Selected Aspects of Cultural Differences and Their Influence On The International Marketing Mix

University of Economics, Prague
International Business Central European Business Realities
Selected Aspects of Cultural Differences and their

Influence on the International Marketing Mix
Author: Anne Sakseide Svendsen

Thesis instructor: Marketa Lhotakova
Scholar year: 2010/2011
Declaration:
I hereby declare that I am the sole author of the thesis entitled Selected Aspects of Cultural
Differences and their Influence on the International Marketing Mix. I have duly marked out
all quotations. The used literature and sources are stated in the attached list of references.
In Prague on 24th of May 2011

Anne Sakseide Svendsen
Acknowledgement
I hereby wish to express my appreciation and gratitude to the supervisor of my thesis, Ing.
Markta Lhotkov, Ph.D.
Table of contents
Introduction .......................................................................................................3
1
Culture ...................................................................................................6
1.1
Research through history.....................................................................8

1.1.1 Hofstede ..................................................................................... 8
1.1.2 Trompenaars ............................................................................11
1.2
Elements of culture ...........................................................................14

1.2.1 Values & norms .......................................................................14
1.2.2 Non-verbal communication ..................................................... 15
1.2.3 Language ................................................................................. 16
1.2.4 Demographic ...........................................................................18
International marketing .......................................................................19

2.1
International marketing mix .............................................................. 21

2.1.1 Product ..................................................................................... 21
2.1.2 International price ....................................................................24
2.1.3 International distribution ......................................................... 30
2.1.4 International promotion ........................................................... 33
Case study: Hagen-Dazs ....................................................................43

3.1
The brand Hagen-Dazs h gn d s ....................... 43

3.1.1 History/development ............................................................... 44
3.1.2 Product portfolio ......................................................................45
3.1.3 Home market strategy the United States of America ...........47
3.2
China .................................................................................................51
3.2.1 Basic information ....................................................................51
3.2.2 History ..................................................................................... 52
3.2.3 Economy and international trade .............................................58
3.2.4 Culture ..................................................................................... 59
3.2.5 China and Hofstedet ................................................................ 64
3.3
Hagen- Dazs in China ....................................................................67

3.3.1 Hagen-Dazs in China ............................................................ 67
3.3.2 Distribution ..............................................................................68
3.3.3 Product ..................................................................................... 70
3.3.4 Promotion ................................................................................ 74
3.3.5 Price ......................................................................................... 85
1
Recommendations ...............................................................................87
Conclusion, limitation and further research .................................................... 93

Bibliography....................................................................................................95
Appendix .......................................................................................................100
Figure list ......................................................................................................102
Table list ........................................................................................................102
Introduction
During the last decades large changes has happened regarding trade in the world.
From having a world with large trading barriers, both political and economical, the
world has developed to become one global market place. This provides companies all
over the world major opportunities, but also causes many treats.
While the consumers experience the globalisation by a growing product
spectrum and in some cases lower prices, the companies have to deal with higher and
stronger global competition. This results in that it is not only important for a company
to have good knowledge about their own country and local competitors, but also
possible treats from abroad. But there are not only disadvantages for the companies, the
increasing ratio of international trade and international trade agreements lowers the
barriers for companies to do business abroad. With this possibility companies can do
business abroad and target a larger market, this can increase the sale and reduce the
costs with economy of scale.
There are many issues a company have to take into consideration before making
the decision about going abroad. First the company have to consider if they actually
have the resources to enter a new market, both regarding finance and knowledge, as
well as what challenges they might experience in the target country. Even though many
international agreements that makes the process easier exists, different countries have
different customs of dealing with both formal issues like tax and banking system, and
informal issues or a natural barrier like culture.
While the formal issues can be dealt with by help from consultation companies
or with specific education, the informal issues are in many cases omitted because
companies do not realize that there are differences. Culture is an important business
element which can make the difference between success and failure. The differences
between two cultures do not have to vary to a large extent, but they still have to be
considered. Even for a company expansion to a neighbour country might result in
cultural problems with for example language or norms. Hence knowledge about culture
plays an important role in a companys decision making process.
The topic of this master thesis is Selected Aspects of Cultural Differences and
their Influence on the International Marketing Mix. The thesis will contain a
theoretical and practical part with focus on the main issues a company have to take into
consideration when developing an international marketing mix.
The beginning of the thesis will contain a theoretical overview of culture and
some of the main research which has been done through history: Hofstede and
Trompenaars. Then four selected variables which influence the culture will be
discussed. The variables demonstrate the effect culture has on the customer behaviour
and the marketing mix and is based on a cultural model from the book Consumer
Behaviour. Implications for marketing strategy1.
Further on theory about the marketing mix will be discussed, with the usage of
Philip Kotlers four Ps2, as well as how the culture elements influence the international
marketing mix.
The practical part will consist of a case study of the international marketing mix
Hagen-Dazs uses on the Chinese market. It will start with general knowledge about
Hagen-Dazs, their products and their strategy in the United States. Then continue with
basic information about China, Chinas history and culture which is relevant to
understand the changes Hagen-Dazs have made on their marketing mix used in China.
The thesis will then continue with analyses of Hagen-Dazs marketing mix on the
Chinese market with emphasis on the element which is adapted to the Chinese culture
and why these changes have been made. The practical part will also include Hofstedes
analyses about China and see if these analyses are applicable on the marketing mix that
Hagen-Dazs is using on the Chinese market. As a closure of the practical part further
recommendations for Hagen-Dazs marketing mix in China have been conducted with
emphasis on the further adaption to the Chinese culture.
The thesis will then finalise with the conclusion, bibliography and the appendix.
In the start of the development of these thesis three hypothesis where prepared
with the purpose of being a guideline and goals for the thesis. The hypotheses are as
following:
1. If culture affects the marketing mix, then companies have to take this
into consideration when developing a marketing mix.
2. Culture plays an important role in the peoples life and this has to be
taken into consideration to be able to develop an effective and purposeful
marketing mix.
Consumer behavoiur - Implications for Marketing Strategy (2007). Quester, Neal & Pettigrew.
Principles of Marketing (2005). P. Kotler & G. Armstrong. NJ: Pearson/Prentice-Hall, Upper Saddle
River. 11th edition.
2
3. Hofstedes research is still genuine today based on the marketing mix

Hagen-Dazs is using on the Chinese market.
The methods used for proving these hypotheses are secondary sources as books,
journalistic articles and internet articles. The information have been gathered over a
period of five months and then analysed based on the topic.
Culture
A culture is a way of life of a group of people-the behaviours, beliefs, values,
and symbols that they accept, generally without thinking about them, and that are
passed along by communication and imitation from one generation to the next.3 This is
one of the many definitions of culture which can be found today. The research about
this topic is very wide and it has gone on for many centuries.
According to Lars Perner, Ph.D.4 there are some characteristics that equal when
you are looking at cultures in the world, this is the main elements that the culture is
based on and has developed from.
One of these characteristics is that culture is learned rather than congenital.
During the years of growth a child will learn about for example the norms of the culture,
communication style or unwritten laws either by acting or thought by someone else.
This can either be from people close to them, like parents or siblings, but also be people
they look up to like politicians or movie stars. The cultural elements that the child will
learn have all developed within limits of what are acceptable in the society. The cultural
elements should not violate the acceptable behaviour in the society, and if they do this
can result in legal problems or problems related with socialization in the society and the
punishment is ranked according to the degree of the offence. Since culture is learned
from the childhood it becomes a natural part of peoples life, and in many cases a
person can react unconscious on culture related issues according to their habits. One
example is that people in Scandinavia have been learned from they are small that they
shall eat all the food on their plate as a sign that they liked the food and that they are
grateful to the host. While in many Asian countries an empty plate is a sigh that you are
still hungry and that the host should offer you more food and if you then reject the offer
it is an insult to the host. The problems might occur when Scandinavians comes to Asia,
or the other way, and the guest acts unconscious according to the habit from their
culture.
Another characteristic is that culture is comprehensive. This means that the
culture is extensive with many elements that are logically brought together and they will
support the main values and norms of the culture when they are followed correctly. For
3
TimelessTime (n.d.) CULTURE MATTERS- Maximising People Contribution through Collective

Behaviour. Retrieved 22th of May 2011 from http://www.timelesstime.co.uk/white-papers/culturematters-maximising-people-contribution/
4
USC
Marshall
(nd.)
Culture.
Retrieved
22th
of
May
2011
from
http://www.consumerpsychologist.com/intl_Culture.html
example, bowing and a strong desire to avoid the loss of face are unified in their
manifestation of the importance of respect. 5
One last characteristic that should be mentioned is that the culture is static or
dynamic based on how quickly the people in the society accept changes. In cultures
based on strong, traditional values, like many Arabian countries, the cultural changes
have been much slower compared to cultures that accept changes to a higher extend,
like the inhabitants in America.
There are today as well different levels of culture in the society. This is national
culture, organizational culture, subculture and individual culture.6 The national culture
is the culture which is to some extent equal for the whole country. This can for example
be if the culture is individualistic or afraid of changes. The cultural research by Prof.
Geert Hofstede, which will be discussed later, is discussing cultural dimensions on a
national level.
The second cultural level is the organizational culture level. Organizational
culture is the norms, values, and beliefs concerning the organization shared by member
of the organization7 This culture is specific for the organization, and is based on the
national culture in the country.
The fourth culture level is the subcultures which are found in the country. A
cultural subgroup differentiated by status, ethnic background, residence, religion, or
other factors that functionally unify the group and act collectively on each member.8
This can for example be Punks or Goths.
The last cultural level is individual culture. This is the individuals norms, values
and beliefs. It is based on all of the mentioned levels in addition to the individuals
mindset and experiences.
All these levels of culture companies have to take into consideration when
making business decisions. The reason for this is that the levels influence the
consumers purchasing decision.
USC
Marshall
(nd.)
Culture.
Retrieved
5th
of
January
2011
from
6
L. Smirnova (2007). Understanding Culture.Retrieved 22th of May 2011 from
http://www.lisaconsulting.com/en/weblog/2007/07/24/culture4/
7
Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson Higher
Education, 4th edition. P. 53
8
The American Heritage Dictionary of the English Language (2009). Subculture. Retrieved 22th of
May 2011 from http://www.thefreedictionary.com/subculture
1.1 Research through history

Through the history there has been done much research about culture and how it
influences the business environment. Some of the research is more known than other
and the next section will focus on research frequently used both business education and
in companies, this is Hofstedes model of national culture and Seven Dimensions of
Culture by Trompenaars.
1.1.1 Hofstede
The first cultural model was introduced by Prof. Geert Hofstede, a world-famous
Dutch scientist, in the beginning of the 1980s. Between 1967 till 1973 a survey was
conducted by IBM and it had 116 000 responders from 70 countries9. The result was a
model identifying four cultural value dimensions based on the largest 40 countries from
the survey. At a later stage the analyses have been updated to include 74 countries and
regions as well as one additional dimension.
Today Hofstedes model of national culture includes five dimensions; Power
Distance, Individualism, Masculinity, Uncertainty Avoidance, and Long-Term
Orientation.
The first dimension Power Distance relates to how people deal with power and
inequality. In other words, how much control and power an employer has over the
employees and if the power is divided equality or not.
In countries with high power distance the power is divided unequally in the
society and high hierarchies are commonly used. Respect is a keyword in these
countries, everyone knows their place in the society and the future has to some extent
been predetermined for the people according to your social group. The hierarchal
structure is visible in all stages of a persons life; as children they are taught to obey
their parents and elders, when they start at school they have to obey the teachers and in
the workplace they have to respect and obey their boss.
Countries with high power distance are commonly found in (for example
Malaysia) and the Arab World, while countries in Northern Europe (such as Sweden)
usually have low power distance.10
Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson Higher

Education, 4th edition p.54
10
Intercultural communication (2009). Milena Bonkov a kol. Vysoka skola ekonomicka v Praze. .
The second dimension is individualism. Individualism is the relationship

between the individual and the group in the society.11 In countries with a highly
individualistic culture the people are perceived as unique, they are responsible for
themselves and in business life promotions are based on individual performance. United
States, Australia and the United Kingdom are all examples of countries with high
individualism.
On the opposite end of the spectrum to individualistic countries are collectivistic
countries. "Collectivism means the subjugation of the individual to a group - whether to
a race, class or state does not matter. Collectivism holds that man must be chained to
collective action and collective thought for the sake of what is called 'the common
good."12 This means that a person should not have their own opinions unless it is in the
best interest of the whole group, if they do have a different opinion compared with the
group this can be looked on as a loyalty break One of the main issues related to business
promotions in collectivistic societies is that promotions usually happen slowly and is
based on seniority. Although a person might go directly into a management position if
they have family members in high positions in the company as family relationships are
highly regarded in collectivistic cultures.
When looking at collectivistic countries we can see a pattern related to the size
and also the power distance. In highly populated countries, as for example China and
Indonesia, the power distance is quite high and these have a collectivistic society. The
reason for this might be the issue about control especially when the population is so
high. Additionally the Confucius theories where collectivism and respect are the main
aspects have been central throughout history in many Asian countries.
The third dimension masculinity is related to weather the general values in
society are male or female related. Typically male related values are linked to
achievement, self-fulfilment and money. It is also related to how the leader positions are
divided in the companies between males and females. In countries where the
masculinity is high men are dominating the important leader positions. Some examples
of countries with a high masculinity are Great Britain and Japan.
Feminine values are the care for other people, emphasis on relationships and
sympathy for the weak. The feminine values can be found for example in Scandinavia
11
Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson

Higher Education, 4th edition. p. 58
12
Fare Rideau (1944). The Only Path to Tomorrow. Retrieved5th of January 2011 from
http://fare.tunes.org/liberty/library/toptt.html
where womens return to work after giving birth is encouraged by government

supported universal day care and a one year paid parental leave is available for parents
(it can go to the mother or father or a combination).
The dimension which describes how people react to change, differences or
unknown situations is called uncertainty avoidance. In countries with high uncertainty
avoidance the society reacts negatively to change and frequently cause stress or
frustration. To make the inhabitants most comfortable there should be precise laws and
regulation and a structured social system. The inhabitants also believe that the
authorities are usually correct and it is important that the government lives up to this.
In countries with low uncertainty avoidance flexibility is desired and the level of
formality is usually low. In these countries, for example the United States, innovation is
commonly promoted while in countries with high uncertainty avoidance the probability
that innovations will be implemented is higher. 13
The last dimension, long-term orientation, is not one of the original dimensions
but was added later to explain the rapid economic growth that has occurred in many
Asian countries. This dimension deals with how the inhabitants deal with time, if they
are focusing on the future or on the past and present.
When it comes to the values associated with long term orientation these are
related to saving resources by only using what is necessary, adaptation of traditions to a
modern context and planning according to what will gain them the most in the future.
In short term oriented countries people are living in the moment. They usually
feel a social pressure to be on the same level as their social group with material things,
even if this will result in overspending. The short term oriented countries also have a
respect for traditions and are not willing to change these traditions if its not necessary.
Countries that are short term oriented are countries like Canada, Norway and the United
Kingdome, while China, Hong Gong and Taiwan are long term oriented.
13

Higher Education, 4th edition, p. 58
10
1.1.2 Trompenaars
Another well-known Dutch scientist that studied culture is Fons Trompenaars.
Together with Charles Hampden-Turner, he developed a cultural model called Seven
Dimensions of Culture that was released in 1998 after over ten years of research. The
questionnaire was conducted in 28 countries with at least 500 responses in each country
and was later tested on 55 national cultures.14
The main difference between the Trompenaars and Hofstede was the research
methods used. While Hofstede mostly used direct questions, Trompenaars used case
studies within his questionnaire to see how people would react in real life.15 In this way
Trompenaars research is more accurate according to how people behave, while Hofstede
relates to how people feel they should behave, because it can be a contrast between this.
In addition to this it was a large time gap between when the research was
conducted, this time gap is approximately twenty years. Within twenty years many
changes has happened in the culture and because of this some of the finding of
Trompenaars and Hofstede do not correspond. This is for example regarding the
collectivism that both of the scientists have included in their research, but the finding in
this category is not the same.
The model is based on the fact that all people come into situations where they
have to solve problems related to the problem of survival. Even if the problems might
be similar in all countries the way people react differs according to their cultures values
and norms. The model is therefore responding to three different problems that people
may experience; the first relates to how people relates to each other, which is the topic
in the first five dimensions, and the two last dimensions relates to how the culture deals
with time and how they deals with nature.16
Since some of the dimensions in Trompenaars model are quite equal to
Hofstedes dimensions I have decided not to go into detail about these dimensions and
instead refer to the part about Hofstede cultural model.
First universalism vs. particularism is taking into consideration how people treat
each other and if rules or personal relationship is the most important thing. In
universalistic cultures the people should treat each other based on law, religion or
14
Provenmodels b.v (2011) Seven dimensions of culture. Retrieved 15th of January 2011 from
http://www.provenmodels.com/580
15
Higher Education, 4th edition, p 72
16
Higher Education, 4th edition, p 68
11
cultural principles, who you know and your personal relationship with the person does
not matter like it does in particularistic cultures. Here the laws are looked at as
guidelines for how to act, but every situation should be evaluated separately. Typical
universalistic cultures is United States and United Kingdom while South Korea and
Mexico have particularistic cultures
Second individualism versus collectivism, it is one of the dimensions that
Hofstede and Trompenaars have in common and this will therefore not be discussed
further in this part.
Neutral vs. affective is also a dimension that relates to how people relates to
each other, but this time in connection to if they show emotions or not. While is some
cultures emotions is a common way to show their opinion and how they feel, it is in
other cultures looked at as a sign of weakness. In neutral cultures people are supposed
to reveal thoughts through feeling and communication should be objective and task
oriented. On the contrary in affective cultures emotions are a common part of the
conversation together with gesturing to emphasis their opinion. According to
Trompenaars research Sweden is one of the most neutral countries while China is one of
the most affective.
The fourth dimension by Trompenaars is specific vs. diffuse is related to how
involved a person is in their work relationship. In specific cultures the people is direct in
their relationship and precise in their communication. Work related issues belong at
work and they separate work and family to a large extend. In diffuse cultures the line
between family and work is not that strict and it is important to build up a relationship
with people so they know they can trust each other.
The last dimension relating to how people interact with each other is
achievement vs. ascription. This dimension is related to if the person is given their
status according to whom they are and who they know or if they earn it by what they do.
In achievement cultures like Norway you earn your status according to what you
perform and your accomplishments. It does not help to know the right people unless you
have achieved something in the past. In ascription cultures on the other hand people can
be get status based on their background, their profession or their title. In ascription
cultures the usage of profession titles are commonly used and the age and a persons
seniority is important.
The sixth dimension is related to the societies attitudes to time, where they are
either future-oriented or past-oriented. In past-oriented cultures they assume that the life
12
is following a predetermine path based on tradition, fate or the will of God. Due to this
they often feel that when it comes to a decision it is best that an old person, who have
lived long and has more experience, is the best person for a decision. In this category
we have countries like China, Great Britain and Japan.
In future-oriented cultures the people look at the future as something positive
that they can change according to their actions. Long term planning for companies is
most profitable and controlling that everything is going according to the plan is
important.17 The United States and Brazil are both future-oriented countries.
The last dimension from Trompenaars is about internal vs. external control, in
other words if we are controlling our fate or if the environment around us do. In cultures
who focus on internal control the people believes that they have control over the
environment and the main issue is themselves and their group.
Countries with external-oriented culture on the other hand are more flexible and
open for a compromise, they are also more being more comfortable with changes and
are adopting more easily. 18
On the top list of countries that is focused on internal-control we have Poland
and Norway, while the countries that is external-focused is Russia, Singapore and
Cuba.19
17
Analytic Technologies (nd.) Differences in Cultures. Retrieved 15th of January 2011 from
http://www.analytictech.com/mb021/cultural.htm
18
Jean Binder (2007). Trompenaars dimensions. Retrieved from
http://www.globalprojectmanagement.org/index.php?option=com_content&task=view&id=23
19
Multinational Management - A strategic approach (2008), Cullen and Parboteeah, Thomson Higher
Education, 4th edition, p.78
13
1.2 Elements of culture

For a company to communicate efficiently to consumers and potential consumer
they need understand the culture and the elements which is influences it. Today there
are many cultural models expressing these elements, but the choice in this thesis fell on
a model from the book Consumer Behaviour. Implications for marketing strategy
(2007).20 The reason for this choice is because the model catches the essence of what a
company have to understand about a culture. As shown in Figure 1: Variables
influencing cross-cultural marketing strategy, there are four main variables which
influence the marketing strategy; values and norms, non-verbal communication,
language and demographics.
Figure 1: Variables influencing cross-cultural marketing strategy
Language
Demographics
Culture
Marketing strategy
Values & normes
Non-verbal
commun-ication
Source 1. Consumer behavoiur. Implications for Marketing Strategy (2007). Quester, Neal & Pettigrew.
McGraw-Hill Australia. 5th edition
1.2.1 Values & norms

Values and norms are important elements influencing the society in the culture
because these are two of the foundations in a persons mind. Both the values and the
norms are usually learned through the childhood, but are changing according to the
environment people live in and the values and norms in this environment. The cultural
values are belief tells us what is good, what is right and acceptable. Norms are
boundaries which are set by the people in the culture based on the values in this culture.
20
Consumer behavoiur. Implications for Marketing Strategy (2007). Quester, Neal & Pettigrew.
McGraw-Hill Australia. 5th edition
14
Norms are about the behaviour of the people and reflects the behaviour of the
people and can be used as a guideline to our actions.21 One example is that the norm in
France is to kiss as greetings, while this is not accepted in Japan where physical contact
is kept to a minimum.22 A global example is that people do not yell at others in the
grocery store, because its not especially appropriate behaviour. In both cases there are
no specific law against this, but it is against the norms in the society.
Like culture in general, the values and norms are under constant changing. An
example of values that has changed through history can be seen in China.23
Traditionally the sons in Chinese families were valued higher than the daughters. Hence
many girls were killed at birth because they were looked at as useless. The reason for
this is that girls could not carry the family name further or earn money for the family,
because their job was at home. Due to this the sons were expected to work hard and
obey they their father and in this way give the family name a good reputation. Today the
values in Chine have shifted towards a more sex equality society, partly due to the
Western influence. The traditional family values are still important, but in large cities it
is usual that male and female are working. Education for children, both girls and boys,
are today strongly valued to increase their possibility to obtain success later in their life.
Regardless of this it is important to mention that the development in the countryside has
has been much slower than in the cities and here the traditional values about sons and
daughters are still important and the parents wants to give birth to a boy so that they
have an insurance that someone will take care of them when they goes older.
1.2.2 Non-verbal communication
Non-verbal communication is the communication that is not verbal. This can be
movement and body positioning, clothing and bodily characteristics, physical
environment, time, symbols and physical objects. According to research non-verbal
communication represents 55% of the impression we make and only 38% from the way
we speak.24 This indicates that the words themselves are not that important, but how we
behave and appear is influencing more than we might be aware of.
21
Chris Brogan (2008). Laws rules norms and habits. Retrieved 5th of January 2011from
http://www.chrisbrogan.com/laws-rules-norms-and-habits/
22
McGraw-Hill Australia. 5th edition p. 526
23
Thinkquest Team (1998). Living and Values. Retrieved 5th of January 2011from
http://library.thinkquest.org/20443/g_living.html
24
Dragonbridge Corporation (nd.) Interpersonal Communication Training. Retrieved from
http://www.dragonbridgecorp.com/training.php
15
When it comes to how companies have to be aware of non-verbal

communication in their marketing mix, this will in most cases be related to the product
and the promotion. Regarding the product itself non verbal communication can affect
design, symbols used on products and usage of colour. In promotion it can influence
how sales people are dressed, greeting customer as well as the colours used in
promotion campaigns.
As mentioned, symbols can be an important element when a company is dealing
with products and promotion. The definition of symbols is: signs or objects
representing something (e.g. status).25 This can for example be a number, a colour, a
shape or an animal. Some examples on this can be in Ghana and Singapore number 7
means bad luck, while in India, Slovakia and USA it symbolizes good luck. Another
example is the animal deer. This is in United State associated with speed and grace,
while in Brazil it symbolizes homosexuality.
When it comes to colours it can be a very sensitive issue because one colour can
symbolize different things in different countries. One example can be that the
comprehension of the colour red in different countries. In China red is considered as a
colour of good luck and is worn by the brides while in the Middle East red symbolize
evil or danger, while in Amsterdam red is usually connected with the Red Light
district.26
Many companies have actually failed on the international market just because
they havent done their research when it comes to use of colours. One example of a
failure due to this was made by a manufacturer of water-sports product that wanted to
go into the Malaysian market. The problem was that the companies predominated
colour was green who is associated with the jungle and illness.27 The result was that the
Malaysians where willing to buy the product due to superstition regarding the colour
and the company had to change their predominated colour to increase the sale.
1.2.3 Language
In the world today many thousands of languages are spoken, but no one knows
precisely how many languages there are. Some languages can be understood by a large
25
26
Color-Wheel-Artist.com (2008) The Meaning of Red. Retrieved from http://www.color-wheelartist.com/meanings-of-red.html
27
16
amount of people like Mandarin Chinese, Hindu, Spanish and English, while other
languages are just understood by a small tribe at a small geographical area. 28 But
language is not only about what language you use, but also about how you use the
words in the language and the meaning of the words.
When it comes to the issue about how the word are being used this can be
divided into explicit messages and implicit messages. In low-context countries the use
of explicit messages in communication is very common. The message is then literally
and the words are most important and not the context they are being set to. When it
comes to implicit messages this is more common in high-context cultures and the
communication style is more diffuse. The communication is then being more presented
in pictures and it can be hard for the conversation partners if they do not have a fairly
good understanding about the other partner.
In most countries the word yes means actually yes, but when you take it into
the context of negotiation with Japanese the meaning is actually yes, I understand what
you are saying instead of yes I agree with you like most Europeans or Americans are
used to.29 In most Asia countries it is also considered impolite to say no and due to this
the answer will not be straight forward.
One of the main problems for many companies has been the translation process
from one language to another. Many companies have done the mistake of translating to
literary and it has resulted in a marketing disasters. One example of this can be the well
know mistake from the company Kentucky Fried Chicken. When their slogan "fingerlickin' good" where translating into Chinese the meaning was changed into "eat your
fingers off."30 This is only one of many translation mistakes that has happened in
marketing the recent years and this has made the translators of marketing campaigns
more focused on translating the ideas instead of the words and in this way be able to
avoid the mistakes to a larger extend.
Another issue regarding language is the written alphabet. There are today
approximately 50 different written alphabets in the world and most of these are used in
28
Vistawide (2011). Top 30 languages of the world. Retrieved 2th of February from
http://www.vistawide.com/languages/top_30_languages.htm
29
International Business (2007) Griffin & Pustay. Pearson Education International p. 90
30
Learn English Network (n.d.) English Horror Mistakes. Retrieved 30th of January 2011 from
http://www.learnenglish.de/mistakes/HorrorMistakes.htm
17
Asia. Just in South Asia there are more than ten alphabets, while in whole Europe only
three alphabets are used.31
The main advantage with written alphabets is that this is not a hidden cultural
element like values or norms, but a cultural element which it is easy for companies to
find information about. In todays technological society there are as well computer
programs suitable for all alphabets, but it might result in higher costs for the company.
External communication will also be influences by usage of different alphabets, but the
translation process for the company will not be that different from translating from one
language to another.
1.2.4 Demographic
Demographics are commonly used in marketing to look at the characteristics of
human populations and population segments to identify consumer markets.32 This can
be age, occupation, income, status, sex, education, religion or family size. The
demographical information is usually quite easy to find for the company through the
official authorities in the different countries and they are usually being updated on a
regular basic by national population censuses.
Regarding demographic in connection with the marketing mix it is commonly
used in the preparation for stage, i.e. segmentation. Demographics as a part of the
segmentation are a commonly used tool for companies to target the customers suitable
for their product, but also to see what products which are suitable for the population.
For example with the knowledge about the family size a company can see if a large
packaging size or a small one is most preferred for their product. Or if a company is
going to launch a product suitable for students at a college level they will have
information about the size of the target group.
When it comes to the usage of demographic in segmentation it is commonly
used in addition to another segmentation strategy. The reason for this is that
demographic is not saying anything about the customers attitude and behaviour, these
two factors are also not demographically driven or demographical related.33
Demographic is therefore commonly used to identify and describe the segment.
31
L. LO (2011). Timeline. Retrieved 12th of May 2011 from

http://www.ancientscripts.com/ws_timeline.html
32
American Heritage Dictionary (n.d.) Demographics. Retrieved 12th of May 2011 from
http://www.answers.com/topic/demographics#ixzz1DvTM4P4U
33
International marketing: theory, practices and new trends. (2010) Machkov, Krl, Lhotkov,
Karlek, Mal, trbov. Praha: Oeconomica.
18
International marketing
International marketing is the business of presenting and promoting goods or
services in such a way as to make customers want to buy them34 outside their domestic
market. International marketing has the same purpose as domestic marketing, but when
conducting an international marketing strategy more factors have to be taken into
consideration.
The first factor a company has to look at is the international market
environment. This consists of the political, legal and regulatory- (P), the economical(E), the social and cultural- (S) and the technological environment (T). These factors are
together forming the PEST analysis which analyses the external macro environment
which the company is rarely able to control. 35 Some selected factors of the analyses are
listed in Table 1 PEST factors. These are some of the factors a company have to
consider before entering the market. The cultural factors in the PEST analyses will be
discussed to a large extent later in this thesis.
Table 1 PEST factors
PEST factors
Political Analysis
Political stability
Legal framework for contract enforcement
Intellectual property protection
Trade regulations & tariffs
Anti-trust laws
Pricing regulations
Taxation - tax rates and incentives
Wage legislation - minimum wage and
overtime
Work week
Industrial safety regulations
Product labeling requirements
Social Analysis
Class structure
Education
Culture (demographics, gender roles, etc.)
Entrepreneurial spirit
Attitudes (health, environmental consciousness)
Leisure interests
Economic Analysis
Economic system in countries of operation
Government intervention in the free market
Comparative advantages of host country
Exchange rates & stability of host country
currency
Efficiency of financial markets
Infrastructure quality
Skill level of workforce
Labor costs
Economic growth rate
Unemployment rate
Inflation rate & interest rates
Technological Analysis
Recent technological developments
Technology's impact on product offering
Impact on cost structure
Impact on value chain structure
Rate of technological diffusion
Source 2 NetMBA.com (n.d.) PEST Analysis. Retrieved from http://www.netmba.com/strategy/pest/

34
GlossaryOfMarketing.com (n.d.) Marketing. Retrieved 22th

http://www.glossaryofmarketing.com/definition/marketing.html
35
NetMBA.com (n.d.). PEST Analysis. Retrieved 22th of May 2011 from
http://www.netmba.com/strategy/pest
of
May
2011
from
19
Another decision companies have to make before expanding abroad is what

marketing approach they will use. There are three main strategies: ethnocentric
approach, polycentric approach and geocentric approach.36 With the ethnocentric
approach companies use the same marketing strategy on their domestic market and
abroad. The company can in this way reduce costs for adapting their marketing mix, but
will not be able to react to customer preferences on the international market.
With the usage of a polycentric approach the company adapts the whole
marketing mix based on thorough research of every market it approach. This strategy
requires high investments, but some companies feel that this is well invested money
because the customers in the different countries receive offers customized to their
needs.
In the last strategy, geocentric approach, the company standardizes their
marketing mix to sell product or services globally. The main difference between this
approach and the ethnocentric approach is that with a geocentric approach global
analyses have been conducted and decisions are made based on this. With an
ethnocentric approach the company uses an already established marketing mix and
copies this to the new market.
Based on the advantages and disadvantages mentioned in Table 2 Advantages
and Disadvantages of Standardized International Marketing and Table 3 Advantages
and Disadvantages of Customized International Marketing the company has to take
into consideration what strategy will be most effective and profitable for them.
Table 2 Advantages and Disadvantages of Standardized International Marketing
Standardized international marketing

Advantages
Disadvantages
Reduces marketing costs
Ignored different conditions of product use
Facilitates centralized control of marketing
Ignores local legal differences
Promotes efficiency in R&D
Ignores differences in buying behaviour
Result in economy of scale of production

Reflects the trend towards a single global
marketplace
pattern
Inhibits local marketing initiatives
Ignores
other differences in individual
markets
Source 3 International Business - A managerial perspective (2007). Griffin & Pustay. Pearson Education
International. 5th edition. P.449
36
International Business - A managerial perspective (2007). Griffin & Pustay. Pearson Education
20
Table 3 Advantages and Disadvantages of Customized International Marketing
Customized international marketing

Advantages
Disadvantages
Ignores different conditions of product use
Increases marketing costs
Acknowledges local legal differences
Inhibits centralized control of marketing
Accounts
for
differences
in
buying Creates inefficiency in R&D
behaviour
Promotes local marketing initiatives
Accounts for other differences in individual
Reduces economy of scale of production

Ignores the trend towards a single global
marketplace
markets
Source 4 International Business - A managerial perspective (2007). Griffin & Pustay. Pearson Education
2.1 International marketing mix

The marketing mix is a central and important part of the marketing strategy
which a company prepare wherever they are doing business on their domestic market or
abroad. The marketing mix is a planned mix of the controllable elements of a product's
marketing plan commonly termed as 4Ps: product, price, place, and promotion. These
four elements are adjusted until the right combination is found that serves the needs of
the product's customers, while generating optimum income.37 For the best result the
company should develop a marketing mix which supports itself through the whole mix.
The marketing mix should as well support the corporate goals for the company as well
as the marketing strategy. When the company has found the best combination the
optimum for the company has been created.
2.1.1 Product
The product is the main element in the marketing mix and it play an important
role in the international marketing strategy. It can be looked at as the main element
because the other elements are in some way dependent on the product.
Historically products were a reaction to a need that customers wanted satisfied.
In todays marketing, product is not only a certain set of physical features but rather a
complex solution that is offered to customers to satisfy their need and wishes. 38 One
37
WebFinance, Inc.
(n.d.). Marketing mix. Retrieved 23th of March 2011
http://www.businessdictionary.com/definition/marketing-mix.html
38
from
21
reason for this is that consumers are getting more aware of their needs, but also because
in many societies citizens have covered their physical needs and want to fulfil other
needs they have. In the education sector the usage of Maslows hierarchy of needs is
commonly used to describe the needs and wants the consumers have (Appendix 3
Maslow's hierarchy of needs).
Looking at the product itself it consists of three or four levels or dimensions
depending on the research material you are looking at. For the purposes of this section a
model consisting of four dimensions has been used as it reflects and emphasizes the
product dimensions in a manner more congruent to this discussion.
Figure 2 Four levels of a product
Source 5 Strategic Marketing (2010). A. Whalley. Andrew Whalley & Ventus Publishing ApS
The first dimension is the core benefits of the product. This is the physical and
technical features of the product which satisfy the need or the want of the customers. An
example can be that a customer wants to satisfy the need of being transported from
place A to place B in a specific time and the product can then be a bus, a car or other
means of transportation that can cover this.
The second dimension is the basic product; for example the quality, design or
the packaging. This is characteristics of the product, how they are presented to add
value to the customers and also the benefit the customers expect to achieve by using the
product.
The third dimension is the augmented product consisting of supporting features
that are included in the product or can be brought additionally. It consists of warranties,
customer service, delivery or other features that can help persuading the customers if
they have doubts.
22
The last dimension is the perceived product. In other words how the customers
see the product in their mind. This is one of the hardest parts for a company to control
because different customers have different views on what they like and dislike based on
their life experience and personalities, for example. But a company has the possibility to
influence the customers view via positioning. The main purpose of this is to create a
clear position for the brand in consumers mind; it should differentiate it from its
competitors and represents a clear benefit or value to the customer.39
When a company is deciding to go abroad they have to make one main decision
concerning the product, this is whether they should adapt their products to the foreign
market or standardized the products. This decision should be based on an in depth
analyses about the country, for example with the usage of PEST analysis which
examines the political, technological, economical and social environment in the target
country. The most common reasons for adapting a product are technical norms, legal
requirements, or cultural and economical differences on the target market. Because
changes of the product are quite expensive many companies try to avoid this if it is
possible.
Regarding the adaption that is related to the cultural issues this can be looked at
through the different dimension that is visible in Figure 2 Four levels of a product.
The most expensive adaptation for a company occurs when changes have to be made in
the first dimension, the core benefits of the product. The reason for this is that the
switching costs for a company to change the manufacturing process are in most cases
very high. In this dimension cultural issues like demographic, for example family size,
and values (if the usage of this product acceptable in this culture) can influence if the
core benefits of the product have to be changed or not.
In the second dimension cultural issues such as language and non-verbal issues
is influence the product. Especially the design and packaging is influenced by colours,
symbol or if the product has a soft or a hard design. According to research Hofstedet
cultural dimension is commonly influencing the product design in many cultures. In
culture societies with high masculinity the design on the products are harder and
stronger while in feminine cultures the design is softer.
The third dimension, the support features, is influenced by the values in the
society and also by the formal laws in the country. Commonly in high developed
39
23
countries there are more regulations regarding warranties and return policies for the
products then in developing countries. The reason for this can be that consumers in
developed countries have higher expectations regarding the features of the products and
their durability. Consumer protection is commonly higher in developed countries as
well, resulting in a higher consumer power.
The fourth and last dimension, the perceived product, is again influenced by the
values in the society. Brand image is all about how the brand is represented in the mind
of the consumers and the company therefore have to do a thorough job with finding the
best representation of the brand that reflects the image they want to the customers to
perceive.
One example related to the brand image is the cultural values towards luxury
brands in different cultures. In some areas of the United States, for example in Los
Angeles, luxury brands like Dior or Dolce & Gabbana demonstrate the status the owner
has in the society. Hence these brands focus on the status, prestige and elegancy when
they are branding their products. On the other hand, in Scandinavian societies there is
an unwritten rule regarding how to act and behave regarding demonstrating wealth or
financial achievements called the Jante law. The Jante Law was written in 1933 by the
Danish-Norwegian author Aksel Sandemose in the novel A fugitive crosses his
tracks, original title En flyktning krysser sitt spor. Originally it contains ten rules,
but it can be briefly summarize as you should not think you are better than anyone
else. Today almost 80 years after it was written the Jante Law is still a part of the
Scandinavian society. To show off one's wealth and financial achievements with luxury
brands and exclusive cars is perceived as negative and condescending above others.
Even so luxury brands have a good possibility of success in Scandinavia if they are
aware of the Jante Law and adapt their brand image according to this.
2.1.2 International price
The only element in the international marketing mix which is directly
influencing the economic revenue for a company is the price. In addition it can be an
important strategic weapon in the fight against the competitors. Choosing the right price
can be the difference between failure and success so it is an important element which
has to be considered in detail.
24
Factors influencing the international price

There are many factors influencing the price a company can charge for a
product, both internally and externally (Figure 3 Factors influencing the price).
Figure 3 Factors influencing the price
Internal factors
External factors
Firm-level factors
Environmental
factors
Pricing strategy
Product factors
Market factors
Source 6 G. Pfajfar (2009) International pricing decisions. Retrieved from miha.ef.unilj.si/_dokumenti3plus2/190198/Lecture7_pricing.ppt
The internal factors influencing the price strategy can be divided into two
categories; firm-level factors and product factors,40 while the external factors can be
divided into environmental factors and market factors. To give a clearer picture of what
the different factors contain Figure 4 Internal and external factors has been developed.
Figure 4 Internal and external factors
Internal factors
Product factors
- Stage in Product life cycle
- Place in product line
- Most important product features
- Product positioning
- Product cost structure
Firm-level factors
- Corporate and marketing objectives
- Competitive strategy
- Firm positioning
- Product development
- Production location
- Market entry modes
External factors
Environmental factors
- Government influences and constraints
- Inflation
- Currency fluctuations
- Business cycle stage
Market factors
- Customers perceptions
- Customers ability to pay
- Nature of competition
- Competitors objectives, strategies,
strengths and weaknesses
Source 7 Pfajfar (2009) International pricing decisions. Retrieved from miha.ef.unilj.si/_dokumenti3plus2/190198/Lecture7_pricing.ppt
Concerning the internal factors this is factors that the company to some extend
can influence themselves. Especially Firm-level factors are determent by the internal
40
G. Pfajfar (2009) International pricing decisions. Retrieved 20th of March 2011 from miha.ef.unilj.si/_dokumenti3plus2/190198/Lecture7_pricing.ppt
25
strategies the company have developed; both corporate strategy and market strategy.
The product factors are as well partly determined by the internal strategy as well as by
the market and the customers purchasing behavoiur.
The external factors on the other hand are determined by factors outside the
power of the company. These factors the company have to learn to handle based on
knowledge and experience. The company might be able to influence some of them, like
customers perceptions and government constrains (last one is only able to influence in
some markets), but factors as nature of competition and currency fluctuation is out of
the reach of the company.
Especially when dealing with international business taxations and currency
fluctuations are important indicators on how hard or easy it will be for a company to do
business on the market.
The last years the issue concerning taxation has been easier for companies to
relate and the reason for this is the high number of trade agreements that has been
developed. This has resulted in a more transparent taxations and tariff system and it is
now more predictable for companies to do business within these trade areas. There are
today a high number of regional trade agreements in the world where the largest
agreements are related to the World Trade Organization (WTO). WTO has in 2008 153
members from all over the world.41
The issue with currency fluctuation have also been solved for some countries
within the European Union (EU). In 2011 17 countries are officially using the currency
Euro and in addition some countries are using it, but are not officially included in the
Euro zone.42 For these countries the trade within the Euro zone has reduced their risk of
unwanted changes in relationship with currency fluctuation. There are also other
advantages for the businesses within the Euro zone like reduction in costs because there
is no need for currency exchange, the companies have better access to capital and it is
easier for the companies to develop plans for the future.43
41
World Trade Organization (2008). Members and Observers. Retrieved 20th of March 2011 from
http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
42
European central bank (2011). Map of euro area 1999-2011. Retrieved 20th of March 2011 from
http://www.ecb.int/euro/intro/html/map.en.html
43
European Commission (2009). The Euro- Business Benefits. Retrieved 20th of March 2011 from
http://www.eubusiness.com/topics/euro/business
26
International pricing strategies

The international price strategies a company choose is depending on the
companies goal for the market and the factors discussed above. As with the other
element in the marketing mix the company have the possibility to standardize or adapt
their price strategy to their new market. Regarding price this is called price
standardization, two-tiered pricing or price differentiation.44
Price standardization means that a company charge the same price for their
product or service no matter what market they are present on and it can be defined as:
Pre-established uniform price for a good or service, based on its historical price,
replacement cost, or an analysis of its competitive position in the market. 45 This
strategy is commonly used in relation to a global positioning. Especially in todays
world where internet and other technological communication methods makes it possible
for people to buy products from other countries, the usage of price standardization can
be the best solution for some companies. The main disadvantage with this strategy is
that the price is not adapted to for example purchase power in the country or the market
price. This can result in a price gap between what the company is offering and the
market price.
The second strategy a company can use is two-tiered pricing. This means that
the company use one price on the international market and one price on the domestic
market. In this way the international price is covering the charges related to the
international business, and the domestic price is covering the costs related to
administration, research and development and accounting costs.46 This method is as
well commonly used on the price on entrance tickets for tourist attractions in developing
countries where the share of foreign tourists is high. The reason for this is that the
foreign tourists can afford to spend more money than the locals and local businesses
exploit this.47
Price differentiation is defined as a pricing strategy in which a company sells
the same product at different prices in different markets.48 With the usage of this
strategy the local management team in the targeted country defines the price according
44
International Business (2007). Griffin & Pustay. Pearson Education International. 5th edition. P. 456
WebFinance, Inc. (n.d.). Standard price. Retrieved 20th of March 2011from
http://www.businessdictionary.com/definition/standard-price.html
46
International Business (2007). Griffin & Pustay. Pearson Education International. 5th edition. P. 456
47
www.braun-rentacar.com (2010). Two-Tier Pricing. Retrieved 20th of March 2011 from
http://www.braun-rentacar.com/Two-tier%20pricing.htm
48
GlossaryOfMarketing.com (n.d.). Price differentiation. Retrieved 20th of March 2011 from
http://www.glossaryofmarketing.com/definition/price-differentiation.html
45
27
to the analyses made about the market. One of the advantages related to this strategy is
that the company can respond faster to changes in the market, for example the internal
and external factors discussed earlier. In addition to this in a market with
heterogeneous tastes and different product valuations, companies may increase their
profits by segmenting consumers and charging differential prices, which allows for the
extraction of additional consumer surplus.49
Further there are more pricing decisions which have to be taken into
consideration when using price discrimination. This can be the usage of for example
premium pricing or penetration pricing.
Premium pricing is defined as Practice in which a product is sold at a price
higher than that of competing brands to give it snob appeal through an aura of
'exclusivity.'50 The marketing objective is to maximize profit with fewer, but more
profitable sales. With this strategy it is usual to target a small group, but people with a
higher purchasing power who are willing to pay more for the image of the product.
Premium pricing is commonly used for luxury brands and high quality technologies and
services.
According to the research Luxury markets and premium pricing by Yeoman
and McMahon-Beattie there has been changes in the society. Because of increasing
income and lack of time more people choose to spend more money on things that was
not common before. The concept of luxury is incredibly fluid, and changes
dramatically across time and culture. In the past, it was associated with champagne,
caviar, designer clothes and sports cars. Nowadays, with increased affluence, luxury is a
blurred genre which is no longer the preserve of the elite. More and more consumers
have traded up as the old values of tradition and nobility have become less important.
People are enjoying much more material comfort in comparison with previous
generations, resulting in a trend of a cultural shift for personal fulfilment and aspiration
through experience. Therefore, it could be argued that luxury is increasingly about
experience and authenticity (Yeoman et al., 2005), rather than monetary value.51 They
49
A. Wolk & C. Ebling (2008). Multi-Channel Price Differentiation: An Empirical Investigation of

Existence and Causes. Retrieved 20th of March 2011 from
http://ijrm.feb.uvt.nl/uploads/Forthcoming_Wolk&Ebling.pdf
50
WebFinance, Inc. (n.d.). Premium pricing. Retrieved 20th of March 2011 from
http://www.businessdictionary.com/definition/premium-pricing.html
51
I. Yeoman & U. McMahon-Beattie (2005). Luxury markets and premium pricing. Journal of Revenue
and Pricing Management, Vol. 4, No. 4, 2006, pp. 319328. Retrieved 21th of March 2011 from
http://www.tomorrowstourist.com/pdf/luxury.pdf
28
state further that this is an increasing trend that companies have to be aware of because
it will influence the way the consumers think in the future.
The opposite pricing strategy is price penetration.
Penetration pricing is
commonly used if a company wants to penetrate a market to gain market shares or when
a company needs to use up spare resources (e.g. factory capacity). With this strategy the
company charge a low price for their product and services in first phase on the new
market and when they achieve their targeted market shares the price will increase. For
this strategy to be successful the demand for the goods has to be highly elastic and the
company have to have the capacity, both regarding production and distribution to be
able to meet the increasing demand. A successful penetration pricing strategy may lead
to large sales volumes/market shares and therefore lower costs per unit. The effects of
economies of both scale and experience lead to lower production costs, which justify
the use of penetration pricing strategies to gain market share.52
There are two main cultural elements that are influencing the pricing strategy,
this is demography and values. While demography us related to if the customers have
the income to buy the product, the value is related to the willingness of consumer
spending. This can be reflected in Hofstedets analyses regarding long term orientation
and short term orientations. In long term oriented countries, like China, the population
are mainly investing money into the future instead. On the other hand in short term
oriented countries, like the United States, money is looked at as a reward for the hard
work which can be enjoyed.
It is important to notice that these values are changing through time. Even
though Hofstedet analyzed China as the country with the highest Long Term
orientation, China is today one of the largest growing luxury markets in the world
because of their growing purchasing power. According to research KRMG in 2007 the
attitude in the Chinese population regarding the owners of luxury brands are quite good
and it reflected that the users where successful and only 2 percent of the responders
looked at the users as superficial.53 This indicates that the Chinese culture has shifted
towards a more Short Term Oriented country and that it is more accepted for the
population to buy luxury products.
52
tutor2u (n.d.). pricing strategies - penetration pricing. Retrieved 21th of March 2011 from
http://tutor2u.net/business/marketing/pricing_strategy_penetration.asp
53
N. Debnam & G. Svinos (2007). Luxury brands in China. Retrieved 15th of March 2011 from
http://www.kpmg.com.cn/en/virtual_library/Consumer_markets/CM_Luxury_brand.pdf
29
2.1.3 International distribution

International distribution is the factor in the international marketing mix that is
the most complex, complicated and least flexible tool. To create a well functioning and
efficient distribution strategy it requires a lot of strategic planning and high investments.
It is important to mention that international distribution is not just about where the
product is sold abroad, but also the whole process of getting the product from the
manufacturing plant till the end customer.
To develop the best international distribution strategy there are many factors that
has to be evaluated and looked at. These factors are according to Food and Agriculture
Organization of the United Nation54:
Market needs and preferences
The cost of channel service provision
Incentives for channel members and methods of payment
The size of the end market to be served
Product characteristics required, complexity of product, price, perishability,
packaging
Middlemen characteristics - whether they will push products or be passive
Market and channel concentration and organization
Appropriate contractual agreements
Degree of control.
Based on these factors the company has to decide what distribution channels to
use, if they will distribute directly to the customers themselves or go indirectly through
middlemen or use a combination on both of the options.
Indirect channels are based on whether they are using domestic overseas
intermediaries or foreign intermediaries. With the usage of domestic overseas
intermediaries a company can choose between commission buying agents, countrycontrolled buying agents, export management companies (EMCs), export merchants,
export agents or piggy backing. While with the usage of foreign intermediaries the
choice is between foreign sales representatives, foreign sales agents, foreign stocking
and non-stocking agents or state controlled trading companies.55 Definitions and
advantages and disadvantages can be seen in Appendix 1 Distribution: Definitions,
advantages and disadvantages.
54
Food and Agriculture Organization of the United Nation (1997). Global agricultural marketing
management. (Marketing and Agribusiness Texts - 3). Edition 3. Retrieved 15th of March 2011 from
http://www.fao.org/docrep/W5973E/w5973e0e.htm#channels
55
Indira Gandhi National Open University (n.d.).
International distribution and sales policy. Retrieved 15th of March 2011 from
http://www.egyankosh.ac.in/bitstream/123456789/35472/1/Unit-12.pdf P. 3
30
The other option a company has is to use direct distribution. direct distribution
include sending missionary skiles representatives abroad from the headquarter, setting
up of local sales/branch office in the foreign country or for a region, establishing a
subsidiary abroad, entering into a joint venture or franchising agreement.56 For
companies with long-term interest in the market this can be the best alternative, but
requires a lot of investments and if the strategy fails it can result in a large loss.
After these decisions there is still one question that the company has to take into
consideration: where and in how many stores should the products is sold. For this there
are three basic distribution strategies a company can use, intensive distribution,
selective distribution or exclusive distribution.
Intensive distribution means to Marketing strategy under which a firm sells
through as many outlets as possible, so that the consumers encounter the product
virtually everywhere they go: supermarkets, drug stores, gas stations, etc.57 The main
goal with this strategy is to cover the whole market with the usage of all available
outlets and to sell a huge number of products. This strategy is commonly used for
products as soft drinks and snacks where you can in most cases find in every
supermarket or kiosk no matter where in a country you are. For a company to be able to
use this strategy they have to invest a lot of financial resources and have a close
cooperation with the retailers.
Selective distribution is a type of product distribution that lies between
intensive distribution and exclusive distribution, and in which only a few retail outlets
cover a specific geographical area. Considered more suitable for high-end items such as
'designer' or prestige goods58 but also suitable for products with a long life cycle.
Some of the reasons why a company is choosing this strategy can be to minimize
the distribution costs to receive a higher net profit as well as trying to limit the potential
competition. In addition to this the company has more control over the channels they are
going through.
When choosing this strategy the company is identifying a smaller and more
specific market with specific specifications which the distribution outlet has to fulfil.
56
Indira Gandhi National Open University (n.d.).

International distribution and sales policy. Retrieved 15th of March 2011 from
http://www.egyankosh.ac.in/bitstream/123456789/35472/1/Unit-12.pdf P.4
57
WebFinance, Inc. (n.d.). Intensive distribution. Retrieved 15th of March 2011 from
http://www.businessdictionary.com/definition/intensive-distribution.html
58
WebFinance, Inc. (n.d.). Selective distribution. Retrieved 15th of March 2011 from
http://www.businessdictionary.com/definition/selective-distribution.html
31
This can be related to outlet size, quality of service, market size, customers group or
other specifications which reflects the companys corporate strategy. The retailers can
also be chosen based on a geographical area.
Exclusive distribution is a situation where suppliers and distributors enter into
an exclusive agreement that only allows the named distributor to sell a specific
product.59 In most cases there will be an exclusive, legal distribution agreement where
the agreement is specified, but this depends on the two parties.
This usage of exclusive distribution is commonly used with high end and luxury
products for example with cars or Apple had an exclusive distribution deal with AT&T
to provide the iPhone to consumers.60
The usage of exclusive distribution agreement is in favour for both the
manufacturer and the distributor or retailer. For the manufacturer the logistic will be
simplified and they will have more control on how their products are marketed and
branded. In addition the usage of fewer and more exclusive retailers can also reinforce
the idea that the product is exclusive and rare. And from the retailers point of view an
exclusive contract mean that the consumers who want the product will come to them to
buy the product.
It is important to emphasize one main difference between the selective and
exclusive distribution and this is; while with selective distribution the retailer is allowed
to sell similar product from other brands, this is not the case with exclusive distribution.
With exclusive distribution the retailers are, by contract, not allowed to carry competing
brand but they on the other hand they are the only the retailer with the right to distribute
the brand in the area.
An increasing trend for consumer purchase today is e-commerce or electronic
commerce. It can be defined as:the buying and selling of products and services by
businesses and consumers through an electronic medium, without using any paper
document.61 Increasing usage of internet in private homes as well as increasing trust to
the system has resulted in a steady growth of e-commerce. From 2003 till 2010 ecommerce sales increased from 1,5% till 4% of the total retail sale in the United States
59
WebFinance, Inc. (n.d.). Exclusive distribution. Retrieved 15th of March 2011 from
http://www.businessdictionary.com/definition/exclusive-distribution.html
60
WebFinance, Inc. (n.d.). Exclusive distribution. Retrieved 15th of March 2011 from
http://www.businessdictionary.com/definition/exclusive-distribution.html
61
WebFinance, Inc. (n.d.). E-commerce. Retrieved 19th of May 2011 from
http://www.investorwords.com/1637/e_commerce.html
32
and the growth will according to prognoses continue.62 Today it accounts for a small
percentage of the total retail sale but according to forecast it will reach over $240 billion
by 2014. Other countries with a high level of e-commerce are the Scandinavian
countries, United Kingdom and the Netherlands63 where more than 50% of the
responders had purchased or sold goods or service over internet the last 3 months.
Looking at how the culture is influencing the international distribution this is
related to the economic situation in the country, as well as the cultural traditions in the
country. In many Asian countries the purchase habits for grocery goods differ from
Western countries due to limited access to fridge or freezers which result in that many
families have to buy groceries every day. In addition to this many Asians prefers
markets instead for supermarkets due to the tradition in the country.
It is as well possible to relate Hofstede and his research to the choice of
international distribution. It is said that in countries with a strong uncertainty avoidance
or collectivistic countries, or if they are male the probability for being more loyal are
higher.64 The reason for this is that the collectivistic countries feel related to their choice
of distribution channel while people with strong uncertainty avoidance feel secure
because they know what they can expect from the distribution channel. These are some
example of cultural related issues companies have to take into consideration when
choosing distribution channels.
2.1.4 International promotion
Promotion is the last factor in the international marketing mix that will be
discussed in this chapter and maybe the most important element because this is the
element with the goal to attract the customer.
International promotion, also called the promotion mix or communication mix,
consists of four elements; advertising, sales promotion, public relationship and direct
marketing.
Advertising
For most international companies selling product or services abroad
advertisement is the most important element in the promotion mix. Advertising can be
62
Wansink, Budde and Baker with more (2010). World Digital Economy - E-Commerce and MCommerce Trends. Retrieved 19th of May 2011 from https://www.budde.com.au/Research/WorldDigital-Economy-E-Commerce-and-M-Commerce-Trends.html?r=51
63
Eurostat (2010). Internet purchase by individuals. Retrieved 19th of May from
http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do?dvsc=8
64
Marketing Across Cultures (2009). J-C Usunier & J.A. Lee. Pearson Education Limited. 5th edition
33
defined as a paid-for communication to a mass audience that creates awareness and

changes the target audiences attitudes65
The purpose of advertisement is to educate, inform, remind or do brand building
for either a product or an institute. Institutional advertisement is when the promotional
message aimed at creating an image, enhancing reputation, building goodwill, or
advocating an idea or the philosophy of an organization, instead of sales promotion.66
This is also called corporate advertising.
When deciding to use advertisement as the way to reach the customers a
company have to develop an advertising campaign.67
The first step is to find the target group for the campaign. This is to identify the
recipient of the advertisements which will be the best consumer for the product. The
target group will to a large extend influence the advertising campaign because the
decisions will be based on knowledge about the target group. This can be knowledge
about their economical situation, demographic or media usage.
The second step is to create the campaign objectives. The objectives should be
specific, measurable, actionable, relevant and timely,68 also referred to as SMART
objectives. With the usage of SMART objective the company know their targets and the
progression towards them.
The third step is to develop the message which will be communicated to the
potential customers. It can for example be about quality, value (prestige or economic
price) or style. The message will be based on the decisions made earlier, target group
and objectives, for the best campaign result. The message will as well be reflected in the
creative idea of the advertisement to develop a consistency through the whole
advertising campaign.
The next steps are regarding how and where to communicate to the customers.
Experts, specialist or celebrities can be used to communicate the message, but the
creative idea should relate to the target group and not outshine the message.
65
66
WebFinance, Inc. (n.d.). Institutional advertisement. Retrieved 31th of March 2011 from
http://www.businessdictionary.com/definition/institutional-advertising.html
67
Marketing Communications: A European Perspective (2010). Pelsmacker, Geuens, Van Den Bergh.
Pearson Educaton. 4th edition.
68
Internet Marketing- Strategy, implementation and practice (2006). Chaffey, Ellis-Chadwick, Johnston
& Mayer. Pearson Education Limited. 3th edition. P. 172
34
When choosing where to communicate the message the choice should take into
consideration what is the most efficient media, as well availability, legal restrictions,
target groups life standard and other factors. Advantages and disadvantages of the
medium, analyses of what media mix which is most appropriate for the target group and
the message they want to communicate should be looked at as well.
Table 4 Advertising Media Characteristics
Medium
Television
Radio
Magazines
Newspapers
Direct response
Interactive
Outdoor
Advantages
Mass coverage
High reach
Impact of sight, sound and motion
High prestige
Low cost per exposure
Attention getting
Favourable image
Low coverage
Low cost
High frequency
Flexible
Low production costs
Well-segmented audience
Segmentation potential
Quality reproduction
High information content
Longevity
Multiple readers
High coverage
Low cost
Short lead time for placing ads
Ads can be places in interest sections
Timely (current ads)
Reader controls exposure
Can be used for coupons
High selectivity
Reader control exposure
High information content
Opportunities for repeat exposures
Customized and personalized
In-depth information
Can be engaging
Location specific
High repetition
Easily noticed
Disadvantages
Low selectivity
Short message life
High absolute costs
Clutter
Audio only
Clutter
Low attention-getting
capabilities
Fleeting message
Long lead time for ad placement
Visual only
Lack of flexibility
Short life
Clutter
Low attention-getting
capabilities
Poor reproduction quality
Selective reader exposure
High cost per contact
Poor image (junk mail)
Clutter
No obtrusive
Often lacks emotionality
Short exposure time requires
short ad
Poor image
Local restrictions
Source 8 Strategic Brand Management Building, Measuring and Managing Brand Equity (2008). K. L.
Keller. Pearson International Edition. 3th edition.
The main characteristic of the different mediums can be seen in Table 4

Advertising Media Characteristics. In addition to this there have been some resent
trends influencing the choice of medium the companies are using today.
Due to the increasing usage of internet in the society many companies chose
differently than before. The usage of traditional mediums like television, newspapers or
radio has decreased and there is a shift towards internet related mediums. According to
35
Jack Myers Media Business Report in 2009 there where large decrease in the spending
on some of the tradition media, while the usage of new medias increased (Figure 5
Projected Changes in Ad Spending 2009).
Figure 5 Projected Changes in Ad Spending 2009
Source 9 MarketingCharts.com (n.d.) Ad Spending Continues 2009 Spiral, Forecasts Slightly Better for 2010.
Retrieved 4th of April 2011 from http://www.marketingcharts.com/television/ad-spending-continues-2009spiral-forecasts-slightly-better-for-2010-8306/jack-myers-media-business-report-projected-change-adspending-2009jpg/
In the same report Jack Myers forecasted the new advertising trends for 2009
and 2010 and which can be seen in Figure 6 Online Advertising Expenditures by
Channel. It shows an increasing trend of Mobil advertising which is a relative new
form of advertisement.
Figure 6 Online Advertising Expenditures by Channel
Source 10 E. Burns (2009). Online Advertising Expenditure Forecast, 2009-2010. Retrieved 4th of April 2011
from http://www.clickz.com/clickz/stats/1708807/online-advertising-expenditure-forecast-2009-2010
Adverting is influenced by the language, values & norms and non-verbal

communication. The demographic influences as well, but this is commonly used as a
36
method of finding the target audience as discussed earlier. Based on the demographic
companies can as well find information about what media the people in the society use.
When developing the advertising message as discussed earlier this has to be
adapted to the values and norms in the society. This can for example be if it is
appropriate to use humour, fear or comparative message appeals. In Norway the usage
of humour and fear is a commonly used method to grab the attention of the potential
customers, while in for example Japan this is against the values and norms, because
advertisements are looked at as a serious issue.
The creative ideas for adverting are commonly influenced by non-verbal
communication. Since the creative idea is based on the adverting message values and
norms are as well indirectly influencing. The non-verbal communication can among
other factors be colours, symbols or clothing. For example in France the general attitude
toward sensuality and nudity is very relaxed while in Arabic countries this would be
totally unaccepted advertising methods.
For all international promotion categories language is an important influencer.
The language is usually translated to the local language. Since this is equal for all
international promotion categories it will not be discussed further.
Sales promotion
Sales promotion is stimulation of sales achieved through contests,
demonstrations, discounts, exhibitions or trade shows, games, giveaways, point-of-sale
displays and merchandising, special offers, and similar activities.69
In todays society there are in certain sectors low brand loyalty, hence a large
amount of brand switchers, there are a lack of differentiation and many decisions are
made at the point of purchase and this result in that companies use sales promotion.
There are mainly four objectives for using sales promotion. This is to introduce
new products, to attract new customers and retain the existing ones, to maintain sales of
seasonal products and to meet the challenge of competition.70
Regarding the usage of sales promotion when introducing a product that that
many customers are most likely to spend money on products they know suits their
needs. When using sales promotion like free samples the customer have the possibility
69
WebFinance, Inc. (n.d.). Sales promotion. Retrieved 4th of April 2011from

http://www.businessdictionary.com/definition/sales-promotion.html
70
National institute of Open Schooling (n.d). Sales Promotion. Retrieved 4th of April 2011from
http://www.nios.ac.in/Secbuscour/24.pdf
37
to try the product and develop a fondness for it and buy the products later for
consumption.
When it comes to attracting new customers and retain the existing once sales
promotion tools like discounts, gifts and or prizes often attract new customers who are
moving into the market. Due to their lack of experience with the product they might
want to try new products for a good offer to see if it suits them. Regarding the existing
customers, promotion methods as loyalty cards can make the customer feel a relation to
the company and in this way stay loyal to the brand instead of buying from the
competitors.
Maintaining sales of seasonal product throughout the year can be a large
problem for many companies and the usage of sale promotion can be an effective way
to solve this. The usage of off-season discount is one possibility to for example sell
winter cloths, air conditioners, fans or other seasonal products outside season.
The last reason for using sales promotion it to meet challenges from competitors.
In todays tough market companies have to find good ways of winning market shares
and the usage of sales promotion is one of these ways.
There are different main methods that can be used in sales promotion. This can
be money off coupons where the customers receive a coupon they can change into a
product or receive a reduction in the price on a later occasion. Companies can also use
competitions, free gifts or point of purchase materials to encourage the customers to buy
their products. And the last option is the usage of loyalty cards.
Loyalty cards are a marketing program designed to enhance brand loyalty by
cultivating an ongoing relationship between a marketer and his customer. Successful
loyalty programs encourage the consumer to buy frequently, to increase the amount
spent each time, and to concentrate all or most of their related purchases on that
brand.71 The loyal customers can be rewarded based on the value of their purchases or
the frequency of purchases. Loyalty program strategies also include regular
communication with customers such as newsletters, cross-sell offers, satisfaction and
opinion surveys, and collection of information for member databases. In this way
customers feel loyal to the brand, and also the company is able to analyze their
purchasing behavoiur.
71
AllBusiness.com, Inc (nd.) Business Glossary- loyalty program. Retrieved 4th of April 2011from
http://www.allbusiness.com/glossaries/loyalty-program/4962013-1.html
38
Sales promotion in commonly used as a part of the promotion mix to boost up

sales in different ways over a short period and advertisement can be used to inform the
potential customers about their sales promotion tools. Sales promotion tools can for
examples be free samples, bonus offers, exchange schemes (exchange of old product for
a new product at a price less than the original price of the product), coupons or fairs and
exhibitions.
When we look at the importance of sales promotion this can be looked at from
two point of views, the manufacturers point and the consumers point of view and for
both of them sales promotion can be important as illustrated in Table 5 Importance of
sales promotion for manufacturers and consumers.
Table 5 Importance of sales promotion for manufacturers and consumers
Manufacturers
Consumer
Helps to increase sales in a competitive market The consumer gets the product at a
and thus, increases profits
cheaper rate
Gives financial benefit to the
Helps to introduce new products in the market
customers by way of providing prizes
by drawing the attention of potential
and sending them to visit different
customers
places
When a new product is introduced or there is a The consumer gets all information
change of fashion or taste of consumers, about the quality, features and uses of
existing stocks can be quickly disposed off
different products
Stabilizes sales volume by keeping its Helps to raise the standard of living of
customers with them. In the age of people. By exchanging their old items
competition it is quite much possible that a they can use latest items available in
customer may change his/her mind and try the market. Use of such goods
other brands. Various incentives under sales improves their image in society
promotion schemes help to retain the
customers
Certain schemes like money back offer
creates confidence in the mind of
customers about the quality of goods
Source 11 National institute of Open Schooling (n.d). Sales Promotion. Retrieved from
Values and norms are commonly influencing sales promotion. For example in
environmentalist societies the usage of exchange schemes would be profitable for the
company. For example in most of the Scandinavian countries a system of deposit it is
made for plastic and glass bottles. The customers pay a small additional fee for the good
and are repaid when the bottle is returned to a store. The bottles are then recycled and
used again.
39
Public relations
Public relations, also called PR, is defined by the profession or practice of
creating and maintaining goodwill of an organization's various publics (customers,
employees, investors, suppliers, etc.), usually through publicity and other nonpaid forms
of communication. These efforts may also include support of arts, charitable causes,
education, sporting events, and other civic engagements.72
The main goal with public relations is to strengthen the companys reputation
both internally and externally and help the public to understand the company and their
products. Public relations can also be inform or educate the public and can be conducted
through the media; newspapers, television or magazines where they write information
about the company.73
Regarding the public relationship activities that companies do this is for example
building media relations, communication both with opinion leaders and if any crisis in
the company would happen, in addition to internal communication within the company.
Companies also do sponsorship and corporate social responsibility (CSR) to increase
their image.
Some of the main advantages with public relationship is that the credibility of is
very high in addition to high reach and low costs. Building media relation is commonly
done by getting other sources to write information about the company and in this way
increase the credibility of the information. The main disadvantage is the lack of control
the company have over the information.
Public relations are again influenced by values and norm. In this category we are
commonly discussing the values and norms within a company more than within the
society. This can for example be seen when a company have to face major crisis as
pollution or a plane crash. While some companies chose to hold a very low profile and
wait for the situation to calm down by itself, other companies adopt a high profile and
try to solve the situation. These issues are related to the values and norms within the
company.
72
WebFinance, Inc. (n.d.). Public relations. Retrieved 7th of April 2011 from
http://www.businessdictionary.com/definition/public-relations.html
73
Marketing Communications: A European Perspective (2010). Pelsmacker, Geuens, Van Den Bergh.
Pearson Educaton. 4th edition
40
Direct marketing
Direct marketing can be defined as following: the practice of delivering
promotional messages directly to potential customers on an individual basis as opposed
to through a mass medium.74 With the usage of leaflets, direct mail, telemarketing and
email marketing the company can easier target the customers more accurate which
results in a more cost-effective way of promotion compared to for example television
advertisements. The newest trends regarding direct marketing are today SMS (short
message service) marketing and social media.
The main advantage of direct marketing is that the company can target the
information directly to the target group most suitable for their products or services.
Companies can in this way focus their resources on the group that will most likely
purchase their product or service and in this way reduce their costs.
One important aspect when working with direct marketing is that the company
researches the target group and sends the direct mail only to people within the target
group. Especially today when email marketing is very popular, people receive an
overload of email marketing every day. With the usage of direct marketing based on the
customers preferences it can therefore create a positive experience for the receiver and
more likely result in a purchase.
For the company to find the receivers best suitable for their product or service
the usage of a database is common used. Depending on the size and the resources of the
company they can either develop their own database or cooperate with other companies
about building a database or purchase the information from companies which are
specialized in this field.
Today many e-commerce companies establish their own database based on the
purchases the customers makes through their website. A good example is amazon.com
which has developed their own database based on the customers earlier purchases and
their browse history. With the usage of this kind of database the customers receive email adapted to their preferences and they are more therefore likely to purchase
products as a reaction to the direct marketing.
Direct marketing is influenced by values and norms, non-verbal communication
as well as language. Values and norms are related to for example how aggressive direct
marketing a company can use. If a company breaks these norms in the society it can
74
WebFinance, Inc. (n.d.). Direct marketing. Retrieved 19th of May 2011 from
http://www.investorwords.com/1447/direct_marketing.html
41
result in a bad reputation and decreasing income. For example telephone marketing
during the afternoon on a daily basic will create a negative feeling towards the company
and loss of potential customers.
While with direct marketing as leaflets, direct mail or electronic mail the same
variables discussed in advertising will affect the marketing because of the message and
the creative idea.
42
Case study: Hagen-Dazs

In this part of the thesis the theory from part one will be used to analyze the
American brand Hagen-Dazs and the influence culture has on their marketing mix.
To be able to do this I will start with some information about the company itself,
history, products and their strategy on the home market. Then continue with basic
information about Mainland China, their history, economy, culture and Hofstedet
analysis of the country. At last there will be analysis of Hagen-Dazs marketing
strategy on the Chinese market on the mainland and also comments reading if
Hofstedes cultural analysis agree with the strategy Hagen-Dazs is using on the
Chinese market.
Figure 7 Hagen-Dazs logo
Source 12 D. Altri (2010). Hagen-Dazs trasforma Milano in una classica New Orleans. Retrieved from
http://www.marketingjournal.it/hagendazs-trasforma-milano-classica-new-orleans/
3.1 The brand Hagen-Dazs h gn d s

Hagen- Dazs is a luxury ice cream brand known for their top quality all over
the world. The brand is today the market leader on super-premium ice cream and has
capture market shares due to the usage of their vision the world's finest sweet
indulgence that sets the Hagen-Dazs standard and provides the Hagen-Dazs
Moment.75
Today Hagen-Dazs is present in 54 countries worldwide. They are selling their
products, among other places, in supermarkets and convenience stores and in addition to
this there are also over 700 Hagen-Dazs cafes worldwide selling both retail product
and shop specialities. Their main presence is in North America, Europe and Asia and in
addition Hagen-Dazs is growing in Latin America.
75
General Mills (2011). Discover Hagen-Dazs. Retrieved from

http://discoverindulgence.com/Global/Discover
43
3.1.1 History/development
The history of Hagen- Dazs started as early as in 1921 when the founder,
Reuben Mattus, started selling fruit ice from a horse drawn wagon in Bronx, New
York76 and with this his dream was made. He wanted to start a company which would
produce superior ice cream with the richest and purest ingredients and sell it at a
premium price.77 And it was in 1961 that Mr. Mattus dream came true and the brand
Hagen-Dazs was founded. The name Hagen-Dazs was created to sound Scandinavian
to get a more exotic sound to the brand and to this day on many people believe that
Hagen-Dazs is a Danish brand.
During the first years the Hagen- Dazs ice cream was only sold in gourmet
shops in New York City, but due to their unique taste and premium quality the ice
cream soon become popular and Hagen- Dazs started their expansion on the east coast
of the Unites States and by 1973 the brand has expanded throughout the United States.
After seeing how popular their ice cream was Mr. Mattus daughter opened the
first Hagen- Dazs shop in 1976 in New York City. It became a success at once and
within some years the Hagen- Dazs shop was to see all across the country. The next
step for Hagen- Dazs after the success in The United States was to expand abroad. Mr.
Mattus did not have the capacity and knowledge to do this alone and therefore decided
to sell Hagen-Dazs to The Pillsbury Company with the promise that the brand image
was to be kept. In 1982 Hagen-Dazs started their international distribution with
expanding to Canada, in 1984 Hagen-Dazs made the first joint venture agreement
abroad and launched Hagen- Dazs shops in Japan and in 1987 the first Hagen- Dazs
shops was opened in Europe, in the United Kingdom and Germany.
After 1980s Hagen-Dazs has kept on with their expansion of shops, number of
retail store they distribute to and development of a broader product assortment. Today
you can find Hagen-Dazs in 54 countries worldwide and with flavours suitable for
everyone. Hagen-Dazs is today owned by General Mills who has the right to use the
trademark outside the United States and Canada while Nestl has an exclusive license of
the trademark in the United States and Canada on ice cream and other frozen dessert
products.78
76
Hagen-Dazs (nd.) History. Retrieved from http://www.haagendazs.com/company/history.aspx

General Mills (2011) The Story of Hagen-Dazs. Retrieved from http://www.haagendazs.com.hk/html/eng/ourstory/history.html
78
Xignite quote data (2011) General Mills Inc.(GIS Description. Retrieved from
http://seekingalpha.com/symbol/gis/description
77
44
3.1.2 Product portfolio

The philosophy of Hagen-Dazs is according to themselves very simple find
the purest and finest ingredients in the world and craft them into the best ice cream,
sorbet and frozen yogurt available,79 in conclusion that is Hagen-Dazs strategy until
today. From starting with three flavours in 1961; vanilla, chocolate and coffee, HagenDazs has developed a wide product spectral with more than 24 ice cream flavours,
sorbets, frozen yogurt and shops specialties which are all made from unique recipes. In
addition to this Hagen-Dazs launched light ice cream in 2005 as a reaction to the
increasing focus on obese and health in the society.
According to Hagen-Dazs their recipes include dark chocolate from Belgium
and handpicked vanilla beans from Madagascar, which is creating a distinctive and
indulgent taste experiences.80 They are doing this throughout their whole product line.
Figure 8 Hagen-Dazs product portfolio
Source 13 HDIP, Inc. (2011). Hagen-Dazs Products. Retrieved from http://www.haagendazs.com/products/
When it comes to the flavour of the Hagen-Dazs ice cream today, this is a
combination of the common ice creams like chocolate, vanilla and strawberry till the
more special flavours like chocolate peanut butter, green tea and white chocolate
raspberry truffle. To produce these products the company is focusing on the best
ingredients to make the best ice cream. This is reflected in their motto: Perfect ice
cream begins with perfect ingredients81 According to their website Hagen-Dazs
79
HDIP inc (nd.) Made like no other. Retrieved 15th of February 2011 from http://www.haagendazs.com/company/default.aspx
80
Hagen-Dazs
(nd.)
History.
Retrieved
15th
of
February
2011
from
http://www.haagendazs.com/company/history.aspx
81
General Mills (2011). Discover Hagen-Dazs. Retrieved 15th of February 2011from
45
commit hundred percent to find the best ingredients for their products. Wherever the
finest hand-selected ingredients can be found, youll find Hagen-Dazs suppliers
from the jungles of Africa and Indonesia to the strawberry fields of the Pacific
Northwest to the nut orchards of the American South. No corner of the world is too
remote when it comes to finding the perfect ingredients for our products. If its the best,
well find it.82 This shows how much Hagen-Dazs commits to find the best
ingredients to make the finest products for their customers. One of the reasons for why
Hagen-Dazs has reached the success they have today is due to the unique quality and
taste.
Some times throughout the year Hagen-Dazs is launching limited editions of
their ice cream which is being sold for a limited period. On the American market today
there are five limited edition flavours where the three last once where launched in
February 2011 and will be available until September or December 2011. The limited
editions of the market today are Ameretto Almond Crunch (January till December),
Bananas Foster (January till December), Blueberry Crumble (February till December),
Caramel Apple Pie (February till September) and Sweet Chai Latte (February till
September).
83
The main purpose with limited ice cream editions is to monitor the
market and see if the product will be popular as well as profitable for a longer term of
investment.
Figure 9 Selected Hagen-Dazs flavours
Source 14 General Mills (2011). Flavours. Retrieved from

http://discoverindulgence.com/UK_Home/Indulge/Flavours
82
General Mills (2011). Discover Hagen-Dazs. Retrieved 15th of February 2011 from
83
Hagen-Dazs (2011). Ice cream. Retrieved 15th of February 2011 from
http://www.haagendazs.com/products/ice_cream.aspx
46
3.1.3 Home market strategy the United States of America

From the creation of Hagen-Dazs, Mr. Mattus goal was to build up a premium
brand, based on the uniqueness of the taste and the premium quality. By being the first
ice cream brand that focused on luxury ice cream for adults they invented a new
target group which would be very profitable for the company. Today Hagen-Dazs is
still the best-selling brand in the super-premium segment although it has been hard
competition for another American company named Ben & Jerrys.
From the beginning Hagen-Dazs promoted their products minimally due to lack
of resources and in the 1960s promotion was not common. The reason for HagenDazs success was due to world of mouth by their satisfied customers.84
The last years the main promotions Hagen-Dazs used on the American market
have been focusing on the natural ingredients of their products. With delicate photos of
fresh strawberries and texts like: Deep within the tropical jungles of Madagascar, the
finest vanilla beans in the world are chosen exclusively for our vanilla ice cream. For a
distinctive, 100% natural departure from the ordinary85 they are creating a special,
uniqueness for their ice cream that no other ice cream brands have been able to match.
Figure 10 Print ad for Mint Bar shows a print advertisement for Mint Bar which is
one of the printed advertisements in the advertising campaign for natural ingredients
made by Goodby Silverstein & Partners. The advertisement is having a tempting picture
showing the ingredients in addition to informative information about what the product
contains and the purity of the ingredients.
Figure 10 Print ad for Mint Bar
Source 15 Goodby, Silverstein & Partners (nd). Made like no Other Print Mint. Retrieved from
http://www.goodbysilverstein.com/#/work/haagen-dazs-madelikenoother-mint-print
84
Hagen-Dazs
(nd.)
History.
Retrieved
1th
of
May
85
Hagen-Dazs (2007). Our new print advertising. Retrieved 1th of May 2011 from
http://replay.web.archive.org/20090531145721/http://www.haagendazs.com/company/print_ads.htm#header
2011
from
47
An example of how Hagen-Dazs is using corporate social responsibility on the

American market it is to see in the way they are engaged in the fight for the honey bees.
In February 2008 Hagen-Dazs started to engage in the fight for the honey bees in
America. Over a period of three winters approximately 1/3 of the honey bee colonies in
America suddenly died out and this can be a threat for the food supply in the world and
especially for the natural ingredients that Hagen-Dazs is using in their products.86
In the fight for the honey bees Hagen-Dazs have invested money into both
research and into a marketing campaign called Hagen-Dazs loves Honey Bees to
create awareness about the ecological problem. In March 2009 the interactive website
http://www.helpthehoneybees.com was launched with information about the honey bee
crisis, (what Hagen-Dazs is doing to find the reasons for the crisis and how the public
can help the honey bees). In addition to this Hagen-Dazs also launched a special
flavour called Vanilla Honey Bee (Figure 11 Vanilla Honey Bee) to create awareness
in addition to have a specific HD loves HB symbol on all their products containing at
least one bee-pollinated ingredient. Some parts of the revenue from the sale of these
products will also go directly to support the honey bees. As a part of the campaign
Hagen-Dazs included Goodby Silverstein & Partners to make their marketing
campaign including print ads and online advertisements and internet movies.
(Appendix 2 Honey Bee advertisement)
As a result of the Hagen-Dazs loves Honey Bees campaign in 2008 the
Hagen-Dazs brand awareness increased according to The Newspaper Works from 29%
till 36% and in addition to this when the campaign was launched the baseline sales of
Hagen-Dazs products in April 2008 increased 5,2% ($ volume).87
Figure 11 Vanilla Honey Bee
Source 16 Hagen-Dazs (nd). Image Gallery. Retrieved from http://www.helpthehoneybees.com/presskit/
86
Nestle Usa (2009). The hagen-dazs brand redoubles efforts to help the honey bees. Retrieved 1th of
May 2011 from
http://www.nestleusa.com/PubNews/PressReleaseLibraryDetails.aspx?id=AFF2213E-17C9-49AC-861678B9053008DD
87
The Newspaper Works (nd.) Hagen-Dazs supports cause. Retrieved 1th of May from
http://www.thenewspaperworks.com.au/go/news/us-haagen-dazs
48
Hagen-Dazs has from the beginning focused on being a high end product with
the best quality, which is also reflected in the high price. The ingredients Hagen-Dazs
is using in their production are according to them self the purest ingredients on the
market. As a result the price for the ingredients is high.
On the American market the price for Hagen-Dazs pints in the retail store vary
according to the product. For example the average price for a Hagen-Dazs Ice Cream
or Frozen Sorbet in the retail stores is 2 USD approximately 33 CZK88 for 125ml. The
larger boxes with 875 ml with Hagen-Dazs Ice Cream have the average price 8 USD,
130CZK.89
When it comes to the prices in the Hagen-Dazs cafes these products are as well
priced as premium products. Since there is no price information on the Hagen-Dazs
websites the price information have been conducted through a website called TheFind
and the price might not be completely accurate, but it create a picture of the HagenDazs prices. Regarding the 500g Ice cream cakes that Hagen-Dazs is offering these are
sold for a price between 65 till 75 USD (approximately 1000 till 1300 CZK)90
Looking at the distribution strategy for Hagen-Dazs on the American market
they are using selective distribution for their retail product and exclusive distribution of
their cafe concept and store specialities.
Today the Hagen-Dazs products are produced in the production facilities to
Nestle in Bakersfield, California and Laurel in Maryland. The reason for this is that
Nestle are licensed for the sale of Hagen-Dazs retail product on the American market
through a joint venture agreement.91 From the production facilities Haagen-Dazs have
developed a direct store delivery system which transports the product to the HagenDazs cafes and the retail stores.
When it comes to the retail stores which do offer Hagen-Dazs products this is
commonly large retail chains like Albertsons, Target, Ralphs and Vons which is known
for their large assortment, high quality and high image. All stores are equipped with
their own Hagen-Dazs freezers for the products with the Hagen-Dazs logo and
pattern. This is to distinguish Hagen-Dazs premium ice cream from the other brands.
88
Retrieved 2th of May 2011

90
91
D. Fusaro (2000). An amazingly complementary marriage of two ice cream powerhouses. Retrieved 2th
of May 2011 from http://findarticles.com/p/articles/mi_m3301/is_4_101/ai_62141008/
89
49
The Hagen-Dazs cafes are based on franchise agreements where the cafes are
independently owned and operated. To give the customers the best experience and
consistency when they are visiting different Hagen-Dazs cafes there are regulations
regarding for example the design of the cafe, the location and the size.92 Regarding the
location the cafe should be located at a highly visible place with strong foot traffic
throughout the evenings and weekends, this could for example be super regional malls,
airports or designer outlet centres. The size of the Hagen-Dazs cafe depends on the
location of the cafe. If the cafe is located inside to a mall or a lifestyle centres the
requirements are 500-1,200 square feet, while is there caf is located on the street the
caf have to be larger 800-1,200 square feet. The last possibility is a Hagen-Dazs kiosk
where the requirements are 175-200 square feet.
92
HDIP inc (n.d.). U.S. franchise info. Retrieved 2th of May 2011 from http://www.haagendazs.com/company/franchise/building.aspx
50
3.2 China
3.2.1 Basic information
The People's Republic of China or China is the world most populated country
with a population of approximately 1 330 million people and approximately 15 million
of these people are living in the capital Beijing 93. China is located in the Eastern
Asia between Vietnam and North Korea and with a large coastline on the east side.
China is today one of few countries in the world that still has a communistic regime and
Hu Jintao is at present time the president.
Figure 12 Map of China
Source 17 World Bank (2010). China. Retrieved from

http://siteresources.worldbank.org/INTCHINA/Images/318861-1121409190375/CHN32621.jpg
China is the third largest country in the world based on the area and with this
size it is understandable that the diversity between the people is large. There are 55
ethnical groups living in the country and approximately 92 % of the population is
representing the Han people. Today the Mongolians and Tibetan is the most known
ethnical group outside the country due to their conflict with The People's Republic of
China.
With 55 ethnical groups which all have their own language it is easy to
understand that communication in China is problematic. Today the official language in
China is Putonghua, also called Mandarin, and is spoken by 70% of the population.
Mandarin is thought at schools all over the country and is the main language in media
and in the government. In addition to Mandarin there are six major Chinese dialects and
many sub dialects. Many of these dialects are so different that people are not able to
understand each other and this can result in large communication problems.
93
Central intelligence agency (2011). China. Retrieved 26th of March 2011 from
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
51
Today China is known as a new, growing business market, but also as an exotic
travelling destination. The combination of historical wonders like The Forbidden City,
the Chinese Wall and The Terracotta Army, together with large, top modern cities as
Beijing and Shanghai is increasing peoples interest for China as a travelling
destination. This interest has to some extend helped China with their development.
3.2.2 History
The Chinese history has in many ways made the foundation of the Chinese
society. Through decades with emperors, kings and queens, the Chinese society has
developed to the country which is today. Many of the old traditions and values are still
important in China today and this part will therefore focus on the most important
cultural milestones in the Chinese history.
Figure 13 Timeline Chinas history
Source 18 Peabody Essex Museum (nd) A Teachers Sourcebook for Chinese Art & Culture. Retrieved from
www.pem.org/aux/pdf/learn/asia_curriculum/china-tsb.pdf
52
The Imperial Era

China has a long history where the archaeologists have found traces from
humans back to the 21th century before Christ which it traces from the first Chinese
dynasty, Xia Dynasty. The Xia Dynasty is an important milestone in the Chinese history
both because it was the first dynasty, as well because this was the end of the primitive
society and the start of the Chinese class society.
The Xia dynasty lasted for almost 500 years and included 17 emperors. During
this time the tradition with Jade craft started as well as the development of a calendar
system which used both lunar and solar movements.94 The Xia dynasty fell in 1675 BC
after the emperor had been tyrannized the people for many years.
For the second time in history China was again ruled as one country in 221 BC Qin Dynasty. This period is famous for starting the development of the Great Wall, the
Terra-Cotta Warriors, as well as a mausoleum for the emperor. China had great
economic growth, but lasted only for 15 years. Even so the dynasty had a large impact
on the economical and cultural development of China.
When the emperor from the Qin Dynasty died a civil war broke out in China and
shortly after a new chapter in Chinese history stated, Han Dynasty. Han Dynasty used
many of the political aspects from the Qin Dynasty as the model for the administrative
structure, but was more open for an equal society where the citizens could interact as
well. Confucianism which was banded during Qui Dynasty was during Han Dynasty the
state religion and the Confucian scholars together with the intellectual, literary and
artistic where important people in the civil service system.95
Confucius and Confucianism are and have been an important part of the Chinese
culture. For many hundred years Confucianism was the state religion in China before
it was forbidden when China become a communistic state. Even so Confucianism has
survived and it today more of an ethical guideline to how to live than a religion. The last
years Confucianism have received support from President Hu Juntao who has developed
the idea of a "Harmonious Socialist Society," this is based on Confucianisms values.96
94
TravelChinaGuide.com (nd.). Xia Dynasty. Retrieved 14th of May 2011 from

http://www.travelchinaguide.com/intro/history/xia/
95
Chaos Group (n.d.). The Imperial Era. Retrieved 14th of May 2011 from
http://www-chaos.umd.edu/history/imperial.html
96
Berkley center for Religion, Peace & World Affairs (2011). Confucianism in China Today. Retrieved
15th of May 2011 from http://berkleycenter.georgetown.edu/events/confucianism-in-china-today
53
Confucianism is an ethical and philosophical system developed by K'ung Fu

Tzu. K'ung Fu Tzu was living from 551 till 479 BC. His idea included a complex
system of moral, social, political and religious.97
The main concept of Confucianism is based on six values: Li, Hsiao, Yi, Xin,
Jen and Chung. Li has two basic meanings; to be a guide to human relationships and as
a general principle of social order, including that every action affects someone else and
that this should be taken into consideration before acting.
Hsiao is the love within the family both the love from parents to child and
children for their parents. Yi is righteousness also call the moral disposition to do
good.98 Xin is regarding honesty and trustworthiness, while Jen focus on love for
mankind and humaneness towards others. Jen the most important Confucianism value
and it is said to be dearer than life itself--the man of Jen will sacrifice his life to
preserve Jen, and conversely it is what makes life worth living.99 The last value is
Chung. Chung is regarding awareness of responsibility, trying to do your duties and
your best and putting into practice the obligations you have to others. This is both
regarding people you know and the state.100
The Han Dynasty was an important period for the culture and inventions in
Chinese history. During this dynasty paper and porcelain was invented and woven silk
fabrics, silk painting, monuments and indicated the high wealth that was in China
during this period. It was also during the Han Dynasty that the Silk route was started.
It was the export caravan path for silk from China till Roman Empire and also the
secure caravan route across Central Asia.
In 1271 warlords to from Mongolia took control over large parts of China and
founded the Yuan Dynasty. The Mongols had also good international relationships so
trade with western countries increased. Some of the Chinese key inventions like printing
techniques, medicine literature and porcelain where introduced in Europe and China
were introduced to new food products and methods of food preparation. The Mongolian
leaders also reorganized and improved the roads and water communications in addition
to rebuilding the city of Beijing.
97
E. Crystal (nd.). Confucianism. Retrieved 15th of May 2011 from

http://www.crystalinks.com/confucianism.html
98
philosophy.lander.edu (nd.) Main Concepts of Confucianism. Retrieved 15th of May 2011 from
http://philosophy.lander.edu/oriental/main.html
99
philosophy.lander.edu (nd.) Main Concepts of Confucianism. Retrieved 15th of May 2011 from
http://philosophy.lander.edu/oriental/main.html
100
R Hooker(1996). Shu And Chung. Retrieved 15th of May 2011 from
http://www.wsu.edu/~dee/GLOSSARY/SHUCHUNG.HTM
54
The fell of Yuan Dynasty came after major rivalry among the Mongo imperials
and the Ming Dynasty was founded. During the period it was stability both regarding
economy, population, arts and society which resulted that it was promoted a belief
among the Chinese that they had achieved the most satisfactory civilization on earth and
that nothing foreign was needed or welcome.101 Unfortunate for the Chinese this was
not true and after a long wars against the Mongols, Korea and Japan the Ming dynasty
fell and the last Chinese dynasty was established, The Qing Dynasty.
The Qing Dynasty was established by the Manchus, an ethnical group in the
north east of China. The Manchus decided to retain many institutional processes from
Ming Dynasty and continue the Confucian court practices and temple rituals which
emperors traditionally had used. Even so the Qing Dynasty had to protect itself from
both internal rebels and foreign invasion and after great victories with gaining control
over large parts of Central Asia the Qing Dynasty in the end collapsed in 1911 and
marked the end of the dynastic rule.
Republican Era
When the Quig Dynasty collapsed in 1911 Syn Yaw-sen and his associates took
the power over China. After a hard start with almost no economical growth Yuan Shikai
announced him as the dictator, but soon has to escape to Japan because of
demonstrations. In the meantime the political party Kuomintang, also known as
Nationalist Party, as founded and they won the majority seats in the national election the
next year. Even if Yuan had escaped he was elected as president of the Republic of
China in 1913 and removed all the members of Kuomintang from the parliament. In
addition he made him president for life, but died within a short while.
After the death of Yuan different warlords where fighting over the control of
Beijing, in addition Japan was threatening to invade China. The turn came in May 1919
when there were organized a massive student demonstration against the government and
Japan. The republican Sun Yat-sen was commander-in-chief in Guangzhou and
cooperated with the southern warlords to reestablish Kuomintang to counter the
government in Beijing. Because of large economical difficulties Sun Yat-sen had to turn
to the Soviet Union for support and they agreed on helping him on the condition that the
Soviet leadership initiated a dual policy of support for both Sun and the newly
101
Chaos Group (n.d.). Imperian Era: III. Retrieved 15th of May 2011 from http://wwwchaos.umd.edu/history/imperial3.html#mongol
55
established Chinese Communist Party (CCP).102 And from this time the struggle for the
power in China began between the Communists and the Nationalists.
At this time the CCP was a small party with only 300 in 1922 while Kuomintang
had 150,000 members. Within 1925 the Nationalist movement had concurred half of
China and the support was growing. A major problem for the Nationalists where the
internal problems that occurred which resulted in a split. Large propaganda from the
Communists with focus on reforms, and the land- and tax-reform measures made it even
harder for the Nationalists. But after many years with internal conflicts between the
Nationalist and the Communists, in addition to a large conflict with Japan and the
Second World War, the Nationalists escaped to Taiwan in December 1949 and Mao
Zedong came to power.
People's Republic of China
People's Republic of China was formally established on 1 October 1949. With
Mao Zedong and the Chinese Communist Party (CCP) in the lead, this was the time
where the people fought for the working class and their rights. To manage this Mao
launched a program to develop a classless, communist society where the main focus
was on people mobilization, modernization of agriculture and hostility to Western
influence.103
In the period from 1958 till 1960 CCP launched a mass mobilization against the
industrialization to keep up with the United States and the Soviet Union in the steel
industry, this was called "The Great Leap Forward". The goal was to transform China
into an economic and military superpower. At first this went well, but the pressure to
produce unrealistic growth quotas damaged the Chinese food production. In 1959 it was
clear to CCP that "the Great Leap Forward" had been a disaster. The objectives of
production had been reached, but the quality was so bad that the steel could not be used.
In addition to this, it was dry land and the agricultural production collapsed, all this
resulted in a national disaster.
After "The Great Leap Forward" Mao felt that the position of the party had been
substantially weakened and therefore in 1966 Cultural Revolution started.
102
Chaos Group (n.d.). Republican China. Retrieved 15th of May 2011 from http://wwwchaos.umd.edu/history/republican.html
103
N. Mecholsky (2009). History of China. Retrieved 15th of May 2011 from http://wwwchaos.umd.edu/history/toc.html
56
The Cultural Revolution was a revolution where Mao and the CCP eliminated all
enemies of the system, like intellectuals, religious people, foreigners or the minority
populations and all were pursuit and killed. The result of the Cultural Revolution was
also that significant parts of Chinas cultural heritage were lost because Mao wanted to
reduce the risk of insurgents in the future.
China today
There have been major changes in China after 1976 when Dng Xiopng got to
power and introduced market economy. The whole population have worked together to
build up the country and the economy growth in the country has increased rapidly. But
it is important to remember that this is only in some parts of the country. While some
parts of the large cities are distinguished by world-famous brands, global companies and
modern buildings other parts of the cities are affected by poverty due to the villager that
moves to the cities in the search of a better life. So even if the Chinese economy grows
it has resulted in a large gap between rich and poor.
The inequality among the citizens in China we can see with the usage of Gini
index measures. Gini index measures the extent to which the distribution of income
(or, in some cases, consumption expenditure) among individuals or households within
an economy deviates from a perfectly equal distribution. ()Thus a Gini index of 0
represents perfect equality, while an index of 100 implies perfect inequality.104
Looking at the Chinese Gini index measures China is listed with 46,9 points in
2004 and ranked as the 34th worse country in the world on a list of 130 countries. This
means that the values in China is distributed inequality and also above the world
average which is 40,7.105
104
World Development Indicators database (2004). Economy Statistics > GINI index (most recent) by
country. Retrieved 15th of May 2011 from http://www.nationmaster.com/graph/eco_gin_ind-economygini-index#definition
105
World Development Indicators database (2004). Economy Statistics > GINI index (most recent) by
country. Retrieved 15th of May 2011 from http://www.nationmaster.com/graph/eco_gin_ind-economygini-index
57
3.2.3 Economy and international trade

After having a closed economy for many decades during the period of Mao,
Deng Xiaoping introduced an economic reform opening for international trade in the
end of 1970s. Due to the size of the market many international companies saw a great
opportunity in the Chinese market and many companies started to focus on China as a
market for investments. From 1980s it has been a steady growth in foreign direct
investments, with a jump in 2001 when China became a member of the World Trade
Organization.
In 2009 the gross domestic product (GDP) in China was almost 5 000 trillion
USD, which is the second largest economy in the world after The United States, and it
represents approximately 8% of the worlds GDP. China also has one of the highest real
growth rates in the world today with approximately 10% per year. Many experts think
that China will within ten years have the largest economy in the world.
Even though China in one of the countries in the world with the highest GDP,
this does not mean that the economical welfare in the country is good as well. China is
today the country in the world with the highest population and when you take into
consideration this China is ranked as the 95th country in the world with 3,734.608 USD
in nominal GDP per capita.106 There are today also a large difference on the economical
level in the cities and in the suburbs and villages. Especially in the rural areas the
poverty is much higher than in other areas and the last years China has started to work
hard to reduce the poverty in these areas.107
The representation of China in international trade has been growing and in 2010
China became the largest exporter of goods in the world, and regarding import China is
ranked as the second largest in the world. The most important export trading partners
for China is the European Union countries, United States and Hong Kong. The main
origin for the imported goods is from Japan and the European Union and also here the
main importance is manufacturing goods, but fuels and mining products are also
important.108
106
International Monetary Fund (2011) Data and Statistics. Retrieved 15th of May 2011 from
http://www.imf.org/external/data.htm#data
107
IFAD (n.d.). Rural poverty in China. Retrieved 15th of May 2011 from
http://www.ruralpovertyportal.org/web/guest/country/home/tags/china
108
World Trade Organization (2010). China. Retrieved 4th of May 2011from
http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=CN
58
3.2.4 Culture
The Chinese culture is one of the oldest and most complex cultures in the world.
Due to the large geographical area the culture fluctuate according to the region,
provinces and even within one city. There has also been a large move from the rural
areas to the cities that has resulted in that the cultures have been transferred from one
area till another.
This part about Chinese culture will be concentrated on the topics that will be
discussed later in the thesis regarding the marketing mix Hagen-Dazs is using on the
Chinese market.
Tea in China
In China the cuisine and food traditions differs according to the geographically
area and if it is located near the sea or the inland. When it comes to the eastern part of
China seafood is an important part of the cuisine, while in the north mutton and lamb is
common and in the south rice and strong spices are mostly used. Despite of these
differences there is still some one important tradition that is the same for most Chinese the importance of tea.
Tea is an important part of the social life in China and is used both in the
everyday life and for formal celebrations. The tradition goes back as far as the Qin
Dynasty (221-206 BC), but was at this time tea was mostly used as a medical herb
known for ability to clean the body for poisons and clear the peoples mind. It was not
until the Tang Dynasty (618-907) the tradition of tea as a drink started to spread
throughout the country. 109 The main reason for this was that the Tang Dynasty was the
largest Dynasty in Chinas history at this time and this made the travelling within China
were more common and the tradition of drinking tea spread quickly.
In China the tradition of drinking tea was never just for the aristocracy or
wealthy people, but for people from all social classes. During Tang Dynasty tea was
actually so popular that the government collected a tea tax to earn money and in some
regions near the Chinese boarders tea was used as a currency when trading with
nomadic people. Later, in the Ming Dynasty (1368-1644), brewing as we know it today
with usage of a teapot and dried tea become more common and the teahouse culture
started. The purpose with the teahouses was to unite tea and socialization with
109
Indigo Tea Company (2011). The History of Tea in China. Retrieved 4th of May 2011from
http://www.indigo-tea.com/chinateahistory.shtml
59
performance entertainers and they were very common in the large Chinese cities.
Unfortunately most of the Chinese teahouses were destroyed during the Communist
collectivization, but they are today being rebuilt.
Celebrations and festivals
Celebrations of life and festivals in the China are an important part of the
Chinese culture. Throughout the year there are six major festivals which are celebrated,
in addition to the traditional celebrations for the ethnic minorities and celebrations of
the lifecycle.
Some of the major traditional festivals that are being celebrated are the Lantern
Festival, Mid-Autumn Festival and Lunar New Year. While ethnical festivals includes
the Water Sprinkling Festival of the Dai people in south China and the Nadam Fair of
the Mongolian people.110
The most important celebration in Chinese culture today is Lunar New Year,
also known as Chinese New Year or Spring Festival. This is actually a period of
celebrations starting on New Years Day which is on the first day of the first month of
the Chinese calendar and ending the fifteenth day of the month with the Lantern
Festival.
The tradition of the Luna New Year goes back thousands of years including a
rich background including many famous legends and myths. The most famous legend is
related to the beast Nian which was extremely cruel and ferocious. According to the
legend on New Years Eve Nian would go from house to house and kill the people
living there and therefore the Chinese had to protect themselves from Nian. This was
done with lighted torches, firecrackers where set out and red-paper couples where
passed on the doors. The reason for this was that it was said that Nian was afraid of light
of fire, loud noises and the colour red. The next day the people are happy about being
able to keep away Nian for another year and a celebration is being hold.
The preparation for the Luna Year is according to the tradition starting 10 days
before the New Years Day with the annual housecleaning to prepare the house. Special
Spring Couplets are placed next to the main doors to welcome spring and as a
decoration. This is red calligraphies with short poems written in traditional Chinese with
110
Asiainfo.org (2009). Society Celebrations in China. Retrieved 4th of May 2011from

http://www.asianinfo.org/asianinfo/china/society_celebrations.htm
60
wished for the next year for family and friends.111 In addition the families are preparing
the house for the Reunion Dinner which is happening on New Years Eve. On this day
family members are gathering to celebrate the year that have passed by and the year that
will arrive.
The next days in Luna Celebration are commonly celebrated with the family
with the traditions of gifts, visiting relatives and celebrating the common man's
birthday. This is according to the Chinese culture the day when everyone gets on year
older. Hence the Chinese people do not celebrate their birthday the day they are born,
but instead they celebrate the newborn and the elder. The first celebration of the child is
looked at as the most important one, because this celebration will determined the childs
future with the usage of some traditional games. After the first birthday this celebration
is not celebrated until a person reach 60 years old which is looked an important
milestone where the lifecycle is completed and a new lifecycle is starting at 61. After
this a birthday is celebrated every tenth year.112
The Luna New Years is ended on the 15th day of New Year with the Lantern
Festival. On this evening there are parades in most Chinese cities where the people are
carrying lanterns into the streets and the highlight in the parade is the dragon dance
where a huge dragon made by bamboo, silk and paper. The origin of the Lantern festival
comes from the time when Buddhism was strong in China. One of the emperors wanted
to honour the remains of Buddha on the 15th day of the 1th Luna month and decorated
his palace with lanterns. He continued this celebration every year and later it developed
to a large festival which is taking place all over China113
Another important celebration in China is the Moon festival or Mid-Autumn
Festival and is a celebration that takes place on the 15th day in the 8 months in the
Chinese moon calendar. This tradition goes back till the ancient Xia and Shang
Dynasties (2000 B.C. till 1066 B.C.) with the purpose to greet winter and worship the
moon.114 Since this happened right after the harvest of fruit, grain and vegetables this
was offered to the moon. Today the celebration has developed to become a harvest
celebration where people enjoy with good food, wine and celebrate life. Traditional
111
Y.M. Yang (2010). Spring Couplets. Retrieved at 4th of May 2011 from
http://www.gio.gov.tw/info/festival_c/spring_e/slogans.htm
112
Ministry of Culture (2003). A Typical Chinese Birthday Bash. Retrieved 8th of May 2011 from
http://www.chinaculture.org/gb/en_chinaway/2004-09/14/content_60246.htm
113
China Internet Information Center (n.d.). Traditional Chinese Festivals. Retrieved 4th of May 2011
from http://www.china.org.cn/english/features/Festivals/78320.htm
114
Chinavoc (2007) Mid-Autumn Festival. Retrieved 4th of March 2011 from
http://www.chinavoc.com/festivals/Midautumn.htm
61
food for this celebration is moon cakes, cooked taro, edible snails from the taro patches
or rice paddies cooked with sweet basil, and water caltrop, a type of water chestnut
resembling black buffalo horns.115
The purpose of the mooncakes is to be a gift to show respect to business partner
and people you want to be close to. The problem that was seen was that people received
so many mooncakes from family and friends that most of them were not eaten and
thrown away. To reduce the waste companies started to make vouchers that would
represent the mooncake and the receiver could redeem the voucher for a mooncake in
the stores. The vouchers become very popular, but since many people did not want to
exchange the vouchers they started to sell them on the black market for cash. This has
actually resulted in that China today has a large black market due to mooncakes, but it
also shows the importance of the mooncake in the Chinese celebration today.
Earlier in history the round shape of the mooncakes were symbolizing the
family union and were filled with an egg plumb that was symbolizing the moon. Today
the flavour of the moon cakes has evolved from this tradition and has become more
adapted to the modern flavours like ice cream as Haagen-Dazs is using, but the shape is
still the same.
Colours
Colours are an important part of the non-verbal communication in every culture
and in China this is no exception. The usage of colours in Chinese culture has a long
tradition and is still important today.
To give a clear picture of the meaning of the different colour Table 6 Colours in
Chinese culture have been developed. The table is based on three articles, Symbolism
of Colours,116 The Meaning of Colours 117 and Colours Across Cultures: Translating
Colours in Interactive Marketing Communications.118
115
Chinavoc (2007) Mid-Autumn Festival. Retrieved 8th of May2011 from

116
Nations Online (2011).Symbolism of Colours. Retrieved 8th of May 2011 from
http://www.nationsonline.org/oneworld/Chinese_Customs/colours.htm
117
Sibagraphics (2009). The Meaning of Colours. Retrieved 8th of May 2011 from
http://www.sibagraphics.com/colour.php
118
M. Bortoli & J. Maroto (2001). Colours Across Cultures: Translating Colours in Interactive
Marketing Communications. Retrieved 8th of May 2011 from
www.globalpropaganda.com/articles/TranslatingColours.pdf
62
Table 6 Colours in Chinese culture
Colour
Meaning
Blue
Immortality, conserving, healing, relaxation, exploration, trust,

calmness.
Celebration, good luck, happiness. Traditional bridal colour,
symbolizes a long life and joy.
Nourishing, royalty, earth, power, stabilizing, grounded, reliability,
sunbeam, warmth, clarity, good faith.
Desirability, spring, youth, birth, growing, refreshing, balancing,
calming, healing, health, harmony, sensitivity.
Happiness, humility, indicating change, adaptability, spontaneity,
strengthens concentration
Love
Spiritual awareness, physical and mental healing, strength. Red purple
brings luck and fame.
Death, mourning, pure, neutral, contracting, withering, pureness,
confidence, intuition, strength, ancestral spirits, ghosts.
Life, stability, colour for young boys (who will continue the family/
ancestor lineages), dormant, winter.
Success, high quality, money, preciousness, status.
Metal (income, wealth), trustworthiness.
Red
Yellow
Green
Orange
Pink
Purple
White
Black
Gold
Silver
Source 19 Self-made based on articles.
63
3.2.5 China and Hofstedet

China was not included in the original research when Hofstedet was developing
the model of national cultures in the beginning of 1980s. Due to this China was at a
later stage added to the analyses and the research was based on secondary research and
estimations. Regarding the values in the different dimensions this is visible in Table 7
Hofstedet and China.
Table 7 Hofstedet and China
China
118
80
66
30
20
PDI
IND
MAS
UAI
LTO
Source 20 G. Hofstede (2009). Geert Hofstedet Cultural Dimensions. Retrieved from http://www.geerthofstede.com/hofstede_dimensions.php
Starting with the power distance index (PDI), China has the values of 80 which
indicate that there is a high separation of power in the society. This can be experience
both in the business environment where the workers knows their place in the company
hierarchy based on their position, but also in the everyday life in the relationship
between generations.
The high PDI is quite visible in the Chinese culture, from a child is born they are
brought up to with the values that loyalty and respect for other are important. Especially
respect for older people is very important which to some extend comes from the ethical
and philosophical system Confucianism which has been practised in China for many
decades.
Regarding individualism (IDV) China is scoring low both compared to the
general average in Asia (24) and the world average (43), with only 20 points and the
main reason for this lie in the Chinese history with a communistic regime. Today China
is one of the few countries in the world that is still having a communistic regime and
this is influencing the culture. But the high collectivism is not only regarding the society
itself and the interaction with the authority, but also with family. In China family is very
64
important part of a persons life throughout their whole life. Traditional it is a

patriarchal setup which means that the family is ruled by the male members in the
family and the elders, but is today gradually shifting towards a more Western view
where the children can participate in the decisions regarding their future. Especially due
to the One Child Policy that is practised in China today, the nuclear family which is
common in Western is rarely seen in China. Extended families are very common
especially in the rural areas of China.
Looking at the development in China after Hofstedes research was done, the
Chinese individualism has probably increased due to the citizens contact with Western
countries and globalisation. The fact that many Chinese citizens choose to travel or
study abroad result in that they are taking with them Westerns impulses back to China.
The third dimension Masculinity focus on the allocation of power, control and
prestige in the society between the sexes. In this dimension China have 66 points. This
means that China is a country with high masculinity which indicates that there are large
differences between the genders and males are in the most powerful positions in the
society.
As already mentioned the traditional family structure in China was patriarchal
and it was the males job to earn money for the family while the women should stay at
home and take care of the family and the house. While the urban areas in China has
shifted toward a more equal society where the woman works outside home on the same
level as men, especially in the rural areas they are keeping onto the old traditions where
the woman do not have that many opportunities. Also in the communistic government
it is visible that women do not play that important role.
In the dimension uncertainty avoidance index (UAI) Hofstedet analysed China
to have 30 points which indicates that the Chinese population are open for changes and
to a large extend tolerates uncertainty. They are mainly not guided by emotions and are
more phlegmatic and contemplative than cultures with high uncertainty avoidance.
Regarding emotions this is quite visible in the Chinese business culture. Chinese
business people are commonly known for not showing feelings and therefore being hard
to read.
With the score of 118 points on long-term orientation (LTO) China is above the
average score for Asia. High LTO is common in the Asian countries and it means that
the society perceives that problems can be overcome with the help of time and it this is
not possible then will and strength will help.
65
Comparison of China and United States based on Hofstedes research

As stated earlier Hofstedet analyses give an overview of the culture in the
country and his values will therefore be used to look at the cultural differences of China
and the United States.
Table 8 Hofstede comparison of China and United States
China and United States

118
91
80
66 62
30
20
PDI
China
46
40
IND
MAS
UAI
29
Usa
LTO
Source 21 G. Hofstede (2009). Geert Hofstedet Cultural Dimensions. Retrieved from http://www.geerthofstede.com/hofstede_dimensions.php
Starting with the power distance, Table 8 Hofstede comparison of China and
United States shows that the power distance in China is twice as high as in the United
States. This indicates that the American society have a flatter structure where people are
valued equally. In the United States the employees are able to participate in the decision
making process to a larger extent than in China, in addition disagreements with people
higher in the hierarchy will not creating large problems.
When looking at individualism we can see a large gap concerning China and the
United States. The United States are a highly individualistic country where the citizens
are encouraged to have their own opinions and use critical thinking. In contrast to China
where a promotion is based on seniority, promotions in the Unites States are based on
results, experience and knowledge. With the right knowledge an employee can reach far
without having a long history in the company.
Related to individualism in the United States this is also visible household
structure. While in China it is common to live together with the family until marriage, in
66
the United State 25% of population where living alone in 2000.119 This indicates that
American citizens prefer living alone contra living with family members.
The masculinity in these countries is quite equal in China and the United States.
This indicates that there are small differences according to where the power is located in
society concerning the genders or which values are in the society is the most important.
Like China the Unites States are a society with masculine values related to money, selffulfilment and achievements.
When it comes to uncertainty avoidance again the values are quite equal, but the
American are more concerned with changes and uncertainty than the Chinese. Even so
both countries have values under the world average which is 64.
The largest difference between Hofstedes values for China and the United
States is in the category long-term orientation. Here there is a difference of 89 points
between the two countries which is a large gap. As mentioned before China has one of
the highest values in the world in this category while the United States are under the
world average (45 point). This means that Americans are more willing to use money on
things for example leisure, while in China the people investment more into the future
like property or education.
3.3 Hagen- Dazs in China

In this section the main focus will be on the marketing mix Hagen-Dazs is
using on the Chinese market, especially the elements adapted to the Chinese culture. In
addition we will look at the differences between the Chinese marketing mix and the one
used in the United States. And in the end investigations will be made to see if the
Chinese marketing mix is supported by the analyses Hofstedet did in the 1970s about
the Chinese culture.
3.3.1 Hagen-Dazs in China
Hagen-Dazs made its first appearance on the mainland of China in 1996 and
had success from the beginning when they launched their cafes in Shanghai and Beijing.
From 2004 till 2009 they were launching approximately 10 Hagen-Dazs cafes per year
119
U.S. Census Bureau (2005). Examining American Household. Composition: 1990 and 2000. Retrieved
16th of May 2011 from http://www.census.gov/prod/2005pubs/censr-24.pdf
67
and in 2011 they have 113 cafes spread over the country.120 Their main focus in China
is the Hagen-Dazs cafes and to some extent Hagen-Dazs products in retail stores.
According to the director of Hagen-Dazs business unit in China, Johnny Song,
"the core customer group is 20-35 year olds who are sophisticated and have disposable
income," and "they pay attention to quality and want to enjoy a little bit of the
indulgence lifestyle."121 According to research made by Credit Lyonnais Securities Asia
then spending for luxury products and services in China is expected to increase by 25%
per year the next five years. And in year 2020 19% of the luxury consumption in the
world is expected to be in China.122
When taking into consideration these estimations the future for Hagen-Dazs
looks very bright.
3.3.2 Distribution
The main focus of Hagen-Dazs distribution in China is on the Hagen-Dazs
cafes. There are today Hagen-Dazs cafes in 27 cities on the Mainland China, and a
total of 113 cafes. They are mainly concentrated to the largest cities and 36 of them are
situated in Shanghai, while 18 are located in Beijing.
When it comes to the physical distribution of the Hagen-Dazs products these
are mainly produced in France and transported to China. One of the reasons for this is
that Hagen-Dazs wants to be sure that their product consist of the best ingredients
which result in the highest quality for their products. France is also known for their high
quality products which can be another reason why Hagen-Dazs located their
production facilities to this country.
Regarding the Hagen-Dazs Cafes the locations of these are carefully selected to
reflect the Hagen-Dazs premium brand identity. They are located in super regional
malls, lifestyles centres, designer outlet centres and on fashionable street locations. One
example of this is Hagen-Dazs location in Shanghai on Nanjing Road. Nanjing Road
is one of the famous shopping streets in Shanghai known for its elegancy and top-end
designer brands.
120
whatsonxiamen (2009). Success story of Haagen-Dazs in China. Retrieved 16th of May 2011 from
http://www.whatsonxiamen.com/wine_msg.php?titleid=505
121
whatsonxiamen (2009). Success story of Haagen-Dazs in China. Retrieved 16th of May 2011 from
122
NTB (2011). Forbruket av luksusvarer eksploderer i Kina. Retrieved 16th of May 2011 from
http://www.dagbladet.no/2011/03/06/nyheter/handel/livsstil/reiseliv/politikk/15699599/
68
Since Hagen-Dazs is the only location in China where the customers can buy
Hagen-Dazs store specialities, this means that they are the exclusive distribution of
these products. When it comes to retail products Hagen-Dazs is using a selective
distribution strategy. Based on specific characteristics and preferences Hagen-Dazs
choose the retail chains or stores that is best suited for their brand. Today Hagen-Dazs
is available in for example Tesco and some small selection of the Hagen-Dazs products
are located there, but the main focus of Hagen-Dazs in China is on the Hagen-Dazs
cafes.
One of the main reasons for Hagen-Dazs focus on Hagen-Dazs cafe is
because of the limited number of connection to freezers and refrigerators in Chinese
homes. In 2004 only three of hundred homeowners owned a freezer and this included
also the urban areas.123 According to the report China Exporter Guide 2008,124
composed by Global Agriculture Information Network, the personal ownership of
freezers are today increasing rapidly which can give Hagen-Dazs a large opportunity in
the future to focus more on this market.
Figure 14 Hagen- Dazs cafes in China
Source 22 General Mills Inc (2009). Hagen-Dazs cafes. Retrieved from

http://haagendazs.com.cn/main.aspx?mainnum=4
Looking at the differences between the strategy Hagen-Dazs is using on the

Chinese and the American market this is mainly on what distribution channel HagenDazs is focusing on. On the Chinese market the main focus is on the Hagen- Dazs
cafes while on the American market it is on the retail stores. One reason for the main
123
J. Rutledge (2004). China Fanciest Tasty Ice Cream. Retrieved from

http://www.fas.usda.gov/info/agexporter/1997/February%201997/chinaic.html
124
GAIN (2008). China Exporter Guide 2008. Retrieved from
http://www.fas.usda.gov/gainfiles/200811/146306566.pdf
69
focus on the retail market in the United States can be the increasing demand for ice
cream in American homes. According to Mintel International's report "The U.S. Ice
Cream Market" the ice cream consumption from 1998 till 2003 increased by nearly
24%.125 Most of the ice cream was bought by households including children, but 20% of
the consumption was from households without children which are the main target for
Hagen-Dazs. This indicates that on the American market the demand for ice cream to
bring home is the main market, and the Hagen-Dazs cafes are additional to satisfy the
needs of the customers which want to enjoy ice cream in a premium caf.
Another difference between the distribution in China and the United States is
that on the American market Hagen-Dazs itself is no longer distribution their products
to the retail stores, but Nestle has the responsibility for this on the American and
Canadian market. In China Hagen-Dazs still have the responsibility for the distribution
both to the Hagen-Dazs cafes and the retail stores.
3.3.3 Product
The product selection for Hagen-Dazs in China is mainly chosen to be
distributed in Hagen-Dazs cafes and to a smaller extend to be sold in the retail stores.
The product spectre offered in China is a combination of products adapted to the
Chinese preferences, as well as products from the international product portfolio.
As mentioned earlier tea is an important part of the Chinese and Asian culture.
As a reply to this customer preference Hagen-Dazs developed an ice cream custom
made for these markets - Green Tea. The ice cream flavour was first launched on the
Japanese market in 1996, and because of its success there, the product can now be found
on most Asian markets, both in retail stores and in Hagen-Dazs cafes. The product was
later launched on non-Asia markets, like the United States, first as a limited edition and
later as a standard product in the Hagen-Dazs portfolio.
125
A. Rea (2004). Screaming for ice cream: a rapidly growing market, ice cream nevertheless faces its
share of possible demons. What will be the effect of changing demographics on the frozen treat, and how
will manfacturers respond?Retrieved 16th of May 2011 from
http://findarticles.com/p/articles/mi_m3289/is_4_173/ai_115490578/
70
Figure 15 Hagen-Dazs Green Tea
Source 23 The Teatropolitan Times (2009). Haagen-Dazs Green Tea Ice Cream. Retrieved from
http://teatropolitan.wordpress.com/2009/07/11/haagen-dazs-green-tea-ice-cream/
The Green Tea ice cream flavour is one of the important changes that HagenDazs has made to adapt their products to China and Asia. Another important adaption
Hagen-Dazs has made was to introduce Ice Cream Mooncakes in Hong Kong in 1992.
Even though the Moon Festival is based on traditions, Hagen-Dazs have obtained large
success by launching ice cream mooncakes in China. In 2010 Hagen-Dazs sold 1.5
million boxes with mooncakes with a product price range between $50 and $100.126
This indicates how important the mooncakes are for the Chinese Moon festival, taking
into consideration that Hagen-Dazs is capturing only a small share of the large
mooncake market.
Today the Mooncakes are only available on the Asia market and customers can
therefore not purchase these products in the United States. Even though there is a small
demand for these products from the Asian population in the United States, this demand
is not large enough for Hagen-Dazs to focus on.
Regarding the other products available on the Chinese market these are not
adapted to the Chinese culture, but are a selection of Hagen-Dazs international
product portfolio.
In the Hagen-Dazs cafes in China the consumers are offered ice cream in five
different categories; Scope, Ultimate Indulgence, Cake Ice Cream, Delicate Patisseries
and Wedding Cake.
The scopes offered on the Chinese market consist of 15 different flavours in
addition to three fruit sorbets; mango, passion fruit and raspberry. The ice cream
flavours are common flavours like Strawberry and Summer Berries in addition to
specialities as Dark Chocolate Orange and Rum Raisin, and of course Green Tea. The
126
Rob Schmitz (2010). A black market for mooncakes in China. Retrieved 15th of March 2011 from
http://marketplace.publicradio.org/display/web/2010/09/21/a-black-market-for-mooncakes-in-china/
71
selection is not as wide as in the United States, where over 30 ice cream flavours are
offered in addition to a selection of frozen yogurts and sorbet. The main reason for this
is that the Unites States is the home market for Hagen-Dazs and most of the products
are first launched there and depending on the success they might be launched outside
the United States at a late stage. Hagen-Dazs has as well been present on the Chinese
market only from 1996 and the products they are offering the customers are therefore
more limited than on the American market since the market knowledge of Hagen-Dazs
is not that widespread.
The category Delicate Patisseries that is being offered in the Hagen-Dazs Cafes
consist of cakes from different parts of the world, five French cakes, two Italian cakes,
two cakes from the Unites States and one German cake; this includes for example
Tiramisu cake, Walnut Pie and Black Forest cake.127
The next product category, Cake Ice Cream, is catering cakes that the customers
can order. This is sixteen cakes divided into three groups representing the childhood
series, the love series and other occasions. Looking at decoration style and the cake
recipes these are international cakes with no representation of Chinese culture.
Figure 16 Selected cakes from Cake Ice Cream
Source 24 General Mills Inc (2009). Cake Ice Cream. Retrieved from
Ultimate Indulence is the specialities that are served in the Hagen-Dazs cafes
all over China. This is specially deserts put together of the finest ice cream and ice
cakes that Hagen-Dazs is offering. This category as well as the Delicate Patisseries and
Cake Ice Cream are not specially adapted to the Chinese.
The last category of products Hagen-Dazs is offering in their cafes is weddingcakes. Weddings are one of the most important celebrations in a Chinese persons life
127
General Mills inc. (2009). Product offer in China. Retrieved 15th of March 2011 from
72
and they are therefore investing a lot of money and time into making this celebration
perfect. The wedding traditions in China have to some extend evolved from the old
traditions, but there are still some traditions that is kept. One of these traditions is the
symbol of the wedding-cake. The layers of the cake are symbolizing a ladder that the
couple will climb to success and the newly wedded are therefore starting on the bottom
and working their way up to the top.128
The tradition with many layers on the Wedding cake this is reflected in the
choice Hagen-Dazs have made when it comes to their four wedding-cakes offered on
their website. All of the cakes consist of at least three levels and the customers have the
possibility to choose how many levels they want according to their guest. The colours
on the cakes is also reflecting Chinese tradition where the colour white, symbolize
death, is not used as basic for any of the cakes, but always used with a shade of yellow
or pink.
Figure 17 Hagen-Dazs Wedding cake
Source 25 General Mills Inc (2009). Angels Gift. Retrieved from

Looking at what Hagen-Dazs is offering their customers in China and the

United States there are differences in the offers. For example in the United States
Hagen-Dazs is offering Hagen-Dazs smoothies and Sorbet Sipper which are frozen
beverages made by Hagen-Dazs ice cream or Sorbet. In addition Hagen-Dazs is
offering a dessert called Dazzler frozen desserts which is described as signature
Dazzler frozen desserts come in four delicious varieties Rocky Road, Dulce Split,
Mint Chip and Banana Split. Each Dazzler is made with 3 scoops of the Hagen-Dazs
128
Euroevents & Travel, LLC (2004). Chinese Wedding Traditions. Retrieved 4th of March 2011from
http://www.worldweddingtraditions.com/locations/asian_traditions/chinese_traditions.html
73
ice cream of your choice and 3 layers if toppings.129 Neither of these specialities is
today present at the Chinese market. One reason for this is that frozen beverages are not
common in China and it has mostly been introduced because of Western influence. And
as mentioned earlier the Chinese market is also developing and new products are
therefore introduced gradually.
Concerning the products Hagen-Dazs offers in the retail stores this is HagenDazs pints, single serve cups and crispy sandwiches. As mentioned earlier Hagen-Dazs
focus in China is mainly Hagen-Dazs cafes, in addition a low ratio of people has
access to freezers; this influences the width of the product spectre. Compared to the
retail store product spectre in America the offer China has for their customers is low. In
addition to pints and single serve cups Hagen-Dazs is offering sorbet, frozen yogurt,
sundae cones and bars, as well as an ice cream with the name Five Ice Cream. Five Ice
Creams contain of only five ingredients; milk, cream, sugar and egg, in addition to the
flavour ingredient. This product is supposed to be healthier for the body.
3.3.4 Promotion
Hagen-Dazs promotion in China is a combination of advertisement, direct
marketing and public relation. In addition they use sales promotion, like loyalty
programs and cooperation with other premium brands, to increase brand awareness and
build brand loyalty. The overall message is mostly focusing on their premium quality
and pure ingredients in combination with the usage of promotion reflecting the HagenDazs brand image.
Advertisement
The official Hagen-Dazs website in China is http://haagendazs.com.cn/. It is
offered in Chinese, but with simplified characters which is the most common written
language in the Mainland China. The first contact the customers get with the brand is
with a small introduction movie about the Hagen-Dazs products on the Chinese market
before they arrive at the main website of Hagen-Dazs in China.
During the period this research for Hagen-Dazs promotion was conducted it
was close to the international Valentines Day (14th of February) and the website was
influenced by this regarding the four advertisements that where on the first page
(Figure 18 Hagen-Dazs China). All of the advertisements where in pink colours with
129
HDIP, Inc (n.d.). Shop specialties. Retrieved 19th of May 2011 from
http://www.haagendazs.com/shops/specialties.aspx
74
romantic details like hearts and roseleaves and with informing about a new love-cake,
a Hagen-Dazs Ice Cream Fondue and the VIP loyalty program that Hagen-Dazs are
offering their customers.
The layout of the Hagen-Dazs website is very simple with an advertisement on
half the page and navigation buttons on the left side with colourful photos and a small
text for easy navigation. The layout on the website differs from the American HagenDazs website with for example the usage of larger navigation bottoms with descriptive
pictures and the usage of descriptive pictures in general on the website. One reason for
this can be related with language which is influencing the marketing mix. Even thought
China has one official written language many Chinese cannot read this language and
with the usage of navigation pictures Hagen-Dazs is still able to communicate their
message to this customers.
The usage of colour on the website is neutral with the usage of the Haagen-Dazs
colours and pattern for the background. The Hagen-Dazs logo is present on all of the
sites as well which give a clear understand of who the page belongs to. It is easy for the
readers to find information about the Hagen-Dazs brand, product that is been offered in
retail stores, description of the flavours and the menus in the Hagen-Dazs cafes, all
with tempting illustration photos and descriptions. There is also an interactive map
where the readers can see where the Hagen-Dazs cafes are located in China.
Figure 18 Hagen-Dazs China
Source 26 General Mills Inc (2009). Hagen-Dazs. Retrieved from http://haagendazs.com.cn/
When going through different advertisement there are some obvious differences
you can see on the printed Chinese advertisements compared to for example the
American advertisements and the most obvious is the language. In all the Chinese
75
advertisements simplified Chinese is used because it has the same forms of signs that
are used on Hagen-Dazs website.
As mentioned before Hagen-Dazs have developed a special product called
Mooncakes for the Moon festival and it is therefore natural to choose an advertisement
for this product and look at how the culture influence the promotion.
Figure 19 Mooncakes Rainbow Collection
Source 27 Wangunteng (2011). Hagen-Dazs moon cakes. Retrieved from

http://wangyunteng.deviantart.com/art/haagen-dazs-moon-cake-180435650
The chosen advertisement is for the Rainbow collection of Mooncakes which

consists of nine mooncakes in four different colours (Figure 19 Mooncakes Rainbow
Collection). It is an elegant advertisement where the picture of the mooncakes is the
first thing that draws the attention of potential customers. The Mooncakes are places on
a high cake dish and they have the colours of the rainbow; pink, yellow, purple and
brown. The general usage of the colours in the advertisement is as well related to the
rainbow, both in the background, the flowers and the top text with is reflecting the
product itself; Mooncake Rainbow Collection. The rest of the advertisement is in
diffuse colours with an information text in Chinese signs and a picture of the box with
mooncakes and information about the price. Around the photo of the mooncakes you
can see some painted flowers in purple, yellow and green.
The relationship between the advertisement for Mooncakes Rainbow collection
and the dimensions of Hofstede is in this advertisement not present. The advertisement
takes into consideration other cultural aspects of China with main emphasize on the
traditions regarding the Moon Festival. Since The Moon Festival celebration has been
discussed earlier in the part about Chinese culture it will not be discussed further here.
Regarding the usage of the flowers in the advertisement this is related to the
usage of flowers in the Chinese culture. Flowers are a powerful symbol and are often
76
symbolizing rebirth, new life or a change from one period to another. The Moon
Festival is also a celebration of harvesting of crops and reunion of family members and
therefore flowers play an important part in the celebration.
The other printed advertisement that will be analyzed is an advertisement for
Hagen-Dazs Ice Cream Fondue - a winter commercial.
The winter commercial (Figure 20 Hagen-Dazs Ice Cream Fondue) displays an
Ice Cream Fondue placed in the snow with a white castle in the background and with
white, snow-covered mountains in the skyline. The dark blue sky and the large starts
indicate that it is night and this is also visible in the way the stars make the snow
sparkle.
Figure 20 Hagen-Dazs Ice Cream Fondue
Source 28 meishichina.com (n.d.) Happy to share the winter. Retrieved from

http://www.meishichina.com/News/CanYin/201012/94577.shtml
Ice cream is for many people connected with summer and nice weather, but
looking at it from another angle what is more natural than connecting it with snow,
winter and cold which is more related to the product itself. With this in mind HagenDazs made an advertisement for the Ice Cream Fondue where the usage of hot, steaming
chocolate makes the product tempting for cold nights and not only to cool down.
Looking at the environment in the advertisement the usage of white snow
capped mountains and a clear blue sky shows that the nature is pure and clean with no
pollution which is a large contrast to what you experience in many heavily polluted
77
Chinese cities. The usage of the colour blue in China also represents immortality, which
is what we want for our environment. Transferring this to the Hagen-Dazs product this
is actually the core philosophy of the brand; Find the purest and finest ingredients in
the world130 Hence Hagen-Dazs have related the cleanness and purity of their
products with nature itself.
Beauty and health is also very important for many Chinese women and they are
therefore very careful with what they eat. Purity of the ingredients is therefore important
to attract this consumer segment to buy the Hagen-Dazs products. Linkage of pure ice
cream and nature makes it possible.
The colours used in the advertisements are mostly blue, white and red in
addition to the colours used for the ingredients in the Ice Cream Fondue. As mentioned
blue means immortality in China, white represents the snow and ice and also the core
product - ice cream. Red is an important symbol in Chinese culture and is the colour of
celebration, good luck and happiness. It is a traditional wedding colour and it also
symbolizes a long life and joy.131 The Ice Cream Fondue is a product commonly used
for a celebration or gatherings and the usage of red signals that the product will give
happiness and joy to the users.
On the top of the advertisement there is a text written in both Chinese and
English saying: Share the happiness. Share Hagen-Dazs Ice Cream Fondue. This
indicates that the ice cream fondue is a product that is supposed to be shared for the best
consumer experience. This is also reflects the Chinese culture that is a highly
collectivistic society and enjoying the free time together with friends is very common.
The advertisements can also being looked at as an informative advertisement
because the picture shows how the Ice Cream fondue should be used. Ice cream fondue
is a quite new product and is not commonly used in China. Therefore people who are
not informed about how to use the Ice Cream fondue will after looking at the
advertisement understand the usage.
When relating Hofstedes research to this advertisement we can see some of his
findings in for example the text written on the top of the advertisement; Share the
happiness. Share Hagen-Dazs Ice Cream Fondue. China is as mentioned a collectivist
130
HDIP, Inc (n.d.). Made like no other. Retrieved 5th of February 2011 from http://www.haagendazs.com/company/print_ads.htm#header
131
Sibagraphics (2009). The Meaning of Colors. Retrieved 5th of February 2011 from
78
society and we can see Hagen-Dazs relating to this in the advertisement through the
text.
Beauty, purity and health issue is very important for many Chinese, especially
women. This can be seen in the Chinese society for example with their relation to
women beauty and how aware the women are about what they eat and how they look.
Traditionally beauty, purity and health issue was related to how early a girl would get
married, the most beautiful girls were married first, but the beauty was also related to
how much money her family would received from the family of the future husband.
Today beauty is still important issue for Chinese women. In China, large eyes,
a small nose and petite frame are all regarded as attractive on a woman. () The ideal
beauty has wide, bright eyes and a face shaped like a goose egg or sunflower seed.
Sichuan women are regarded as the most beautiful in China.132 This quotation is from
an article written in 2008 so the preferences of how to look are still important in the
Chinese society and they are not just related to the old traditions. Further the article is
pointing out that height a womans to some extend determine what jobs a woman
cannot have. Many jobs require women to be over 1.6 meters tall. Even people
applying for government jobs or university places are often rejected out of hand if they
are less than 1.5 meters.133
One things that is common for all advertisement made by Hagen-Dazs to the
Chinese is that usage of people in the Hagen-Dazs promotion this is not very common.
The main focus is mostly on the products and the creation of an environment around the
brand. On the other hand when people are present in the Hagen-Dazs advertisements in
China these are mostly non-Chinese people with pale skin and light characteristic. The
reason for this is the pale preferences that is present in the China society today and has
been a part of the Chinese culture for centuries. The origin of the pale preferences
comes from the ancient China where the saying "one white covers up three ugliness"
was passed through generations.134 Being pale was a sign of being aristocratic and
wealthy enough to stay inside all day instead of working on the rice fields. 135 Today
there is a large cosmetic business, especially in southern Asia, with products to lighten
132
J. Hays (2010). Beauty in China. Retrieved 6th of February 2011 from

http://factsanddetails.com/china.php?itemid=137&catid=11&subcatid=75
133
134
M. Bray (2002). Skin deep: dying to be white. Retrieved 6th of February 2011 from
http://edition.cnn.com/2002/WORLD/asiapcf/east/05/13/asia.whitening/
135
79
and brighten the skin of Asian citizens and all over the world you can see Asian people
using an umbrella during sunny days to protect their skin against the sun. And due to
this pale preferences the usage of Western models or pale Asian models are mostly used
in promotion in China both by Asian and Western companies.
One example where this is visible is in the Hagen-Dazs television commercial
for Green Tea ice cream.136 The setting of the commercial is located in traditional
Japanese surroundings, in a modern city, but the two women eating the ice cream is
having a Western appearance and are non-Asian women. The plot is that the women are
eating Green Tea ice cream on a balcony in an urban area, but still with linkage to the
Japanese traditions.
In addition to this Hagen-Dazs have other forms of promotion their brand and
their products which are not particularly adapted to the culture of China, but are used to
build up the brand image.
Summary of the differences Hagen-Dazs have made regarding the placement of
their advertising on the Chinese and the American market is placed in Table 9
Advertising in China and the United States. Regarding this there are not many
differences, except the usage of outdoor advertisements on the American market which
there are no traces of on the Chinese market.
Table 9 Advertising in China and the United States
Advertising
TV
China
United States
Radio
Magazine
Newspaper
X
Outdoor
Online
Website
Social media
Viral marketing
Source 29 Self-made based on research
136
Can be viewed on: http://www.youtube.com/watch?v=wTo8AhqeOxo&feature=related
80
The message Hagen-Dazs have used in advertisements in China and the United
States the recent years have not been identical. On the Chinese the marketing message
has mainly been focusing on cultural celebrations like Mid-Autumn festival, Valentines
Day or Mothers Day in addition to the purity of their ingredients. On the other side, on
the American market the main focus the last years has been on the Hagen-Dazs loves
Honey Bees campaign. The campaign has included both television commercials,
magazines, outdoor and online marketing. A viral video was also produced staring a
break dance team dressed as giant bees competing on the dance floor. 137 The viral video
has large success and within two weeks the video had two million views and 3,500
comments.
One of the main reasons for the focus on the purity of the ingredients on the
Chinese market is that Hagen-Dazs is still developing their brand image on the Chinese
market. Since the brand is still quite new in China it is important to inform the
customers about their requirements for the ingredients used in the ice cream. The
purpose of this is to convince the customers that Hagen-Dazs have only top quality
products. This is related to the reverse price war discussed earlier in the thesis regarding
perceived quality and its relation to the price Chinese are willing to pay.
The main reason for the focus on celebrations as Mid Autumn festival or
Valentines Day is that Hagen-Dazs want to be associated with celebrations and
positive feelings. China is known for keeping their traditions liked with old-established
celebrations. This is a way to show respect to their ancestors and culture.
Sales promotion
As mentioned Hagen-Dazs is offering a loyalty club to their VIP customers in
China. To become a VIP member the customer has to buy Hagen-Dazs products for a
value above RMB 500 over a two months period (approximately 1300 CZK138). The
customers can then register their purchases and become a Hagen-Dazs VIP member.
The VIP customers have with their member card the possibility to collect point
when purchasing products at Hagen-Dazs cafes and later they can exchange their
points into products or experiences. For example when a customer have 1680 points
they can exchange the points into a Haagen-Dazs pint after their choice. In addition to
this Hagen-Dazs arrange special events for the top VIP customers. In July 2010 VIP
137
Marketing VOX (2008). Haagen Dazs Viral Vid Sparks Bee-Lovin' Buzz. Retrieved 21th of May 2011
from http://www.marketingvox.com/haagen-dazs-viral-vid-sparks-youth-buzz-for-bees-040367/
138
Per 12th of March 2011
81
club member with more than 2000 bonus point could participate in an event with makeup artist A Zhi that would teach them how to make the perfect makeup adapted to their
style. This was taking place in Shanghai and 30 customers were able to participate.
Hagen-Dazs recently offers VIP loyalty programs only in Asia. This can be
related with the fact that most of the Asian countries are relationship oriented, meaning
that the relationship oriented person is less concerned with getting things done, but
more interested in building and maintaining good relationships with others.139 For
Hagen-Dazs it is therefore important to create a relationship between themselves and
the customers at an early stage so the customers feel loyalty to their brand instead of the
competitors. Hagen-Dazs might also want to create a relationship with their customers
at an early stage before the competition in the premium ice cream marked is getting
fierce. It will as well be an advantage for Hagen-Dazs to have a good relationship with
the customers when their purchasing power is increasing. When the purchasing power
in Asia increase this causes a rise of demand for luxury products and Hagen-Dazs want
to be sure they are the brand the customers will choose.
Based on the analyses Hofstede made in the beginning of 1980s the Chinese
people are long term oriented. They would not spend money on luxury goods only with
the purpose to satisfy their needs. But with the usage of a loyalty program the company
relates to the collectivistic side of the people and create a relationship between the
company and the customers. According to research collectivistic people are more loyal
and this is an opportunity for Hagen-Dazs.
Looking at the changes Hagen-Dazs have made regarding sales promotion on
the Chinese and American market there are large differences. On the Chinese market
Hagen-Dazs have been using competitions, discounts and loyalty programs in addition
to point of sales advertising.
One of the competitions Hagen-Dazs have used on the Chinese market in the
past has been that customers send in photos of them and their partner and tell their love
store. Then the people votes for the best love story and the winner receive a love trip to
a chosen destination. With this kind of competition the customers are interactive and are
able to share their love story with other people. To increase their chance of winning the
participants will as well inform friends and family about the competition so that they
139
Communication Resource Center (n.d.). What is the difference (and importance) of task oriented
communication and relationship oriented communication? Retrieved 12th of March 2011 from
http://work911.com/communication/taskrelationship.htm
82
vote for them. In this way the awareness for the competitions as well as Hagen-Dazs
brand increase.
In addition to this Hagen-Dazs have in China at some occasions cooperated
with Christian Dior to be able to send out advertisements and coupons for nearby
Haagen-Dazs cafes through Diors database of VIP customers to support their superpremium brand image.140 The reason for this is that the customer segment of the two
brands is similar and the relationship between the brands can help increase the brand
awareness for both of them. This is one of the few times Hagen-Dazs have used sales
promotion discounts as coupons, because they are very aware of the disadvantages
discounts can have on their brand Hagen-Dazs commonly do not use this.
As mentioned earlier Hagen-Dazs has a loyalty program in China, but not in the
United States. In the United States they had a loyalty program at an earlier stage, but
this has been terminated. The reason of this according to Hagen-Dazs is that feedback
from our Rewards members indicated that they were interested in learning more about
the Hagen-Dazs brand and our products. In response to that feedback, the HagenDazs Rewards program has evolved into a quarterly email newsletter with exclusive
coverage on new flavors, new products, and more.141
Table 10 Sales promotion in China and the United States
Sales promotion
China
Contest
Discount
Point of sale
Loyalty program
United States
The point of sale advertisings which have been used both in China and the
United States are the usage of freezers in the retail stores specially made for HagenDazs product. These are used all over the world to emphasis the premium brand of
Hagen-Dazs. The freezers are decorated with the Hagen-Dazs pattern and are
produced in different sizes according to the request from the retail stores.
140
Whats on Xiamen (2009). Success story of Haagen-Dazs in China. Retrieved 15th of March 2011 from
141
HDIP, Inc. (n.d.). Faqs- promotion and offers. Retrieved 22th of March 2011 from
http://www.haagendazs.com/company/faq/promotions.aspx
83
Public relations
One example of this promotion is that Hagen-Dazs is today engaged in the fight
against breast cancer in China. In November 2009 Hagen-Dazs established a Breast
Cancer Aid Fund together with Shanghai Ruijin Hospital, Shanghai Charity Foundation
and Shanghai Charitable Cancer Research Center. The fund aims to help the
impoverished patients complete surgery and related treatments, as well as raise the
public awareness of breast cancer prevention and treatment.142 In connection to this a
website (www.breastcanceraid.com.cn) was launched and according to General Mills
this was the first website in China about breast cancer which offers online aid
application in addition to information about the disease.143
Table 11 PR in China and the United States
Public relations
Press release
China
United States
Sponsor ship
CSR
Hagen-Dazs both in China and the United States send press releases to the press
for major events as well as for their corporate social responsibility causes This is in
China the Breast Cancer Aid Fund while in the United States the Honey Bees.
Direct marketing
On the Chinese market Hagen-Dazs is today using direct marketing as one of
the methods to communicate to the customers. The newsletters contain information
about their newest products, offers and other news which can be interesting for the
customers. The newsletter is electronic mail and the customer can sign up at the website
or in the Hagen-Dazs cafes.
On the American market the same concept is being used. The customers can sign
up via their internet site and receive the newsletter every quarter. The usage of
142
General Mills, Inc (209). Breast Cancer Aid Fund Launches to Save Lives. Retrieved 15th of March
2011 from http://www.generalmills.cn/Gmi/NewsPage.aspx?NewsNumber=343
143
General Mills, Inc (209). Breast Cancer Aid Fund Launches to Save Lives. Retrieved 15th of March
2011 from http://www.generalmills.cn/Gmi/NewsPage.aspx?NewsNumber=343
84
newsletters as electronic mail gives Hagen-Dazs the advantage of saving money on

both postage and paper, which result in an environmental friendly approach.
Table 12 Direct marketing in China and the United States
Direct marketing
Newsletter
China
United States
SMS
Neither in China nor the United States direct marketing via SMS is being used,
but this can be a possibility in the future.
3.3.5 Price
Hagen-Dazs is using the same price strategy in China as on the rest of their
markets; high prices to reflect the super- premium brand. Hagen-Dazs is a luxury
brand which attracts the increasing high-middle and high class in China. As mentioned
earlier these segments are the fastest growing segments in the Chinese society and have
an increasing interest for luxury brands.
The main focus of Hagen-Dazs in China is on the Hagen-Dazs cafes. In China
the average cost per person at a Hagen-Dazs cafe is 80 CNY approximately
200CZK.144 Looking at this from a Czech point of view, with an average Czech salary,
it will be an expensive cafe used for special occasions. Looking at this from a Chinese
point of view with an average monthly salary of around 2400 CNY145 (6200 CZK), this
is not a cafe for the average Chinese people, but for the high or high middle-class.
According to the research made by Harvard Business Review146 there is a
reverse price war in China today which Hagen-Das is a part of. It is said that Chinese
people are very price sensitive and even if they find a cheap product they will try to find
it even cheaper. But there are some cases when the consumers are willing to pay more
and according to Harvard Business Review there are three reasons for this.
The first reason is that Chinese people perceive the price to be equal with the
quality; hence the customers choose the price of the product they will buy according to
the quality they are looking for.
144
TravelChinaGuide.com (2011). Icecream Bars in Beijing. Retrieved 15th of March 2011 from
http://www.travelchinaguide.com/cityguides/beijing/dinning/icecreambar.htm
145
International Labour Office (2009). Employment. Retrieved 15th of March 2011 from
http://laborsta.ilo.org/STP/guest
146
Magni & Atsmo (2010). Chinas Reverse Price Wars. Retrieved 15th of March 2011 from
http://blogs.hbr.org/cs/2010/03/chinas_reverse_price_wars.html
85
The second reason is that consumers, increasingly, buy products that are status
symbols147 and this to a large extend why Hagen-Dazs is having such a success in
China. Hagen-Dazs has established a well-known cafe where the customers can sit in
prestigious surrounding and be seen by others.
The third reason is that in Chinese culture it is important to save face of
yourself or others and premium brands are therefore commonly used as gift. An
example mentioned earlier is the Hagen-Dazs Ice Cream Mooncakes that is a
prestigious gift given to friends, family members or business partners for the Moon
Festival to show respect and that appreciation to the others.
According to the article a company can successfully charge a higher price if they
are addressing one of the factors above and as mentioned Hagen-Dazs fulfil two of
three factors.
In addition to the reverse price war on the Chinese market most of the HagenDazs products are produced in France which results in higher production and
transportation cost. Since the infrastructure in some areas is not well developed this
influences the transportation costs as well. There are as well high health regulations on
dairy products in China because of the concern of diseases. The last years the concern
has grown and the regulations have increased after the contamination scandal with for
example infant formulas.
Looking at price of Hagen-Dazs products on the Chinese market contra the
American market there is a large gap. Today a pint of Hagen-Dazs ice cream retails
for $11 (RMB 75) in a Chinese supermarket as against $4 in a U.S. supermarket.148
The main reason for this is the reverse price war which is present on the Chinese market
where the customers are willing to pay a very high price for premium luxury products.
This is today not the case on the American market where also the competition in this
price group is high.
When it comes to the price strategy Hagen-Dazs is using on the Chinese market
this is not supported up by Hofstedes research. According to Hofstede Chinese people
are very long term oriented and save money rather that spending them on luxury
products, this is also supported by the research made by Harvard Business Review with
their findings that Chinese are very price sensitive.
147
Magni & Atsmo (2010). Chinas Reverse Price Wars. Retrieved 15th of March 2011from
148
Magni & Atsmo (2010). Chinas Reverse Price Wars. Retrieved 15th of March 2011 from
86
Recommendations
Even though Hagen-Dazs is one of the few companies on the Chinese ice cream
market which is focusing on the super-premium segment the company have to have a
constant development to meet the customers needs. This is not just related to
developing new products, but also in the usage of promotion tools and where to
distribute their products.
This section will focus on how Hagen-Dazs can develop on the Chinese market
with relation to adapting their marketing mix closer to the Chinese culture and
preferences.
Product
For the future Hagen-Dazs have two possibilities regarding their products on
the Chinese market, this is either to develop new product adapted to the Chinese market
or expand products from the existing product portfolio to the Chinese market.
First we will look at the opportunities Hagen-Dazs has to develop new products
adapted to the Chinese market. One option Hagen-Dazs has is to introduce new ice
cream or sorbet flavours adapted to the Chinese market which can be used both for the
Ice Cream Specialties in the Haagen-Dazs cafes in China as well as for ice cream pints.
One suggestion for the flavour is ice cream or sorbet with Kumquats. Kumquats
are the worlds smallest citrus fruit which look similar to orange, but have the size of a
grape. The origin of the fruit is from China, but has today spread to other Asian
countries as well as to some warm areas in the United States. The name Kumquats
originally comes from Cantonese kam kwat, which means "golden orange."149
One reason why this fruit can be interesting for the Chinese market is the special
flavour. The flavour is described as: an intense flavour that is both sweet and sour,
with a surprising twist in that the skin is sweeter than the pulp150 and extremely juicy
and tasty and usually have a sweet outer skin accompanied by a tart, inner flesh.151
Sweet and sour are flavours that are commonly used in the Chinese cuisines, hence
connecting this to the Hagen-Dazs ice cream can be a success.
149
S. Russo (2008). Kumquats: Discovering the Sweetness of Sour. Retrieved 1th of May 2011from
http://www.npr.org/templates/story/story.php?storyId=18828304
150
E. Sung (n.d.). Visual Guide to Asian Fruits and Vegetables. Retrieved 1th of May 2011from
http://www.epicurious.com/articlesguides/seasonalcooking/farmtotable/visualguideasianproduce
151
Demand Media (n.d.). What Is A Kumquat? Retrieved 1th of May 2011 from
http://www.essortment.com/kumquat-53646.html
87
A second reason for using the Kumquats fruit is that it offers many nutritional
benefits. Kumquats contain no fat, cholesterol or sodium and they provide fibre and
vitamin A and C in addition to trace of iron and calcium.152 All this makes the
Kumquats a healthy fruit which Hagen-Dazs can focus on for their heath related
customers.
A third reason for the usage of Kumquats on the Chinese market is the symbol
the fruit has in the Chinese culture and the traditional usage of it. The fruit symbolizes
prosperity and unity and is a traditional gift for the Chinese New Year.153
A way for Hagen-Dazs to start with the Kumquats products is to introduce them
as limited specialties in the Hagen-Dazs cafes in connection to the Chinese New Year.
If Hagen-Dazs experience a high demand for the product they can at a later stage
introduce gift packages with Kumquats ice cream cakes which can be used as gifts for
family and friends to show their respect for Chinese New Year. This will be based on
the same concept as the Hagen-Dazs Ice Cream Mooncakes, but will instead be
focused on Chinese New Year.
Figure 21 Kumquats
Figure 22 Dragon fruit
Source 33 E. Sung (nd). Visual Guide to Asian Fruits

and Vegetables. Retrieved from
http://www.epicurious.com/articlesguides/seasonalcoo
king/farmtotable/visualguideasianproduce
Source 34 Dragon fruit (2009). All about dragonfruit.

Retrieved from http://dragon-fruit.biz/
Another fruit that can be used for Hagen-Dazs flavours is Pitaya Fruit,
commonly known as Dragon fruit. Dragon fruit is a nutritious and exotic fruit which is
commonly used in Asia. The taste is light sweet and very refreshing and consists of
varied nutritional ingredients.154 The fruit has also proven to be good for people with
152
Demand Media (n.d.). What Is A Kumquat? Retrieved 1th of May 20111from

153
S. Russo (2008). Kumquats: Discovering the Sweetness of Sour. Retrieved 1th of May 2011 from
154
Dragon fruit (2009). All about dragonfruit. Retrieved 1th of May 2011 from http://dragon-fruit.biz/
88
high blood pressure, diabetes and obesity; hence Hagen-Dazs can focus on the health
issue related to this product for the part of the Chinese population that is focused on this
issue.
As mentioned earlier many Chinese people are very aware of their health and
what they eat and to target these people in the population Hagen-Dazs can launch
healthier products. On the American market Hagen-Dazs is offering products called
Lowfat Frozen Yogurt and this can be a product that can lead to success also on the
Chinese market. On the American market the product is today offered in six different
flavours; Coffee, Dulce de Leche, Peach, Vanilla, Vanilla Raspberry Swirl and
Wildberry.155 With the usage of the same flavours on the Chinese market Hagen-Dazs
will have the advantage of not having to investing money into research and
development and reach out to another target group. Hagen-Dazs can for example test
the Chinese market with launching the low fat frozen yogurt products as limited editions
products to see if the Chinese customers are interested. If this result in a success
Hagen-Dazs can launch this as a regular product and in a long time perspective expand
the selection of flavours.
Distribution
Today Hagen-Dazs is having 113 Hagen-Dazs cafes in 27 cities all over
China. The possibilities Hagen-Dazs have is either to expand to some other Chinese
cities or introduce more Hagen-Dazs cafes in the cities they are already present in.
Regarding the last option this might be the option with most advantages for the
company. The reason for this is that Hagen-Dazs is already present at the market,
hence there should be some brand awareness about Hagen-Dazs and in addition the
company can earn on the usage of economy of scale regarding transportation of the
products from the production facilities. One example is the city Changsha the province
capital in Hunan. This city has today a population of approximately 6 million (2003)
where the urbanized area has a population of around 2.7 million people and one
Hagen-Dazs cafe156. It is in cities like this Hagen-Dazs have the possibility to
establish more cafes to saturate the demand. To be sure it will result in success in-depth
155
HDIP, Inc. (n.d.) Frozen yogurt. Retrieved 1th of May 2011 from http://www.haagendazs.com/products/yogurt.aspx
156
China Tour (2010). Changsha. Retrieved 1th of May 2011 from
http://www.chinatour.com/attraction/changsha.htm
89
analyses of the population, the existing cafe and other relevant analyses have to be
conducted to see if there is demand for another caf.
As mentioned earlier the presence of freezers in Chinese homes are not very
common, but increasing. If the increase continues Hagen-Dazs will have the possibility
to focus more on their retail product, especially in cities like Shanghai and Beijing
where the increase is happening more rapidly. Another opportunity is to focus on single
serve cup for sale in the retail stores instead large ice cream boxes which are commonly
the focus in the stores. The single serve cups consist of 204g157 of ice cream and are
nice size for enjoying for example after lunch. A possibility for Hagen-Dazs is
therefore to focus on that the single serve cups are perfect for enjoying just after they
have been brought for example on a bench in the sun if there is no Hagen-Dazs cafes
present in neighbourhood. This can be done with the usage of in store promotion like
posters and supported by advertisements in magazines or newspapers.
Promotion
Since China is a Long term oriented country and very focused on the aspect of
saving face Chinese people often use gifts as a way to show respect and the value of the
gift symbolize their respect to the other. Hagen-Dazs has therefore an advantage as a
premium brand if they start to offer more gift related products. They have started with
the sale of mooncakes gift vouchers for the Moon Festival, but Hagen-Dazs can
expand this offer with also having other gift related products like wedding gifts or
birthday gifts that are more symbolic than the vouchers they are offering for this
purpose today. An example can be custom made ice cakes with picture on, but since this
is quite common Hagen-Dazs should also offer other special gift which reflects their
premium brand.
Regarding the promotion Hagen-Dazs can use on the Chinese market is to have
more focus on Share the happiness. Share Hagen-Dazs. The reason for this is the
collectivistic culture that is present in China. With relating Hagen-Dazs products and
cafes to something social this can result in that the Chinese population prefer HagenDazs when they want to be social, when they want to impress someone or for special
occasions. Organization of special events like luxury birthdays or anniversaries can also
create a positive relationship between the customers and Hagen-Dazs.
157
HDIP, Inc (n.d.). Caramel cone cup. Retrieved 1th of May 2011 from
http://www.haagendazs.com/ingredients/ingredient.aspx?id=404&name=caramel+cone&seg=cup
90
To increase the brand awareness in the younger generation Hagen-Dazs should

focus some of their marketing to the new media like mobile marketing, social
networks and applications.
As for the social network services in China are today four social networks that
are the most used ones: renren.com, http://www.kaixin001.com/, http://qzone.qq.com/
and http://www.51.com/. According to the report China's Top 10 Social Games and
Top Social Networks developed by BloggerInsight.com in 2010158 these are the major
players on the Chinese market and many major global players like Facebook or
Myspace have very small market shares on the Chinese market. The main reason for
this is that the Chinese government has at some occasions banned the website because
of their concerns over spread of uncensored information.
When analyzing the Top 4 social network in China the player that is best for
Hagen-Dazs is the social network called Kaixin001. Even though it has the lowest
amount of users according to Table 13 Chinas Top 4 social network sites comparison
table with more than 80 million the target users are White-collars in 1st tier cities which
are the main customers of Hagen-Dazs.
Table 13 Chinas Top 4 social network sites comparison table
Source 35 BloggerInsight.com (2010). China's Top 10 Social Games and Top Social Networks. Retrieved from
http://www.chinasocialgames.com/wp-content/uploads/2009/12/Preview.pdf
158
BloggerInsight.com (2010). China's Top 10 Social Games and Top Social Networks. Retrieved 1th of
May 2011 from http://www.chinasocialgames.com/wp-content/uploads/2009/12/Preview.pdf
91
Today
Hagen-Dazs
is
present
at
the
Kaixin001
with
the
site
www.kaixin001.com/haagendazs. The site is today consisting of general information

about the Hagen-Dazs brand and information about special offers that the consumers
can experience in the Hagen-Dazs cafes. For example from 30th of April 2011 till the
8th of May 2011 the VIP Club Members are offered double points for the products they
buy in the Hagen-Dazs cafes to celebrate Mothers Day.159 The reason for this offer is
to encourage the customers to celebrate Mother Day in the Hagen-Dazs cafes.
To develop the Hagen-Dazs site on Kaixin001 into a more interactive site
Hagen-Dazs can for example make game applications where the customers manage
their own Hagen-Dazs caf. Chinese people are very active in social games on Internet
and develop a good entertaining game which can increase the brand awareness in this
customer group. In addition this might create an interest for becoming a Hagen-Dazs
franchise which Hagen-Dazs can utilize. The only issue is that Hagen-Dazs have to be
able to develop a game which does not decrease the brand image of the company and
this can be a challenge.
As far as mobile marketing in China is concerned this is a huge market which is
increasing rapidly especially with the usage of Smartphone. Hagen-Dazs have the
possibility to develop internet applications with recipes of the best Hagen-Dazs
deserts, competitions where the customers can send their best ice cream recipes and
applications to find the closest Hagen-Dazs products both in retail stores and HagenDazs cafes which can increase the interest of the product and result in more purchases.
Price
Concerning the price of the Hagen-Dazs products no recommendations have
been made. The reason for this is that the premium price strategy that Hagen-Dazs is
using on their products today strengthens the brand image as a super premium ice cream
company. Hence no recommendations are needed because Hagen-Dazs should follow
the same strategy in the future.
159
Hagen-Dazs (n.d.). Hagen-Dazs. Retrieved 1th of May 2011 www.kaixin001.com/haagendazs
92
Conclusion, limitation and further research

To increase the effectiveness and efficiency for a company to deal with
international business many issues have to be taken into consideration. In depth
analyses of the countries political, economical, cultural and technological environment
should be conducted, in addition to research concerning existing and potential
competitors.
The main focus in this thesis has been on culture and its influence on the
marketing mix. Through theoretical and practical in depth analyses it was proven that
culture place a greater part in the international marketing mix than earlier anticipated.
Culture is an important part in the consumers life and therefore affects the consumer
behavoiur when making purchasing dictions. This is one important aspect, but there are
different other aspects as well, e.g. economic aspects, religion etc. which also have an
influence in the marketing mix (but it is not part of this thesis and could be an aspect of
further research).
When doing research for this thesis finding of information about the effect
culture have on the marketing mix was quite hard. Most consumer marketing textbooks
are emphasizing the world market and to a small extent focus on the large impact
culture has on consumers and their purchasing behavoiur. Even if globalization is an
important issue in the world today further research should be conducted on the
importance of culture for a companys marketing mix and the thesis offers a good basis
for this.
The further research which should be conducted is qualitative research with
standardized questionnaires to analyze the new cultural trends around the world. Today
universities and consolation companies still focus on research which was conducted by
Hofstede and Trompenaars many decades ago and this should be updated to reflect
todays environment.
Even though Hofstedes research was conducted in the early 1980s his research
values are to some extent genuine in China today. Through analyses of Hagen-Dazs
Chinese marketing mix, it was proven that some of the values Hofstede prepared are
still valid today. The Chinese culture is still collectivistic and has a high power distance,
but because of the economic growth in the urban areas the long term orientation values
have decreased. But it is important to point out that there are large differences between
the urban and rural areas in China. Hagen-Dazs marketing mix for the Chinese market
93
is developed for a premium luxury product which is only offered in the largest and
urban areas with a strong economy. In these areas there has been an increase in the
income as well as for the lifestyle. In the rural areas in China Hofstedes research is still
accurate. The main reason for this is that there has been slow economical and cultural
development in these parts of the country.
94
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Appendix
Appendix 1 Distribution: Definitions, advantages and disadvantages
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100
Appendix 2 Honey Bee advertisement
Source
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Ice
Cream
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from
Retrieved
from
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101
Figure list
Figure 1: Variables influencing cross-cultural marketing strategy ..................................................... 14
Figure 2 Four levels of a product ............................................................................................................ 22
Figure 3 Factors influencing the price ................................................................................................... 25
Figure 4 Internal and external factors ................................................................................................... 25
Figure 5 Projected Changes in Ad Spending 2009 ................................................................................ 36
Figure 6 Online Advertising Expenditures by Channel ....................................................................... 36
Figure 7 Hagen-Dazs logo ..................................................................................................................... 43
Figure 8 Hagen-Dazs product portfolio .............................................................................................. 45
Figure 9 Selected Hagen-Dazs flavours ................................................................................................ 46
Figure 10 Print ad for Mint Bar ............................................................................................................. 47
Figure 11 Vanilla Honey Bee .................................................................................................................. 48
Figure 12 Map of China .......................................................................................................................... 51
Figure 13 Timeline Chinas history ......................................................................................................... 52
Figure 14 Hagen- Dazs cafes in China ................................................................................................. 69
Figure 15 Hagen-Dazs Green Tea......................................................................................................... 71
Figure 16 Selected cakes from Cake Ice Cream .................................................................................... 72
Figure 17 Hagen-Dazs Wedding cake .................................................................................................. 73
Figure 18 Hagen-Dazs China ................................................................................................................ 75
Figure 19 Mooncakes Rainbow Collection ............................................................................................ 76
Figure 20 Hagen-Dazs Ice Cream Fondue ........................................................................................... 77
Figure 21 Kumquats ................................................................................................................................ 88
Figure 22 Dragon fruit ............................................................................................................................ 88
Table list
Table 1 PEST factors ............................................................................................................................... 19
Table 2 Advantages and Disadvantages of Standardized International Marketing .......................... 20
Table 3 Advantages and Disadvantages of Customized International Marketing ............................. 21
Table 4 Advertising Media Characteristics ........................................................................................... 35
Table 5 Importance of sales promotion for manufacturers and consumers ....................................... 39
Table 6 Colours in Chinese culture ........................................................................................................ 63
Table 7 Hofstedet and China .................................................................................................................. 64
Table 8 Hofstede comparison of China and United States ................................................................... 66
Table 9 Advertising in China and the United States ............................................................................. 80
Table 10 Sales promotion in China and the United States ................................................................... 83
Table 11 PR in China and the United States ......................................................................................... 84
Table 12 Direct marketing in China and the United States ................................................................. 85
Table 13 Chinas Top 4 social network sites comparison table ........................................................... 91
102

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University of Economics, Prague

International Business Central European Business Realities

Selected Aspects of Cultural Differences and their

Author: Anne Sakseide Svendsen

In Prague on 24th of May 2011

Research through history.....................................................................8

Elements of culture ...........................................................................14

International marketing .......................................................................19

International marketing mix .............................................................. 21

Case study: Hagen-Dazs ....................................................................43

The brand Hagen-Dazs h gn d s ....................... 43

Hagen- Dazs in China ....................................................................67

Conclusion, limitation and further research .................................................... 93

3. Hofstedes research is still genuine today based on the marketing mix

TimelessTime (n.d.) CULTURE MATTERS- Maximising People Contribution through Collective

1.1 Research through history

Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson Higher

The second dimension is individualism. Individualism is the relationship

Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson

where womens return to work after giving birth is encouraged by government

Multinational Management - A strategic approach (2008), J.B.Cullen, K.P.Parboteeah , Thomson

1.2 Elements of culture

Values & normes

1.2.1 Values & norms

When it comes to how companies have to be aware of non-verbal

L. LO (2011). Timeline. Retrieved 12th of May 2011 from

Source 2 NetMBA.com (n.d.) PEST Analysis. Retrieved from http://www.netmba.com/strategy/pest/

GlossaryOfMarketing.com (n.d.) Marketing. Retrieved 22th

Another decision companies have to make before expanding abroad is what

Table 2 Advantages and Disadvantages of Standardized International Marketing

Standardized international marketing

Reduces marketing costs

Ignored different conditions of product use

Facilitates centralized control of marketing

Ignores local legal differences

Promotes efficiency in R&D

Ignores differences in buying behaviour

Result in economy of scale of production

other differences in individual

Table 3 Advantages and Disadvantages of Customized International Marketing

Customized international marketing

Ignores different conditions of product use

Increases marketing costs

Acknowledges local legal differences

Inhibits centralized control of marketing

buying Creates inefficiency in R&D

Reduces economy of scale of production

2.1 International marketing mix

Figure 2 Four levels of a product

Factors influencing the international price

Figure 3 Factors influencing the price

Source 6 G. Pfajfar (2009) International pricing decisions. Retrieved from miha.ef.unilj.si/_dokumenti3plus2/190198/Lecture7_pricing.ppt

Source 7 Pfajfar (2009) International pricing decisions. Retrieved from miha.ef.unilj.si/_dokumenti3plus2/190198/Lecture7_pricing.ppt

International pricing strategies

A. Wolk & C. Ebling (2008). Multi-Channel Price Differentiation: An Empirical Investigation of

2.1.3 International distribution

Indira Gandhi National Open University (n.d.).

defined as a paid-for communication to a mass audience that creates awareness and

The main characteristic of the different mediums can be seen in Table 4

Adverting is influenced by the language, values & norms and non-verbal

WebFinance, Inc. (n.d.). Sales promotion. Retrieved 4th of April 2011from

Sales promotion in commonly used as a part of the promotion mix to boost up

Case study: Hagen-Dazs