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BACHELOR THESIS MARKETING

What are the differences in global branding strategies between the US and Chinese

food and beverage market, as a result of cultural influences?

Name : Y.A.E. van Grootel

ANR : 649434

Word count : 8290

Subject : Marketing

Topic 3 : Global versus local marketing

Supervisor : Drs. Annemieke van Gool

Study Program: International Business

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MANAGEMENT SUMMARY

Increasingly people around the world, consume the same meals, drink the

same beverages, eat similar snacks and dine at the same restaurants (Belk, 1995).

Food and beverage multinational companies (F&B MNCs) market their products all

over the world. China is an interesting market for these F&B MNCs since the demand

for Western-style convenience foods is growing (Curtis, McCluskey and Wahl, 2006).

But how can these F&B MNCs market their products successfully in China? In this

thesis the following problem statements will be addressed:

What are the differences in global branding strategies between the US and

Chinese food and beverage market, as a result of cultural influences?

Hofstede‟s five dimensions of culture are used to define and compare the

American and Chinese culture. The most important differences appear in the long-

term orientation and individualism dimensions (Hofstede‟s cultural dimensions1).

Furthermore there is a notable resembles in the masculinity dimension between the

United States and China. Before these cultural differences can be applied to global

branding strategies in the food and beverage market, global branding should be

defined.

A company should use global branding strategies if their product is demanded

all over the world. This is referred to as a global consumer logic. If a company faces a

strong global consumer logic it should implement a global branding strategy (Jeannet

and Hennessey, 2001). Global banding should include features such as the brand

name, the brand logo and its personality at a global level. This global branding

strategy can be implemented by using a global consumer culture positioning (GCCP)

strategy (D.L. Alden, J.E.M. Steenkamp and R. Batra, 1999). But can these global

branding strategies be applied to China?

Recently Chinese traditional culture has been moving towards Western beliefs

(D. Davis 2000). In addition, Western-style convenience foods have become

increasingly popular in China (Curtis, McCluskey and Wahl, 2006). These shifts in

Chinese beliefs and preferences increase the number of global citizens and global

dreamers in China (D.B. Holt, et al., 2004). Consequently global food and beverage

brands have been incredibly successful in China (Jeannet, et al., 2001) and F&B

MNCs should apply global branding strategies, to market their products in China.

1. http://www.geert-hofstede.com/

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TABLE OF CONTENT

MANAGEMENT SUMMARY ............................................................................................... 2

1. INTRODUCTION............................................................................................................ 5

1.1 The problem background ..................................................................................... 5

1.2 The problem statement ......................................................................................... 6

1.3 Research Questions .............................................................................................. 6

1.4 Relevance ............................................................................................................. 6

1.4.1 Academic relevance ....................................................................................... 6

1.4.2 Managerial relevance ..................................................................................... 7

1.5 Structure of the thesis ........................................................................................... 7

2. WHAT IS CULTURE AND WHAT ARE THE MAIN DIFFERENCES BETWEEN AMERICAN AND

CHINESE CULTURE? ........................................................................................................ 8

2.1 What is culture? .................................................................................................... 8

2.1.1 Hofstede‟s dimensions of culture .................................................................. 8

2.1.2 Schwartz‟s Universal structure of values ...................................................... 9

2.1.3 Trompenaars ................................................................................................ 10

2.1.4 Discussion .................................................................................................... 11

2.2 What are the main differences between American and Chinese culture? .......... 12

2.2.1 American culture according to Hofstede ..................................................... 12

2.2.2 Chinese culture according to Hofstede ........................................................ 13

2.2.3 Discussion .................................................................................................... 14

2.3 Conclusion .......................................................................................................... 15

3. WHAT IS GLOBAL BRANDING AND HOW HAS IT DEVELOPED IN THE FOOD AND

BEVERAGE MARKET? ..................................................................................................... 16

3.1 What is global branding?.................................................................................... 17

3.1.1 Global consumer logic ................................................................................. 17

3.1.1 Characteristics of global brands .................................................................. 18

3.1.3 Brand positioning ........................................................................................ 19

3.2 How has global branding developed in the food and beverage market? ............ 21

3.2.1 Coca-Cola .................................................................................................... 22

3.2.2 McDonald‟s ................................................................................................. 23

3.3 Conclusion .......................................................................................................... 24

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4. WHAT ARE THE INFLUENCES OF THE AMERICAN AND CHINESE CULTURES ON GLOBAL

BRANDING STRATEGIES IN THE FOOD AND BEVERAGE MARKET? ................................... 25

4.1 The food and beverage market ........................................................................... 25

4.1.1 The Chinese food & beverage market ......................................................... 25

4.1.2 The American food & beverage market ...................................................... 26

4.1.3 Discussion .................................................................................................... 26

4.2 Influences of the American and Chinese cultures on global food and beverage

brands ....................................................................................................................... 27

4.2.1 Chinese consumers versus American consumers ........................................ 27

4.3 Conclusion .......................................................................................................... 29

5. CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS ............................................ 30

5.1 Conclusions ........................................................................................................ 30

5.2 Recommendations .............................................................................................. 31

5.3 Limitations ......................................................................................................... 31

6. REFERENCES ............................................................................................................. 33

7. APPENDIX ................................................................................................................. 37

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1. INTRODUCTION

1.1 The problem background

Branding has enormous possibilities for international marketing (B. Merrilees and

H.Y. Wong, 2007) and global branding has become a popular topic, as is confirmed

by the amount of monologues, conferences and research papers devoted to

investigating this topic every year (Bernd Schmitt, 2002). Consistent with domestic

branding, the development of global branding provides opportunities to capitalize on

economies of scale, develop global markets and pursue multiple market segments

(Barwise and Robertson, 1992; de Chernatony, L., Halliburton, C. and Bernath, R., 1995;

B. Merrilees, et al., 2007). But cultural differences may be the most important

obstacle to accomplishing globally acknowledged brands (H. Lee and J.W. Jun,

2007).

This problem is especially important to food and beverage multinational companies

(F&B MNCs), given that F&B MNCs have globalized earlier and to a larger degree

than most MNCs (Anastassopoulos and Rama, 2005; UNCTAD, 2005; F. Filippaios

and R. Rama, 2008).

Their potential market is extremely large (Selvanathan and Selvanathan, 2006; F.

Filippaios and R. Rama, 2008) and to a greater extent consumers all over the world

like to eat the same foods, drink the same beverages and dine in the same restaurants

(Belk, 1995).

F&B MNCs in search of new markets turn to China because it has a potential market

of 1.3 billion consumers and the demand for western foods is growing each (Curtis,

McCluskey and Wahl, 2006). The large number of consumers in combination with

fast and continued economic growth have made China an unmistakable potential

market for F&B MNCs. Most of the world‟s largest F&B MNCs are companies based

in the United States of America. And some American F&B multinational corporation

such as McDonald‟s and Kentucky Fried Chicken have already over 500 locations in

China each (Curtis, et al., 2006).

American F&B MNCs are expected to benefit from global branding strategies aimed

at Chinese consumers who prefer western foods. In order to develop these successful

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global branding strategies, it is important for F&B MNCs to understand the Chinese

food and beverage market and the differences between the US food and beverage

market. Furthermore, it is important to understand the influence of Chinese culture

and compare this to the influence of American culture (Curtis, et al., 2006). Therefore

in this thesis the differences in global branding between the US and Chinese food and

beverage market, as a result of cultural influences will be researched.

1.2 The problem statement

The central question to be answered in this thesis is:

What are the differences in global branding strategies between the US and

Chinese food and beverage market, as a result of cultural influences?

1.3 Research Questions

The following research questions will be addressed to answer the problem statement:

1) What is culture and what are the main differences between American and

Chinese culture?

2) What is global branding and how has it developed in the food and

beverage market?

3) What are the influences of the American and Chinese cultures on global

branding strategies in the food and beverage market?

1.4 Relevance

1.4.1 Academic relevance

There are already numerous articles on global branding strategies and it has become a

popular topic as is confirmed by the number of monologues, conferences and research

papers devoted to investigating this topic every year (B. Schmitt, 2002).

Branding has been an important and dominant aspect of domestic marketing research,

but to some extent it has been overlooked in the international context (Bill Merrilees,

et al., 2007). Additionally Varadarajan and Jayachandran (1999) discuss that the

cultural aspects in global branding strategies are not well researched, despite the fact

that this is important within increasing global markets (B. Merrilees, et al., 2007).

This gap is essential since global branding strategies can be used to increase a

company‟s brand and financial results internationally (B. Merrilees, et al., 2007).

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1.4.2 Managerial relevance

The development of global brands could offer multinational companies opportunities

for cost saving, developing global markets and brand positioning across cultures

through standardization of branding strategies (B. Holt, J.A. Quelch and E.L. Taylor,

2004). However, cultural differences might cause problems in developing these

globally acknowledged brands (Hyung-Seok Lee, et al., 2007), since consumers

across the world could have trouble relating to these standard international brands (B.

Holt, J.A. Quelch and E.L. Taylor, 2004).

Since F&B companies operate in a consumer industry they are more likely than other

companies to become international (F. Filippaios, et al., 2008).

China can be an interesting potential market for these F&B companies since it has 1.3

billion consumers and the demand for western foods is growing (Curtis, et al., 2006).

Some large American F&B MNCs like Procter and Gamble and Philip Morris are

already present in China and have managed to compete alongside Chinese food

companies (A. Veeck and G. Veeck, 2000; Curtis, et al., 2006). Global branding

strategies are important in order to strengthen their international position. And given

that global branding has enormous possibilities for international marketing (B.

Merrilees, et al., 2007), these global branding strategies are also important for F&B

MNCs which want to enter the Chinese market. Therefore this thesis is interesting for

marketers and managers of F&B MNCs, especially those who are also operating or

thinking of operating on the Chinese food and beverage market.

1.5 Structure of the thesis

In order to answer the problem statement a literature study is conducted. In each

chapter a research questions is addressed. In the first chapter culture is defined and the

main differences between the American and Chinese culture are indicated. The second

chapter addresses global branding, several important aspects of global branding are

discussed and global branding strategies in the American and Chinese food and

beverage market are researched. After defining culture and global branding the third

chapter addresses the influences of American and Chinese cultures on global branding

strategies in the food and beverage market are addressed and the differences between

these cultural influences are researched. Finally the problem statement will be

answered and conclusions and recommendations will be presented.

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2. WHAT IS CULTURE AND WHAT ARE THE MAIN DIFFERENCES BETWEEN

AMERICAN AND CHINESE CULTURE?

Cultural differences may be the most important problem to developing globally

accepted marketing strategies (H. Lee, et al., 2007). As a result the effect of culture on

marketing has drawn more attention in recent years (A. Shoham, M. Farhangmehr and

A.M. Soares, 2006). Frequently the required knowledge about cultural differences is

missing. In order to solve this problem and to better interpret the values of different

cultures, it is essential to determine the correct way to explicate differences and

similarities that are present across countries and cultures (H. Lee, et al., 2007). This

can be done by researching the variation in cultural dimensions that exists in

numerous studies and theories on culture.

2.1 What is culture?

Culture represents the widest influence on various aspects of human behaviour. This

extensiveness makes it hard to define culture (McCort and Malhotra, 1993; A.

Shoham, et al., 2006). In this paragraph Hofstede‟s, Schwartz‟s and Trompenaars‟s

theory on culture will be addressed and compared.

2.1.1 Hofstede’s dimensions of culture

Hofstede used data collected from 116,000 questionnaires of IBM employees in more

than 40 countries. The size and the geographic coverage of this sample were

exceptional (C. L. Koen, 2005). Hofstede‟s theory on culture initially consisted of

four dimensions, respectively individualism-collectivism, uncertainty avoidance,

power distance and masculinity-femininity. Hofstede characterized these dimensions

in such a way that they would resemble the way members of a society usually deal

with each of the basic societal problem. He connected his dimensions with economic,

geographic, demographic and political features of a society. In a later stage of his

research he added a fifth dimension, namely long-term orientation (C. L. Koen, 2005;

A. Shoham, et al., 2006).

Individualism-collectivism

Individualism versus collectivism depicts the kind of relationships individuals have in

a certain culture. In an individualistic society people are expected to look after

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themselves and their direct family whereas in collectivist society people are integrated

into strong groups and they are very loyal to these groups (A. Shoham, et al., 2006).

Uncertainty avoidance

Uncertainty avoidance deals with “The extent to which people feel threatened by

uncertainty and ambiguity and try to avoid these situations” (Hofstede, 1991, pp. 113;

A. Shoham, et al., 2006).

Power distance

Power distance describes the consequences of unequal power distribution and

authority relations in a society (A. Shoham, et al., 2006).

Masculinity-femininity

Masculinity versus femininity describes how gender roles are divided in society. In a

masculine country values such as success and accomplishment are important. And in

a feminine country caring for others and quality of life are examples of important

values (A. Shoham, et al., 2006).

Long-term orientation

Long-term orientation is related to the “fostering of virtues oriented towards future

rewards, in particular perseverance and thrift” (Hostede, 2001, pp. 359; A. Shoham, et

al., 2006).

2.1.2 Schwartz’s Universal structure of values

Schwartz initially carried out his research in 20 countries, but this number increased

continuously. The data was collected between 1988 and 1992 and the respondents

included university students and schoolteachers (Daniel W. Baack and Nitish Singh,

2007). In order to explain cultural differences Schwartz has indicated three bipolar

dimensions, respectively embeddedness versus autonomy, hierarchy versus

egalitarianism and mastery versus harmony (C. L. Koen, 2005).

Embeddedness versus autonomy

Embedded societies focus on social relationships and sustaining the status quo. Values

that are associated with embedded societies are security, traditions and knowledge.

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Autonomy societies focus on uniqueness and preferences. Schwartz describes two

kinds of autonomy; intellectual and affective autonomy. Values that are associated

with autonomy societies are security, traditions and public order (C. L. Koen, 2005).

Hierarchy versus egalitarianism

Hierarchical societies focus on authority and the unequal distribution of power.

Values that are associated with hierarchical societies are prosperity, authority and

social power. Egalitarian societies focus on corporation and equality. Values that are

associated with egalitarian societies are equality, honesty and responsibility (C. L.

Koen, 2005).

Mastery versus harmony

Mastery-orientated societies focus on the achievement of personal or group goals.

Values that are associated with a mastery-orientated society are ambition, strive,

success and competition. Harmony-orientated societies focus on the environment and

respect the world as it is. Values that are associated with a harmony-orientated society

are taking care of the environment and world piece (C. L. Koen, 2005).

2.1.3 Trompenaars

Trompenaars based his research on sociological literature. He designed a

questionnaire that was filled in by approximately 46,000 managers from more than 40

countries over the past ten years. In his research on culture Trompenaars uses six

dimensions or dilemmas, respectively universalism versus particularism,

individualism versus communitarianism, specificity versus diffuseness, achieved

status versus ascribed status, inner-directed versus outer-directed and sequential

versus synchronous time orientation (C. L. Koen, 2005).

Universalism versus particularism

In a universalist society personal relationships should not hinder conducting business.

A particularist society on the other hand focuses on friendship and personal

relationships (C. L. Koen, 2005).

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Individualism versus communitarianism

This dimension is roughly the same as Hofstede‟s dimension of Individualism-

collectivism (C. L. Koen, 2005).

Specificity versus diffuseness

This dimension emphasizes the differences between societies that analyse

circumstances either into specifics or into broader perspectives (C. L. Koen, 2005).

Achieved status versus ascribed status

In some cultures status is based on accomplishments and in other cultures status is

ascribed. This dimension stresses the difference between the achieved status culture

and the ascribed status culture (C. L. Koen, 2005).

Inner-directed versus outer-directed

This dimension characterizes whether actions are guided by internally directed

findings and choices or by signs in the outside world (C. L. Koen, 2005).

Sequential versus synchronous time orientation

A sequential society focuses on efficiency and punctuality. A synchronic society on

the other hand focuses on effectiveness rather than efficiency (C. L. Koen, 2005).

2.1.4 Discussion

There are several limitations to each of these three theories on culture. In order to

choose one theory on culture, the differences between all three theories are discussed.

Hofstede‟s theory on culture might be outdated, since the research that resulted in his

five dimensions took place between 1967 and 1973 (A. Shoham, et al., 2006).

Furthermore his work is greatly based upon work-related values. Consequently his

work may not be applicable to other situations. In addition he only collected data from

IBM employees, these employees might not be representative for their county, since

IBM is a Western company (Steenkamp, 2001). Both Schwartz‟s and Trompenaars‟

research are more recent than Hofstede‟s research (C. L. Koen, 2005). Furthermore

both Schwartz and Trompenaars used a more diverse sample to collect their data. In

addition their research is considered to be more applicable in other than work-related

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situations than Hofstede‟s work (D.W. Baack, et al., 2007; C. L. Koen, 2005).

However, both Schwartz and Trompenaars have based a significant part of their

theories on Hofstede‟s five dimensions (D.W. Baack, et al., 2007). For instance

Trompenaars‟ individualism versus communitarianism dimension is almost similar to

Hofstede‟s individualism-collectivism dimension (C. L. Koen, 2005). Although

Hofstede‟s work experiences several limitations, Steenkamp (2001) states that

Hofstede‟s theory on culture is by far the most important theory on culture. Compared

to the theories of Schwartz and Trompenaars, Hofstede‟s work has been applied more

extensively. His dimensions are used in numerous studies, including several studies in

the marketing field (Steenkamp, 2001). Therefore Hofstede‟s theory is used in this

thesis to define culture.

2.2 What are the main differences between American and Chinese culture?

The American and Chinese population have dissimilar cultural values, norms, beliefs

and characteristics (Lin, C.A., 2001; Triandis, H.C. 1995; L. Teng and M. Laroche,

2006). In this paragraph the main differences between American and Chinese culture

will be addressed and compared according to Hofstede‟s dimensions of culture.

2.2.1 American culture according to Hofstede

In Hofstede‟s research the United States have

Individualism (IDV) as their highest dimension at 91.

This high ranking implies an individualistic society in

which the relationships between people are weak.

This indicates that within this society people are more

independent and they only look after themselves and

their direct family (Hofstede‟s cultural dimensions1).

The second highest dimension for the United States is

Masculinity (MAS) at 62. This ranking implies a

society which experiences gender differences of roles to a larger extent. Important

parts of the society and power distribution are dominated by males. As a consequence

the women in this society move away from their female role and towards the male

role model, becoming more confident and competitive (Hofstede‟s cultural

dimensions1)

. 1. http://www.geert-hofstede.com/

0

20

40

60

80

100

PDI IDV MAS UAI LTO

Figure 2.1: American

culture according to

Hofstede. Source:

Hofstede’s cultural

dimensions1

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The next dimension for the United States is Uncertainty Avoidance (UAI) at 46. This

ranking indicates a society which has less regulation and a considerable level of open-

mindedness for different opinions, ideas and beliefs (Hofstede‟s cultural

dimensions1).

The United States‟ Power Distance (PDI) dimension has a ranking of 40. This ranking

implies a higher level of equality across societal levels. This situation strengthens a

collaborative communication between power levels and it generates a more stable

cultural environment (Hofstede‟s cultural dimensions1).

The United States have Long-term Orientation (LTO) as their lowest ranking at 29.

This low ranking implies a belief in fulfilling responsibilities and appreciating cultural

heritage (Hofstede‟s cultural dimensions1).

2.2.2 Chinese culture according to Hofstede

In Hofstede‟s research China has Long-term Orientation (LTO) as the highest

dimension at 118. This ranking implies a society‟s time and perseverance perspective,

conquering difficulties with time determination and strength (Hofstede‟s cultural

dimensions1).

China has a Power Distance (PDI) ranking of 80. This implies that there is a greater

inequality of power and prosperity in the society. This

situation is accepted by the population as a result of

their cultural traditions (Hofstede‟s cultural

dimensions1).

The next dimension for China is Masculinity (MAS)

at 66. This ranking indicates a society in which

gender differences of roles occur to a larger extent.

As a result significant parts of the society are

dominated by males (Hofstede‟s cultural

dimensions1).

1. http://www.geert-hofstede.com/

0

20

40

60

80

100

120

140

PDI IDV MAS UAI LTO

Figure 2.2: Chinese culture

according to Hofstede

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China‟s Uncertainty Avoidance (UAI) dimension has a ranking of 30. This ranking

implies a society which has a small number of rules and a relatively high tolerance

level (Hofstede‟s cultural dimensions1).

China has very low ranking in Individualism (IDV) at 20. This ranking can be

partially explained by the importance of collectivism as a consequence of the

communistic authority. The low ranking of Individualism in a collectivist society is

evidenced in certain close and dedicated groups. People are integrated into these

strong groups where everybody is responsible for their fellow group members

(Hofstede‟s cultural dimensions1).

2.2.3 Discussion

There is a significantly large difference between the United States and China

concerning the Long-term Orientation (LTO) dimension. The United States has a

Long-term Orientation ranking of 29 and China has a ranking of 118. This implies

that the United States is relatively short-term orientated. Principles related to short-

term orientation are fulfilling responsibilities and respecting traditions. In addition

this implies that China is relatively long-term orientated. Principles related to long-

term orientation are perseverance and thrift (Hofstede‟s cultural dimensions1).

Another significantly large difference between

the United States and China is the

Individualism (IDV) ranking at respectively 91

and 20. This difference implies that the United

States has an individualistic society and China

has a collectivist society. In an individualistic

society people are more independent and they

only look after themselves and their direct

family. In a collectivist society on the other

hand people are integrated into strong groups,

where everybody is responsible for their fellow

group members (Hofstede‟s cultural

dimensions1). 1. http://www.geert-hofstede.com/

0

20

40

60

80

100

120

140

PDI IDV MAS UAI LTO

Figure 2.3: The 5D Model of

Hofstede applied to the United

States and China

United States China

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There is a less significant, but still quite important difference between the Power

Distance (PDI) dimension of the United States and China. The United States has a

Power Distance ranking of 40 and China has a ranking of 80. This implies that there is

a higher level of power inequality in China compared to the United States.

Both the United States and China have low Uncertainty Avoidance rankings,

respectively 46 and 30. These rankings indicate that there is a high level of acceptance

for uncertainty and not everything in society is controlled (Hofstede‟s cultural

dimensions1).

Furthermore a remarkable similarity between the United States and China is that they

have approximately similar rankings of Masculinity (MAS), respectively 62 and 66.

Values related to Masculinity are assertiveness and competitiveness (Hofstede‟s

cultural dimensions1).

Table 2.1: Hofstede’s 5 dimensions applied to the United States and China. Source: Hofstede’s

cultural dimensions1

United States China

Power Distance Low Power Distance (40) High Power Distance (80)

Individualism Individualistic society (91) Collectivist society (20)

Masculinity/

Femininity

Masculine society (62) Masculine society (66)

Uncertainty Avoidance Low Uncertainty Avoidance

(46)

Low Uncertainty Avoidance

(30)

Long-term Orientation Short-term orientated (29) Long-term orientated (118)

1. http://www.geert-hofstede.com/

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2.3 Conclusion

According to Steenkamp (2001) Hofstede‟s theory is the most influential theory on

culture. His theory has been applied to numerous studies in the field of marketing

(Steenkamp, 2001). As a result his five dimensions are used to define culture and

compare the American and Chinese culture. The main cultural differences appear in

the dimensions Individualism and Long-term Orientation (Hofstede‟s cultural

dimensions1). After defining these main cultural differences, they can be applied to

global branding in the F&B market. But what is global branding and how has it

developed in the food and beverage market?

1. http://www.geert-hofstede.com/

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3. WHAT IS GLOBAL BRANDING AND HOW HAS IT DEVELOPED IN THE

FOOD AND BEVERAGE MARKET?

Brands have become a universal part of an international popular culture. The Coca-

Cola logo and the McDonald arches are brand symbols that are recognized all over the

world (E. J. Arnould and J. Cayla, 2008). Branding refers to the use of a trademark to

position a specific product. This would imply that global branding simply refers to the

international use of that trademark (F. Fastoso and J. Whitelock, 2007). But what is

the specific definition of global branding and what are its characteristics?

3.1 What is global branding?

According to F. Fastoso, et al. (2007) global branding refers to those brand features

that make it special and unique in the area of marketing. These features are the brand

name, the brand logo, its sound elements and its personality. Global branding should

include the use of these features at a global level. Furthermore it should also focus on

the problems that arise in its strategy from acting globally, such as the influences of

local environments including local culture and politics.

In sum, global branding is an area in international marketing that relates to the

problems that a company faces when their brands cross national borders (F. Fastoso,

et al., 2007). In order to further understand global brands and their strategies, this

paragraph addresses global consumer logic, characteristics of global brands and brand

positioning strategies.

3.1.1 Global consumer logic

A company is confronted with a global consumer logic when people all around the

world demand the same product (Jeannet and Hennessey, 2001). If a company faces a

strong global consumer logic it should implement a global branding strategy. Thus it

is important for a company‟s to know if they have a global consumer. Global

consumer logic consists of three elements, respectively global consumer needs, global

consumer benefits and global product features (Jeannet, et al., 2001).

The need for a specific product across countries is referred to as a global need. These

specific products are present all over the world. Many common needs, like the need

for food and shelter, are global needs. The next element of global consumer logic is

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global consumer benefits. Global consumer benefits can be described as a situation in

which consumers derive the same benefits from a particular product all over the

world. A company should implement global branding strategies if consumers across

countries experience these global benefits. The third element of global consumer

logic is global product features. If consumers around the world desire the same

product features, then a company faces global product logic. Global product logic

enables companies to produce standardized product across countries (Jeannet, et al.,

2001).

The level and intensity of global consumer logic with which a company is confronted

depends on its specific product. A company could face global product logic, thus

consumers desire the same product features worldwide, and experience differences in

global consumer benefits across countries. This can also be the other way around.

Therefore companies should adapt their global branding strategies based upon the

level and intensity of global consumer logic that they face (Jeannet, et al., 2001).

3.1.1 Characteristics of global brands

Detailed research by D.B. Holt, et al. (2004) uncovered that consumers all across the

world relate global branding to three characteristics. These characteristics are quality

signals, global myths and social responsibility.

Quality signals

Consumers are sensitive to the amount of people who buy a certain global brand.

They believe that the more a global brand is bought, the higher the quality of this

specific brand. Because of this belief multinational companies are able to charge a

higher price for their products. A company‟s global status positively influences the

quality perception of costumers. Additionally consumers also believe that

multinational companies are more innovative than local companies (D.B. Holt, et al.,

2004).

Global myths

Consumers think of global brands as symbols of an idealistic culture. They use global

brands to develop a global identity and to feel like world citizens. Consumers relate

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global brands to what they would like to be. As a result multinational companies

compete for global myths (D.B. Holt, et al., 2004).

Social responsibility

Consumers know that international companies influence society, both negatively and

positively. They expect companies to act responsibly and deal with social problems

which are related to their products and the way they conduct business. Consumers are

convinced that international brands have a duty to address social issues such as

consumer health, the environment and employee rights. Consumers do not have these

expectations of local companies since their influence on society is not as extensive

compared to international companies (D.B. Holt, et al., 2004).

This research by D.B. Holt, et al. (2004) also revealed that the country of origin of

multinational companies has become less important. For instance in the past

companies like McDonald‟s and Jack Daniels‟s created American myths, but today

consumers find global myths more important than American myths. They use global

brands as symbols of global myths and they believe that these global brands are part

of a global consumer culture (D.B. Holt, et al., 2004). But how can companies

position their brands as part of this global consumer culture?

3.1.3 Brand positioning

The emergence of mass media such as movies, music, television programs and so on,

mostly originated from the United States, have contributed to the development of a

global consumer culture (A. Appadurai, 1990; C. Walker, 1996; D.L. Alden, J.E.M.

Steenkamp and R. Batra, 1999). Product categories, brands, consumption behavior,

and so on used in these international mass media are perceived as global consumption

symbols (V. Terpstra and K. David, 1991; D.L. Alden, et al., 1999). According to

Walker (1996) mass media and specifically television play a significant role in the

creation of these global consumption symbols (D.L. Alden, et al., 1999). He

comments that in 1996 MTV single-handedly reached 239 million viewers in 68

countries. Teenagers who watch MTV or comparable channels are expected to show

more signs of a global culture. This phenomenon is referred to as the MTV

Generation. Consequently access to international mass media is establishing a global

culture of consumption (Walker, 1996; D.L. Alden, et al., 1999).

20

When a product is marketed all over the world the company‟s brand positioning

strategy influences the way consumers view a specific global brand (D.L. Alden, et

al., 1999). As a consequence of the increasing global market a global brand

positioning strategy emerged, the global consumer culture positioning strategy. A

global consumer culture positioning (GCCP) strategy is described as a strategy which

associates a specific brand as an element of global culture. This specific brand is thus

positioned as a global consumption symbol. Marketing managers can use GCCP to

reinforce their brand‟s equity in an increasing global market, since consumers all over

the world will view their product as an international brand (D.L. Alden, et al., 1999).

GCCP can be differentiated from two other culture positioning strategies, namely

local consumer culture positioning (LCCP) and foreign consumer culture positioning

(FCCP). LCCP is a brand positioning strategy that connects brands to a particular

local customer culture. These brands are associated with local norms, values and

beliefs and they are presented as locally produced and consumed products. FCCP is a

brand positioning strategy that connects brands to a certain foreign culture. The brand

image, its consumers and the circumstances under which a particular brand is used are

depicted as a part of a foreign culture (D.L. Alden, et al., 1999).

The thought of people all across the world consuming the same specific brand creates

the cultural meaning of being part of a global culture. This is accomplished through

an advertising process that connects a brand with other elements of cultural symbols.

There are three essential elements of a cultural symbol set; these are language,

aesthetic styles and story themes (D.L. Alden, et al., 1999).

Language

The English language has become the most important language on the Internet, in

conducting global business and in the mass media (BusinessWeek, 1996; D.L. Alden,

et al., 1999). Many consumers associate the English language with

internationalization and innovation. This implies that if a brand desires to implement a

GCCP strategy it may use written or spoken English words in its communications.

Consequently a brand that wants to execute a LCCP strategy might stress a specific

local language. Finally a brand that wants to implement a FCCP strategy could use

words that are associated to a specific foreign culture (D.L. Alden, et al., 1999).

21

Aesthetic styles

According to D.L. Alden, et al. (1999) consumers associate various aesthetic styles

with global culture. For instance a brand could use a spokesperson which represents a

particular consumer culture. If a company wants to implement a GCCP strategy it will

choose a spokesperson who characterizes a more global image. The company could

also choose to use a spokesperson that characterizes a specific foreign or local culture,

by either implementing a FCCP or a LCCP strategy. Furthermore a brand could also

use several visual aesthetics, such as colors and shapes in the brand logo. A certain

brand logo could communicate a specific consumer culture, being a global, foreign or

local consumer culture. Some logos may be associated with a specific culture and

others may have no connection to any culture (D.L. Alden, et al., 1999).

Story themes

Certain story themes can be representatives of global consumer culture. Whether

consumers relate a brand to a specific consumer culture, either being GCCP, LCCP or

FCCP, relies on the story theme in an advertisement (D.L. Alden, et al., 1999).

3.2 How has global branding developed in the food and beverage market?

The food and beverage market is very large since people all over the world spend

approximately 23% of their income on food, 3.2% on alcoholic beverages and 1.2%

on carbonated beverages (Selvanathan, et al., 2006; F. Filippaios, et al., 2008). F&B

MNCs have globalized earlier and to a larger degree than most MNCs. Increasingly,

people all across the world like to eat the same foods, drink the same beverages and

dine in the same restaurants (Selvanathan and Selvanathan, 2006; F. Filippaios, et al.,

2008). Consequently global branding is especially important for F&B MNCs. In

general it is unlikely for food and beverage brands to implement GCCP strategies. But

there are exceptions; global food and beverage brands like Coca-Cola and

McDonald‟s do implement GCCP strategies (D.L. Alden, et al, 1999). These food and

beverage brands are known all over the world. The following two examples of Coca-

Cola and McDonalds‟s illustrate their global branding strategies in the food and

beverage market.

22

3.2.1 Coca-Cola

The Coca-Cola Company was founded in 1886 and sells over 3300 beverages in more

than 200 countries. These beverages are still beverages including juices, sports drinks

and energy drinks and carbonated beverages including global brands such as Coca-

Cola, Diet Coke, Sprite and Fanta. The company uses a GCCP strategy since it uses

relatively the same brands, formulas, packages, positioning and distributing in all its

international markets (The Coca-Cola Company Annual Review 20091; K. Roth and

S. Samiee, 1992).

Quality signals

Every day consumers all over the world drink 1.6 billion servings of Coca-Cola

beverages. The per capita consumption worldwide in 2009 was 86. This indicates the

average consumption of Coca-Cola beverages in a specific year based on U.S. 8 fluid

ounces of a Coca-Cola product. In 1999 the worldwide per capita consumption was

66. This implies that more and more people all over the world are consuming and thus

buying Coco-Cola beverages (The Coca-Cola Company Annual Review 20091).

Table 3.1 Per capita consumption of Coca-Cola Beverages. Source: The Coca-Cola Company

Annual Review 20091

Global myths

The Coca-Cola Company has three important mission statements which it implements

globally. These mission statements are to refresh the world, inspire moments of

happiness and create value and make a difference. Furthermore The Cola-Cola

Company attaches several values to its brands, including passion, encourage

creativity, optimism and fun. Consumers relate these values to what they would like

to be (The Coca-Cola Company Annual Review 20091).

1. http://www.thecoca-colacompany.com/ourcompany/ar/pdf/2009_annual_review.pdf

23

Social responsibility

Since The Coca-Cola Company operates all over the world in an increasingly

international environment it developed LIVE POSITIVELY. LIVE POSITIVELY

focuses on creating a more sustainable environment through seven essential areas.

These seven areas are designed to make a positive difference in the world and include

beverage benefits, active healthy living, energy management and climate protection,

community, sustainable packaging, water stewardship and workplace (The Coca-Cola

Company Sustainability Review 2008/20092).

Conclusion on Coca-Cola

Coca-Cola positions itself as an element of global culture. It achieves this by using a

GCCP strategy to become a global consumption symbol. As a result consumers view

Coca-Cola as a global brand since it is consumed all around the world, it is viewed as

a symbol of an idealistic culture and the company focuses on creating a more

sustainable environment.

3.2.2 McDonald’s

McDonald‟s was founded in 1955 and has over 32,000 restaurants around the world in

117 countries. McDonald‟s is a global foodservice retailer serving foods such as Fries,

Chicken McNuggets and Hamburgers. (McDonald‟s Corporation Annual Report 2009

3). The company uses a GCCP strategy, because even though McDonald menus differ

to some extent from county to country, its core product is globally constant (K. Roth,

et al., 1992).

Quality signals

In 2009 McDonald‟s served an average of 60 million customers per day all around the

world. This is an increase of 14 million customers compared to 2002, when the

company only served 46 million customers per day. This remarkable increase in

costumer visits has a positive effect on global sales, which increased with 3.8% in

2009 (McDonald‟s Corporation Annual Report 20093).

2. http://www.thecoca-colacompany.com/citizenship/pdf/2008-2009_sustainability_review.pdf

3. http://www.aboutmcdonalds.com/mcd/csr.html

24

Global myths

The company‟s mission statement is to become “better, not just bigger”. McDonald‟s

achieves this through service, quality and hygiene. McDonald‟s brand mission is to

"be our customers' favourite place and way to eat". In addition it attaches several

other values to its brands, such as familiar taste and family fun. Consumers relate

these values to what they would like to be (McDonald‟s Corporation Annual Report

20093).

Social responsibility

McDonald‟s constantly aims to improve its social and environmental performance

trough corporate responsibility. In order to achieve a sustainable future for the

company and its environment, McDonald‟s focuses on five areas. These areas are

sustainable supply chain, nutrition and well-being, environmental responsibility,

employment experience and community (McDonald‟s Corporate Responsibility4).

Conclusion on McDonald’s

Consumers view McDonald‟s as a global brand since it is served all around the world,

it is viewed as a symbol of an idealistic culture and the company aims to improve its

environmental performance trough corporate responsibility. McDonald‟s achieves this

by using a GCCP strategy to position itself as a global consumption symbol.

3.3 Conclusion

Global branding relates to the problems that a company faces when they cross

national borders (F. Fastoso, et al., 2007). If consumers all around the world demand

the same product then a company is confronted with a global consumer logic. If a

company faces a strong global consumer logic it should implement a global branding

strategy (Jeannet, et al., 2001). According to a research by D.B. Holt, et al. (2004)

consumers relate global branding to quality signals, global myths and social

responsibility. Companies can create these global brands by implementing global

branding strategies through GCCP strategies (D.L. Alden, et al., 1999). In the

previous chapter the American and Chinese culture are described and compared and

in this chapter global branding is defined and applied to the F&B market. But how do

the American and Chinese cultures influence global branding in the food and

beverage market? 3.& 4. http://www.aboutmcdonalds.com/mcd/csr.html

25

4. WHAT ARE THE INFLUENCES OF THE AMERICAN AND CHINESE

CULTURES ON GLOBAL BRANDING STRATEGIES IN THE FOOD AND

BEVERAGE MARKET?

According to D.L. Alden, et al. (1999) food and beverages are mostly viewed as a

product category that is frequently consumed in a locally characteristic and traditional

way. Since food and beverages have a strong connection to a specific local culture

(D.L. Alden, et al., 1999), developing globally acknowledged brands in the F&B

market might become challenging (H. Lee, et al., 2007). However, in order to apply

these global branding strategies to the American and Chinese F&B market, these

markets should first be described and discussed.

4.1 The food and beverage market

4.1.1 The Chinese food & beverage market

According to Li, Yin and Saito (2004) traditional Chinese foods primarily consist of

rice, wheat or other grains. These traditional Chinese foods are referred to as the

traditional Chinese food culture. An essential part of this traditional Chinese food

culture is to maintain healthy by eating. Nowadays, traditional Chinese foods are

facing increasing competition because of the emergence of Western foods,

specifically fast foods. Numerous Chinese foods and cultures are disappearing

because of continuing modernization and changing lifestyles. Younger generations

believe that traditional Chinese foods are old-fashioned. They also consider traditional

foods to be of low quality and hygiene. Furthermore they believe that traditional foods

are not convenient (Li, et al., 2004).

The movement towards Western foods includes fast foods, meals away from home

and increased convenience store expenditure. “This increased consumption of

Western-style convenience foods in China, is likely the result of the modernization of

consumer preferences, where the consumption of imported foods, is viewed as a

“sign” of modern living” (Yan, 1197; Curtis, et al., 2006, pp. 2). Chinese use global

brands as a sign of cosmopolitanism. They use dining at Western restaurants and

eating Western foods as status symbols. According to Curtis, et al. (2006) consumers

with high disposable income, lower age level and positive opinions on Western foods

are expected to acquire more Western-style convenience foods.

26

4.1.2 The American food & beverage market

According to S. A. Bowman and B. T. Vinyard (2004) Americans work more than

they did a few decades ago, and occasionally they even have more than one job.

Because of these circumstances they have less time to prepare food at home, which

results in an increase of meals away from home. Increasingly these meals away from

home are consumed at fast food restaurants, since fast foods are relatively low-priced,

convenient and quick (S. A. Bowman, et al., 2004). Research by S. J. Nielsen, A.M.

Siega-Riz and B.M. Popkin (2002) revealed that between 1977 and 1996 the amount

of food consumed at fast food restaurants increased substantially. Consequently

increasing the American consumption of hamburgers, french fries, Mexican food and

pizza from 3.9% in 1977 to 9% in 1996. Additionally there are also increases in the

consumption of soft drinks and salty snacks (S. J. Nielsen, et al., 2002). The

probability of consuming fast food decreases with aging. Younger people are

approximately 4 times more likely to consume fast food than older people (S. A.

Bowman, et al., 2004).

4.1.3 Discussion

Both the United States and China experience an increasing consumption of

convenience foods. Moreover they both experience an increase in the amount of

meals consumed away from home (Curtis, et al., 2006; S. A. Bowman, et al., 2004).

Although these similarities exist there are also some substantial differences. The

primary reason for Americans to consume more meals away from home is because it

is easy and quick (S. A. Bowman, et al., 2004). Americans have less time to prepare

meals themselves and to go grocery shopping, which results in an increased

consumption of fast foods. This behaviour is unlikely in China since dining out is a

social and entertaining event. A Chinese consumer can spend several hours in a

McDonald‟s restaurant with family and friends, whereas an American consumer

simply wants to save time. The main reason for Chinese people to consume Western

convenience foods is because it is fashionable (Curtis, et al., 2006). Furthermore they

believe that consuming Western-style convenience goods provides status (Curtis, et

al., 2006).

27

These differences between American and Chinese consumers influence the level and

intensity of global consumer logic. American and Chinese consumers have similar

global needs for Western convenience foods and they desire the same product

features. However, they derive different benefits from these Western convenience

foods. This situation consequently influences a company‟s global branding strategy,

since a company should adapt their global branding strategy based upon the level and

intensity of global consumer logic (Jeannet, et al., 2001). Furthermore a company

should be aware of the cultural influences on global brands when implementing these

global branding strategies.

4.2 Influences of the American and Chinese cultures on global food and beverage

brands

Brands are influential symbols that reflect both the image which marketing managers

want to create and the cultural environment in which they are introduced (Levy and

Sidney, 1959; G.M. Eckhardt and M.J, Houston, 2001). Americans and Chinese

consumers both have different views on international brands.

4.2.1 Chinese consumers versus American consumers

According to D. Tse (1996), Chinese consumers use brands for their social value. This

social value contributes to a social identity. The Chinese culture is known as a

collectivist society (D. Tse, 1996; G.M. Eckhardt, et al., 2001). According to

Hofstede‟s theory on culture, a collectivist society is integrated into strong groups.

Chinese consumers use brands to associate or dissociate themselves from a specific

strong social group (G.M. Eckhardt, et al., 2001). Important themes used in Chinese

branding strategies are family values, technology and tradition (D.L. Alden, et al.,

1999). These collectivistic beliefs can for instance be seen in the seating arrangements

in Chinese restaurants. Generally, restaurants in China have seating arrangements for

gatherings of eight instead of two. Furthermore dining is considered a social event

G.M. Eckhardt, et al., 2001).

American consumers on the other hand use brands as a symbol of self-expression and

independence. They believe that brands contribute to an individual identity. Important

themes used in American branding strategies are individualism, enjoyment and cost

28

and time saving (D.L. Alden, et al., 1999). These individualistic beliefs can for

instance be seen in the Coca-Cola slogan, which states “Open Happiness”1.

Nowadays traditional Chinese culture is merging with Western beliefs, in particular

with regard to consumerism, consumption and brands (D. Davis 2000; G.M. Eckhardt,

et al., 2001). This movement towards Western beliefs is a consequence of lifestyle

changes, increased incomes and the increased availability of Western products in

China (Curtis, et al., 2006).

According to D.B. Holt, et al. (2004) there are four segments of consumers groups

who evaluate international brands in the same way, despite their country of origin,

respectively global citizens, global dreamers, antiglobals and global agnostics.

Global citizens believe that global companies offer more quality and

innovation than local companies. They also consider whether companies act

responsibly on issues such as consumer health, the environment and employee

rights.

Global dreamers see international brands as high quality products but they

aren‟t really concerned with corporate responsibilities.

Antiglobals are unconvinced that global companies offer higher quality goods

and they don‟t believe that global companies act responsibly. Furthermore

antiglobals do not like brands that advocate American.

Global Agnostics evaluate global brands according to the same criteria as local

brands.

Compared to China, the United States has less global citizens and global dreamers and

more antiglobals and global agnostics (D.B. Holt, et al., 2004). As a result of the

movement towards Western beliefs (Curtis, et al., 2006), the number of global citizens

and global dreamers in China is respectively high (D.B. Holt, et al., 2004). On the

other hand the number of antiglobals and global agnostics in China is relatively low.

Consequently global food and beverage brands have been incredibly successful in

China (Jeannet, et al., 2001).

1. http://www.coca-cola.com./index.jsp

29

4.3 Conclusion

Chinese and American food preferences are changing. Both American and Chinese

consumers are demanding more convenience foods (Curtis, et al., 2006). However,

these similar changes in food preferences have different causes. Furthermore Chinese

and American consumers view brands differently as a result of cultural influences,

primarily caused by Hofstede‟s individualism dimension. But what are the differences

in global branding strategies between the US and Chinese food and beverage market,

as a result of cultural influences?

30

5. CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS

5.1 Conclusions

The primary difference between the American and Chinese culture according to

Hofstede, appear in the dimensions individualism and long-term orientation. Research

by L. Teng and M. Laroch (2006) has showed that Hofstede‟s dimension of

individualism is the most important dimension, when comparing American and

Chinese branding strategies.

China has a collectivist society and Chinese consumers use brands to associate

themselves with certain social groups. Important values in Chinese branding strategies

are family and tradition (D.L. Alden, et al., 1999). American consumers on the other

hand use brands to achieve an individual identity. America is an individualistic

society and Americans believe that brands can reflect self-expression, independence

and achievement.

These existing differences in branding strategies could complicate the development of

global brands. However, the movement towards Western beliefs and Western-style

convenience foods in China could have great potential for global branding in the F&B

market. These shifts in Chinese beliefs and preferences increase the number of global

citizens and global dreamers in China (D.B. Holt, et al., 2004). Global citizens and

global dreamers have positive attitudes towards global brands. Consequently global

food and beverage brands have been incredibly successful in China (Jeannet, et al.,

2001). Companies can create these global brands by implementing global branding

strategies through GCCP strategies (D.L. Alden, et al., 1999), although they should

keep in mind the existence of some cultural differences.

“A small number of foods, representative of a single modern society, prepared in

highly standardized ways, can apparently find enthusiastic consumers nearly

everywhere” (Mintz, 1997, pp. 184; Curtis, et al., 2006, pp. 13).

31

5.2 Recommendations

If a company wants to enter the Chinese food & beverage market is should implement

a GCCP strategy. The number of global citizens and global dreamers in China is

increasing (D.B. Holt, et al., 2004). Increasingly Western brands are considered to be

fashionable (Curtis, et al., 2006). However there are still some differences between

the American and the Chinese consumers, which should be taken into account. China

is a collectivist society. Chinese consumers use brands to associate or dissociate

themselves from certain social groups (G.M. Eckhardt, et al., 2001). American

consumers use brands to create their individual identity.

Marketing managers of F&B MNC, who want to enter the Chinese food and beverage

market should also take into the level and intensity of global consumer logic.

Marketing managers should adapt their global branding strategies according to this

level and intensity of global consumer logic (Jeannet and Hennessey, 2001), since

Chinese consumers derive different benefits from convenience foods than American

consumers.

Overall it can be recommended to implement global branding strategies using a

GCCP strategy. Although marketing managers should keep in mind that there are still

some differences between the American and Chinese consumers.

5.3 Limitations

Although several conclusions can be derived from this research, future studies on the

influences of the American and Chinese cultures on global branding strategies in the

food and beverage market can be improved if they take the following into account:

First of all, this thesis uses Hofstede‟s theory on culture, since Schwartz and

Trompenaars have based their dimensions on Hofstede‟s theory. Furthermore his

theory has been extensively used in the marketing field. Although these arguments

defend Hofstede‟s theory, there are still several limitations to his theory. For instance

Hofstede‟s theory could be considered outdated, because most of his research took

place between 1967 and 1973. Future studies could take these limitations into account

and as a result they may choose a different theory on culture, rather than Hofstede,

Schwartz or Trompenaars.

32

Secondly, in this thesis global consumer logic, global consumer culture positioning,

and characteristics of global brands are used to clarify global brands and their

branding strategies. These are just three elements of global branding. There are many

more papers and elements available on global branding. These could be addressed in

future research on this topic.

Third, many of the papers used in this thesis base their theories on very large well-

known multinational companies, such as McDonald‟s and Coca-Cola. However, there

are many more food and beverage companies which apply global branding strategies.

It might be interesting for future research to find more literature on these other F&B

MNEs, to expand the number of companies studied.

Finally, this research was conducted using a literature study. A more thorough

research could be accomplished when using an empirical study. Some of the literature

used in this thesis might be considered outdated. When using an empirical study,

these theories can be checked and applied.

33

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7. APPENDIX

1. Conceptual Model

What are the differences in global branding strategies

between the US and Chinese food and beverage market,

as a result of cultural differences?

Introduction

What is culture and

what are the main

differences between

American and Chinese

culture?

What is global branding

and how has it

developed in the food

and beverage market?

What are the influences

of American and

Chinese cultures on

global branding

strategies in the food

and beverage market?

Background information

Problem statement and research questions

Specify American culture and Chinese culture

Define culture, use 3 different theories, finally chose one theory

Academic and managerial relevance

Indicate the main differences between the American and Chinese culture

Define global branding Discuss important aspects: GCCP, Global citizens

Branding strategies in the American and Chinese food and beverage market

The Chinese and American food and beverage market

Influences of Chinese and American culture on global branding strategies

Compare differences between cultural influences on global branding strategies

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