely cost effective. Directional boards are particularly

useful in directing potential clients to a small business’s location, especially if the small

business is not located on the main roads that may make them more difficult to locate in

a densely populated area, such as Soweto. This medium is not expressed in the literature

and adds a new dimension to determining which advertising mediums will be effective

in order for small businesses in Soweto to advertise.

The internet is an effective advertising medium, according to 5% of respondents.

Because of the increase in tourists to the area, tourism is an important market and the

internet allows for a cost effective way to communicate with this market. This agrees with

Du Plessis et al. (2003, p.349) that internet advertising is a cost effective advertising

medium. E-mail appears to be an affordable method of advertising that allows

small businesses in Soweto to communicate directly with potential clients anywhere

in the world. This is also the assumption made by Du Plessis et al. (2003, p.344).

The respondents felt that not enough small businesses were using the internet as an

advertising medium, but foresaw this changing in the near future, with more people

in Soweto becoming computer literate, making the internet accessible to the general

public.

Five percent of the respondents (see Figure 2) indicated that pamphlets and

door-to-door promotions were effective advertising mediums. Door-to-door promotions

allowed a two-way conversation to take place between the consumer and the business

representative. In an area such as Soweto, which is densely populated, many houses

can be visited in a short period of time, thus making door-to-door promotions more

cost effective than in many other areas.

Figure 2 shows that 25% of the respondents indicated that signboards placed outside

the small business were an important form of advertising for small businesses in Soweto.

Signboards erected outside the small business allowed potential clients to identify the

small business location, name and service. Signboards outside the company should

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


show the small businesses contact numbers and trading hours, allowing small businesses

to differentiate themselves from similar businesses.

Five percent of the respondents judged that transit advertising was effective. This

involves boards being placed, with the business name and contact details, on various

cars and taxis. This advertising medium is effective because it is inexpensive and also

allows a greater exposure time, which means a large amount of people will see this

form of advertising. This is in agreement with Morris’s (1992, p.102) statement that

advertising on company cars and taxis is an effective way of advertising in Soweto.

8.4 Key success factors for advertising in SowetoThe last question asked in the questionnaire asked respondents what the key success

factors were to making advertising in Soweto effective. This is important for the

researcher to ascertain because advertising needs to be effectively implemented for it

to be a success for any small business. Respondents informed the researcher of the

key success factors that made their company’s advertising a success and this is shown

in Figure 3.

Source: Question three of the questionnaire

Figure 3 indicates the success factors that make advertising in Soweto effective. The

answers were obtained from respondents’ responses to question three of the questionnaire.

Figure 3 shows that 28% of the respondents stated that in order for outdoor advertising to

be effective as an advertising medium, it needed to be placed in areas of high traffic in

Soweto. This is essential because the higher the number of people who see the

advertisement the higher the response rate will be. This agrees with Morris (1992, p.94),

as discussed above, who suggests that outdoor advertising, such as wall painting and

posters, are only effective when placed in high traffic areas where the opportunity of

them being seen is high.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Figure 3 Success factors that make advertising in Soweto effective (see online

version for colours)

Taxi ranks were also mentioned as another area in which many potential clients gather

and would, therefore, be a successful location to advertise. The reason for this is that a

majority of people living in Soweto make use of public transport and therefore a taxi rank

is an important place for a small business to target an advertising campaign. One of the

respondents stated that, when using the internet as an advertising medium, it is important

that a company advertises on websites that receive a large amount of traffic. The more

people who visit the site, the greater the chance of the advertisement being effective.

According to the respondents, when advertising in high traffic areas, there are usually

many different businesses advertising in the same area, so it is important for a small

business to make their advertising stand out from the rest. As shown in Figure 3, 18% of

the respondents stated that advertising needs to stand out from the other advertisements

which surround it. This can be done by making the advertisement more eye-catching than

other advertisements in the area. The respondents suggested that this can be done, for

example, by using a light background on the wall, such as white, and then painting the

writing in a darker colour such as red.

Figure 3 indicates that 18% of the respondents thought that advertising could also

be made more effective by the size of the advertisement. According to the respondents,

this could be achieved by making the advertisement large enough to be seen and by using

bold print that could be read easily by a passenger in a moving car. The respondents added

that, when advertising on main roads, cars are travelling faster and people are generally

too busy to notice every advertisement, therefore advertisements in these areas should

be large, easy to read and eye catching. When erecting a signboard outside the business,

a small business must ensure that it is large enough to be read clearly and seen easily,

therefore making it easier for potential clients to locate the business. The respondents

added that, for an advertisement to be successful, it is very important for it to be attractive

and the layout of the advertisement needs to be appealing.

Twenty-four percent of the respondents claimed that repetition was essential to the

success of a business’s advertising efforts (see Figure 3). When a potential client sees

the advert they may not make use of the business straightaway, but through repeated and

frequent viewing of the advertisement, when the potential client needs that particular

product or service, they will then remember the advertised product and buy from that

business. It is important for the advertising company to place advertisements all over a

selected area, therefore increasing the amount of times people notice the advertisement in

a short period of time. This is helpful in increasing memory retention. The respondents

added that repetition was important when using all forms of advertising. The more people

see the advertisement, the higher the chance of it being remembered when needed.

Figure 3 shows that 12% of the respondents thought that regular observation of a small

business’s name and product was very important and that this is achieved by advertising

regularly. The respondents state that advertising must be conducted regularly, in order to

remind consumers of the business and its offerings on a regular basis. Regular advertising

keeps clients and potential clients informed about specials and the latest product news,

which increases the likelihood that they will buy the business’s products or services. The

respondents added that regular advertising was imperative when handing out pamphlets,

as potential consumers often do not read the pamphlets or lose the pamphlets after

receiving them. When using pamphlets as an advertising medium, large amounts need to

be handed out for pamphlets to be an effective advertising medium. Pamphlets must also

be handed out on a regular basis. When conducting door to door advertising, it is important

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


for it to be conducted regularly for it to be successful. This is because people have

varying schedules, so different people will need to be reached at different times.

Findings have shown that advertising is a viable method for small businesses in

Soweto to differentiate their business and products from the increasing competition

that has been changing the business environment in Soweto.

9 Recommendations

Selected small businesses in Soweto were analysed through in-depth interviews, and

advertising mediums used in Soweto were identified. The following advertising mediums

have been identified by respondents: brochures, the internet, pamphlets, signboards,

door-to-door, local newspapers, radio, shopping centre information boards, company cars,

posters, directional signboards, product displays and wall painting.

Due to the cost associated with advertising and the limited budget small businesses in

Soweto have for advertising, it is important for any small business to choose the best

advertising medium available for their business. Owners of small businesses who were

interviewed, recognised the most successful advertising mediums to be implemented

in the Sowetan business environment. The selected mediums were chosen by small

businesses in Soweto, on the basis of:

� cost effectiveness

� ability to reach certain customers

� effectiveness in an environment such as Soweto.

The following mediums were chosen: wall painting, newspapers, directional boards,

Internet, pamphlets, door-to-door and transit advertising.

For advertising to be successful, it needs to be implemented correctly and key success

factors must be identified. According to the survey, the main success factor for advertising

is the area in which it is chosen to place the advertisement. Advertising should be placed

in high traffic areas where the advertisement can reach a higher proportion of the selected

population. It was also found that if advertising was repeated regularly in this way, there

was a higher chance of the advertisement being recalled from memory. Repetition of the

advertisement in a short period of time was also considered very important as it helped

a person initially remember the advertisement. The size, colour, graphics and writing of

the advertisement all had an effect on the advertising campaign and helped potential

clients differentiate the advertisement from surrounding advertisements. This is especially

necessary in areas which are cluttered with competitors’ advertisements.

Based on the outcome of the research, the following recommendations should be

considered:

� Both old and new small businesses in the Soweto area need to advertise for their

small business to succeed.

� Wall painting is a successful advertising medium in Soweto, but in future new

advertising mediums should be looked at due to advertising clutter and limited

space.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


� Door-to-door advertising is a successful advertising medium in Soweto and

should be implemented by current small businesses and should be considered by

future companies entering Soweto. It was observed that, during the research, the

majority of households in the Sowetan area had at least one adult member of the

family at home through the majority of the day. This helps with door to door

advertising/promotions because they will have an increased hit rate.

� With an increase of tourists to the area, the internet should be considered a more

popular form of advertising in the area.

� More research into advertising mediums that can be used by small businesses in

Soweto, and in similar commercial environments, should be conducted.

10 Concluding remarks

This research has exposed new ways in which small businesses, operating in

changing environments, can advertise and which advertising mediums are effective.

This research will present owners and managers of small businesses operating in

changing business environments such as Soweto, with an in-depth understanding of

advertising and advertising mediums. This information can be implemented, to

increase the success of their small businesses and promote sustainable development.

The research also displays results regarding advertising mediums and how it can

help small businesses differentiate themselves from the competition. This is important

in a changing commercial environment, such as Soweto, where there is increasing

competition.

References

Anon (2003a) ‘Advertising objectives’, [internet] available from: <http://www.examstutor.com/

business/resources/studyroom/marketing/advertising/2-advertisingobjectives.php?style=>

[accessed: 18 Apr 2004].

Anon (2003b) ‘The making of Soweto’, [internet], available from: <http://www.joburg.org.za/

soweto/overview.stm> [accessed: 15 Apr 2004].

Anon (2003c) ‘What are the advantages of advertising on the internet?’, [internet], available from:

<http://www.happy-online.co.uk/tutorial/advertising.htm> [accessed: 10 Oct 2004].

Anon (2004) ‘CTN launches living township billboards’, [internet], Biz-Community, available

from:<http://www.biz-community.com/Article.aspx?c=70&1=196&ai=4796> [accessed: 6 Oct

2004].

Bradley, H. BCom Hons (Marketing) Report, University of South Africa.

Cohen, D. (1999) Advertising, Illinois: Scott, Foresman and Company.

Davie, L. (2001) ‘Soweto, city of contrasts’, [internet], available from: <http://www.joburg.org.za/

december/soweto.stm> [accessed: 13 Apr. 2004].

Dirksen, C.J., Kroeger, A. and Nicosia, F.M. (1983) Advertising: Principles and ManagementCases, 6th edn, Illinois: Richard D. Irwin Inc.

Du Plessis, F., Bothma, N., Jordaan, Y. and van Heerden, N. (2003) Integrated MarketingCommunication, Claremont: New Africa.

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Dupont, L. (2002) ‘The six effects of repetition’, [internet], available from:<http://bellzinc.

sympatico.ca/en/content/503046?skin=sli> [accessed: 14 Oct 2004].

Egelhoff, T. (2004) ‘How to develop a successful advertising campaign’, [internet], available from:

<http://www.smalltownmarketing.com/adprogram.html> [accessed: 16 October 2004].

Foxall, G., Goldsmith, R. and Brown, S. (1998) Consumer Psychology For Marketing, 2nd edn,

London: Thomson.

Maravilla, N. (2000) ‘The perceived value of advertising’, [internet], available from:

<http://www.powerhomebiz.com/vo1/ad-value.htm> [accessed: 10 Sep 2004].

Morris, R. (1992) Marketing to Black Townships, Cape Town: Juta and Co.

Pleshette, L.A. (2003) ‘Choosing the right advertising medium for your small business’, [internet],

available from: <http://www.powerhomebiz.com/vol118/admediums.htm> [accessed: 19 Sep

2004].

Reiter, J. (1990) ‘The great outdoors’, [internet], available from: <http://www.findarticles.com/p/

articles/mi_m3301/is_n5_v91/ai_9175677> [accessed: 18 October 2004].

Russel, J.T. and Lane, W.R. (1999) Kleppner’s Advertising Procedure, 14th edn, New Jersey:

Prentice Hall.

Sissors, J.Z. and Bumba, L. (1996) Advertising Media Planning, 5th edn, Illinois: NTC Business

Books.

Smith, T. (2004) ‘So where to now?’, The Property Magazine, October, Johannesburg: Media

Nova (Pty) Limited, pp.43–52.

Stirling, R. (2003) ‘Advantages of internet advertising’, [internet], available from:<http://au.

geocities.com/comptroller_pboro/advantagesinternetadvertising.htm> [accessed: 11 Oct 2004].

Thale, T. (2003) ‘Soweto’s gravel roads to become history’, [internet], available from:

<http://www.joburg.org.za/2003/sept/sep11_roads.stm> [accessed: 13 Apr. 2004].

111

2

3

4

5

6

7

8

9

1011

1

2

3

4

5

6

7

8

9

2011

1

2

3

4

5

6

7

8

9

30

1

2

3

4

5

6

7

8

9

40

1

2

3

4

5

6

711

8


Journal for Global Business Advancement

CONTENTS, KEYWORDS AND AUTHOR INDEXESFOR VOLUME 1

Contents Index Volume 1, 2008

Issue No. 1

1 PrefaceSaid Elfakhani

4 State of the art of international marketing research: directions for the futureSubhash C. Jain

20 Export promotion programmes as antecedents of internationalisation ofdeveloping country firms: a theoretical model and empirical assessmentM. Yunus Ali and A.K. Shamsuddoha

37 Compliance with consolidation (group) accounting standards ±the vertical adjustment issue: a survey of Swedish multinationalsArne FagerstroÈm, Lars G. Hassel and Gary M. Cunningham

49 Foreign direct investment in the Middle East and North Africa regionSaid M. Elfakhani and Linda M. Matar

71 A behavioural approach to foreign-market expansion to turbulent markets:a case of the internationalisation of seven Finnish corporations to theRepublic of South AfricaEvariste Habiyakare and Jan-AÊke ToÈrnroos

91 An empowerment analysis: the ability of local managers to influencethe termination of overseas operationsKimon Constas, Robert P. Vichas and Valentin H. Pashtenko

102 Assessing strategic philosophy across borders: a research noteJohn A. Parnell and Donald. L. Lester

114 A cross-national exploration of the potential cultural antecedents oforganisational improvisationPiotr Chelminski

459

127 The cost of sovereign lending in the Middle East after September 11Mahmoud M. Haddad and Sam Hakim

140 Global information systems failure sphere: a forecasting modelTony Feghali and Imad J. Zbib

Issue Nos. 2/3

153 Importance of international skills for international businessBen L. Kedia, Liliana PeÂrez-Nordtvedt and Jiun-Shiu Chen

178 Assessment of globalisation: a revisitSubhash C. Jain and Narasimhan Srinivasan

204 Budget effectiveness in multinational companies: a systems-fitapproachGary M. Cunningham and Lars G. Hassel

225 International human trade: a marketing analysisPatriya Tansuhaj and Jim McCullough

237 Profit opportunities from successive analysts revision of stockgrading statusSaid M. Elfakhani and Zeina A. Halabieh

252 Business strategy-balanced scorecard measures alignment:an empirical test of its performance implications using systemsapproachRuzita Jusoh, Dato Daing Nasir Ibrahim and Yuserrie Zainuddin

271 Organisational innovation: does structure, culture, and country oforigin matter?Muhamad Jantan, Aizzat Mohd Nasurdin and Nur Fitriah Ahmed Fadzil

289 The relationship between power bases and group-buying decisionsin Malaysia: does it vary according to viscidity, time constraint,and perceived risk?T. Ramayah, Airrat Mohd Nasurdin, Mohd Nasser Mohd Noor andR. Letchumanan

309 Evaluation and analysis of IJV marketing performance and its keypredictorsCraig C. Julian and B. Ramaseshan

Contents Index460

Issue No. 4

SPECIAL ISSUE:INTERNATIONAL BRANDING AND MARKETING COMMUNICATIONSGuest Editors: Demetris Vrontis and Ioanna Papasolomou

327 Motivators and critical factors in mobile banking communications:the case of KuwaitAlkis Thrassou and Lijo Raju Philip

350 Are net surfers ready for audio banners?Caner Dincer

362 International celebrities: worldwide surrogate salesforce?B.Z. Erdogan

370 Implicit prices of product characteristics in the milk and cheese marketPhilippos Karipidis, Stamatis Aggelopoulos and Efthimia Tsakiridou

381 Website development as a means of communication: a case study for theKolossi Grand Hotel, CyprusDespo Ktoridou and E.N. Roussakis

390 The marketing implications of the undesired self ; the case of ChineseY-generationAlkis Thrassou, Demetris Vrontis and Ching-Wei Ho

409 Evaluation of the Khula enterprise in the promotion of SMMEsin South AfricaLouise van Scheers and Simon Radipere

422 The impact of culture in TV advertising behaviour: an exploratory studyin Southeast AsiaDemetris Vrontis, Andriani Susanti and Ioanna Papasolomou

433 Consumer self-construal and cross-cultural marketing communications:theory and implicationsCheng Lu Wang

445 Gathering perceptions of Soweto small business owners on advertisingin black townships in South AfricaLouise van Scheers and Simon Radipere

Contents Index 461

Keywords Index Volume 1, 2008

Indexing is based on the key words and phrases, title and abstract on the first page ofeach paper. Page references are to the first page of the paper or report

Aaccounting standard compliance 37advertising appeal and promotion strategies 433advertising mediums 445advertising music 350analysts' recommendations 237art 102attitudes 390audio banners 350

Bbalanced scorecard 252behavioural approach 71black economic empowerment 409bond credit spread 127bond pricing 127brand image 390branding 390budget control 204business failure 409business networks 71business skills 409business strategy 252

Ccelebrities 362cheese 370China 390communications 327conceptual definition 178connectedness-separateness self-schema 433consolidated financial reporting 37consumer behaviour 390country of origin 4country risk 127credit risk 127cross-cultural 433cross-cultural management 114

462

culture 390, 422customer relationship 327

Ddefault risk 127developing country firm 20diversification 381door to door 445

Ee-promotion 381economic integration 49educational background 409effectiveness 362electronic marketing 327emergent markets 71emerging bond markets 127empirical assessment 178endorsement 362entrepreneur 409events 71export commitment 20export knowledge 20export promotion programme 20export strategy 20

Ffirm export performance 20firm performance 252flexibility 102foreign bonds 127foreign direct investment and determinants 49funds flows 49future research 4

GGCC 49global MNCs 91globalisation 178, 204group accounting 37group buying 289

Hhedonic 370Hofstede's cultural dimensions 114holding company 381human trade 225

Keywords Index 463

Iimplicit prices 370improvisation 114information and communication technology (ICT) 140information systems failure 140information systems indicators 140information systems project failure 140innovation 271international 362, 422international business skills 153international human trade 225international joint ventures 309international marketing 4international trade 49internationalisation 71internet 445internet advertising 350investment drivers 49

KKhula Enterprise 409Kuwait 327

Llocal management 91

MMalaysia 289Malaysian firms 252, 271managerial perceptions 153managerial skills 409managers 102market 370marketing 390, 422marketing communications 381, 433marketing performance factors 309MENA 49Mexico 102milk 370mobile banking 327modal choice 71multinational companies 204multinationals 37

Nnational culture 114net surfers 350newspapers 445

Keywords Index464

Oorganisational innovation 271overseas operations 91

Ppamphlets 445perceptions 390philosophy 102portfolio strategies 237power bases 289product differentiation 370profit opportunities 237

Qquality characteristics 370

Rradio and poster 445risk management 127

Sscience 102self-image 390services 327signboards 445small business owners 445SME sector 409SMME 409sovereign risk 127Soweto 445standardisation/adaptation 4stock grading status 237strategic decision-making 91strategy 102subsidiaries 381subsidiary management 91subsidiary reporting 37systems-fit approach 204

Ttemporality 71Thailand 309top-down 102TV advertising 422types of business 409

Keywords Index 465

Uundesired self 390

Vvertical adjustments 37

Wwall painting 445website design 381

Keywords Index466

Author Index Volume 1, 2008

Aggelopoulos, S. 370Ahmed Fadzil, N.F. 271Ali, M.Y. 20Chelminski, P. 114Chen, J-S. 153Constas, K. 91Cunningham, G.M. 37, 204Dincer, C. 350Elfakhani, S.M. 1, 49, 237Erdogan, B.Z. 362FagerstroÈ m, A. 37Feghali, T. 140Habiyakare, E. 71Haddad, M.M. 127Hakim, S. 127Halabieh, Z.A. 237Hassel, L.G. 37, 204Ho, C-W. 390Ibrahim, D.D.N. 252Jain, S.C. 4, 178Jantan, M. 271Julian, C.C. 309Jusoh, R. 252Karipidis, P. 370Kedia, B.L. 153Ktoridou, D. 381Lester, D.L. 102

Letchumanan, R. 289Matar, L.M. 49McCullough, J. 225Nasurdin, A.M. 271, 289Noor, M.N.M. 289Papasolomou, I. 422Parnell, J.A. 102Pashtenko, V.H. 91PeÂ rez-Nordtvedt, L. 153Philip, L.R. 327Radipere, S. 409, 445Ramaseshan, B. 309Ramayah, T. 289Roussakis, E.N. 381Shamsuddoha, A.K. 20Srinivasan, N. 178Susanti, A. 422Tansuhaj, P. 225Thrassou, A. 327, 390ToÈ rnroos, J-AÊ . 71Tsakiridou, E. 370van Scheers, L. 409, 445Vichas, R.P. 91Vrontis, D. 390, 422Wang, C.L. 433Zainuddin, Y. 252Zbib, I.J. 140

467

CALL FOR PAPERS

International Journal of Monetary Economics and Finance (IJMEF)

Website: www.inderscience.com ISSN (Online): 1752-0487 – ISSN (Print): 1752-0479

IJMEF addresses the advancement of contemporary research in the field of international monetary economics and finance. It is an internationally competitive, peer-reviewed journal dedicated to serve as the primary outlet for theoretical and empirical research in all areas of international monetary economics and finance. The IJMEF seeks to publish thought-provoking, policy relevant analysis.

Objectives

IJMEF especially encourages the submission of high quality articles, which are empirical in nature, particularly papers that are relevant for economic policy and bridge the gap between theory and policy in macroeconomics and finance. Theoretical work submitted to IJMEF should be original in its motivation or modelling structure.

Readership

IJMEF provides a scientific vehicle for researchers, policy makers, national and corporate treasuries, central and investment banks, international organisations, and academic institutions.

Contents

IJMEF invites and welcomes theoretical and applied papers, case studies, and special issues. The journal will also publish review papers, technical reports, and case studies.

Subject Coverage

Topics covered include, but are not limited to: • International institutions • Monetary economics • Exchange rates • Open economy macroeconomics • International finance • Financial markets

Specific Notes for Authors

Submitted papers should not have been previously published nor be currently under consideration for publication elsewhere.

All papers are refereed through a double blind process. A guide for authors, sample copies and other relevant information for submitting papers are available at www.inderscience.com/papers

You may send one copy in the form of an MS Word file attached to an email (details of file formats in Author Guidelines) to:

Editor: Dr. Bruno S. Sergi University of Messina DESMaS “V. Pareto"

Faculty of Political Science Via T. Cannizzaro, 278 98122 Messina, Italy


The impact of culture in TV advertising behaviour: an exploratory study in Southeast Asia

Documents

Transcript of The impact of culture in TV advertising behaviour: an exploratory study in Southeast Asia