Retail promotion practices in Hong Kong and Australia - A cross-country study.

University Degree Business and Administrative studies

RETAIL PROMOTION PRACTICES IN HONG KONG AND Australia -

A CROSS-COUNTRY STUDY

Abstract

This study provides insight into differences in promotional tool preferences and spending between retailers of two national markets that have distinct cultural values. I compared and contrasted the sales promotion and mass media tools preferences and spending of Hong Kong and Australian retailers. The study indicate that the Hong Kong retailers are more inclined to use the sales promotion tools relative to Australia. The results of this study provide an interesting insight into how national culture can influence retailers’ choice of not only using promotional tools, but also the type of promotional tools that they choose. This claim is based on comparing like with like that is, clothing and shoe retailers, who tend to carry similar product items. The only difference between these retailers thus is national culture, in particular the cultural value differences between Hong Kong Chinese and Australian Europeans. Basically there are four cultural values on which we can focus to explain the differences in the perception of sales promotion versus mass media tools between the retailers in Hong Kong and Australia. They include a desire to build relationships, risk aversion, attitudes towards bargaining and belief in luck and fate.

Building Relationships

As outlined earlier in the study, relationship building, both among friends and business acquaintances, as much as between buyer and seller, is of great importance in the Chinese-based Hong Kong. Sales promotion tools such as coupons and vouchers are a form of loyalty programme. The use of these tools could help the seller to build and maintain a relationship with its buyers and could also prevent the latter from going to the competitors. This concept is not so important in Australia, where consumers are more likely to act as individuals, and do not place such emphasis on building and maintaining successful relationships as their Chinese Hong Kong counterparts do.

Risk Aversion

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Risk Aversion

It is a common practice amongst Hong Kong consumers to spend many hours window shopping in shopping complexes rather than relax in their often crowded homes and to them, time does not count as a factor. A typical Chinese shopper tends to engage in habitual comparison shopping rather than impulse buying and there is a Chinese saying which emphasises this - “Never make a purchase until you have compared three shops,” (Cui, 1997). Hofstede (1980) claim that most Asian culture rates strongly on the uncertainty avoidance dimension. The upshot of this value is that Hong Kong consumers tend to exhibit a high brand-name consciousness, a greater insistence on quality, an active use of reference groups and opinion leaders and prefer group shopping. In addition, Asians as a whole tend to be more sensitive to social risk than are Western consumers. This sensitivity leads Asian (including Hong Kong) consumers to a greater hesitancy in trying new products. Based on this cultural backdrop, it seems the retailers in Hong Kong are more inclined to use various sales promotion tools to entice the consumers to come into their retail outlets relative to Australian retailers. Sales promotion tools like price marked-down and discounts are attractive tools that could be used to reduce either monetary and/or social risk(s). For instance, Asian (including Hong Kong) consumers prefer group shopping. Therefore, any consumption of discounted items would save the purchaser some money and at the same time not make the purchaser ‘lose face’ as the items were purchased from an established retail outlet and not from the street hawkers.

Attitude towards Bargaining

In a Western context, the prices of most consumer goods are clearly displayed on shelves or in shop windows. Prices are therefore fixed - an outcome appreciated both by retailers interested in efficiency and control and manufacturers of brands interested in the stability of sales and positioning. The use of mass media therefore is particularly attractive amongst Austrailian retailers. In Asia, besides the modern retailing system, most prices are not openly displayed and are thus negotiable. Chinese consumers value bargaining. Bargaining involves the purchaser in a role-play that may be enjoyable. Time is not always pressing in Asia, or the notion that ‘time is money’ does not always apply. Succeeding in negotiations can boost the morale of the purchaser. In the more modern retailing context, bargaining need not be in the form of spending hours trying to get a dollar deducted from the list price. A purchaser might feel equally satisfied when he/she was able to purchase a reduced item especially after visiting and comparing the prices of several retail outlets. Hong Kong consumers are often considered to be quite involved shoppers, displaying a combination of strong suspicion for cheap products and a desire for bargains. Given the inclination amongst Hong Kong consumers to shop for a bargain, most retail outlets in Hong Kong are located close to one another. This reduces the need to use mass media tools to communicate their offerings. In Australia, because it is sparsely populated, mass media tools such as print and broadcast advertising become an effective and cost efficient way to communicate the retailers’ offerings.

A Belief in Fate and Luck

Chinese people believe in fate and luck. They also like to gamble. These behaviours are particularly common amongst the people of Hong Kong. For instance, whenever there is a special occasion such as opening a new shop, wedding, or moving to a new house, they tend to choose an “auspicious day”. They believe that when the special occasion was performed on that auspicious day, it will not affect their future and prosperity. Also on this special occasion gift like vouchers and money-off coupons are usually given out by those celebrating the occasion. Perhaps this was the reason why vouchers and money-off coupons were popular tools amongst Hong Kong retailers. Gambling in horse racing, government sanction lotteries or other form of contests/competitions have become a common form of entertainment amongst the people of Hong Kong. Hence the use of contests and sweepstakes by the retailers in Hong Kong are becoming relatively common and popular compared to Australia.

This study has attempted to investigate the underlying dimensions of Chinese cultural values and promotion strategies. We started off by comparing Hong Kong and Australia retailers’ cultural values in relation to promotional tool preferences. The results indicated that there is a high correlation between the Chinese cultural values of building relationships, risk aversion, bargaining, and a belief in fate and luck and the retailers’ preference for sales promotion tools like price marked-down, money-off coupons, vouchers, contests and sweepstakes. First, although the two sets of retailers were from the same retail category, they nevertheless used a different set of promotional tools. This is in line with the call for localisation of promotion strategies. Obviously, the retailers in Hong Kong were using the promotional tools which best suit the local consumers’ needs and wants. Likewise the Australia retailers were using the appropriate tools to reach their target market. Hence, for a foreign retailer thinking of transplanting their business into Hong Kong, our advice is to give more attention to sales promotion tools. This implication does not only apply to Hong Kong - it could also apply to other Chinese dominated societies such as Singapore, Taiwan, and even China itself.

The second managerial implication relates to the value and quality of the sales promotion tools used, in particular the type of gifts to give, related to the Chinese-based culture of Hong Kong. Gifts should always be given in even numbers and the gifts should be circular. For instance, one could offer an 8.88% discount, where ‘8’ to the Chinese language sounds prosperity. Roundness is auspicious and signifies completeness. Giving a clock as a gift to Hong Kong Chinese is not recommended because this shows the giver is telling the receiver that his/her death is imminent. Gifts of knives and scissors represent the severing of a friendship, while herons and stocks represent a woman’s death. All of these should not be used as a gift. In addition, when establishing the value of the gift, one should make sure that either the giver or the receiver will not ‘lose’ face. This means the retailers or marketers need to ensure that the value of the gifts does not embarrass either the receiver or the purchaser.

These findings suggest that Chinese cultural values have an influence on the retailers’ choice of sales promotion tools. These findings need to be tested in other countries, but until then, one can conjecture Chinese dominated countries like Singapore, Taiwan and China favor the sales promotion tools approach. Other countries like Australia, Canada, USA and European countries favor the mass media tools approach. However, these are just conjectures at this stage until the research is conducted. For references, please contact the first author.