Marketing innovation: A consequence of competitiveness | Journal of Business Research | Part 3: Research Methodology

 

Professor Suraksha Gupta, University of Kent

Professor Naresh K Malhotra, Georgia Institute of Technology

Professor Michael Czinkota, Georgetown University

Professor Pantea Foroudi, Middlesex University

ISSN 0148-2963

This study addresses this question in four phases. The first phase underpins the arguments about competitiveness and marketing innovation with the current academic knowledge about theory of competitive advantage and resource-advantage theory. The second phase explores the concept and assumptions using expert insights. During the third phase, this study conducts a field survey to collect data from resellers of international brands and use structure equation modelling (SEM) and fuzzyset qualitative comparative analysis (fsQCA) (Ragin, 2006 and 2008). fsQCA has received increased attention as it gives an opportunity to the researchers to gain a deeper and richer perspective on the data, particularly when applied together with complexity theory (Leischnig and Kasper-Brauer, 2015; Mikalef, Pateli, Batenburg and Wetering, 2015; Ordanini et al., 2013; Woodside, 2014; Wu et al., 2014). The fourth phase leads to interpret the results in order to make recommendations and consider future avenues for the research. This research contributes to the literature on business-to-business and international marketing. Finally, the study advances the current understanding about the interdependence of brand and reseller firms for developing their competitiveness and adopting innovative approaches to marketing.

Yes Virginia, the Ham Is Chinese (Part 4)

The emerging middle class in China represents enormous opportunity not only for Smithfield but also for many American companies.  For companies like General Motors, Procter & Gamble, Yum Brands, and Caterpillar, China is where the growth is. Coca Cola has described China as “the commercial opportunity of the 21st century”.  In 2013, KFC, McDonald’s, and Starbucks will reportedly each open one new restaurant every day in China. But, such market expansion must be a two-way street.  For more American firms to be able to have access to the Chinese marketplace, Chinese firms must be allowed and encouraged to compete in the United States.

Previous investment attempts by Chinese companies have not always gone smoothly. A big obstacle has been that many deals have touched on  national security sensitivity.  The Committee on Foreign Investment in the United States (CFIUS), is a U.S. inter-agency government panel that reviews foreign deals for national security issues.  In 2005, Cnooc tried to buy Unocal but ran into insurmountable U.S. political opposition and retreated from the deal.  In 2011, China’s Huawei had attempted to acquire the U.S. technology company 3Leaf Systems but withdrew after CFIUS stipulated restrictions. In 2012, a CFIUS review of an acquisition of Oregon wind farms by Ralls Corp, owned in turn by executives of the Chinese Sany Group, collapsed, since some wind farm properties were located near a sensitive U.S. naval facility. Even the Cnooc acquisition of Canada’s Nexen had to accommodate concerns raised by CFIUS over U.S. operations.

While Chinese deals for energy, technology, and infrastructure businesses are likely to draw serious scrutiny by CFIUS, consumer goods businesses are a different matter.  These deals will be far less sensitive.

For our and their investment benefit, Chinese companies should focus on companies that are heavily dependent on consumer choice and preference like Smithfield.  Will American customers continue to prefer these brands after a foreign acquisition?  If the brands continue to pursue the marketing discipline of providing great value and pleasure, the answer is likely to be a resounding “yes”.

This article is the final part of a series written by Michael Czinkota and Charles Skuba. Read part 3 here.  Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

Yes Virginia, the Ham Is Chinese (Part 2)

The result is economic growth at double digit levels for several decades and a rapidly expanding middle class.  This success has also led to new economic challenges as the expectations of China’s citizens for higher wages and quality of life have risen. China may well be approaching a tipping point for an economic  transition from being export focused to becoming  consumption-driven.  After  improving the world by manufacturing good basic products, Chinese businesses must now learn how to succeed through marketing and excellence.

Just as American brands like KFC, Coca Cola, Apple, Buick, and Pampers have learned how to successfully win over consumers worldwide, Chinese companies need to compete for brand preference employing more than a low price approach. Already, Chinese products are emerging as leading brands.  WPP’s 2013 BrandZ Most Valuable Global Brands research has 12 Chinese brands among the top 100 global brands. However, a closer look at this study reveals that the top Chinese brands are mostly successful in China alone, and in sectors where access by foreign firms such as telecommunications, banking and insurance, Web-based technology, and energy is restricted. Though there are many Chinese consumer brands, such as Haier, Tsingtao, Li-Ning, Lenovo, Baidu, Tencent, and Huiyuan Juice, marketing to consumers outside of China has not been highly successful for Chinese brands thus far.

Marketing guru Philip Kotler defines marketing as both an art and a science. Chinese firms have mainly concentrated on science, via price. Now they must become better at creating higher quality products, placing them in distribution outlets that Western consumers prefer, and promoting them with a direct appeal to Western emotions.  The best way to accomplish all this quickly is through the acquisition of Western firms with already established base of consumer preference.  Therefore, in addition to the establishment of new brands, we are likely to see a significant expansion of Chinese acquisitions of U.S. and European consumer goods brands in the coming years.

Is this a good thing? Acquisitions by foreigners tend to be accompanied by concerns. When U.S. giant Kraft acquired British Cadbury, there was worry about diminished  chocolate quality in the U.K. Now Americans (accompanied with much hamming it up by master comic Jay Leno) state that the Smithfield acquisition could lead to diminished quality and loss of American jobs.

Far from it ! The Chinese are not just obtaining products – imports and exports would have done that. Rather, the acquisition helps integrate China into the global economy, and contributes to its future branding success by delivering new connections, experience, capabilities and trust. The key benefits will be learning of both quality and marketing.

This article is a part of a series written by Michael Czinkota and Charles Skuba. Read part 1 here.  Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

Yes Virginia, the Ham Is Chinese (Part 1)

For many Americans, Virginia ham is a long established part of a festive family dinner. But good old American traditions like that can carry new meaning in a global economy.  The recent news that Smithfield Foods, owner of leading pork brands like Smithfield Ham, Eckrich sausages, Armour meatballs and Farmland bacon, is to be acquired by Chinese company Shuanghui International Holdings Ltd. caused indigestion for some in the United States.

The $4.7 billion deal, announced on May 30, 2013, would be the largest acquisition of a U.S. company by a Chinese firm. It is another of a series of recent significant global acquisitions by Chinese firms. Other examples include the 2012 purchase of the AMC movie chain by Dalian Wanda Group Corp. of Bejing and the 2013 acquisition, of Canada’s Nexen by China National Offshore Oil Corporation (Cnooc). At year’s mid-point, 2013 promises to be a record year for Chinese foreign direct investment in the United States. It is also indicative of a new focus for Chinese investment : branded consumer businesses.

Chinese businesses, some state-owned, have proven remarkably successful in the global economy.  Many American companies in a broad range of industries source their manufacturing activities or components from China.  Within a few decades, China has developed into a manufacturing powerhouse, accounting for over ten percent of global exports.

This article is a part of a series written by Michael Czinkota and Charles Skuba. Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.