Global products marketing strategy of two European MNCs in Vietnam
| DOI | https://doi.org/10.1108/JPBM-04-2016-1144 |
| Published date | 18 September 2017 |
| Date | 18 September 2017 |
| Pages | 573-588 |
| Author | Beat Hans Wafler,Yuosre F. Badir |
| Subject Matter | Marketing,Product management,Brand management/equity |
Global products marketing strategy of two
European MNCs in Vietnam
Beat Hans Wafler and Yuosre F. Badir
School of Management, Asian Institute of Technology, Pathumthani, Thailand
Abstract
Purpose – The purpose of this paper is to analyze how two multinational companies (MNCs) faced the challenge of market uncertainty and political
instability in a newly emerging market, and how it affected the impact of their product marketing strategy (PMS) and product (brand) performance.
Design/methodology/approach – A comparative longitudinal paired case study of a market entry by two global MNCs. Twelve global brands
(products) were studied, which were locally manufactured and launched by the two MNCs during their first ten years of operation in Vietnam.
Findings – The authors approached the investigation from a conventional point of view: standardization versus adaptation. The results showed that
in addition to these two traditional processes, a third one was also operating, which the authors labeled semi-adaptation, or the midway PMS.
Semi-adaptation refers to a product that has been introduced to Vietnam from a neighboring country.
Research limitations/implications – This research is based on two European MNCs active in the food and consumer-household goods industry
in a newly emerging market: Vietnam.
Practical implications – This primary data indicate that the product standardization, semi-adaptation and adaptation process in practice is a
technique applied to fit a product to a newly emerging market more by degree of change than by product category.
Originality/value – This paper supports a recent stream of research, which views Standardization or Adaptation as the two ends of the same
continuum, where the degree of the firm’s PMS can range between them.
Keywords Market entry, Product marketing strategy, Brand performance, Product standardization and adaptation, Multinational corporations,
Fast moving consumer goods
Paper type Research paper
Introduction
Extensive research on the subject of standardization versus
adaptation has revealed that the recent literature was able to
highlight the significant ambiguity surrounding the
achievements of previous investigations (Akgün et al., 2014;
Khandai, 2014;Brei et al., 2011;Schmid and Kotulla, 2011;
Alashban et al., 2002;Medina and Duffey, 1998). The
decision to use standardization or adaptation as the product
marketing strategy (PMS) is situation-specific and should be
the outcome of thorough analysis of the relevant factors
prevailing in a specific market at a specific time (Hakala et al.,
2011;Griffith, 2010;Vrontis et al., 2009;Vrontis and
Kitchen, 2005;Ryans et al., 2003;Theodosiou and Leonidou,
2003). When using the term “situation”, scholars embrace
both the firm’s internal situation such as resources, skills,
experiences, competences, product characteristics and brands
(Guzman and Davis, 2017;Chatzipanagiotou et al., 2016;
Christodoulides et al., 2016;Guzman et al., 2016;Davcik and
Sharma, 2015;Davcik et al., 2015;Veloutsou et al., 2013),
and the firm’s external situation like customers, competitors,
culture, social and political system (Truong et al., 2017;
Schmid and Kotulla, 2011;Chung, 2007). This research
adopts the situational strategic fit concept to investigate the
PMS of multinational companies (MNCs) in a newly
emerging market. The “concept of fit” is necessary because it
offers an appropriate theoretical framework for investigating
the degree of adaptation versus standardization PMS that
influences product performance (Davcik and Sharma, 2016;
Hultman et al., 2009;Hultman, 2008;Vrontis and Thrassou,
2007;Zott and Amit, 2006;Papavassiliou and
Stathakopoulos, 1997). The situation strategic fit concept
exists from two perspectives: internal and external:
In an internal situation context, firms that want to adapt
their products for foreign countries need higher usage of
international competence (Cavusgil and Zou, 1994). O’Cass
and Julian (2003) claimed that firms may adapt their PMS to
foreign countries when operations are small. Schilke et al.
(2009) and O’Donnell and Jeong (2000) postulated that
cross-national standardization of PMS requires an extensive
marketing experience. Firms tend to standardize their PMS
across nations when the product has unique characteristics
(O’Cass and Julian, 2003;Low and Lam, 2000;Park and
Srinivasan, 1994;Boddewyn et al., 1986;Levitt, 1983)or
when marketing a high-tech product (Souiden et al., 2011;
O’Donnell and Jeong, 2000).
In an external situation context, Evans et al. (2008) argued
that adapting marketing strategies to culturally distant foreign
countries has a negative effect on firms’ performances.
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
26/6 (2017) 573–588
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-04-2016-1144]
Received 15 April 2016
Revised 7 September 2016
18 December 2016
21 February 2017
Accepted 25 February 2017
573
Roth (1995) challenged these findings and empirically
supported the importance of adapting PMS to foreign
countries when there are cross-national differences in the
cultural and socioeconomic market conditions.
This research aims at filling the gap in the literature by
investigating how MNCs face the challenge of market
uncertainty and political instability in emerging markets and
its impact on the PMS and the products’ performance. The
investigation conducted a comparative longitudinal paired
case research of a newly emerging market entry by two global
MNCs: Nestlé SA and Unilever NV. This study covers 12 of
their global brands that were locally manufactured and
domestically launched by these MNCs during the first ten
years of operation in Vietnam.
The paper is organized as follows: the next section presents
the research setting and the methodology that guides the
investigation, while the third section presents and discusses
the findings. It examines the PMS used for each global brand
during this period and compared the results to provide an
empirically based conclusion and recommendation in Section
4. The final section sets out the limitations and proposes
further research.
Research setting and methodology
The investigation utilizes a qualitative research design
(Creswell, 2007), as there is a need for deep understanding of
the local contextualization, causal inference and exposal of the
points of view of the people under study (Babbie, 2007;Miles
and Huberman, 1984,1994). The qualitative research
approach is most suitable when studying global PMS that
takes place in the MNCs’ foreign subsidiaries where the
national and company culture, product strategy, local
consumer behavior and headquarter–subsidiary relationship
are all interconnected.
The case study approach (Yin, 1993,2003) using a
qualitative method has been particularly effective in the study
of relations (Larsson, 1990) and serves as an empirical
foundation to support a theoretical development (Urde,
2016). It is an appropriate method to generate new
knowledge, to investigate a complex interaction between a
phenomenon and its context and to increase the
understanding between the data, the context and the existing
knowledge (Easterby-Smith et al., 2012;Eisenhardt, 1989;
Yin, 1993,2003). The research captures the complexities and
holistic nature of the phenomenon under investigation and, in
this context, validates the recommendations of Badir et al.
(2009) and Ravasi and Schultz (2006).
Research setting
This research is based on a comparative longitudinal paired
case study of two European MNCs of similar size, close
distant origin and which are fierce competitors. This research
design enhances the extension of existing research and
generates field-based insights (Davcik et al., 2015;Veloutsou
et al., 2013). All data used are taken from real-life experience:
practice, work and life-as-lived by the executives who were
present (Eisenhardt and Graebner, 2007;Yin, 2003;
Eisenhardt, 1989). Nestlé SA of Switzerland and
Anglo-Dutch Unilever NV are both European MNCs
penetrating the Vietnamese market at almost the same time.
Nestlé SA emphasized on food and beverage only. Unilever
NV managed a portfolio of food and personal products.
The first ten years of their operations in Vietnam, from 1995
to 2005, was divided into two phases: the early-days phase
from 1995 to 2000 and the maturity phase from 2001 to 2005.
These two phases were not only shaped by local market
developments and political oscillations, but regional and
global events as well (Elliott, 2012). The early-days phase
notably included the uptick of domestic production in 1995,
right after the US-led trade embargo on Vietnam had been
lifted a few months earlier. The higher risk period included the
Asian financial crisis, which started in Thailand in 1997 on
July 2, just one day after the British Crown Colony of Hong
Kong was handed over to the People’s Republic of China.
Vietnam and especially its neighbors suffered a dramatic loss
of confidence from investors, which took years to recover. The
“dot-com” bubble that had been building up since 1998
peaked in 2000, and burst shortly afterward, while in 1999,
the world prepared for the Y2K Millennium bug. By late
2001, the global situation, particularly within the Asian
region, began to stabilize, and the following five years
witnessed both calamity and economic development.
The investigation followed up on the sales performance of
each of the 12 products over the two five-year periods and
examined whether there was any alteration to the initial PMS.
It studied six products of Nestlé, belonging to three different
product categories – dairy-chilled, beverages and culinary –
and six products of Unilever, belonging to three different
product categories – personal care, home care and food. The
two MNCs have similar experience in the region and operate
large subsidiaries globally. The broad similarities between the
two European MNCs were important in eliminating variations
that might have been caused by other differences in the firms.
Risk
Studies on MNCs showed that the choice of PMS is largely
influenced by the risks perceived and benefits available
(Albaum et al., 2005;Agarwal and Teas, 2001). Risk,
uncertainty and imperfect knowledge are crucial determinants
in PMS’ selections since MNCs, which begin to engage in
foreign market activities often lack prior knowledge,
experience and adequate information (Albaum et al., 2005).
The early days higher risk period was the initial emerging of a
free market economy, which did not exist in Vietnam
previously. No reliable data on the limited market activity
were available, as the country had been in communist isolation
since it sank into economic stagnation (Elliott, 2010;Chanda,
1986;Duiker, 1985) after the fall of Saigon in 1975 (Butler,
1985;Hosmer et al., 1978;Terzani, 1976). The beginning of
the lower risk period was demarcated from 2001, when foreign
firms could gather useable market data and had a more
accurate understanding of the local trading environment.
Overall, the risk for foreign firms was largely consequent upon
the limited knowledge they possessed on Vietnam and the
uncertainties they faced owing to the lack of reliable data and
experience (Ashwill and Diep, 2005).
Global products marketing strategy
Beat Hans Wafler and Yuosre F. Badir
Journal of Product & Brand Management
Volume 26 · Number 6 · 2017 · 573–588
574
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