International Marketing Issues for Shangrila Hotels

Introduction

Shangrila Hotels is one of the leading hotels in the world, especially in Asian countries. The hotel, which was found in 1971, is based in Hong Kong and it now owns more than 95 luxurious hotels in various parts of the world, Asia, Africa, Europe, and North America included. The hotel has more than 40,000 room capacity and employs thousands of employees globally. Hotel and hospitality is one of the fasted growing industries worldwide, particularly due to the high rate of tourism and international travels. The industry has been experiencing rapid growth over the last decades, mainly in developed and emerging countries in Asia, Latin America, and Africa. China is one of the leading countries in terms of the growth of the hotel and hospitality industry. The high and increasing number of middle income-earners in China is one of the primary factors that are spurring the enormous growth of hotel and hospitality industry in the country. Consequently, many international hotels are expanding to China with the intention of gaining a competitive advantaged, leading to rapid growth and profitability. Shangrila Hotels is one of the firms that are determined to dominate the Chinese hospitality industry due to its growth potential. The firm has one of the best marketing strategies as it has positioned as the best hotel that offers a legendary and comfortable stay in Asia and other countries in various parts of the world. At the same time, the hotel is positioned as the most convenient restaurants in the industry despite many players. However, despite is successful marketing strategies and activities; Shangrila Hotels is likely to face many international marketing issues, specifically in China, which is rated as the second largest economies in the world. Some of the major issues that are linked to international marketing include cultural differences, regulations, and demographic changes and diversity. Shangrila Hotels can only succeed in the Chinese market if it addresses or overcomes the international marketing issues, which is a crucial area that can benefit from marketing dissertation help.

International Marketing Issues that Shangrila Hotels Might Face

Cultural Difference

Cultural difference is one of the major international marketing issues that are facing many multinational companies (MNCs). Nations always have different cultures that define the values, behaviors, and actions of individuals (Liao, 2016). At the same time, countries are defined by different languages, religious beliefs, and norms that their respective citizens subscribe to as a way of life. As a result, cultures in different nations impose a significant challenge in international marketing. Thus, it is crucial for every MNC to understand in understanding cultural differences in countries that they operate or intend to expand to at any given time. Understanding cultural difference is important in international marketing because it gives MNCs a competitive edge in the global market (Liao, 2016). Culture plays a critical role in international marketing because it influences the effectiveness of advertisement and marketing messages, including brand effectiveness. Unfortunately, culture is often learned, giving international companies like Shangrila Hotels to adapt to various cultural orientations.

There are two main types of cultural dimensions that Shangrila Hotels should be aware of as it expands to countries such as China and they include individualism and collectivism, which are mainly found in Asian countries and Western nations respectively. Other cultural dimensions include power distance, uncertainty avoidance, femininity, and masculinity. Shangrila Hotels should know that China is mainly characterized by collectivism culture. Culture is a major issue in international marketing because it does not give MNCs the opportunity to use a standardized marketing strategy that is cost-effective while leading to a significant impact on the targeted customers. International marketing demands that company’s factor in various cultural dimensions in their global marketing strategies. Firms such as Shangrila Hotels must ensure that international marketing strategies are in line with the cultural dimension of a given country. Importantly, the international marketing strategies and activities must adhere to the cultural dimension of the intended customers or target market. Consequently, Shangrila Hotels may be forced to use adaptation marketing strategies. The adaptation marketing strategy, even though it is effective in the international market, it is expensive, time consuming, and it involves a lot of marketing research. On the contrary, standardization marketing strategy is cost-effective because it does not involve the use of a lot of resources. Therefore, cultural has a significant influence on international marketing, and it forces companies to alter their marketing tactics substantially.

Marketing in China is one of the contentious issues facing many companies that operates or intend to venture into the country’s market because it is a culturally diverse society. The country has many native languages, even though English is recognized as an international business language (Liao, 2016). Chinese culture is mainly based on the interpersonal relationship as well as social orientation. Hence, it to successfully reach the Chinese customers and dominate the country’s hotel in the hospitality industry, Shangrila Hotels must have an in-depth understanding of the Chinese culture, which is totally different from the common western culture. Importantly, the marketing professionals in the company must recognize the fact that China has many subcultures that influence consumer behaviors and choices. The success of the international marketing strategies that are employed by Shangrila Hotels will largely depend on its ability to effectively interpret and use cultural dimensions to formulate and advertisement and promotion tactics in the Chinese market.

Regulations

Regulation is a factor that MNCs like Shangrila Hotels must consider when they are formulating and executing global marketing strategies. Shangrila Hotels must be ready to understand and cope with marketing strategies that differ from one country to another. Many western countries have a liberal approach to doing business and they do not have a lot of regulations that guide local and international marketing. Conversely, a substantial number of Asian countries are conservatives and they impose many regulations to guide marketing activities, especially of foreign companies or enterprises. Specifically, in China, the government plays a significant role in businesses. China is a country that has planned economy that is closely monitored and regulated by the government to serve the interests of Chinese and their enterprises (Gao, 2008). The role of government in business influence international marketing, including other activities. Countries that are characterized by many international marketing regulations like China increase the noncompliance risks, which may be costly to business operations. As a result, Shangrila Hotels must be ready to face many international marketing regulations in the Chinese market. The main challenge of marketing in China is that almost all marketing information that is used in the country is censored by the government. Consequently, it is not easy for a brand to have a real connection with targeted consumers or audiences.

One of the main Chinese marketing laws that Shangrila Hotels should be aware of is that which relates to young people of children. In the Chinese marketing law, a child who is below 10-year-old is not required to endorse any product or service. Therefore, even though Shangrila Hotels is not likely to use children to endorse its brands because of the nature of its products and services, it should be aware of this legal requirement to avoid noncompliance risks and costs, which may be extremely expensive, leading to losses. In addition, the Chinese marketing laws require businesses to base their advertisement messages or information on facts (Gao, 2008). Using misleading or incorrect marketing information in China can attract heavy penalties in the country. Hence, Shangrila Hotels may be forced to change its persuasion strategies by desisting from using any misleading or false marketing messages and information when communicating to the target consumers in China. Also, the Chinese marketing regulations outlaw the use of extreme words such as “best” and “most”. Thus, the use of superlatives in marketing is illegal in China.

Marketing in the Chinese market can be challenging, especially for the new entrants. Any brand that is entering the Chinese must be informed and updated of the many Chinese marketing laws. Although China is characterized by many regulations, the challenges reaped from the market can give Shangrila Hotels a competitive edge in the global business arena. The hotel and hospitality industry in China is rapidly growing and can open many opportunities for the firm. Nonetheless, according to Skarmeas et al (2016), the many regulations have a negative impact on the marketing activities and strategies in the market. Failure to master and understand the regulations pose a lot of challenges to Shangrila Hotels and other players in the industry.

Demographic Differences

Customer demographic varies from one country to another. The success of international marketing strategies depends on the ability of a firm to understand customer demographics. First, unlike customers from many western countries, Chinese are likely to distrust information from official channel or media. Chinese are skeptical of information that comes from many mainstream media due to the long history of information censorship. Censorship is regarded as a norm in China (Yu, 2006). However, the distrust of information differs from one generation to another. The older Chinese have higher chances of trusting information or marketing messages from official media compared to their younger counterparts. Young Chinese are increasingly becoming suspicious of information from official media or channel. Hence, many Chinese are not likely t believe brand messages that are that are conveyed via official media. Conversely, bloggers act as key opinion leader (KOP) in China, especially among young Chinese. Young people trust online bloggers because of the perception that they deliver reliable information. As a result, Chinese consumer mainly relies on social media.

However, due to cultural, political, and societal factors, the use of online or the internet international marketing is not the same across nations. Some countries allow free use of the internet while others restrict its use. The use of the internet or social media marketing in China faces a number of challenges. The Chinese government controls the use of the internet in the country, particularly social media. The cost of accessing the internet is also much higher in China when compared to other developed countries such as the USA and many European countries. As a result, only less than 10% of the Chinese population is able to freely and frequently access the internet (Yu, 2006). Thus, even though Shangrila Hotels largely relies on the internet to reach the target market, this may be a challenge in China such international marketing avenues are controlled and closely monitored by the government. In addition, restriction on the use of the internet has made face-to-face one of the major transaction modes in China. Online transaction is not as popular as many developed and emerging nations. Nonetheless, utilization of the internet in international marketing is a trend that cannot be ignored in the current globalized world.

Another demographic challenge in China is the fear of purchasing foreign products or service, especially when they are expensive. Many middle and high-income earners in China are hesitant to buy expensive products or services from other countries. Nevertheless, products that have high visibility are attractive to Chinese middle-income consumers. Middle-income people in China also like purchasing products that portray their social class in the society. To capitalize on the high and increasing number of high-income earners in China, therefore, Shangrila Hotels must appropriately position its products and services in a way that meet the specific needs of the target consumers. Like in China, Shangrila Hotels should acknowledge that consumer demographics are rapidly changing across the globe, primarily due to social and economic changes, including the rapid advancement of technologies. At the same time, demographic changes vary from one country to another and not in China alone. Demographic changes and difference affect international marketing, mainly marketing strategies that MNCs like Shangrila Hotels use to gain a competitive advantage in the global market.

Recommendations

The first strategy that Shangrila Hotels should use to overcome international marketing issues is to use adaptation marketing tactic. Proponents of adaptation marketing strategy maintain that it can be used to address various environmental, social, economic, and political factors that can hinder the effectiveness of international marketing. Therefore, one of the reasons why Shangrila Hotels should implement adaptation marketing strategy is its easy acceptability. Adaptation strategy will give the company an opportunity to meet specific needs, desires, and preferences of customers in different parts of the world (Otuedon, 2016). Besides, due to easy acceptability, adaptation global marketing strategy helps in overcoming cultural challenges. Hence, Shangrila Hotels can use the strategy to enhance the acceptability of its marketing strategies, including brands, products, and services. The second related advantages why Shangrila Hotels should use adaptation strategy are its responsiveness to local needs as well as the market. A company can only respond to the local customer needs if it uses adaptive strategies as global markets are not the same.

Also, Shangrila Hotels should use adaptation global marketing strategy because it strengthens local content. The strategy gives business the opportunity to develop local content, particularly through the use of local manpower. As a result, a lot of international marketing issues that Shangrila Hotels might face in China can be addressed through the utilization of adaptation international marketing strategy. However, according to Morgan et al (2018), the management should be aware that the strategy is associated with high operation cost than standardization marketing, which is always preferred by local firms. In addition, Shangrila Hotels should be aware that adaptation may interfere with the uniformity of its global image. Effective utilization of adaptation globalization marketing strategy will give Shangrila Hotels a competitive in the international market, especially in China.

Secondly, Shangrila Hotels should rely on key opinion leaders to persuade the target market or customers. Chinese customers do not easily trust information that is shared through official channels due to the perception that they are censored by the government. Shangrila Hotels should, therefore, identify and use highly trusted and influential KOLs who have the ability to persuade many people to like a product or services. Specifically, KOLs should be used to promote the company products and services through social media platforms. All the same, Shangrila Hotels should be sensitive to the fake KOLs who may not generate a significant impact on, primarily with regard to international marketing goals and objectives. KOLs will give Shangrila Hotels the opportunity to effectively use the internet to reach millions of Chinese social media users, leading to increased sales volume and revenue.

Finally, Shangrila Hotels should have a detailed understanding of marketing laws and regulations in China. It should use local lawyers and marketing experts to understand many Chinese marketing regulations. An in-depth and clear understanding of marketing laws and regulation in China will enable Shangrila Hotels to avoid or mitigate noncompliance risks that can be costly and adversely affect its reputation in the local and international market.

Conclusion

Shangrila Hotels still remains to be one of the leading hotels in Asia and other parts of the world. Nevertheless, its long-term success depends on its ability to persuade global consumers through effective marketing strategies. The company must come up with effective ways to address the social, regulations, and demographic challenges that hinder international marketing. It must find effective international marketing tactics that it can use to penetrate the global markets. Adaptation, use of KOLs, and understanding regulations are the strategies that Shangrila Hotels can use in international marketing in countries such as China.

References

Gao, Z., 2008. Controlling deceptive advertising in China: an overview. Journal of public policy & marketing, 27(2), pp.165-177.

Liao, K.H., 2016. Impact of traditional Chinese culture on business-to-business relationship marketing and service firm performance. Journal of Business-to-Business Marketing, 23(4), pp.277-291.

Morgan, N. A., Hui Feng and Whitler, K. A. 2018. Marketing Capabilities in International Marketing’, Journal of International Marketing, 26(1), pp. 61–95.

Skarmeas, D., Zeriti, A. and Baltas, G. 2016. Relationship Value: Drivers and Outcomes in International Marketing Channels, Journal of International Marketing, 24(1), pp. 22–40.

Otuedon, M. 2016. Standardisation versus Adaptation as an International Marketing Strategy: The Role of Cultural Pattern in a Society and its Effect on Consumption. Journal of Marketing and Consumer Research, 23(1), pp. 46-56.

Yu, J., 2006. Marketing to Chinese consumers on the internet. Marketing Intelligence & Planning, 24(4), pp.380-392.