RECONCILING MARKET ORIENTATION WITH BUSINESS LOGIC – THE ROLE OF AFFORDABILITY IN MARKETING STRATEGIES OF WESTERN MULTINATIONAL COMPANIES FOR CENTRAL AND EASTERN EUROPE

Arnold Schuh 글로벌지식마케팅경영학회 2014 Global Marketing Conference Vol.2014 No.7

The catching-up process of the emerging economies of Central and Eastern Europe (CEE) towards the average income level in Western Europe has driven the marketing strategies of Western multinational companies (MNC) so far. Particularly, the boom years from 2002 to 2008 with an average GDP growth for the region of more than 6% (Becker et al., 2010) fuelled the notion that soon a large European market with similar demand and market structures will exist that will allow Western MNCs to sell their international brands in a highly standardized way in the whole region. The Great Recession of 2008-09 stopped this convergence process and highlighted the still existing differences in consumer behavior (Schuh, 2012). The recessionary developments in the aftermath of the crisis have shown that this is more of a structural problem than a temporary one (Labaye et al., 2013). The Western firms now have to acknowledge that many product markets are not “structural twins” of Western markets with a strong upper- and mid-price segment but that CEE markets are rather shaped like bottom heavy pyramids. By just transferring brand strategies developed for high-income economies to emerging markets they ignore large segments of the mass market. To tap these market segments MNCs have to think how they can make their products affordable to these lower-income consumers, i.e. bring-ing the purchase of a product within the financial means of a consumer or household. The neglect of low-income segments may be either a deliberate decision based on the well-proven inherent business logic of Western branded good marketers (“stick to our success-ful way of doing business”) or a blind spot in the strategic approach to emerging markets (Sheth, 2011). The purpose of this paper is twofold: first, a case is made for the relevance of affordability concepts to CEE markets; second, three case studies of affordability initiatives of leading fast-moving consumer goods companies are analyzed in order to get a better understanding of how these firms approach the affordability issue and what are the success factors of such strategies in CEE. Most of the existing emerging market literature is dealing with very low income consum-ers in Southeast Asia, Latin America and Africa earning less than US- 2,500 p.a. (Prahalad, 2005; London & Hart, 2011; Khanna & Palepu, 2010). While the coverage of the “bottom of the pyramid” is regarded as an extreme stretch for most Western firms, more attention is paid to the growing middle class in the emerging markets (Court & Narashimhan, 2010). The steady growth of the middle-class in the emerging economies is promising rising sales for the future and at the same time supporting the notion that West-ern MNCs can continue with their business model and just have to “wait for the market”. The rapidly growing middle class consumers in emerging markets include almost 2 billion people with a total spending of US- 6.9 trillion annually which will expand to US-20 trillion within the next decade (Court & Narasimhan, 2010). Surprisingly, lead-ing Western MNCs approach the affordability issues in the context of CEE rather defen-sively and reluctantly (Schuh, 2012). This may be resulting from the belief that the eco-nomic catching-up process will bring CEE consumers to a similar standard of living as in the “old” EU and any investment in products for the lower-segments would be only of temporary value. Therefore, CEE countries are not seen as the typical candidates for affordability strategies. This may be partly true for the most advanced Central European countries and Russia with rapidly rising household incomes in the last decade. But the economic downturn and the following recessionary development has shattered the consumption model that was based to a high degree on credit financing in those markets too. Moreover, studies show that there exists a high share of low-income households and price-sensitive consumers in CEE. According to the “Life in Transition” survey the mid-dle-class ranges from 4% in Albania to 27% in Slovenia – in between you can find Poland with 16% and Russia with 18% (EBRD, 2007). Pfeifer, Massen and Bombka (2007) estimate that 56% of the consumers or 57 million people, in Eastern Europe are low-income consumers (< 10,000 in PPP per year). In addition, in Russia and Ukraine 70% of the populations are falling in this category. A study of Roland Berger Strategy Consultants (2008) on “Consumer Archetypes in CEE” identified seven basic consumer types in CEE. Three out of them – the “self-centered consumers” (18% of population), “minimalists” (14%) and “rationalists” (12%) – can be classified as highly price-sensitive. Together, these three highly price-conscious consumer types make up 44% of the CEE market. What is more, other identified consumer types with less distinct price sensitivity could be taken into account as well. In total, these consumer types whose purchasing behavior is influenced predominantly by affordability amount to 56% of all CEE consumers. Summing up, the studies provide divergent figures of the size of the middle class and low-income segment in CEE. Different methodological approaches, classifications, and data bases are the reasons for these variations (Kharas, 2010). However, the findings show that the market below the middle class in CEE is a large one, accounting for more than 60% of the population of a country. The strategies that are used to address low-in-come consumers are described by the so-called “4 A’s”: affordability, acceptability, availability and awareness (Anderson & Markides, 2007). Affordability as a strategy con-cept can be defined as all measures of a company that aim at bringing the purchase of a product within the financial means of a consumer or household (or business). In the literature you can find different approaches towards this goal. Firms typically start with marginal changes in their marketing strategy (e.g., different packages, single portions). However, to tap the lower-end of these price-sensitive mass-markets and to reach non-consumers of your products changes have to go beyond rebranding and adapted market-ing elements. New business models with deeper and more comprehensive changes in product development and architecture of the supply-chain are needed to be successful in this segment (Johnson, Christensen & Kagermann, 2008). The purpose of the empirical part of this study is to get a better understanding of motives, goals and success factors of affordability initiatives addressing the countries of CEE. A case study approach is the best way to learn about underlying assumptions and considera-tions of managers involved in the decision-making process (Yin, 2009). The cases consist of two parts: a) a general company profile describing businesses, geographic presence and goals; b) the role of affordability for tapping emerging markets and the description of affordability initiatives in CEE countries. Globally active consumer goods companies in the food sector from USA and Western Europe were chosen as target firms: They ex-panded strongly into emerging markets and CEE in the last years, play a pioneer role in tapping low-income markets and exemplify the sought-after strategic constellation for this research, i.e. an MNC expanding from a traditional “premium-position” into lower-price segments. In addition, food companies serving broad segments of the population are faced with social responsibility issues, namely if they legitimately can deny people access to their products. So far three cases of Western companies with an extensive presence in emerging markets are available (see overview in Table 1). The results show that affordability is part of the marketing strategies in CEE of all these selected companies. A considerable share of the product portfolio and overall sales vol-ume in their CEE country organizations stem from affordable products. Higher growth rates of this segment than the overall market prove that there is a demand for this type of products. And it seems that these companies don’t see an insurmountable conflict in pursuing the two-pronged approach as indicated in the literature. All affordability strate-gies are run under a business perspective. They have to contribute to the growth and profitability goals, although social motives are mentioned as strong arguments too. The case of company A nicely shows how the affordability initiative started as a CSR project and then evolved into a business project. During this process they learned that they can make a “sustainable business case” out of it. This step was a break with so far existing concepts in the company, as it involved product development targeted to the demand and financial conditions of low-income households. Country organizations decide individu-ally if and to what degree they use affordability initiatives. In our cases Russian, Polish and Romanian subsidiaries were interested in the introduction of affordable products and looking for support within the group. The establishment of competence centers for affordability initiatives at global headquarters is a clear indication that a central hub is needed which provides basic strategy guidelines, offers assistance in the introduction of such initiatives and spreads best practices in the group. However, differences can be found in the market and branding strategy. While company A is using local brands in combination with the company brand, company C is using a strict two-tier strategy. Inter-national brands are sold parallel to local/regional ones which are used for the entry into the lower-income segment. Company B is covering all price points within a category with the international brand. So the brand stretches from the super-premium, premium and mainstream to the affordability segment. 4,000 “good value for money products” are sold worldwide today, in CEE the affordable category accounts for 25% of total turnover and grows twice as fast as the whole zone Europe. The differences can be explained via the basic approach towards branding: are they following a House of Brands or a Branded House architecture. As far as success factors are concerned all three cases show that the successful introduction of an affordable product range is based on (a) a commitment of the organization to the development of affordable products; (b) deep understanding of consumer behavior, buying patterns, and market situation; (c) utilization of synergies with higher priced brands; (d) focus on volume and scale via covering a large consumer base and (e) radical cost cutting along the whole value chain. In our ongoing research we try to increase the number of companies which run affordability initiatives to be able to cover a greater variety of industry and company types. Our research shows that multi-tier and affordability strategies can be found in other consumer and industrial markets in CEE too. This research shall help to clarify for which type of company it makes sense to ex-pand to lower-income segments. While so far the internal perspective was in the center of our research attention, market and competitive constellations should be covered in the future too.

EXOTIME: searching for planets around pulsating subdwarf B stars

Schuh, Sonja,Silvotti, Roberto,Lutz, Ronny,Loeptien, Bjö,rn,Green, Elizabeth M.,Østensen, Roy H.,Leccia, Silvio,Kim, Seung-Lee,Fontaine, Gilles,Charpinet, Sté,phane,Francœur, Myriam,Randall, Springer-Verlag 2010 Astrophysics and space science Vol. No.

RECONCILING MARKET ORIENTATION WITH BUSINESS LOGIC : THE ROLE OF AFFORDABILITY IN MARKETING STRATEGIES OF WESTERN MULTINATIONAL COMPANIES FOR CENTRAL AND EASTERN EUROPE

Arnold Schuh 글로벌지식마케팅경영학회 2014 Global Marketing Conference Vol.2014 No.5

The sdB pulsating star V391 Peg and its putative giant planet revisited after 13 years of time-series photometric data

Silvotti, R.,Schuh, S.,Kim, S.-L.,Lutz, R.,Reed, M.,Benatti, S.,Janulis, R.,Lanteri, L.,Østensen, R.,Marsh, T. R.,Dhillon, V. S.,Paparo, M.,Molnar, L. Springer-Verlag 2018 Astronomy and astrophysics Vol.611 No.-

<P>V391 Peg (alias HS 2201+2610) is a subdwarf B (sdB) pulsating star that shows both <I>p</I>- and <I>g</I>-modes. By studying the arrival times of the <I>p</I>-mode maxima and minima through the O-C method, in a previous article the presence of a planet was inferred with an orbital period of 3.2 years and a minimum mass of 3.2 <I>M</I>Jup. Here we present an updated O-C analysis using a larger data set of 1066 h of photometric time series (~2.5× larger in terms of the number of data points), which covers the period between 1999 and 2012 (compared with 1999-2006 of the previous analysis). Up to the end of 2008, the new O-C diagram of the main pulsation frequency (<I>f</I>1) is compatible with (and improves) the previous two-component solution representing the long-term variation of the pulsation period (parabolic component) and the giant planet (sine wave component). Since 2009, the O-C trend of <I>f</I>1 changes, and the time derivative of the pulsation period (<I>p</I><SUP>.</SUP>) passes from positive to negative; the reason of this change of regime is not clear and could be related to nonlinear interactions between different pulsation modes. With the new data, the O-C diagram of the secondary pulsation frequency (<I>f</I>2) continues to show two components (parabola and sine wave), like in the previous analysis. Various solutions are proposed to fit the O-C diagrams of <I>f</I>1 and <I>f</I>2, but in all of them, the sinusoidal components of <I>f</I>1 and <I>f</I>2 differ or at least agree less well than before. The nice agreement found previously was a coincidence due to various small effects that are carefully analyzed. Now, with a larger dataset, the presence of a planet is more uncertain and would require confirmation with an independent method. The new data allow us to improve the measurement of <I>p</I><SUP>.</SUP> for <I>f</I>1 and <I>f</I>2: using only the data up to the end of 2008, we obtain <I>p</I><SUP>.</SUP>1 = (1.34 ± 0.04) × 10<SUP>−12</SUP> and <I>p</I><SUP>.</SUP>2 = (1.62 ± 0.22) × 10<SUP>−12</SUP>. The long-term variation of the two main pulsation periods (and the change of sign of <I>p</I><SUP>.</SUP>1) is visible also in direct measurements made over several years. The absence of peaks near <I>f</I>1 in the Fourier transform and the secondary peak close to <I>f</I>2 confirm a previous identification as <I>l</I> = 0 and <I>l</I> = 1, respectively, and suggest a stellar rotation period of about 40 days. The new data allow constraining the main <I>g</I>-mode pulsation periods of the star.</P>

W-based amorphous phase stable to high temperatures

Cho, Kisub,Schuh, Christopher A. Elsevier 2015 Acta materialia Vol.85 No.-

<P><B>Abstract</B></P> <P>A quaternary W–Co–Fe–C amorphous alloy synthesized by mechanical alloying at room temperature is found to have unusual thermal stability and a complex evolution of phases as it decomposes and crystallizes. The structure of this alloy under continuous heating to 1200°C was characterized using a combination of various techniques, including X-ray diffraction, calorimetry and electron microscopy coupled with energy-dispersive X-ray spectroscopy and electron energy loss spectroscopy. Prior to crystallization, we observe phase separation of the alloy into two distinct amorphous compositions. Subsequently, alloy carbides (M<SUB>6</SUB>C and M<SUB>12</SUB>C), metallic crystalline solutions (Co-rich body-centered cubic/face-centered cubic) and intermetallic phases (W<SUB>6</SUB>Co<SUB>7</SUB>) emerge, but even to an extremely high temperature of 1200°C we find that about half of the alloy remained amorphous, with a local amorphous phase composition of W<SUB>35.0</SUB>Co<SUB>36.2</SUB>Fe<SUB>14.0</SUB>C<SUB>14.8</SUB>. The unusual sequence of phases that evolve and the stability of this amorphous composition are analyzed on the basis of thermodynamic calculations, and in light of the asymmetric diffusivity of carbon vis-à-vis the metallic elements in the system.</P>

Effects of crystallographic texture and nano-scaled features on corrosion behaviors of electrodeposited zinc and their chromium passivation layers

Narin Jantaping,Christopher A. Schuh,Yuttanant Boonyongmaneerat 한국표면공학회 2017 한국표면공학회 학술발표회 초록집 Vol.2017 No.11

Impaired melanoma growth in VASP deficient mice

Kim, Y.M.,Renne, C.,Seifert, S.,Schuh, K.,Renne, T. North-Holland Pub ; Elsevier Science Ltd 2011 FEBS letters Vol.585 No.15

Progression of tumors depends on interactions of cancer cells with the host environment. Expression of the cytoskeleton protein VASP is upregulated in various cancer entities. We analyzed the role of VASP for melanoma growth in murine allograft models. Growth of VASP expressing melanomas was retarded in VASP<SUP>-/-</SUP> versus wild-type animals. Over time tumor size was <50% in VASP<SUP>-/-</SUP> versus wild-type animals and independent of expression levels of Ena/VASP protein family members. Histological analyses showed smaller cells with impaired nutrition status and less vascularization in melanomas derived from VASP<SUP>-/-</SUP> versus counterparts from wild-type mice. Cumulatively, the data reveal a critical role of VASP in non-tumor cells in the tumor environment for melanoma growth in vivo.

Textured and Tungsten-bronze-niobate-doped (K,Na,Li)(Nb,Ta)O3 Piezoceramic Materials

Thomas Soller,Robert Bathelt,Katrin Benkert,Hermann Bodinger,Carsten Schuh,Falko Schlenkrich 한국물리학회 2010 THE JOURNAL OF THE KOREAN PHYSICAL SOCIETY Vol.57 No.41

In this study, the effects of an alkaline-earth niobate doping in tungsten-bronze (TB) stochiometry on the piezoelectric properties and the phase transition temperatures of lead-free (K,Na,Li)(Nb,Ta)O3 ceramics were investigated. In particular, the TB compounds barium niobate (BN), barium sodium niobate (BNN) and strontium calcium sodium niobate (SCNN) were investigated. The TB-modified ceramics show promising piezoelectric properties with large-signal piezo coefficients, d33*, close to 400 pm/V, planar coupling coefficients, kp, up to 0.45 and Curie temperatures of approximately 310 ℃. In addition, the effect of texturing on the undoped (K,Na,Li)(Nb,Ta)O3 base composition via templated grain growth (TGG) with microcrystalline NaNbO3 templates was examined. Lotgering factors up to 81% and strain enhancements by a factor 1.5 with large-signal values of d33* up to 550 pm/V could be achieved in the textured samples.