International marketing strategies and applications

Marketing

Cultural Analysis of Italy

Formally known as the Republic of Italy, Italy is located in southern Europe, and has a population of roughly 58.2 million. Italy has a lot to offer its citizens and visitors. It is surrounded by the four seas of the Mediterranean and is famous for its coastline activities. Italy is also known for a mountain range with elevations over 13,500 feet that is good for the skiing and hiking enthusiast. Italy has no official religion, though the majority of Italy's citizens are Roman Catholic (Geert Hofstede ™ Cultural Dimensions, 2009).

No matter what part of Italy someone is from, Italians share one common thing, a love and lust for life. They're lively, sociable and have a passion for everything that they do. They tend to talk loudly and always express themselves with hand gestures. Italians aren't afraid to show emotions; give each other hugs and kisses. Most Italians are Roman Catholics and the influence of the church can be seen in everyday life. Most religious monuments and paintings as well as local traditions based on Christian celebrations and the lives of the saints (Culture Italy, n.d).

Italy has produced some of the greatest artists in the world; Leonardo da Vinci, Michelangelo, and Raphael and they are very proud of this fact. Museums, churches and courtyards all over the country proudly display the works of these fine Italian artists. Italy is also home to the Opera and Opera music. It is accessible to everyone, from upper class city dwellers to simple peasant farmers. Most Italians have a firm grasp or knowledge of opera and will attend a performance whenever possible (Culture Italy, n.d).

Italians are known are very hard workers but they are also good at relaxing and enjoying themselves. In most cities it's quite normal for people to work a full five days and a half a day on Saturday. While it is also normal for them to take a long lunch break every day, often going home and spending several hours eating and sleeping, before coming back to work. The main meal, which is adoringly prepared and savored, normally takes place in the evening. This is a very social and family orientated event. It is not unusually for the eating, drinking and socializing to go well into the early hours (Culture Italy, n.d).

When comparing the culture of Italy with the culture of the United States they are somewhat alike. Although each has its differences there would be a low need for customization of content within the culture. This is can be determined by looking at Hofstede's classification scheme. The Power Distance Index (PDI) is the extent to which the less powerful members of organizations and institutions accept and expect that power be distributed unequally. It proposes that a society's level of inequality is sanctioned by the followers as much as by the leaders. Power and inequality are seen as being extremely fundamental facts of any society and those with international experience will be aware that all societies are unequal, but some are more unequal than others (Geert Hofstede ™ Cultural Dimensions, 2009

Individualism (IDV) consists of one side vs. its opposite. On the individualist side one finds societies in which the ties between individuals are loose: everyone is expected to look after their self and their own family. On the collectivist side, one find societies in which people from birth onwards are integrated into strong, extended families which continue protecting them in exchange for absolute loyalty (Geert Hofstede ™ Cultural Dimensions, 2009

Masculinity (MAS) refers to the distribution of roles between the genders. The research shows that women's values differ less among societies than men's values and that men's values from one country to another contain a dimension from very assertive and competitive and maximally different from women's values on the one side, to modest and caring and similar to women's values on the other. The women in feminine countries are seen as having the same modest, caring values as the men. In the masculine countries they are somewhat assertive and competitive, but not as much as the men (Geert Hofstede ™ Cultural Dimensions, 2009

The Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and ambiguity. In the end it refers to peoples search for truth. It refers to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are those that are novel, unknown, surprising, and different from the usual. Uncertainty avoiding cultures try to minimize these situations by having strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute truth. People who live in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. Uncertainty accepting cultures are more tolerant of opinions that are different from what they are used to. These cultures try to have as few rules as possible. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions (Geert Hofstede ™ Cultural Dimensions, 2009

Long-Term Orientation (LTO) versus short-term orientation is said to deal with virtue regardless of truth. Values that are associated with Long-Term Orientation are thrift and perseverance. The values associated with Short-Term Orientation are respect for tradition, fulfilling social obligations, and protecting one's face (Geert Hofstede ™ Cultural Dimensions, 2009

In Hofstede's analysis of Italy great emphasis was placed on individualism, masculinity, and uncertainty avoidance, while power distance ranked considerately lower than others. Italy had a lower power distance score that showed that Italy is working to de-emphasize the differences between its citizen's power and wealth. In a country that has over 50% of its population practicing the Catholic religion, it was found the primary correlating Hofstede Dimension to be Uncertainty Avoidance (UAI) (Geert Hofstede ™ Cultural Dimensions, 2009

The volume of soft drink sales in Italy declined in 2008. This was mainly the result of the economic downturn and unfavorable weather conditions. Functional drinks were the only category which recorded volume growth. This was due to the good performance of energy drinks. Concentrates and RTD tea were the worst performing categories which was mainly due to their seasonal characteristics (Carbonates in Italy, 2009).

Because of the ageing Italian population and increasing consumer health awareness caused health and well-being products to increase in popularity during 2008. An increasingly hectic and stressful pace of contemporary life has also helped to fuel the demand for healthier products. Because of this manufacturers have began looking to increase profit margins by introducing new innovative added-value and healthier products to the market. Brands which offer to improve shape and fitness, such as Nestle Fitness and Vitasnella Fit-Drink, have proven particularly popular with consumers (Carbonates in Italy, 2009).

Coca-Cola and San Pellegrino dominated the soft drink market in 2008, accounting for a combined retail value share of 35%. Coca-Cola performed very well during 2008 thanks to its expansion into new areas like flavored bottled water with the recent launch of its Lilia Emotion brand. Due to the weak Italian economy, private label products continued to perform well in 2008 and the availability and range of such products continues to grow (Carbonates in Italy, 2009).

Supermarkets and hypermarkets also performed very well during 2008 and continued to lead the soft drinks sales. Discount stores also performed well as sales continued to be boosted by the economic downturn. Vending machines account for only a modest number of the overall soft drinks sales in Italy but they are an important distribution format within areas such as carbonates, functional drinks, and RTD tea. While independent food stores remain an important distribution format for fruit and vegetable juice, concentrates, and RTD drinks, their value share continued to decline during 2008 due to the increasing popularity of more convenient outlets like supermarkets and hypermarkets (Carbonates in Italy, 2009).

Soft drinks sales are anticipated to recover from the disappointing performance recorded in 2008. The current forecast period is reliant on the recovery of the Italian economy. Energy drinks and functional bottled water are likely to be the best performing categories over the next few years. Energy drinks will benefit from the fact that the increasingly hectic pace of modern life is fuelling demand for products which have stimulating properties. Flavored bottled water sales will be boosted by the entrance of Nestle (Vera Flavor) and Coca-Cola (iLilia Emotion). Manufacturers are thought to likely focus their attention on the launch of healthy, functional, and natural products as well as on more convenient and trendy packaging formats in order to increase brand visibility (Carbonates in Italy, 2009).

When looking at market a new product in Italy it is important to look at the global-local dichotomy. The question is to be looked at is whether to have one standardized approach consisting of identical product range and an associated identical marketing approach or to go for a local approach having a different product and local-based marketing. The answer lies in looking at transnational specialization. It is important to reconcile the seemingly opposing extremes. It is a best practice to satisfy customer needs by learning from the diversity of adopting, adapting, and combining the best of what already works (Trompenaars and Woolliams, 2004).

In regards to the soft drink market in Italy, the best approach would be to utilize adaptation. It appears that standardization would not work as sales in this sector for the same ole product are down. Introducing a healthy drink aimed at the aging population through an adaptation scheme would seem to be the best approach.

Italy has a bicameral political system that is composed of a Senate and a Chamber of Deputies. Both of these are directly elected and have equal authority. The Speakers of the Senate and Chamber are second and third in command to the President of the Republic. The government consists of the President of the Council of Ministers and departmental Ministers who together make up the Council of Ministers. Ministers are nominated by the Prime Minister and formally appointed by the President of the Republic (Italy, 2009).

Italy is one of UK's largest markets in regards to exports of goods. Exports accounted for around $9.2bn in 2008. UK imports from Italy in 2008 were worth $13.7bn and bilateral trade is worth over $22bn. Italian government policies are increasingly directed at the structural reform of the economy with the liberalization of key sectors such as energy and telecommunications. There is an ever growing interest in the concept of public-private partnership in the public services, which is providing new investment and co-operation opportunities for British companies (Italy, 2009).

Italian consumers are very sophisticated and often demanding. They are very particular in terms of quality. Traditional, high quality British consumer goods often do very well while designer items or recognized fashion brands are also very popular. British technologies, along with equipment, components and services all have a good reputation. Innovative high-quality products always have high interest. The key sectors of products include: clothing, footwear and fashion, construction, creative & media, energy, environment, food & drink, healthcare, infrastructure projects, and security (Italy, 2009).

American business representatives often find that selling in Italy offers a set of new challenges. But it also presents no problems that are insurmountable. Over 7,500 American companies are actively doing business in Italy. U.S. executives often find that some commercial practices differ from those in the United States, but that most are very familiar. In Italy the system of retail and wholesale distribution centers on small, family-operated stores. But is has been seen that despite this the supermarket-type operation has gained importance (Marketing U.S. Products and Services, 2004).

Italy represents a large and affluent market where language and personal relationships are greatly valued when conducting business transactions. As a result, some form of local presence is generally required in order to be successful. Companies that wish to enter the Italian market, as an alternative to establishing a subsidiary, might decide to use an agent or a distributor. The option used depends on the type of the goods or services that are to be distributed in Italy. There are important distinctions in Italian law between distribution and agency agreements (Marketing U.S. Products and Services, 2004).