Petra Svobodova. Anna Gnyria. The Importance of cross-cultural differences in the marketing communications: Investigated in Central and Eastern Europe.
© The Authors Karlstad, 2013
Petra Svobodova, Bc. Anna Gnyria, M.A.
Na Navsi 3 Danilevskogo 31, lgt 69
CZ-251 01 Cestlice UA-61068 Kharkiv
ACKNOWLEDGEMENT
First, we would like to thank our supervisor Prof. Bo Rundh for his time, extraordinary care, support and constructive inputs and remarks.
Furthermore, we would like to thank the respondents, who took part in our survey, which would not be possible to conduct without them.
ABSTRACT
Despite the globalization and cultures’ convergence, it is scholarly recognized that cross-cultural issues are important in a business context, especially for companies extending their activities internationally. However, existing theory does not provide an explicit answer of how cultural differences between countries influence customers’ perception of different aspects of marketing communication mix. That is why the underlying task of the current paper is to investigate if cross-cultural differences within the same geographic region are big enough to affect customers’ perception of marketing communication mix used.
To facilitate a data collection, Central and Eastern European region represented by Ukraine and Czech Republic were chosen. As a reference tourism industry was used, due to its’ current significance, scale and global nature. Data was collected by conducting secondary and primary research, both having quantitative nature. Secondary data was collected through statistical offices and official on-line sources. For the primary research purposes a questionnaire survey was conducted among pre-defined target audience in Czech Republic and Ukraine. 300 responses obtained provided a solid basis for the further analysis.
Based on the relevant theory and secondary research findings four hypotheses were developed to address the research question “Does cross-cultural differences within Central and Eastern Europe affect the marketing communication mix in a specific industry?”.
The study results provided that cultural differences exist not only between different regions, but also found within the same geographic region. When considered from marketing perspective, they are significant enough to influence customers’ preferences and perceptions of different aspects of marketing communication mix.
TABLE OF CONTENTS
LIST OF ABBREVIATIONS ... 1
1. Introduction ... 2
1.1. Problem identification ... 2
1.2. Purpose of the study ... 4
2. Theoretical framework ... 5
2.1. Marketing strategy and strategic marketing planning... 6
2.2. Integrated marketing communications strategy ... 9
2.3. Integrated marketing communications mix ... 9
2.3.1. Primary instruments ... 10
2.3.2. Secondary and collective instruments ... 11
2.3.3. Selected tools and media: in-house and/or outsourced ... 11
2.3.4. E-marketing reliance effects ... 11
2.3.5. Marketing communications in tourism industry ... 13
2.4. Cross-cultural marketing ... 16
2.5. Primary integrated marketing communications process: perception management 19 2.6. Primary integrated marketing communications vehicle: branding ... 20
2.7. Terminal integrated marketing communications aim ... 20
3. Research methodology ... 22
3.1. Research strategy ... 22
3.2. Research design ... 22
3.3. Data collection design ... 23
3.3.1. Secondary data description ... 24
3.3.2. Primary data description ... 24
3.3.3. Developing the sampling plan ... 24
3.3.4. Elaboration of the questionnaire ... 25
3.3.5. Designing the survey questionnaire ... 26
3.4. Data analysis and interpretation ... 27
3.5. Limitations... 28
4. Findings ... 30
4.1. Internet penetration ... 30
4.2. Economic growth and income distribution ... 30
4.3. Outbound tourism of Czech Republic and Ukraine ... 31
4.4. Marketing communications ... 32
4.5. Usage of Internet in tourism ... 32
4.6. Population description ... 33
4.7. Marketing communications tools and media ... 34
4.7.1. Preferable marketing communications tools ... 34
4.7.2. Preferable marketing communications media ... 36
4.7.3. Comparison of preferable marketing communications tools and media in Czech Republic and Ukraine by using independent t-test ... 37
4.8. Cultural issue in marketing perspective... 39
4.9. Patterns of using Internet for online purchasing ... 41
4.9.1. Patterns of Internet usage ... 41
4.9.2. Perception about online purchasing ... 42
4.9.3. Comparison of Czech and Ukrainian perceptions about online purchasing ... 43
4.10. Internet as the primary source of information when looking for a holiday ... 44
4.11. Spending on holidays ... 45
4.12. Business-consumer relationships ... 45
4.12.1. Purchasing patterns of Czech respondents ... 46
4.12.2. Purchasing patterns of Ukrainians respondents... 46
4.12.3. Comparison of attitudes to the BCR by using independent t-test ... 47
5. Analysis ... 49
6. Discussion... 54
7. Conclusion ... 58
8. References ... 61
9.1. Appendix I: Theoretical framework ... 66
9.2. Appendix II: Internet usage ... 67
9.3. Appendix III: Economic growth ... 69
9.4. Appendix IV: Marketing communications ... 70
9.5. Appendix Va: Coding ... 71
9.6. Appendix Vb: Questionnaire (English language) ... 72
9.7. Appendix Vc: Questionnaire (Czech language) ... 75
9.8. Appendix Vd: Questionnaire (Ukrainian language) ... 79
9.9. Appendix VI: Population description ... 82
9.10. Appendix VI: Marketing communications tools ... 83
9.11. Appendix VII: Marketing communications media... 87
9.12. Appendix VIII: Comparison of marketing communications ... 89
9.13. Appendix IX: Perception about online purchasing ... 92
9.14. Appendix X: Purchasing patterns ... 96
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LIST OF ABBREVIATIONS
MCM: Marketing Communications Mix AIO: Attitudes, Interests, Opinions AMA: American Marketing Association B2C: Business to Customer
B2B: Business to Business
BCR: Business-Consumer Relationships CBE: Consumer Brand Engagement CEE: Central and Eastern Europe
CGM: Consumer Generated Media
CIA: Central Intelligence Agency GDP: Gross Domestic Product
ICT: Information Communication Technologies IMC: Integrated Marketing Communications MNEs: Multinational Enterprises
OECD: Organization for Economic Co-operation and Development PR: Public Relations
SCA: Sustainable Competitive Advantage SME: Small and Medium-sized Enterprises SBU: Strategic Business Unit
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1.
Introduction
The paper emphasizes cross-cultural issues in marketing communications within the Central and Eastern Europe (CEE). General theoretical background focuses on marketing strategy and marketing communications and also covers some aspects of cross-cultural issues in tourism industry.
Companies in today´s global environment can exploit opportunities brought by the internationalization of business, though they still have to cope with challenges that come along. Globalization comes along with the technological progress and increased transfer of knowledge and information. Consumers all around the world are becoming more experienced and demanding due to emerge and accessibility of the Information and Communication Technologies (ICT). The advent of modern technologies transformed the consumers into so called “prosumers” (Alvin Toffler 1980), which means co-produces of value. Consumers seek for personalized offers providing a superior value for time and money. Cross-cultural differences are another important element when it comes to the current international business. However this issue is sometimes being neglected even by big international corporations. Companies must be aware that customers differ across countries and so do their perceptions of promotion activities. Addressing potential customers should be therefore done considering “cultural meaning perspective” (Usunier 2005), which presupposes specific approach to specific culture.
Therefore, two main fields to be covered in the current paper are marketing communications activities and cross-cultural issues, and if/how they are interrelated within a specific industry and a specific market, chosen and defined by authors.
1.1. Problem identification
3 marketing communications tools and messages should be standardized when targeting markets internationally (Orth et al. 2007). As there is no more specific information found on what aspects of MCM are influenced by the culture and how the perception of MCM differ across countries and to which extent the MCM should be adjusted or modified, these issues are addressed in this study. Although the problem is quite specific, it was necessary to narrow the researched topic. As traditional developed markets are saturated, it is crucial to discover new market opportunities in emerging markets. The CEE has been chosen as the region of interest due to the economic development, growing income and purchasing power, accessibility and rising usage of Internet, mobility of population, easiness of traveling and ultimately the availability and affordability of air transportation via low-cost airlines (Douglas & Craig 2011). Czech Republic and Ukraine were chosen as the key markets in this context. Czech Republic with its central location represents the European Union country with close business relations to Western Europe. On the contrary Ukraine with its binding to Russia, high income disproportions and isolation from the Western influence represents other type of country within the CEE region. These two examples are worth to be examined in details due to the fact that although there are obvious differences between them, companies tend to group both countries within one CEE region, entering them with the same business model and targeting them with the same marketing strategy.
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1.2. Purpose of the study
The main object of this study is the importance of cross-cultural issue in the MCM in Central and Eastern Europe. Steaming from the problem identification the research question was developed.
“Does cross-cultural differences within Central and Eastern Europe affect the marketing communications mix in a specific industry?”
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2.
Theoretical framework
Figure 1 shows the business-consumer relationship model: The marketing communications application developed by Thrassou and Vrontis (2009).
Figure 1: The extract from a business-consumer relationship model: The marketing communications application extended by Cross Cultural Differences (Thrassou & Vrontis 2009)
6 consumer behavior complexity and development indicated by education or technology penetration. Considering this type of measurement, the model can be applied for Czech Republic and Ukraine. Thrassou and Vrontis (2009) admit that the model is still in its conceptual proposition and suggest that the model can serve as a starting point for distinctive analysis or stimulate for further research. To match the researched topic in the best meanings, it was decided to extract the most important parts of the actual marketing communications model (Appendix I) and suggested to extend the MCM by cross-cultural issue. The suggested necessity of inclusion of cross-cultural differences into the model is to be approved or rejected by the study findings.
2.1. Marketing strategy and strategic marketing planning
Varadarajan (2009, p. 119) claims that “marketing strategy can be defined as an organization´s integrated pattern of decisions that specify its crucial choices concerning products, markets, marketing activities and marketing resources in the creation, communication and/or delivery of products that offer value to customers in exchanges with the organization and thereby enables the organization to achieve specific objectives.” Greenly (1993) also sees marketing strategy as a mean of achieving the corporate objectives. Marketing strategy includes five components: market positioning, product positioning, marketing mix, market entry and timing, which can be applied as general rule to both international and industrial market. Marketing strategy involves marketing activities and decisions which are leading to develop and maintain the company´s competitive advantage (Day et al. 1990). Wind and Robertson (1983) even state that long run competitive and consumer advantage is the main focus of marketing strategy.
7 product as it is in the usual way to international markets, modifying products for different countries, designing new products for foreign markets or designing globally flexible product. Factors influencing the product-adaptation decision include regional or country characteristics, product or service characteristics and company considerations about profitability, market opportunities, costs and resources (Czinkota & Ronkainen 2012).
Globalization is an important imperative when it comes to strategy and many companies with worldwide presence are in favor of coordinated global strategy. According to Johansson (2009, p. 371) “the first step in global marketing strategy is to define the segments to be targeted and the product positioning to pursue.” Three main strategic components are segmentation, targeting and positioning (Johansson 2009). Global marketing strategy can be applied to countries with segments strongly affected by globalization and ICT. These global segments are represented by consumers having the same characteristics and similar needs worldwide and can be therefore targeted with the same marketing strategy internationally (Johansson 2009, Czinkota & Ronkainen 2012). Global consumers are influenced by economic status, technology level, personal motives, culture, social or situational factors (Czinkota & Ronkainen 2012). “Internationally, market researchers can observe much similarity in the consumption patterns of young professionals, business executives, teenagers, or the wealthy” (Czinkota & Ronkainen 2012, p. 184). Companies are usually using regional groupings in accordance to similar demographic and behavioral traits. For this type of pan-regional approach the best groups to target are teenagers and young professionals, who are wealthier, appreciate brands, luxury and traveling. These homogenous markets with respect to marketing mix variables can be grouped and targeted with standardized marketing strategy (Czinkota & Ronkainen 2012).
8 Johansson (2009) mentions, that the globalization together with ICT progress caused the use of standardized marketing strategy by many global companies. Marketing managers are now rethinking this approach, realizing that global marketing strategy and marketing activities need to be adapted to local conditions. Local consumers´ behaviors, habits and cultural differences need to be analyzed in order to create the balance (Johansson 2009). The positioning of the good or service in the minds of the target consumers can differ across countries due to the environmental factors. To reach the intended position of the product or service the benefits of the product or service must be communicated and companies must predict how the particular markets will react to standardized product (Johansson 2009).
9 coordination of strategy, and issues such as global branding to development of divergent strategies geared to different customer needs, competitors, and market conditions in different geographic locations” (Douglas & Craig 2011, p. 86).
2.2.Integrated marketing communications strategy
Nowadays companies tend to employ Integrated Marketing Communications (IMC) by integrating all the promotional tools to deliver clear, consistent message and build strong customer relationships. IMC is the fundamental of marketing communications strategy (Kotler et al. 2008). Marketing communications strategies take into consideration factors such as type of product/market, buyer-readiness stage and product life-cycle. Promotional tools vary according to the company´s objectives, while advertising is typical for creating awareness and knowledge, influencing customers´ preferences is done by personal selling and finally purchase is encouraged by sales promotion. A Similar approach can be observed when using product life-cycle approach (Kotler et al. 2008). Finne and Grönroos (2009) are pointing out that most of the companies are neglecting the integration of the customer into the IMC. They suggest using the relationship marketing as a method of the customer´s integration into the IMC. “Relationship marketing is based on on-going communications between the customer and the supplier” (Finne & Grönroos 2009, p. 182). Commitment and trust need to be established to create an effective two-way relationship communication and future factors as expectations and hopes needs to be taken into consideration (Finne & Grönroos 2009).
2.3.Integrated marketing communications mix
10 Figure 2: The tools and position of the marketing communications mix (Fill 2006)
2.3.1. Primary instruments
11 acceptance. PR communicates trustworthy activities believable for readers. These could include news, references, speeches, special events, articles, corporate identity material or public service activities. Word-of-mouth remains the most workable marketing communications tool. Consumers inform about products or services by sharing their opinions and experiences in their communities and companies are monitoring their oppinions and interacting with them online (Kotler et al. 2008, Czinkota & Ronkainen 2012).
2.3.2. Secondary and collective instruments
Secondary instruments include instructional material, corporate design and other tangibles. Collective instruments refered as “marketing communications collaboration of companies either to increase total product usage/market, or to competitively “flock” smaller companies” (Thrassou & Vrontis 2009, p. 516). This could be done by advertising or any other kind of marketing communications means (Thrassou & Vrontis 2009).
2.3.3. Selected tools and media: in-house and/or outsourced
Following tools and media are considered as appropriate when applying the new communication model: people, in meanings of leadership and management, spoke persons, employees or opinion leaders; posters; press, television and radio including ads & no ads.
Internet as a source of information, but also as an interactive tool; mail and leaflets both including ads and no ads; brochures; stationery; merchandise items; point of presence displays; sponsorships and buildings and offices (Thrassou & Vrontis 2009). The marketing communication can be conducted with the in-house resources, as well as outsourced.
2.3.4. E-marketing reliance effects
12 Internet has given marketers a whole new way to create value for customers and build customer relationships” (Kotler et al. 2008, p. 839). Online advertising “appears while consumers are surfing the Web, including display ads (banners, interstitials, pop-ups), search-related ads, online classifieds and other forms” (Kotler et al. 2008, p. 854). Other forms of online promotion include content sponsorships, alliances and affiliate programs, where companies promote each other or viral marketing, which is the online version of word-of-mouth promotional tool. Viral marketing uses an interesting marketing message, which is supposed to evoke consumers´ interest so that they are willing to share the content and pass it by among their friends. E-commerce became an important tool when it comes to international services offerings. Services and goods can be marketed internationally via Internet at low cost and without obstacles which might arise when establishing outlets in some parts of the world. Companies use e-commerce, which can be done by developing company´s single website or by offering products via Business to Customer (B2C) or Business to Business (B2B) platforms like ebay or alibaba (Czinkota & Ronkainen 2012). By using e-commerce even unknown SMEs can become visible and develop an extraordinarily promotional online strategy. Nevertheless, the Internet penetration did not take place around the world equally, some segments are still skeptical about e-commerce and many countries still lack the Internet access. Targeting different customers internationally by e-commerce requires multilingual websites and adaptation to local customers´ habits (Kotler et al. 2008).
word-13 of-mouth promotional tool, and should be incorporated into the media strategy. “Social media are an Internet-based communications medium in which extensive conversations and interactions take place among people online” (Czinkota & Ronkainen 2012, p. 552). Social media enable companies to interact with consumers and consumers can express their needs, wants and positive as well as negative feedback. Marketers can update consumers on regular basis and target them with special promotional activities. Social or Consumer Generated Media (CGM) can have a form of blogs, online bulletin boards or podcasts. Some marketers are already discovering the power of blogs and social networking and are trying to reach targeted consumers. However many companies do not exploit this possibility fully (Czinkota & Ronkainen 2012).
Theory considering both classical and on-line type of word-of-mouth advertising (Keller & Fay 2012, Douglas & Craig 2011, Czinkota & Ronkainen 2012, Raju 2009, Halloway & Robinson 1998, Kotler et al. 2008) indicates that word-of-mouth is one of the most influential and powerful tools within the MCM. Therefore the second hypothesis can be stated: H2: “Word-of-mouth is one of the most influential marketing communications tools in Eastern and Central Europe.”
2.3.5. Marketing communications in tourism industry
14 existing and potential customers. The Internet made it possible for tourism service providers including hotels, property owners, catering providers, airlines and others to increase direct communications with their customers at the decreased costs and overcome such intermediate agents as travel agencies (Ratten & Tsiotsu 2010).
Marketing Communications Mix for the tourism industry will combine the same constituents as general theory suggests (tools, means and message), but their arrangement will differ for every single case even within the industry. Evolution of the tourists´ behavior gives more inputs for marketing activities and encourages shifts in general marketing logic. Previously marketing activities were focused on the offer - tourist products, services or destinations while currently the customer itself has become a target of all the efforts. New logic suggests that marketing communications are aimed at retaining existing customers and building long-term relationships by emphasizing individual approach, added value, personalization and offering customized concepts (Williams 2006, Ratten & Tsiotsu 2010).
16 the Internet as a marketing communications tool and its hidden potential should be used by service providers to improve business efficiency. Elliot & Boshoff (2009) question the Internet as a source of Sustainable Competitive Advantage (SCA), since information technologies needed for employing the Internet for marketing purposes could be easily identified and replicated by competitors.
2.4.Cross-cultural marketing
Cultural factors have been recognized as the ones influencing international marketing communications and success of marketing campaigns launched. Such aspects as language, values, customs, mindsets, traditions or religion arise and they should guide marketers while developing international marketing communications strategy. Despite current globalization and homogenization, there is a parallel process when cultural differences between some regions and ethnicities are becoming even stronger. Culture is becoming an “invisible barrier” resulting in miscommunication and misinterpretation of the communication message (Tian & Borges 2011). Cross-cultural marketing communication defined by Tian and Borges (2011, p. 114) as “a marketing communication among consumers or customers who’s culture differs from that of the marketers own culture in at least one fundamental aspect of culture such as language, religion, social norms and values, education and life style.” Numerous concepts for approaching cross-cultural communications can be found in the existing literature (Orth et al. 2007, Usunier & Lee 2009, Hofstede 2011, Tian & Borges 2011). Tian and Borges (2011) suggest employing anthropological theory, which implies that culture has an impact on marketing communications and vice versa. Such a reciprocal action emerges when culture defines purchasing habits and influences marketing communication and marketing communication contributes to cultural borrowing and altering. Edward T. Hall made an important contribution to the marketing communications by recognizing and describing an importance of cultural impact on communication effectiveness. Hofstede´s global model of cultural dimensions is widely used in different cross-cultural studies as a framework for formulating hypothesis (Soares et al. 2007, Hofstede 2011).
17 communications. Economies of scale, crucial for an effective international business, are possible only through global standardization of activities, which presuppose neglecting local peculiarities of different markets. Oosthuizen (2004) suggests that there are two ways for global companies to improve market penetration while taking into consideration cultural aspects: by adjusting marketing activities to every single culture “bottom-up” approach or by developing marketing based on universal symbols, and then adjusting those symbols and ideas to different social, economic and cultural setting of different markets “top-down” approach (Oosthuizen 2004).
Oosthuizen (2004) identifies three aspects which facilitate the complex process of activities within marketing communications: (a) applicability to target market’s needs and wants, (b) usage of language that a target market understands, (c) empathy in the sense of finding the most appealing elements, emotions, symbols, knowledge, idioms, etc. Oosthuizen (2004) incorporated them into a three-tier core value model, which provides a framework for marketing communications for different target markets across cultures without developing separate marketing communications strategies and keeping “the main strategic threat” for every country. The model (Figure 3) is basically built on two existing theories: Kurt Lewin’s (1939) field theory and the Rokeach (1968) value theory. The ranking of values used in the model are based on consistency of values over time (core values), relation to a certain culture and society (secondary values) and relation of values to a specific period of time (peripheral values) (Oosthuizen 2004).
18 Core values are those that remain the same across cultures, learned values vary from culture to culture according to religion or traditions, but include values established through universal communications (MTV, Coca-Cola) as well, peripheral are then temporary and true just for a some period of time or for a certain group of people. To establish global and universal brands, while building marketing communications appeals, companies should concentrate on core values, which create a fundamental meaning understandable worldwide. Learned values are the most appropriate for localization of communication appeals, they originate from language, customs, traditions, beliefs or social systems. Peripheral values have temporary nature and symbolize certain times, settings and trends. Peripheral values change fast and marketers should revise and update their marketing messages based on these values. Many companies though mistakenly use them as a core idea of brand, as if they would be core values (Oosthuizen 2004).
on-19 line. Travel agents are remaining in the past being displaced by the Internet, independently organized tourism is overcoming packaged and all-inclusive tours (Cooper & Wahab 2001).
2.5.Primary integrated marketing communications process: perception management
According to Thrassou & Vrontis (2009) reality is shadowed by perception and what people think does not always reflect the reality, therefore sometimes it is needed to change the perception of people. There are cases where perception is not closely related with the product or service essence, but with marketing communications tools, e.g. the usage and perception of Internet as a medium of advertising or purchase. Thrassou and Vrontis (2009) appeal to the shift from primary marketing communications process to perception management.
20 stated. H3: “There are significant differences when it comes to perception of marketing communications mix even within one region consisting of similar countries.”
2.6.Primary integrated marketing communications vehicle: branding Thrassou and Vrontis (2009) suggest branding as a main tool for changing people’s perception. The marketing communications model is based on consumer relationships and on the fact that consumers´ needs are becoming intangible wants, which are more vulnerable to marketing strategies. Both of these bases identify branding as value-adding strategy including elements such as lifestyle, values, ideas or attitudes (Thrassou & Vrontis 2009). Reid et al. (2005) state that brand orientation together with market orientation are necessary for successful implementation of IMC. Consumer Brand Engagement (CBE), which is identified as “an overarching marketing concept encapsulating different consumer decision-making dimensions, from brand preference to brand purchase” (Gambetti et al. 2012, p.1) is currently one of the main focuses of branding strategies. CBE emphasizes the importance of consumer-brand relationship and requires long-term strategy aimed at building trust- and commitment-based consumer-brand relationships. Finally consumers are playing active role in creating brand values by incorporating their favorite brands into their daily lives with support of interactive social media and networks (Gambetti et al. 2012).
2.7.Terminal integrated marketing communications aim
21 cross-cultural issue in tourism industry would follow most of the suggested approaches with a focus on exploitation of e-marketing and new social media including viral and buzz marketing and integration of perception management. The main element of the marketing communications model is consumer-business relationship, which is particularly important for the chosen industry, i.e. offering premium tailored services.
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3.
Research methodology
Following chapter provides information about the research methods and techniques used.
3.1. Research strategy
As illustrated in Figure 4 the whole research process is grounded on the deductive theory, which means that based on the information available and theoretical consideration, the hypotheses were stated and consequently further empirically examined.
Figure 4: The process of deduction (Bryman & Bell 2011)
The deductive nature of the research suggests using quantitative research as the most appropriate when the testing of hypotheses is to be performed. Quantitative research is therefore an appropriate strategy for this study. It describes how things are and tries to identify the reasons why they are so. In addition, quantitative research provides following advantages: (1) it is used as a tool for the hypotheses examination, (2) it supplies ‘workable data’ that are easy to analyze, (3) the results provided are more likely to be generalized and used later on for a similar research, (4) considering the settings and time limitations of the research, this method is more likely to provide more responses (Bryman & Bell 2011).
3.2.Research design
Cross-sectional (survey) research design is an appropriate applicable design to analyze and answer the research question (Bryman & Bell 2011). According to Czinkota and Ronkainen (2007) the cross-cultural survey is found to be an efficient method for testing hypothesis. The cross-sectional design belongs to the most important descriptive studies. The descriptive study is guided by initial hypothesis and concerned with investigation of the trends in the consumption, in this study with respect to demographic characteristics (Churchill & Iacobucci
Theory Hypothesis Data
23 2002). A cross-sectional design is recommended when collecting quantitative data on two or more variables on more than one case and at a single point in time to identify patterns of association (Bryman 2011, p. 53). “Survey research comprises a cross-sectional design in relation to which data are collected predominantly by questionnaire or by structured interview” (Bryman 2011, p. 54).
Considering the reliability and validity of this research design, which evaluate the measures of concepts, following factors must be taken into consideration. Reliability can be achieved if the obtained results are stable and do not fluctuate over the time. Internal reliability can be observed as respondents´ answers are consistent and related. The combination of secondary and primary data is enhancing the reliability of the research due to the fact that data were gathered from more than 1 source. Further the use of professional software diminished the variability and errors during the research. Internal validity is weak when compared with experimental research, while external is strong when sample is selected randomly and enables thus generalization (Bryman 2012). In this study non-random as well as non-random selection method were used, which could make the validity questionable. However due to the specific topic and secondary data analysis, it was possible confidently define the segmentation process and target group and thus even non-random sample is quite representative and could be generalized.
3.3.Data collection design
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3.3.1. Secondary data description
Secondary data gathered were concerned with following topics: internet penetration and usage, income level, distribution of the income, spending on holidays and travels, outbound tourism, searching and purchasing travel related items online and ultimately media usage and media preferences. Secondary data in this research were gathered solely from reliable sources such as governmental institutions and statistic bureau of Czech Republic and Ukraine, international organizations´ publications and reports, industry directories and official companies´ web-sites and reports. Since there are no information available particularly concerned with the different communication media or cross cultural issues in the tourism industry in the CEE markets, it was decided to come up with some proxy variables, which are used as alternative variables for a one that cannot be measured directly or the data does not exist (Czinkota & Ronkainen, 2007).
3.3.2. Primary data description
The information obtained from secondary data is of a great help for understanding basic trends in the researched area. However a number of issues related to the research question remain unanswered. When the secondary research does not supply answers to the specific questions set, the primary research should be conducted, covering the areas beyond the scope of the secondary (Bryman & Bell 2011, Czinkota & Ronkainen 2012).
3.3.3. Developing the sampling plan
Following scheme (Figure 5) suggested by Proctor (1997) will be used for the purpose of sample development.
Numerous segmentation patterns could be applied for the primary research. Define the target population Develop a frame Select the sample design Determine appropriate sample size Select appropriate sample members
25 According to Fitzgerald and Arnold (2000) media reach and media communications are strongly based on the demographic characteristics of the chosen target group and demographics continue to play an important role while building marketing communications strategy. At the same time Czinkota and Ronkainen (2007) suggest that life style, attitudes and personality are becoming increasingly important variables to identify new consumer groups need to be targeted across countries. Taking into consideration both points of view, it was decided to base the segmentation process on such variables as demographics, economic factors and life style.
The target population is the population of two big CEE cities: Prague (Czech Republic) and Kharkiv (Ukraine). Identification of the target population was based on the theory (Czinkota & Ronkainen 2012, Johansson 2009) and secondary data analysis. In Czech Republic, the target population is educated middle and higher income class (people earning an average monthly salary and more), in the age category 16 – 44. In Ukraine the target population is higher income class (people earning more than an average) and includes postgraduate students, young professionals and working individuals between 25 and 50 with higher education (Appendix II & III).
The random and non-random sample methods were chosen to conduct the primary research. Additionally, the usage of judgmental sample can be considered as subjective judgments were used to select representative population members, when using the non-random sample method (Kotler, Bowen & Makens, 2003). The sample size was set to be around 150 respondents from each country. This number was considered as sufficient due to the fact that specific segment was targeted directly.
3.3.4. Elaboration of the questionnaire
26 in a form of percentage discount from Costa Barcelona Villas was provided for all the respondents.
3.3.5. Designing the survey questionnaire
Structured and closed-end questions with the predefined limited answer choices were used. Usage of open-end questions was limited as they are more useful in exploratory research. As Bryman and Bell (2011) and Kotler et al. (2008) suggest closed-end questions with different scales as multiply choice, likert scale (level of importance, level of influence, level of agreement and level of frequency) rating scale or evaluation included numerical, verbal and frequency formats were used. Likert-type scales were coded with the numbers (0, 1, 2, 3 and 4). Levels of importance, influence and agreement were coded with 0 for the most positive attitudes (extremely important, extremely influential and strongly agree) and with 4 for the most negative attitudes (not important at all, not influential at all and strongly disagree). The level of frequency was coded with 0 for the lowest frequency (never) and with 4 for the highest frequency (all of the time) (see Appendix Va).
Considering the intercultural perspective, knowledge and awareness of respondents will differ due to the different backgrounds, education or social roles. In addition government restrictions and societal demand may affect the willingness to reveal certain information publicly (i.e. real income or spending on holidays) (Czinkota & Ronkainen 2007). Questions will be therefore made up in a way to adapt to social constraints of the surveyed country, by avoiding direct questions about salaries and real incomes. According to Czincota (2007) the language and culture are crucial while deciding on questions wording and misinterpretation of a question could hamper the validity of the whole survey. Simple formulation, easy words and translation into the national languages was necessary to avoid any misunderstanding. Pretest was carried on small groups of Ukrainians and Czechs to ensure the appropriateness of the questions´ wording, content and format (see Appendix Vb, Vc & Vd).
3.3.6. Primary data collection
27 analysis. Prague, as the capital and the biggest city in Czech Republic with the highest level of income among population, biggest extent of the Internet usage and with the best infrastructure facilitating traveling. Kharkiv, the second biggest city in Ukraine with 1,4 million inhabitants, is on the third place by the Internet penetration index and among the top five regions with the highest level of income (Czech Statistical Office 2012, Ukraine statistical office 2012) The target population was supposed to be reached by spreading questionnaires among working population, young professionals, university teachers, graduate and post-graduate students. Part of the questionnaires was randomly spread in paper format on places providing high concentration of our target groups (universities´ cafes, fitness studios, beauty salons, cafes and social spaces within the commercial zones). Additional part of the questionnaires was distributed in online version by using the personal networks of the researchers.
3.4.Data analysis and interpretation
28 Levene´s test is significant and values from the row labeled as ´Equal variances not assumed´ are used (Field, 2009). I will shift this somewhere to some table or into appendix. SPSS provided the exact value of t, however it needed to be identify if t is greater or less than 0,05. This was done by comparing two-tailed value (Sig. (2-tailed)) with 0,05. If the two-tailed value was smaller or equal to 0,05 there was significant difference between the means, if two-tailed value was greater than 0,05 there was no significant difference between the means (Field 2009).
3.5.Limitations
Secondary data collection was engaged with limitations, which influenced the research outcomes. Not all of the data about CEE region are available for both countries, some of the data are not collected by official statistical offices and some are protected or available only in native languages. Also different data measurements are used, making comparison of countries complicated.
Another limitation comes with the dynamisms of the ICT development. It may result in some inconsistency of the theory related to the Internet as a marketing communication and purchasing tool with the up-to-date tendency. It should be taken into consideration that some sources that were published even two years ago may not be relevant right now.
Further limitation is concerned with the usage of convenience/non-random sample in primary research. “Convenience samples may provide interesting data, but it is crucial to be aware of their limitations in terms of generalizability” (Bryman 2012, p. 206). Considering the fact that some of the individuals from the target group were also randomly chosen, the findings obtained by primary research could be applied and generalized for the whole target population in the researched countries.
29 questionnaires were adjusted to the local language´ characteristics, which could possibly lead to different perceptions of the same question.
30
4.
Findings
Findings obtained from secondary and primary data collections are presented in this chapter. Preferable marketing communications tools and media, Internet penetration and online purchasing patterns, income characteristics, outbound tourism and holiday spending were objects of the secondary data search. The following data, missing from the secondary research, is to be obtained with the help of survey: the most appealing types of marketing communications tools and media in CEE, on-line purchasing patterns, people’s attitude to the Internet as a source of information, holidays spending, own culture awareness, perception of CBR and service customization.
4.1. Internet penetration Country Population in 2012 Internet Users (by June 30) Penetration (% of population) Users in Europe (%) Ukraine 44 854 065 15 300 000 34,1 3 Czech Republic 10 177 300 7 426 376 73,0 1,4
Table 1: The usage of Internet in 2012 (Internet World Stats 2012)
Table 1 indicates that the Internet penetration level is much more significant in Czech Republic than in Ukraine, however, in absolute numbers Ukraine offers more then double the amount of Internet users. Both countries show an increasing tendency in purchasing goods and services on-line. Therefore they represent markets with high potential for e-commerce, including travel oriented services. The groups using Internet at most are young people, students and working individuals aged 25-49, with higher education and higher income (see Appendix II).
4.2.Economic growth and income distribution
31 the income distribution by the highest and lowest 10 or 20% of the population (Appendix III: Table 2). However, even though average monthly salaries are low, the extremes in income distributions provide the affluent target groups, when offering premium class services.
4.3.Outbound tourism of Czech Republic and Ukraine
According to Czech Statistical Office, the outbound tourism is much smaller then inbound, indicating that Czechs still cannot afford to invest into tourism and holidays as much as residents in other developed countries. However, they like to travel and are willing to spend more than an average monthly salary for holiday (Figure 6). This is quite promising attitude for tourism service providers, when taking into consideration further economic growth and rising purchasing power in the country.
Figure 6: Money spend on holiday and average monthly salary of Czech residents in USD (Czech statistical office 2013)
Figure 7 illustrates outbound tourism data for private trips are compared. In the last ten years, the Ukrainian outbound tourism dramatically increased, overcoming a slump in 2008 and 2009, this rising trend is about to continue. Ukrainian tourists should be therefore targeted with new offers and options for holidays and travelling. Czech Republic is experiencing stagnation in outbound trips and since 2008 the number of outbound tourism is slightly decreasing. Thus Ukraine has more favorable development for tourism providers.
0 500 1000 1500 2000 2007 2008 2009 2010 2011 2012
Comparison of average monthly salary and holiday
spendings
Average monthly salary (USD)
32 Figure 7: Private outbound trips in Czech Republic and Ukraine (Czech Statistical Office 2012, Ukrainian Statistical Office 2011)
4.4.Marketing communications
Increasing trend of the Internet usage as a marketing tool is evident in both countries. However TV still remains an important one. People watch TV more than 3 hours a day on average (ATO, 2013, GfK Ukraine, 2012) and listening to the radio remains quite constant. The fact that printed media are loosing on its importance is generally known, but the purchase of newspapers is declining more dramatically than the purchase of magazines (Radio project, 2012, Media project, 2012, GfK Ukraine, 2012). Both countries record almost the same trends and tendencies when it comes to the usage of different media, especially Internet. Thus similar online buying behavior for both countries could be assumed. The key drivers for online shopping are other customers´ reviews and lower prices. To the main barriers belong physical products experiences and required consultancy and recommendations from a salesperson (see Appendix IV)
4.5.Usage of Internet in tourism
Buying behavior in tourism was changed significantly with the rising importance of Internet. It has become a main source of information and its importance as a purchasing tool is continuously rising in both countries.
0 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 14 000 000 16 000 000 18 000 000 20 000 000 2006 2007 2008 2009 2010 2011
Comparison of outbound trips (expressed in number
of trips)
33 According to CzechTourism agency (2012) Internet was the primary source of information for 70% of tourists, who bought a trip in 2011, while a traditional catalogue was used only by 23%. The most common communication tools in tourism are promotion in catalogues, online advertising, TV commercials and sponsoring. However, low price, cheap last minute offers, personal experience and recommendations remain the most influential marketing tools among Czech tourists (CzechTourism 2012). 85% of Ukrainians used Internet to make a research prior making any decision regarding their travelling (GfK Ukraine 2012). Taking into consideration the constantly growing usage of ICT and on-line shopping, it can be assumed that Czechs and Ukrainians are gradually moving toward self-booked holidays.
4.6.Population description
Analysis of the finding shows the target population was reached successfully in both countries. Total number of respondents was 300, 51,7% (155) were Czechs and 145 (48,3%) Ukrainians (see Appendix IV: Table 1).
The gender distribution is almost equally represented by 49% (147 people) of males and 51% (153 people) of females (see Appendix IV: Table 2). The majority of respondents (51%) is aged between 21 and 30 (supposed to be postgraduate students and young professionals); 27,3% is aged between 31-40 (young professionals and white-collars employee), while only 2,3% of respondents are aged 51+ (Figure 8).
Figure 8: Respondents´ Age
34 When it comes to a household size, 46,3% have a family of 2-3 people, supposing couples and young families, while 29,3% are single. 72,3% of population are working, 72% posses high education and 81,7% live in a big city (see Appendix IV: Table 3, 4, 5 & 6).
4.7.Marketing communications tools and media
Responses concerned with marketing communications tools and media obtained from the questions one and two are summarized and the most appealing tools and media are highlighted. T-test was run to determine if there are significant differences in preferable marketing communications tools and media between the researched countries. In general, Czech responses are mostly positively and Ukrainian more negatively skewed. Table 2 demonstrates the used coding for level of influence used in question one and two. To simplify the findings, answers with the mode value of 0 and 1 are identified as positive answers and answers with the mode value of 3 and 4 are identified as negative answers and in some illustrations combined together.
Level of influence Coding
Extremely influential 0
Very influential 1
Somewhat influential 2
Not very influential 3
Not at all influential 4
Table 2: Coding for the variables in Question 1 & 2
4.7.1. Preferable marketing communications tools
35 respectively (Appendix VI: Table 11, 9 & 1). Personal selling, sponsorship and direct marketing are found as the least appealing marketing communications tools.
Table 3: Influence of marketing communication tools in Czech Republic
Unlike Czech Republic, in Ukraine the question about the marketing communication tools’ influence has got more neutral and even negative responses. This tendency could be clearly seen from the values of mode, which indicate mostly 2 and 3 (Table 4). Branding with the mode value of 1 is being considered as the most appealing marketing communications tool among Ukrainians accounting for 64,1% of positive responses and only 1,4% consider branding as ´Not influential at all´ (Appendix VI: Table 12). Branding is followed by sales promotion, public opinion and personal selling, which got a mode value of 2 and account for 49,6%, 39,3% and 37,1% of positive responses respectively (Appendix VI: Table 10, 6 & 4). Sponsorship and events are found as the least influential communications tools for Ukrainian customers having a mode of 3.
36
4.7.2. Preferable marketing communications media
Table 5 summaries the influence of marketing communications media in Czech Republic. Answers are mostly positive and respondents agree that most of the media are somewhat influential. Internet and social media are being the most influential, which is indicated by mode value of 1. Internet and social media are considered as the most influential marketing communications media. Nearly 53% of Czechs feel extremely or very influenced by Internet and only 13% consider Internet as not influential (Appendix VII: Table 1). Similar tendency is seen in social media, where 46,5% of respondents consider them ´Extremely´ or ´Very influential´ and 39% do not think they are influential (Appendix VII: Table 3). Radio and sponsorship represent the least influential marketing communications media, both of them are the only variables negatively skewed. Magazines, newspapers, printed advertising and point of purchase are quite symmetrically distributed and mostly neutral approach can be observed.
Table 5: The most appealing marketing communication tools media in Czech Republic
37 at all influential´. Internet is recognized by 36,6% of Ukrainian respondents as ´Extremely´ or ´Very influential´, but by 28,2% as ´Not very´ or ´Not at all influential´ (Appendix VII: Table 2). Events are considered as second most appealing marketing communications media recognized by 30,3% of Ukrainian as ´Extremely´ or ´Very influential´ (Appendix VII: Table 5). Social media are appealing only to 24,1% of Ukrainian as ´Extremely´ or ´Very influential´ and 49,6% consider them as ´Not very´ or ´Not at all influential´ (Appendix VII: Table 4). TV, social media, newspapers, printed advertisement, point of purchase and sponsorship have the mode of 3 and thus being found as ´Not very influential´ by most of the Ukrainians.
Table 6: The most appealing marketing communication tools media in Ukraine
4.7.3. Comparison of preferable marketing communications tools and media in Czech Republic and Ukraine by using
independent t-test
As the values of standard error mean for marketing communications tools and media are not large (Table 7), they should indicate accurate reflection of the population (Field 2009).
Marketing communications tools
38 significant difference can be observed in the evaluation of public opinion, which Czechs consider as very influential and Ukrainians as somewhat influential. P-value and Sig. (2-tailed) are in this case 0,00 which indicates significant difference between the means of public opinion variable. Additional tool with significant difference in means are sponsorship and events, also having Sig. (2-tailed) of 0,00. Non significant difference in means can be found in the evaluation of personal selling, which indicates that Czechs and Ukrainians agree on personal selling to be influential (see Appendix VIII: Table 1).
Table 7: Comparison of marketing communication tools Marketing communications media
39 Table 8: Comparison of marketing communication media
4.8.Cultural issue in marketing perspective
40 Figure 9: Respondents’ attitude to their culture in Czech Republic
The answers obtained in Ukraine are quite different as shown in Figure 11. The majority of respondents consider their culture as not specific and not influencing a customer behavior. Thus 15,9% (23) consider that Ukrainian culture is very internationalized and companies can use a standardization approach and 55,9% of population (81) consider their culture as specific, but not influencing customer behavior. Still, 24,8% (36) believe that cultural differences are important enough to be integrated into the marketing communications strategy. Only 3,4% (5) of respondents believe that their culture is highly specific and marketing strategy requires adaptation.
Figure 10: Respondents’ attitude to their culture in Ukraine 15 59 70 11 N U M B E R O F R E S PO N S E S
Country: Czech Republic
Culture in the Marketing Perspective
Internationalized, standardization. Specific, doesn´t influence customer behavior. Specific, cultural differences need to be considered. 23 81 36 5 N U M B E R O F R E S PO N S E S Country: Ukraine
Culture in the Marketing Perspective
41
4.9.Patterns of using Internet for online purchasing
Question four and five were designed to illustrate the attitudes of Czech and Ukrainian respondents to online purchasing. Table 9 shows the used coding for level of frequency and level of agreement used in question four and five.
Level of frequency Level of agreement Coding
Never Strongly agree 0
Occasionally Agree 1
Sometimes Neither agree nor disagree 2
Often Disagree 3
All of the time Strongly disagree 4
Table 9: Coding fort he variables in questions 4 & 5
4.9.1. Patterns of Internet usage
Question four provides findings on the on-line purchasing patterns in Ukraine and Czech Republic. Mode has the value of 3 for both countries (Table 10), meaning that most of the respondents often make on-line purchasing. Czech respondents indicate more positive attitude to online purchasing with the mean of 3,15 while Ukrainians have a mean of 3. 39,4% of Czech respondents (61) often make purchases via Internet, while in Ukraine only 19,3% (23) do it on a regular basis (Figure 11 & 12). Ukraine leads in the number of respondents purchasing via Internet sometimes, which is 61,4% (89) of respondents against 48,4% (75) of Czech respondents. In both countries the percentage of people unlikely making on-line purchasing is quite similar, though Czechs do not do that mostly because they are used to the traditional purchasing procedure, while Ukrainians together with this issue are concerned about the safety guarantee engaged with the on-line purchasing.
42 Figure 11: Respondents’ attitude to online purchasing (Czech Republic)
Figure 12: Respondents’ attitude to the on-line purchasing (Ukraine)
4.9.2. Perception about online purchasing
Question five tested online purchasing perception. Respondents were asked to indicate factors that could possibly change their skeptical attitude toward online shopping. It should be taken into consideration that this question was optional, so the response rate is not 100%. T-test and frequency analysis were used to approach this question. From the results obtained by frequency test (see Appendix IX: Table 1) it can be concluded that even though the attitude to the on-line purchasing in both countries have quite similar distribution pattern, the numerical values of responses differ. In Czech Republic the majority of
2 15 2 75 61 N U M B E R O F R E S P O N D E N T S
Country: Czech Republic
Attitude to the Purchasing via Internet
Unlikely, not safe.
Unlikely, used to traditional buying procedure.
Don´t know how to do that. 6 11 11 89 28 N U M B E R O F R E S P O N D E N T S Country: Ukraine
Attitude to the Purchasing via Internet
Unlikely, not safe.
Unlikely, used to traditional buying procedure.
Don´t know how to do that.
43 respondents believe that the most important factor that would change their skeptical attitude to on-line purchasing is the financial incentives (reduced price in comparison with in-store shopping). This point of view was shared by 69% (107) of respondents, where 40 of them ´Strongly agree´ and 29 ´Agree´. In Ukraine the financial incentive was found also as one of the most important by 55,9% (81) of respondents (Appendix IX: Table 5). However, the most crucial factor able to change the Ukrainian perception of on-line purchasing are safety guarantees, which were indicated by 69% (100) of respondents, where 61 of them ´Strongly agree´ and 39 ´Agree´. Safety guarantees appear to be important for Czech respondents to a high extend too, being mentioned by 61,2% (95) of respondents (Appendix IX: Table 2). User Friendly Website would change the attitude to the on-line purchasing of 54,8% (85) of Czechs and 43,5% (63) of Ukrainians (Appendix IX: Table 4). Friends and family recommendations as the factor of influence has got the biggest scores in both cases as neutral (‘Neither agree nor disagree’) with 20,6% in Czech Republic and 26,9% in Ukraine (Appendix IX: Table 3). Wide language options factor was considered as the least important for both countries’ respondents.
4.9.3. Comparison of Czech and Ukrainian perceptions about online purchasing
44 Table 11: Comparison of the perceptions to the on-line purchasing
4.10. Internet as the primary source of information when looking for a holiday
Figure 13 shows that the majority of Czech respondents 49,7% (77) choose the Internet as the primary source of information when looking for a holidays, while in Ukraine the number accounts for 34,5% (50) of respondents. Majority of Ukrainians 42,8% (62) rely more on a public opinion choosing the most popular destinations. 16,6% (24) of respondents still use the travel agency services, while only 6,5% (10) of Czech respondents share the same point of view.
Figure 13: Comparison of respondents´ choices about primary sources of information I always go to the same destination. I choose the most popular. I use travel agencies. I use Internet. I check special offers. 8 48 10 77 12 6 62 24 50 3 N U M B E R O F R E S P O N D E N T S
Primary Source of Information Prior to Planning
Holidays
45
4.11. Spending on holidays
From the Figure 14 can be seen that in both countries respondents consider the most reasonable amount to be spent on holidays per person ranges from 500 to 2000 Euro. In Czech Republic 52,3% (81) of respondents are willing to spend from 500 to 999 Euro and 27,7% (43) of respondents from 1000 to 1999 Euro. In Ukraine the numbers are almost the same accounting for 40,7% (59) and 41,4% (60) of respondents. 17,4% of Czechs are willing to spend less then 500 Euro, while only 2,8% more then 2000 Euro. In Ukraine the tendency is different, 11,8% of respondents are willing to spend more then 2000 Euro and 6,2% less than 500 Euro.
Figure 14: Comparison of respondents’ choices about reasonable holidays spending 4.12. Business-consumer relationships
Question three provides important insights about the customers’ evaluation of the different factors accompanying their purchase. Findings focus also on business-consumer relationship which is being considered as one of the factor gaining importance throughout the contemporary marketing approaches. Likert-type scale using the level of importance was chosen to measure this question. The coding uses 0 for the highest level of importance (extremely important) and 4 for the lowest level of importance (not at all important) (see Appendix Va). Answers labeled as ’Extremely Important’ or ’Very Important’ are considered as positive
<500 EUR 500-999 EUR 1000-1999 EUR 2000-2999 EUR >2999 27 81 43 4 9 59 60 13 4 N U M B E R O F R E S P O N D E N T S
Reasonable Spending on Holidays
46 answers indicating importance and are therefore in some cases combined together to simplify findings.
4.12.1.Purchasing patterns of Czech respondents
Quality is valued as ´Extremely important´ by 73,5% (114) of Czech respondents, and by 97,4% (151) as an important factor when making a purchase (Appendix X: Table 2). Service is valued as important by 73,5% (114) of respondents (Appendix X: Table 3) and price by almost 80% (123) (Appendix X: Table 4). Added value is considered as important factor by 66,5% (103) of Czech respondents (Appendix X: Table 5), followed by personalization with 56,8% (88) of respondents indicating importance (Appendix X: Table 6). As it can be seen from Figure 15, BCR is valued by the majority 35,5% (55) as ´Somewhat important´ and 22,6% (35) state that this factor is ´Not very important´. 2,6% (4) of respondents even states that it is ´Not at all important´. However including all the indications of importance (extremely, very and somewhat important), business-consumer relationships is ´Somehow important´ for 74,8% (116) of Czech respondents.
4.12.2.Purchasing patterns of Ukrainians respondents
