MSc Final Project
CROSS-CULTURAL CONSUMER BEHAVIOR: A COMPARATIVE STUDY ON TESCO IN UNITED KINGDOM AND CHINESE MARKETS
Introduction
Cross-cultural consumer behavior plays a significantly important role in consumer purchase that impact organization performance. Global companies such as Tesco have failed in markets like Japan and China because they failed to understand the culture in these markets (Woohyoung et al, 2020). Culture determines the choice people make when buying and consuming services and products which can bias preferences and decisions (Chiu et al, 2012). It affects consumer behavior by shaping their individual wants and needs that affect their buying behavior. Consumers choose products or services because they provide functional benefits and fulfill consumer personality, psychological needs, or social status. According to Haffar and team (2016), business organizations need in-depth knowledge of various national cultures to increase their chances of success. International retailers strive to understand and meet consumer needs outside the national space enterprise in order to be successful. They focus on true understanding of changing characteristics as well as needs of their consumers in the foreign markets they operate in. The British and Chinese consumers are price sensitive as well as brand conscious. These consumers are happy to pay a premium for a brand that signals higher economic or social status (Zhu, 2013). They have high brand loyalty when their expectations are met at the right price.
Global retailing has provided companies with the opportunities to expand in new locations worldwide for more profits and bigger market share. The large retailers like Costco, Walmart, Carrefour, Tesco and Amazon are some examples of business operating in more than 10 countries globally (Yeng & Yazdanifard, 2015). These top retailers produce billions each yearly from their global sales. However, they face extraordinary challenges such as varied consumer behavior that may result to failure of retail internationalization (Aklamanu, 2015). There are numerous examples of retail internationalizations that failed in the past such as Tesco in China, Walmart in Japan, Carrefour in Germany and Home Depot in Chile. The study aims to compare Tesco operations in the UK and China based on cultural differences.
Previous researchers have identified cross-cultural consumer behavior and their impact on success or failure of retail business in foreign countries. However, not much has been done on cross-cultural consumer behavior on the success and failure of Tesco in UK and Chinese markets respectively. A comparative analysis that involves previous scholarly journals and data on customer satisfaction level will be used to compare Tesco’s success in UK and Chinese markets. The Howarth Sheth Model will be used to help understand ways consumer attitudes, perception levels and learning capacity influence consumer behavior. In order to critically evaluate the impact of cross-cultural consumer behavior on international businesses, this paper seeks to address the following questions: (You should provide a clear statement of the aim of your research.) Comment by Stephen Raybould: You should provide a clear statement of the aim of your research.
1. What is the impact of culture on buying behavior between the British and Chinese?
What relationship exists between China’s grocery market and their buying behavior? (The phras)ing of this objectives is far too broad and the relationship to the objective of the dissertation is not clear. Comment by Stephen Raybould: The phrasing of this objectives is far too broad and the relationship to the objective of the dissertation is not clear.
This study identifies consumer theory in helping understand consumer behavior towards Tesco products in China by obtaining data in both China and UK market. The objectives are to better understand cultural consumer behavior of British and Chinese consumers, compare and analyze their impact on the success or failure of Tesco Company. The Howarth Sheth Model will be used to explore on ways an individual’s reference group and background influence consumer behavior.
The results presented in this paper will be helpful for global retailers in understanding the influence of consumer behavior on organizational success and determine unique characteristics of Chinese consumers that will make global retailers succeed in China.
References Aklamanu, A. (2015). Understanding Failure in International Retailing: An Institutional Framework for Future Investigation. In A. Aklamanu, Institutional Impacts on Firm Internationalization (pp. 238-263). Palgrave Macmillan. Chiu, C-Y., Kwan, L., & Peng, S. (2012). Culture and Consumer. Foundations and Trends in Marketing, 7(2): 109-179. Haffar, M., Ngome, L., Hamdan, M., Gdadamosi, G. (2016). The Influence of National Culture on Consumer Buying Behavior: An exploratory Study of Nigerian and British Consumers. International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 10(8). Lee, J., Sohn, Y., Kim, M., & Kwon, S. (2018). Relative Importance of Human Resource Practices on Affective Commitment and Turnover Intention in South Korea and United States. Frontiers in Psychology, 9: 669. Nadimpalli, M. (2017). Technology in Retail Market. International Journal of Innovative Research in Science, 6(6). Woohyoung, K., Kim, H., Hwang, J. (2020). Transnational Corporation’s Failure in China: Sustainability, doi:10.3390/su12177170. Yeng, W., & Yazdanifard, R. (2015). Opportunities and Challenges in the World of Retailing and the Importance of Adaption to the New Markets. International Journal of Management, Accounting and Economics, 2(9). Zhu, R. (2013, November 14). Understanding Chinese Consumers. Retrieved from Harvard Business Review: https://hbr.org/2013/11/understanding-chinese-consumers