UNIVERSITY OF VAASA SCHOOL OF MARKETING AND COMMUNICATION Cecilia Cerrato THE INFLUENCE OF DIGITALISATION OVER THE INTERNATIONAL MARKETING MIX STRATEGY. A case study in the footwear industry Master’s Thesis in International Business VAASA 2018 Sisu Sisu (see’-soo) noun Extraordinary endurance in the face of adversity ° persistence, determination, guts° full of courage, tenacity, resolve, willpower and an indomitable spirit To Vaasa which taught me to find my own sisu. 1 TABLE OF CONTENT 1. INTRODUCTION ................................................................................ 13 1.1 Background of the study .................................................................................. 13 1.2 Research question and objectives .................................................................... 15 1.3 Delimitation of the study .................................................................................. 16 1.4 Key Concepts..................................................................................................... 17 1.5 Structure of the study ....................................................................................... 18 2. THE INTERNATIONAL MARKETING MIX AND THE CHOICE TO STANDARDISE OR TO ADAPT .................................................... 21 2.1 The definition of International Marketing ..................................................... 21 2.2 Different points of view about the choice of standardisation and adaptation of international marketing mix ................................................................................... 25 2.3 A conceptual model on international marketing strategy standardization and adaptation ...................................................................................................................... 27 3. HOW DIGITALISATION, BIG DATA AND CUSTOMISATION ARE CHANGING THE INTERNATIONAL MARKETING STRATEGIES ........................................................................................... 35 3.1 The definition of digitalisation......................................................................... 35 3.2 Big data and their importance in marketing activities ................................. 37 3.3 The use of new technologies and the spread of customization ..................... 43 3.4 Summary of the theoretical framework ......................................................... 46 3 4. METHODOLOGY ............................................................................... 49 4.1 Methodological approaches ............................................................................. 49 4.2 Sample................................................................................................................ 50 4.3 Data collection ................................................................................................... 52 4.4 Semi-structured interviews .............................................................................. 53 4.5 Data analysis ..................................................................................................... 55 4.6 Quality of the study .......................................................................................... 56 5. EMPIRICAL ANALYSIS AND RESULTS ....................................... 59 5.1 The footwear industry landscape .................................................................... 59 5.2 The selected companies .................................................................................... 61 5.3 The international marketing mix of the selected companies ........................ 65 5.4 The impact of digitalization on the overall business activities of the selected companies ...................................................................................................................... 70 5.5 Big Data and Customization in the selected companies ................................ 72 5.6 Expectations for the future .............................................................................. 78 5.7 Comparison between the companies ............................................................... 80 6. SUMMARY AND CONCLUSIONS ................................................... 82 6.1 Summary of the results .......................................................................................... 82 6.2 Managerial implications......................................................................................... 86 6.3 Limitations and Suggestions .................................................................................. 88 5 REFERENCES ......................................................................................... 90 APPENDIX 1 – (DRAFT) QUESTIONS FOR THE SEMI- STRUCTURED INTERVIEWS ............................................................ 106 APPENDIX 2 – TYPE OF SHOES OFFERED BY UNDANDY AS THE STARTING POINT FOR THE CUSTOMIZATION PROCESS ..... 108 APPENDIX 3 – TYPE OF SHOES OFFERED BY AWL & SUNDRY AS THE STARTING POINT FOR THE CUSTOMIZATION PROCESS ................................................................................................ 109 APPENDIX 4 – TYPE OF SHOES AND EXAMPLES OF CUSTOMIZABLE SHOES BY NIKE ................................................. 110 7 LIST OF FIGURES Figure 1. Structure of the study. .................................................................................... 20 Figure 2. A conceptual model on international marketing strategy standardisation/adaptation (adapted from Theodosiou and Leonidou 2003: 143). ........ 28 Figure 3. Stage view of the digital transformation. ....................................................... 36 Figure 4. Five phases Big Data Insights. (Adapted from Gandomi and Haider 2015).. 40 Figure 5. Benefits of the use of Big Data in Marketing................................................ 42 Figure 6. Knowledge fusion process (Adapted from Xu et al. 2016). ........................... 43 Figure 7. Theoretical Framework (adapted from Theodosiou and Leonidou 2003: 143). ........................................................................................................................................ 47 Figure 8. Research Onion (Adapted from Saunders et al. 2009). .................................. 50 Figure 9. Qualitative Data Characteristics (Adapted from Saunders et al. 2009). ........ 55 Figure 10. Summary of the quality of the study. .......................................................... 58 Figure 11. World Footwear Production (World Footwear Yearbook 2017). ............... 60 Figure 12. Footwear Consumption (World Footwear Yearbook 2017). ...................... 61 Figure 13. Awl & Sundry E-shop Outlook. .................................................................. 63 Figure 14. Nike iD website. .......................................................................................... 64 Figure 15. Undandy Website. ........................................................................................ 65 Figure 16. Theoretical Framework (adapted from Theodosiou and Leonidou 2003: 143). ................................................................................................................................ 84 Figure 17. Key managerial implications. ....................................................................... 87 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322061 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322062 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322062 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322064 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322065 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322066 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322067 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322067 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322069 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322076 file://///Users/Cecilia/Desktop/MIB%20-%20Vaasa/Thesis/Master's%20Thesis%20Cerrato%20Cecilia.docx%23_Toc512322076 9 LIST OF TABLES Table 1. Definitions of international marketing (Adapted from Akgün,2014). ............. 22 Table 2. Results on the degree of standardisation and adaptation of the international marketing strategy. (Adapted from Theodosiou and Leonidou 2003). .......................... 32 Table 3. Definitions of big data. (Adapted from De Mauro et al. 2016). ...................... 38 Table 4. Types of Analytics (Adapted from: Gandomi and Haider 2015). .................. 41 Table 5. Differences between Mass Production and Mass Customisation (Adapted from Forrester Research 2011). ............................................................................................... 45 Table 6. Sample. ........................................................................................................... 52 Table 7. Topic area of the semi-structured interviews. ................................................. 54 Table 8. Undandy 4Ps. .................................................................................................. 66 Table 9. Awl & Sundry 4Ps. .......................................................................................... 67 Table 10. Nike 4Ps. ........................................................................................................ 68 Table 11. Advantages and Challenges of big data (Nike). ............................................ 73 Table 12. Advantages and challenges of Customization (Undandy). ........................... 74 Table 13. Advantages and challenges of Customization (Nike). ................................... 76 Table 14. Advantages and challenges of Customization (Awl & Sundry). ................... 77 Table 15. Comparative table of the results. ................................................................... 81 11 UNIVERSITY OF VAASA School of Marketing and Communication Author: Cecilia Cerrato Topic of the Thesis: The influence of digitalisation over the international marketing mix strategy. A case study in the footwear industry Degree: Master of Science in Economics and Business Administration Master’s Programme: Master in International Business Supervisor: Jorma Larimo Year of Entering the University: 2017 Year of Completing the Thesis: 2018 Pages: 111 ABSTRACT When a company decides to cross the national borders, it has to redefine its marketing strategy, This can be done following two main approaches: standardization and adaptation. Many studies have been made regarding standardization and adaptation of the international marketing strategy and nowadays there are also a lot of studies regarding how digitalization is having an impact on enterprises, but the influence of digitalization over the standardisation and adaptation of the international marketing mix received less attention. This study investigates the relationship between the two traditional approaches and the phenomenon of digitalization. More in detail, it found out what kind of impact digitalisation is having on these approaches, pointing out new trends that marketers should take into account to implement better international marketing strategies. The study focuses on the footwear industry, which is an interesting and dynamic sector, with good growth perspective and the analysis is based on the experience of three different footwear companies which have international activities. To gather information from these companies semi-structured interviews have been conducted. The sample included in the work is composed by three companies of different size and from different countries which all operates in globally or in many different markets. The main characteristic of these companies is related to the customization service they are offering to their customer. The results almost reflected the expectation that the classical dualism of standardization and adaptation has been exceeded because today, due to the customer centricity, there is a persona perspective instead of the old market perspective, which is influencing all the international marketing decisions. Moreover, the results show that the degree of influence of the customization is higher than the one brought by big data, not because of the big data itself, but because companies are too small or still do not know how to use them in an appropriate way. This work helps to focus the attention to a topic which is not so studied, and it gives a better understanding on how companies should take advantage of digitalization. KEYWORDS: Digitalisation, International Marketing, Footwear industry, Big Data, Customisation 13 1. INTRODUCTION This chapter’s intention is to present the topic of this research. First, the background of the study is presented underlining respective research gaps. The second part is followed by goal setting and objectives of this research in addition to the structure of the thesis. Finally, main concepts are defined according to the literature. 1.1 Background of the study The theory of standardization and adaptation in an international marketing perspective developed during the 1960s (Buzzel 1968) and it has been used in many international business circumstances. Based on it, many other theories have been developed supporting both adaptation, standardization and a mix of the two. Digitalisation has brought to many changes in the business environment, that have effects on all the business activities. Digitalisation is for sure an opportunity, but on the other hand – if not well managed- can be a threat too. Looking at the existing literature, it is possible to find many studies regarding standardization and adaptation of the international marketing strategy (Theodosiou and Leonidou 2003; Shoham 2002) and also regarding how digitalization is having an impact on enterprises (Mastilo 2017; Westerman et al. 2011), but what is missing are studies concerning the changes that digitalization is bringing to the international marketing mix strategies. As it can be seen from the title, this thesis will analyse these two important topics from a combined perspective, to offer a fresh and new point of view. In particular, the study will focus on the footwear industry, The revenue in the footwear market is about 357,930 million dollars in 2018 and this market is expected to grow annually by 4.2 % between 2018 and 2021 (Statista 2018) which represent an important growth for the sector and leave room for new business opportunities. 14 The thesis will follow a deductive approach because of the nature of the topic that requires the construction of a proper theoretical framework from which some interview questions will be developed in order to build the empirical part. Last but not least, the outcome of the interviews will be examined and links with the previous theoretical framework will be done (Saunders et al. 2016) The empirical part will be done by conducting qualitative interviews with managers of different footwear companies, in order to see what is actually happening: what are their marketing strategies, their reasons behind them and how they managed the change due to the spread of digitalisation. When a company decides to cross the national borders, it has to redefine its marketing strategy. The choice of standardization or adaptation is particularly relevant for a firm since it will have a huge impact on the success and the increase of profit of the company (Craig and Douglas 1996) and since we are living in a digitalized era it is important for companies to understand how digitalisation is affecting their international marketing strategy in order to make conscious choice that will reflect on positive results. Companies should be aware of what digital factors are affecting the most their decision in order to gain advantage of it. In addition to this, the European footwear market volume will continue to increase in the next year and it is expected to amount to 2,198m pairs by 2021 (Statista 2017) Working on this topic will provide managerial implications that could be important for the future of footwear industries. In addition to this, this work could be applied to other manufacturing industries and lead to further studies. As mentioned above, there have been made much research about standardization and adaptation of the international marketing strategy (Theodosiou and Leonidou 2003; Shoham 2002) and, nowadays, there are also a lot of studies regarding how digitalization is having an impact on enterprises (Mastilo 2017; Westerman et al. 2011). Less relevance has been given to the relationship of these two topics and to the impact digitalisation is having on those strategies. 15 Digitalisation has changed customer behaviour (Piccinini et al. 2015): they are now more informed and digital skilled, which make them able to value and compare the products they want to buy (Lucas et al. 2013). Nowadays when a firm decides to enter a new market and starts to define its marketing strategies should take into account the transformation that digitalisation is having on business activities and more in detail that is having on the two traditional approaches. 1.2 Research question and objectives This study aims to analyse the impact that digitalisation is having over the standardisation and adaptation approaches when it comes to the international marketing mix of a company. More in detail the study will investigate this, among the footwear industry. Then, the research question to be answered is: What kind of changes is digitalization bringing to the degree of standardization or adaptation of the international marketing mix activities of the footwear industry? The objectives of the study can be divided into theoretical goals: • Review the existing literature regarding international marketing and the adaptation or standardisation of the international marketing mix strategies. • Analyse the phenomenon of big data used for marketing activities and the trend of customization to be used to narrow the definition of digitalization and to build the theoretical framework. • Develop a theoretical framework where digitalization is seen as an influencing factor of the degree of standardisation and adaptation of the international marketing mix strategy. And empirical objectives: • Analyse what kind of changes digitalisation is bringing on the degree of standardization or adaptation of the international marketing mix activities in the footwear industries. 16 • Develop managerial implications for footwear companies to allow them to take advantage of the opportunities that digitalisation is providing. By achieving these objectives, this thesis will firstly provide a theoretical framework which will allow the reader to understand what changes are occurring in the international marketing activities and based on that the author will develop an empirical part which will investigate that impact in the footwear industry. This will be done by analyzing three different footwear companies in order to understand and to develop managerial considerations to take advantage of these changes. Moreover, this will contribute to bringing to light to this novel and hot topic, which still needs further studies. 1.3 Delimitation of the study This study focuses only on impact that digitalization is having on the international marketing mix. For this reason, the whole work is based on a marketing perspective and it investigates in which ways digitalization is affecting the choice between the classical strategies of stansardisation and adaptation. In order to follow the purpose of this study, the researcher decided to delimitate the concept of digitalization analyzing two of the biggest digital trends expected for 2018 to obtain more relevants results. The theoretical approach used in this thesis allows the reader to have a better understanding of the topic. For this reason, the author included different perspectives to have a wider view on which the researcher built a solid theoretical framework. Furthermore, the critical thinking applied in this section makes the reader aware of the reasons behind this work and prepares him for the empirical part. In addition to this, due to the actual nature of the topic, a greater focus will be on recent articles rather than books, which -sometimes- may appear outdated. This study, and so its output, is delimited to the footwear industry in order to obtain more comparable results more and to be able to better control the study. Moreover, including any kind of consumer-goods would have been too broad for the aim of the study. 17 First of all, the author wanted to investigate the field of physical good since “consumer- goods companies have been at the forefront of digital innovation in commercial areas such as marketing and sales” (Fritzen et al. 2016). Secondly, we focused on the footwear industry due to its dynamic and interesting features. Furthermore, the footwear industry seems to be one of the sectors most interested in the advanced manufacturing systems Implementation with reference to additive manufacturing and all those new technologies introduced by the spread of digitalization (Di Roma 2017). In this thesis, footwear industry regards only those companies which are producing shoes for private end customers. This means that work and safety shoe producers will not be considered. For the interviews will only be considered those footwear industries that have international activities in order to be able to answer the research question. No restrictions will be made regarding what kind of shoes the selected companies produce (for example sports shoes, town footwear, etc…) To sum up, there are delimitations in this thesis. However, these should be seen as possible opportunities for further studies and not as factors affecting the relevance of the results that will be obtained. 1.4 Key Concepts Hereby are presented the key concepts that are included in this thesis, explaining them through the most widely adopted: MARKETING MIX: “it is a set of controllable variables that the firm can use to influence the buyer’s response” (Singh 2012) and all these variables are linked to each other and influenced by them (Cuellar-Healey and Gomez 2013). The marketing mix includes four decisions a company need to consider before launching a new product. (Singh 2012.) that are price, place, product and promotion. 18 MARKETING STANDARDISATION STRATEGY: is “the offering of identical product lines at identical prices through identical distribution systems, supported by identical promotional programs in several different countries.” (Buzzel 1968, p. 103) MARKETING ADAPTATION STRATEGY: it implies “changing various aspects of products and services to a considerable extent in order to meet the needs of consumers in international markets taking into account their differences” (Chung 2009.) DIGITALISATION: “it is the use of digital technologies to develop new business models. moreover, it provides opportunities and new revenue. it can also be seen as a process which leads a company into a digital business.” (Gartner 2017.) BIG DATA: they can be described as “a combination of volume, variety, velocity and veracity that creates an opportunity for organisations to gain competitive advantage in today’s digitised marketplace.” (Schroeck et al. 2012.) MASS CUSTOMISATION: It “aims to deliver products and services that best meet individual customers’ needs with near mass production efficiency.” (Tseng and Jiao 1996.) 1.5 Structure of the study The first chapter of the work will include an introduction which goal is to define the background of the study, its position and to identify research gap. Secondly, it will illustrate the purpose, the research question and the objectives. Furthermore, this section will present the main theoretical and key concepts related to the topic and the structure of the study. The second chapter will illustrate a critical and appropriate review of the current literature, in order to first analyse the already existing theories and to build on them a proper theoretical framework. The main focus will be on theories regarding the 19 international marketing mix, its key components, the main strategies used (standardization and adaptation) and all the advantages and problems related to them. The third chapter will then focus on the concept of digitalization, more then it will present and analyse the two phenomena that are included in this thesis to better and narrowly investigate the digitalization impact over the international marketing mix strategy: big data and customization. In addition to this, the third chapter will illustrate the theoretical framework which will be used to develop the empirical part. The fourth chapter will show the methodology used during the thesis. In this section, it will be defined what research philosophy has been adopted in the work. Moreover, it will be described what qualitative research is, which research approach has been used, how case studies have been chosen and how data have been collected. Last but not least, the quality of this master’s thesis will be evaluated. The fifth chapter will consist of the empirical analysis of the data collected through the semi-structured interviews and of the description of the results of the study. In this section, the author will include extracts gathered during the semi-structured interviews conducted in order to show real examples of the empirical work. The sixth and last chapter will discuss the results obtained: the empirical outcomes will be connected to the theoretical framework previously defined in order to critically analyse the main findings. The chapter will then continue with a summary of the study and the results obtained. In addition to this, it will include managerial implications in order to make this study a relevant contribution to this topic. Finally, limitations of the study will be clearly defined and some suggestions for further studies will be included. 20 Figure 1. Structure of the study. INTRODUCTION Chapter 1 THE INTERNATIONAL MARKETING MIX AND THE CHOICE TO STANDARDISE OR TO ADAPT Chapter 2 HOW DIGITALISATION, BIG DATA AND CUSTOMISATION ARE CHANGING THE INTERNATIONAL MARKETING STRATEGIES Chapter 3 L it er at u re r ev ie w DIGITALISATION AS AN ANTECEDENT FACTOR OF THE INTERNATIONAL MARKETING ACTIVITIES Chapter 3 METHODOLOGY Chapter 4 A n al y si s & R e su lt s SEMI-STRUCTURED INTERVIEWS Chapter 5 SUMMARY AND CONCLUSION Chapter 6 21 2. THE INTERNATIONAL MARKETING MIX AND THE CHOICE TO STANDARDISE OR TO ADAPT This chapter aims to provide a broader, detailed and critical review of the literature. First of all, it will analyze the concept of international marketing to provide a concise overview of the topic. Then, it will present the different points of view regarding the choice of standardisation or adaptation of the international marketing mix activities. Last but not least it will provide a detailed picture of the phenomenon of the digitalization in order to provide to the reader sufficient information to fully understand the next chapter. 2.1 The definition of International Marketing The first definition of international marketing goes back to World War II and it was used to identify all the “activities belonging to marketing beyond domestic level” (Codita 2011). From that moment on, international marketing became a common marketing concept, but it does not exist a universally accepted definition of it. (Akgün et al. 2014.) For this reason, many authors and researchers define international marketing in different ways. For the purpose of this study, the author wanted to include the most relevant ones presented by Akgün et al. (2014) and they are presented in table 1. 22 Table 1. Definitions of international marketing (Adapted from Akgün,2014). Author Definition Albaum and Peterson (1984: 162) “...marketing activities relevant to products or services that directly or indirectly cross-national borders.” Jain (1999) “....refers to exchanges across national boundaries for the satisfaction of human needs and wants.” Terpstra and Russow (2000) “marketing across national borders, marketing in foreign countries and coordination and integration of marketing in divided foreign environments.” Bradley (2005: 3) “...means identifying needs and wants of customers in different markets and cultures, providing products, services, technologies and ideas to give the firm a competitive marketing advantage, communicating information about these products and services and distributing and exchanging them internationally through one or a combination of foreign market entry modes.” Doole and Lowe (2008: 9) “...,where the marketing activities of an organization include activities, interests or operations in more than one country and where there is some kind of influence or control of marketing activities from outside the country in which the goods or services will actually be sold.” Ghauri and Cateora (2014: 8) “....is the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.” 23 Among all these definitions, the one adopted in this thesis is the one provided by Bradley (2005) because it better fits with the purpose of this master’s thesis and allows the reader to capture the right perspective used to develop this work. International marketing is now a key topic of research in many universities around the globe, it now includes also many scholars from different countries. This is reflected in the fact that during the period 1995–2015 the number of articles written about this topic has remarkably increased (Leonidou et al. 2018). The international marketing mix activities include at least one of the marketing mix decision outside the firm’s home country and are crucial for many companies which operate in today’s globalized economy which is characterized by a high level of competitiveness. (Leonidou et al. 2010.). Furthermore, the international marketing mix activities are more complex because in this case there are two or more sets of uncontrollable variables deriving from different countries (Onkvisit and Shaw 2009). In fact, the company needs to manage a different environment, with customers with different needs and tastes, with a different culture, different laws, different market structures, government policy, laws, different economic and technologic levels (Akgün et al. 2014.) The concept of marketing mix refers to the idea of “mixing ingredients”, meaning that in order to develop a marketing strategy it is necessary to combine a series of different means of competition to be profitable (Grönroos 1994). The elements needed in this mix are the so-called 4Ps: product, price, place and promotion (Goi 2009). This framework has been criticized by some researchers in the past years defining it product oriented and not customer oriented (Popovic 2006), others argued that it should be seen also from a customer’s point of view and for this reason the 4Cs model (customer solution, cost, convenience and communication) has been implemented (Lauterborn 1990), that it does not consider customer behaviour (Möller 2006) or that it does not consider the experiences that consumers buy (Goi 2009). In addition to this, during the past years, many other versions of the 4Ps have been proposed, seeing an increase in the number of elements taken into consideration. Booms 24 and Bitner’s (1981) extended the marketing mix elements from 4 to 7 initially to be able to use it for services too, but later on, it became a generic framework used also for consumer goods (Rafiq and Ahmed 1995). Then we have also other frameworks which 8 Ps (Goldsmith, 1999) or even 15 Ps (Baumgartner 1991). Despite the criticism, the 4Ps framework received it remains a staple of the marketing mix (Goi 2009; Kent and Brown 2006) and many of the marketing mix used today are still based on the 4Ps model (Goi 2009). For these reasons, when referring to the marketing mix activities we will refer to the one based on the 4Ps framework. In the case of the international marketing mix, the activities included in it are (Akgün et al. 2014; Omar 2008): “ 1. The analysis of markets and potential markets 2. The planning and development of products and services that consumers want, distinctly identified in a proper package 3. The distribution of products through channels that assure the services or conveniences demanded by buyers 4. The promotion of products and services, including advertising and personal selling to inform and educate consumers about those products and services, or persuade consumers to try new, improved or different ways of satisfying their wants and needs 5. The setting of prices that reflect both a reasonable value (or utility) of products or services to the consumers, and a satisfactory profit or return on investment 6. The technical and non-technical support given to customers, both before and after a sale is made, to ensure their satisfaction, and thus pave the way for possible future sales that are necessary for company survival and growth”. The just mentioned contribution is from 2008, from that year many things have changed, new technologies have been introduced in our lives and new way of doing marketing have been implemented, but the objectives of the marketing mix activities are still the same and for these reasons it has been used also by Akgün et al. in 2014. 25 2.2 Different points of view about the choice of standardisation and adaptation of international marketing mix In the area of international marketing, topic related to the marketing mix has been widely studied (Ivy 2008; O’Cass and Craig 2003; Griffith and Krampf 1998), but the standardisation or adaptation of the international marketing mix has become nowadays one of the key researched topics (Larimo and Kontkanen 2008). Looking at the literature, the first articles regarding standardization and adaptation of the marketing mix are from the 1960s, but only during 1970s, it became a more researched topic (Larimo and Kontkanen 2008). It is possible to identify three main different opinions regarding the adaptation and standardization of the marketing mix (Hollensen 2008: xiii): those in favour of the standardization strategy (eg. Zou and Cavusgil 2002; Ohmae 1985; Levitt 1983), those who argue that the adaptation approach is better (Terpstra and Sarathy 2000; Baalbaki and Malhotra, 1993) and those who do not see standardization or adaptation as a choice, but the approach can be a mix of the two, where the marketing strategy can range between the two extreme values (Vrontis and Papasolomou 2005; Jain 1989; Onkvisit and Shaw 1987; Quelch and Hoff 1986). According to Theodosiou and Leonidou (2003: 142) the standardisation approach see the world as a globalized one, where there is high technology uniformity, greater market similarly and consumer need, preferences and tastes are more homogeneous (Ohmae 1985; Levitt 1983), The supporters of this approach also state that standardization is further facilitated by the growth of international communication channels, the emergence of global market segments, and the appearance of the Internet. They also point out a number of benefits: (a) significant economies of scale in all value-adding activities, particularly in research and development, production, and marketing; (b) the presentation of a consistent corporate/brand image across countries, especially in light of the increasing consumer mobility around the world; and (c) reduced managerial complexity due to better coordination and control of international operations (Yip et al. 1988; Douglas and Craig 1986; Levitt 1983;). 26 On the other hand, Theodosiou and Leonidou (2003: 142) illustrate that the adaptation supporter state that even if it is true that the world is more globalized, but differences and distance between countries still exist and consumer needs, use conditions, purchasing power, commercial infrastructure, culture and traditions, laws and regulations, and technological development are still too great, thus the adjustment of the marketing strategy to the characteristics of each foreign market it is essential (Terpstra and Sarathy, 2000). In particular, they criticize the standardisation approach referring to it as a kind of marketing myopia, which oversimplify the reality and contradict the marketing concept (Douglas and Wind 1987; Boddewyn et al. 1986; Wind 1986). They also stress the fact that the ultimate objective of the firm is not the cost reduction through standardization, but the long-term profitability through higher sales accrued from a better exploitation of the different consumer needs across countries (Whitelock and Pimblett 1997; Onkvisit and Shaw 1990; Rosen 1990). As mentioned above, there is a third category of researchers that according to Theodosiou and Leonidou (2003: 142 – 143) look at the standardisation and adaptation debate from a contingency perspective. In their view: (a) standardization or adaptation should not be seen in isolation from each other, but as the two ends of the same continuum, where the degree of the firm’s marketing strategy standardization/adaptation can range between them; (b) the decision to standardize or adapt the marketing strategy is situation specific, and this should be the outcome of thorough analysis and assessment of the relevant contingency factors prevailing in a specific market at a specific time; and (c) the appropriateness of the selected level of strategy standardization/adaptation should be evaluated on the basis of its impact on company performance in international markets. Hence, the challenge for the international firm is to determine which specific strategy elements are feasible or desirable to standardize or adapt, under what conditions, and to what degree. (Cavusgil and Zou 1994; Jain 1989; Onkvisit and Shaw 1987; Quelch and Hoff 1986.). 27 2.3 A conceptual model on international marketing strategy standardization and adaptation For the aim of this thesis, the adaptation of marketing mix refers to the degree to which its elements (price, place, product and promotion) are adapted to each external market to consider and to adapt to environmental differences, consumer tastes and needs, standards of use, and competitiveness. (Ang and Massingham 2007; Zou et al. 1997.). On the other hand, the concept of standardisation of the marketing mix refers to the degree to which its components are standardized all over non-domestic markets. This because using the degree of adaptation/standardisation will provide more detailed results and because the fundamental question is not whether to standardise or to adapt marketing strategies, but how much to standardise or to adapt (Jain 2007; Cavusgil and Zou 1994; Jain 1989). This perspective of the standardisation and adaptation approach has led to many studies which are too fragmented, repetitive, diverse and inconsistent. For this reason, Theodosiou and Leonidou (2003: 143) decide to develop a study whose aim is to consolidate this research area. In order to do this, they based their research on a simplified version of the international marketing strategy standardization/ adaptation model (Cavusgil and Zou 1994; Jain 1989) that it is hereby reported in Figure 2. 28 This model by Theodosiou and Leonidou (2003) is composed by three macro elements which are (1) the antecedent factors, which are all those variables, background forces, affecting the decision to standardise or to adapt the international marketing mix strategy, then there are the (2) marketing strategy variables which are the 4Ps of the marketing mix and the (3) performance outcomes which represents the impact of international marketing strategy standardization/adaptation on the performance in foreign markets. (Theodosiou and Leonidou 2003: 144.) This model will be used in this thesis in order to build the theoretical framework and in order to reach the objectives set and be able to develop a reliable a valuable work, no Environmental factors Market characteristics Customer issues Competition Product and industry Organizational factors Managerial factors Degree of standardisation/adaptation of: • Product • Price • Place • Promotion • Sales • Change in sales • Profit • Change in profit • Market share • Goal achievement • Satisfaction with change in performance • Corporate performance ANTECEDENT FACTORS INTERNATIONAL MARKETING STRATEGY PERFORMANCE Figure 2. A conceptual model on international marketing strategy standardisation/adaptation (adapted from Theodosiou and Leonidou 2003: 143). 29 attention will be paid to the performance outcomes. What this work wants to implement is to adapt this model including the digitalization as an antecedent factor to see how this is having effects on the degree of standardisation and adaptation of the international marketing mix. Before proceeding with the analysis and the introduction of the new factor, it is necessary to properly analyze the antecedent factors already present in the model, in order to have a better knowledge about it. The model includes seven different antecedent factors that are: environmental factors, market characteristics, customer issues, competition factors, product and industry factors, organizational factors and managerial factors. (1) Environmental factors consist of a broad variety of economic, sociocultural, political-legal, and physical forces which have an influence, that can be both direct or indirect, on international business operations (Theodosiou and Leonidou 2003.). In fact, these factors can severely limit the firm’s capability to develop and implement a standardized strategy (Douglas and Wind 1987). Even though in many studies it has been said that environmental differences are very important in determining both the feasibility and the appropriateness of international marketing strategy Theodosiou and Leonidou (2003) contradicts this traditional concept which support the idea that environment represents the driving force behind the differentiaon of the marketing strategy. (2) Market characteristics are those factors that determine the level of sophistication and development of a particular foreign market, including its marketing infrastructure, advertising media availability, distribution structure, and market size. (Theodosiou and Leonidou 2003.). While the latter determines demand potentials in a foreign market, the other market characteristics influence the firm’s ability to strengthen and serve demand (Theodosiou and Leonidou 2003.). Of those, market size had consistently exhibited the greatest influence on marketing strategy -the larger the market the more the adaptation required- particularly affecting its promotional aspects (Theodosiou and Leonidou 2003.). Moreover, even if what is expected is a bigger level of standardization due to similarities in the availability, performance, and cost of the marketing between the home and host markets (Jain 1989), in the study by Theodosiou and Leonidou (2003) it was only partially validated. 30 (3) customer issues, according to Theodosiou and Leonidou (2003) focus on the characteristics, tastes, and the behaviour of customers in foreign markets. In fact, A firm can be successful or fail mainly because of its ability to satisfy the needs of its target customers better than the competition. Theodosiou and Leonidou (2003) find out that customer issues have a quite significant effect on marketing strategy and the choice to standardize or to adapt. It has been revealed that if the customer profiles across countries are similar, the companies tend to standardize the marketing strategy, and vice versa. (4) competition factors as defined by Theodosiou and Leonidou (2003) include the structure, nature and intensity of competition in foreign target markets. In most of the cases, the structure/nature of competition does not have a huge impact on the decision to standardize or adapt the different marketing mix elements. This is in contrast to other researchers view (eg. Buzzell 1968; Jain 1989; Rosen 1990). (5) product and industry factors are defined by Theodosiou and Leonidou (2003) as the type of the product, the technology orientation of the industry and the stage of product lifecycle. Technology orientation has been frequently found to have a serious impact on standardizing marketing strategy, due to the need to allocate the vast research and development costs over long production runs (Cavusgil and Zou 1994; Cavusgil et al. 1993). In addition to this, Theodosiou and Leonidou (2003) also found out that product life-cycle significantly affects almost all dimensions of the marketing strategy and they confirmed that in markets where the product is in the same stage of its life cycle the standardized marketing strategy works better. (Theodosiou and Leonidou 2003; Chhabra 1996; Johnson and Arunthanes 1995; Cavusgilet al. 1993.) (6) organizational factors are those related to the internal company characteristics and consist of four items according to Theodosiou and Leonidou (2003): (a) the nationality of the parent company, where results show that although certain product and advertising aspects are influenced by the origin of the parent office, other marketing strategy parameters were not influenced; (b) the nature of company ownership, where results were non-significant, (c) the firm’s international experience (d) the foreign market share 31 position, where no effect was revealed whatsoever on marketing strategy adaptation (Shoham 1999; Akaah 1991.). (7) managerial factors are the attitude toward international operations and include the degree of centralization of decision-making and corporate orientation (Theodosiou and Leonidou 2003). The basic belief is that a standardized marketing strategy is more likely to be followed when decision-making is centrally controlled at headquarters, but the results obtained are against each other (eg. Quester and Conduit 1996; Ozsomer et al. 1991). Moreover, Kanso (1992), found that cultural-oriented managers adapt advertising to a greater extent than do non-culturally-sensitive executives. The study conducted by Theodosiou and Leonidou (2003) pointed out which is the actual degree of standardisation and adaptation of the marketing mix based on the analysis of other empirical studies. The main results of the study are summarized in table 2. 32 Table 2. Results on the degree of standardisation and adaptation of the international marketing strategy. (Adapted from Theodosiou and Leonidou 2003). 4Ps Standardization or Adaptation Reasons Product The most standardise: quality, design, branding and features, were the least adapted. Packaging, after- sales service and warranties were slightly more adapted. Product lines were the most adapted element. (a) the greater incentive to reap the benefits from economies of scale in research and development and production; (b) the desire for rapid diffusion of new products in the market, especially in light of the fact that product life-cycles are increasingly becoming shorter; and (c) the need to achieve better coordination through the application of more uniform internal production controls and quality standards Price Mainly adapted, even if moderate due to the lack of flexibility in international firms due (a) pricing methods/strategies, depending on variations in market size, consumer sensitivity to prices, and competitors’ actions or reactions across markets; (b) wholesale prices resulting from differences in the role of wholesalers in the distribution trade of a foreign country. (c) retail prices, being the result of variations in the size, type, and services provided by retail outlets abroad. (d) end user prices, usually affected by demand variations caused by differences in customer numbers, purchasing power, and economic conditions; and (e) sales/ terms, being the result of variations in the company’s entry mode, degree of involvement, and response to competitors in overseas markets. 33 Place The most adapted: facilities and purchasing and consumption habits. Notably, designing a physical distribution system for international markets requires continuous adjustments because market, competitive and transportation conditions are constantly changing. (a) the special documentation and ordering procedures required in international product shipments; (b) the availability of transportation facilities to carry goods to and within foreign markets; (c) the number, type, and technology of the warehouses abroad; and (d) the level of inventories needed to be maintained in overseas markets, usually determined by territorial size, infrastructural facilities, and purchasing/consumption habits Promotion Just above average levels of adaptation (a) advertising: language differences, media availability, government regulations, economic differences, and competitors’ actions. (b) sales promotions were subject to moderate adaptations, often attributable to variations in legal restrictions, cultural characteristics, competitive practices, and retailers’ capabilities in foreign markets. (c) publicity/public relations, caused mainly by variations in the degree of company involvement, the nature and importance of publics, and availability of public relations agencies abroad. (d) personal selling has also undergone mild adaptations in international markets, particularly as regards the recruitment, training, motivation, and control of the salesforce and the way the selling task is performed. 34 Having this in mind, it is now possible to proceed to the next section where the new antecedent factor will be introduced and explain. For the purpose of this work the previous illustrated results will be used as a basis, as the actual landscape in order to see how the new antecedent factor is influencing the marketing strategy, meaning that the research will be developed only with regards to digitalization. This choice has been based on the need for a greater reliance on past studies to provide higher heterogeneity in the research finding (Theodosiou and Leonidou 2003). Of course, this could be seen as a limitation too, but due time constraints and the nature of this thesis, this is the best option to provide an appropriate contribution, which could lead to further and deeper studies. 35 3. HOW DIGITALISATION, BIG DATA AND CUSTOMISATION ARE CHANGING THE INTERNATIONAL MARKETING STRATEGIES This chapter will be the crucial one for the building of the theoretical framework that will be used in this study. This will be done by introducing the different concept of digitalization in order to identify a more narrowed definition in order to provide to the reader the appropriate knowledge. Then, the theoretical framework will be built based also on the considerations made in the previous chapter. 3.1 The definition of digitalisation Nowadays, it is common to talk, read, discuss the so-called digital transformation and many people talk about digitization and digitalization using these terms in an interchangeable way. Before going through the topic, it is essential to clearly define these concepts to point out the actual different meanings they have, in order to use in this work, the proper definition and in this way avoiding misunderstanding. With the term digitization, many researchers from different discipline refer to the technical process of converting streams of analogue information into digital bits of 1s and 0s with discrete and discontinuous values. Digitization is a process that has both symbolic and material dimensions. The symbolic dimension is the one explained in the definition just mention, while the material dimension refers to the fact that the information produced can be expressed in many different ways, on many different types of materials, and in many different systems (Brennen and Kreiss 2016.). The fact that digitization mediates between the material and the immaterial (Manoff 2006; Hayles 2003) makes digitization a unique process. Looking at digitization from a business perspective, it is possible to define it as the “automation of existing manual and paper-based processes, enabled by the digitization of information; from an analog to a digital format.” (I-Scoop 2017). Digitalisation, instead, refers to “the use of digital technologies to develop new business models. moreover, it provides opportunities and new revenue. it can also be seen as a 36 process which leads a company into a digital business.” (Gartner 2017.) Digitalization is about systems of engagement and systems of insight, leveraging digitized data and processes (I-Scoop 2017). For what concern the term digital transformation, today it refers to a broader concept than the notion of digitalization, it is seen as a way to move to digital business. It includes all aspects of business, regardless of whether it concerns a digital business or not, in times when the acceleration of technology adoption and of change leads to entirely new market, customer and business realities, opportunities and challenges, ultimately leading to a new economy (I-Scoop 2017.). To conclude, all these definitions can be seen as a process that will lead to the creation of a digital business which is a new business design made by blurring the digital and physical worlds (Lopez 2014). Figure 3. Stage view of the digital transformation. Digitisation Digitalization Digital Transformation DIGITAL BUSINESS High level of new technologies adoption Low level of new technologies adoption Introduction of process transformation from analog to digital Completed transformation process from analog to digital 37 Having all these definitions in mind, this work will take into consideration only the notion of digitalization. Digitalization is one of the most significant on-going transformations of contemporary society and encompasses many elements of business and everyday life (Hagberg et al. 2016) and as mention before it refers to the use of digital technologies to develop new business models and opportunities. Although the definition used in this study involves all types of digital technologies, the thesis will focus on the usage of big data and the phenomenon of customization. The first one, according to De Mers (2017), represents the biggest trend in online marketing expected for 2018 due to the fact that now they are available also for smaller businesses and will be the key to stay competitive on the market. Customization, on the other hand, is the new retail frontier - according to Finkelstein (2018)- that will change the way customer shop in 2018. 3.2 Big data and their importance in marketing activities The volume of data continues to double every three years as information pours in from digital platforms, wireless sensors, virtual reality applications, and billions of mobile phones (Henke et al. 2016). The term big data refers to datasets that are so large, unstructured and complex (from social media, sensor, internet-based gadgets data and so on) that require advanced and unique technologies to store, manage, analyse and visualize (Xu et al. 2016; Chen 2012), but this is just one of the various definitions of the notion of big data. De Mauro et al. (2016) collected in their work the most used definition of big data that can be seen in table 3. 38 Table 3. Definitions of big data. (Adapted from De Mauro et al. 2016). Source Definition Shneiderman (2008) A dataset that is too big for a screen. Manyika et al. (2011) Data sets whose size is beyond the ability of typical database software tools to capture, store, manage and analyse.
 Beyer and Laney (2012) High volume, velocity and variety information assets that demand cost- effective, innovative forms of information processing for enhanced insight and
decision-making. Boyd and Crawford (2012) A cultural, technological and scholarly phenomenon that rests on the interplay of
technology, analysis and mythology. Chen et al. (2012) The data sets and analytical techniques in applications that are so large and complex that they require advanced and unique data storage, management, 
analysis and visualisation technologies. Fisher et al. (2012) Data that cannot be handled and processed in a straightforward manner. Intel IT Center (2012) Complex, unstructured or large amounts of data. Schroeck et al. (2012) Big Data is a combination of volume, variety, velocity and veracity that creates an opportunity for organisations to gain competitive advantage in today’s
digitised marketplace. Dijcks (2013) The four characteristics defining Big Data are volume, velocity, variety and value. Dumbill (2013)
 Data that exceed the processing capacity of conventional database systems. Mayer-Schönberger and Cukier (2013) Phenomenon that brings three key shifts in the way we analyse information that transform how we understand and organise the society: 1. More data, 2. Messier (incomplete) data and 3. Correlation overtakes causality. Microsoft Research (2013) The process of applying serious computing power, the latest in machine learning and artificial intelligence, to seriously massive and often highly complex sets of
information. Ward and Barker (2013) The storage and analysis of large and/or complex data sets using a series of techniques including, but not limited to, NoSQL, MapReduce and machine 
learning. NBD-PWG NIST (2014) Extensive data sets, primarily in the characteristics of volume, velocity and/or variety, that require a scalable architecture for efficient storage, manipulation and
analysis. Suthaharan (2014)
 Can be defined using three data characteristics: cardinality, continuity and complexity. 39 For the purpose of this work the definition that will be used is the one by Schroeck et al. (2012) because it allows the reader to understand its meaning without including too many IT details which are not relevant for the thesis and include a business perspective. Big data are characterized by 4 main characteristics (Morabito 2015; McAfee and Brynjolfsson 2012; Pospiech and Felden 2012): Volume, Velocity, Variety and Accessibility. The Volume represents the quantity of data that is available and can be stored thanks to the Internet (Morabito 2015). Then we have Velocity which regards the dynamics of the volume of data and in the case of Big data is time-sensitive. For what concerns the Variety, is the dimension about the type of data, which for Big Data are both structured and unstructured. The Accessibility, on the other hand, regards the unmatched availability of channels that a company can increase its own data and information asset. In the last years, it has been added a fifth dimension which is the Veracity that is about the quality and trust of the data (Morabito 2015.). As mentioned in the previous section, big data is the biggest expected trend in marketing for 2018 (De Mers 2017) and in order to understand the reason why it is necessary to investigate firstly, what is the connection between big data and marketing and secondly, which are the benefits that comes from the use of big data in international marketing activities. “Big data are worthless in a vacuum. Its potential value is unlocked only when leveraged to drive decision making.” (Gandomi and Haider 2015). In order to leverage to drive decision making it is necessary to extract insights from big data. This process can be done in five phases (Labrinidis and Jagadish 2012) that can be seen in the figure number 4. 40 As it can be seen in the figure number 4 there are two main processes that are data management and analytics. The first one includes all those activities to acquire and store data to prepare it for analysis. And then the analytics includes all those techniques used to analyze and to gather insight from big data (Gandomi and Haider 2015). The existing big data analytics are a high number that can be divided into macro areas that are summarized in the table below. Big Data Processes Data Management Analytics Acquisition and Recording Modelling and Analysis Extraction, Cleaning, Annotation Integration, Aggregation, Representation Interpretation Figure 4. Five phases Big Data Insights. (Adapted from Gandomi and Haider 2015). 41 Table 4. Types of Analytics (Adapted from: Gandomi and Haider 2015). Text Analytics Those techniques that extract information from textual data. Social network feeds, emails, blogs, online forums, survey responses, corporate documents, news, and call center logs are examples of textual data held by organizations. Text analytics enable businesses to convert large volumes of human generated text into meaningful summaries, which support evidence-based decision-making. Audio Analytics They are used to analyze and extract information from unstructured audio data. It helps to improve customer experience, evaluate performance, increase sales turnover, monitor compliance, gain insights into customer behavior, and identify product or service issues. Video Analytics It involves a variety of techniques to monitor, analyze, and extract meaningful information from video streams. The primary application of video analytics in recent years has been in automated security and surveillance systems. Another potential application of video analytics in retail lies in the study of buying behavior of groups. Social Media Analytics They refer to the analysis of structured and unstructured data from social media channels. Predictive Analytics They are used to predict future outcomes based on historical and current data. They can be applied in almost all the discipline. In practice, predictive analytics can be applied to almost all disciplines and they seek to uncover patterns and capture relationships in data. In marketing, data analysis has always been used, but the amount of data was smaller, and it is quite incomparable to the amount of data you can gather today. For this reason, big data are a huge opportunity for marketers, not as big data as such, but for all the insights it is possible to discover. 42 Integrating the traditional marketing strategies with big data analytics means having a huge impact in key areas as customer engagement, customer retention and loyalty and marketing optimization. In the first area, big data allow gathering more information about the customer, which means knowing not only who he/she is, but also where he/she is, and what he/she wants. For what concerns the second area, big data can be used to discover what influences customer loyalty. Then, for marketing optimization, big data can determine the optimal marketing spend across multiple channels, optimize marketing programs through analysis (SAS 2018.). In addition to this, Xu et al. (2016), illustrate that a combination of traditional marketing analytics with big data analysis generates a knowledge fusion which leads to new product successes. BIG DATA CUSTOMER ENGAGEMENT CUSTOMER RETENTION AND LOYALTY MARKETING OPTIMIZATION Figure 5. Benefits of the use of Big Data in Marketing. 43 After these considerations, it is clear that big data represents a huge opportunity for marketers and it has the potential to impact nearly every area of marketing. Of course, a huge opportunity means also big challenges, but the benefits overcome the issues, so it is a good trend into which invest. Those companies that will fail in building the resources and capabilities to effectively use Big Data will be challenged to survive the Big Data revolution (Erevelles et al. 2016). 3.3 The use of new technologies and the spread of customization Mass production, which is the production of low-cost products through large-scale manufacturing where the varieties offered by such production is very limited (Hu 2013), has been the established manufacturing paradigm for nearly a century because it was the appropriate answer to the need of the continuously increasing population around the globe (Mourtzis 2016), but later on in 1980 this tendency slowed down and according to Chryssolouris (2006) we overcame that era and we moved to one of the market niches. This era is characterized by short development cycle yielding low cost and high-quality Knowledge Fusion New Product Success Traditional Marketing Analytics Traditional Marketing Analytics Figure 6. Knowledge fusion process (Adapted from Xu et al. 2016). 44 goods to meet the customers’ requests which are truly unique products tailored to their individual taste (Mourtzis 2016; Chryssolouris 2006.). Therefore, it has been introduced the concept of mass customisation which refers to the production of individualized goods that do not have the premium price that characterized the crafted customized products (Victor and Boynton 1998; Hart 1995; Westbrook and Williamson 1993). In addition to this, mass customization is the practice of treating customers as integrated entities in the product design and development cycle instead of only buyers. In this customer-driven environment that is shifting towards online purchases and market globalisation, companies have a huge opportunity to increase their profits and the same time a great responsibility for providing to the customers what they want (Mourtzis 2016.). Table number 5 highlights the main differences between mass production and mass customization and it clear that the main difference is the role of the customer which is no more passive but plays an active role from the design phase until the end. The opportunities for mass customization are acknowledged as fundamentally positive by theoretical and empirical studies for many years (Piller 2004). We are now facing an era where the demand for personalization comes from both the demand and offer side. From the demand side, we have customers which require the possibility to personalize the products they want to buy due to the fact that nowadays this kind of service is cheaper. From the offer side, personalization is made possible thanks to new technologies which are enabling the companies to reach the single customer and to satisfy their needs in a more precise way and at the same time enabling them to produce customized products at a really lower cost. According to Abnett (2015) from Business of Fashion, avoiding excess inventory represents a major advantage of mass customization for those companies which have to deal with a hard-predictable demand because with mass customisation the companies start the production after the consumers’ purchase of the personalized product. 45 Table 5. Differences between Mass Production and Mass Customisation (Adapted from Forrester Research 2011). Parameters Mass Production Mass customisation Goal Deliver standardized good and/or services with low price Deliver varied goods and/or services to fulfill specific customer groups with different needs and requirements. The companies are trying to offer these products/services at a low unit cost Product feature ideation Company Individual customers Product design activity Internal Point of sale, e-commerce Go-to-market Push Individual choice option Differentiation Time-limited Individual customer ideas Customer needs Determined via research Determined by the individual Customer involvement Passive Active Applying the latest Internet technology has not only made it both more economical and simpler for customers to purchase individualized products, but also allows retailers to add variations to designs and flexibility to production without increasing cost (Yoo and Park 2016; The Wall Street Journal 2015; Randall et al. 2005) New technologies, not only enable the company to lower the production costs of customized products but they also allow the customer to be even more actively in the designing phase which is no more just choosing a personalized colour but includes personalization of the product itself. This transformation has generated an effect called “I designed it myself” which, according to Franke et al. (2010), is the fact that a customer is willing to accept a lower-quality outcome, at the same price of product designed by an expert just because the customer feels like the originator of that product. With the spread 46 of e-commerce, this effect has exponentially grown and nowadays on the internet it is possible to buy many different products that the customer can personalize just before the online order. (Franke et al. 2010.). “Consumers expect real-time, customized everything at any touch point.” PricewaterhouseCoopers and TNS Retail Forward (2015). The incredible growth of customization has brought the attention of many researchers in the past years and Marketing Science Institute has included customization-related topics in its 2010–2012 research priorities. Indeed, the numbers of academic papers (for example Franke et al. 2009; Levav et al. 2007) have exponentially increased in the recent years (Miceli et al. 2013) but, this phenomenon is changing and growing so fast that new studies are still needed. For this reason, this work will include this phenomenon among the investigated one to obtain interesting and stimulating results that could be useful for further studies. 3.4 Summary of the theoretical framework As the main aim of this work is to investigate what is the influence of digitalization – in the terms that have been defined in the previous section – over the international marketing activates, a theoretical framework on which building the next part of the work is necessary. In this case, it has been used -as a starting point- the model that has been explained in the first chapter of the literature review. Then, it has been excluded the part regarding the effects on the company’s performance because it does not represent the goal of this thesis. Then among the antecedent factors, it has been added digitalization, that in this works is represented by the biggest trend expected for 2018 which are Big Data (De Mers 2017) and the use of new technologies for customization (Finkelstein 2018). This choice represents both a limitation and an opportunity because of course digitalization is a bigger and wider concept, but due to time constraints and the nature of this work we decided to opt for a more precise work, with a narrow focus on only those two phenomena, leaving 47 room to further studies that could analyze other aspects of digitalization to start building a wider literature regarding this novel, important and hot topic. This work will investigate only the effect of digitalisation over the international marketing strategy, without re-analysing the other antecedent factors. It is possible to have a concise look at the adapted model on which the theoretical framework is built in the figure number 7. ANTECEDENT FACTORS Environmental factors Market characteristics INTERNATIONAL MARKETING STRATEGY Customer issues Degree of standardisation/adaptation of: • Product • Price • Place • Promotion Competition Digitalisation Managerial factors Organizational factors Product and industry Figure 7. Theoretical Framework (adapted from Theodosiou and Leonidou 2003: 143). 48 In the previous sections, we analysed what is the connection of those phenomena with marketing, we pointed out which are the benefits of using them and the challenges that the companies have to face. This first part has been crucial to understanding those phenomena are impacting in a sensitive way the international marketing activity. Having this in mind, in the next sections – the empirical ones- we will investigate more in detail what kind of impact they are having over all the four components of the international marketing mix, in order to find out what is happening in terms of the degree of standardization and adaptation of the international marketing strategies. What it is expected is that the classical dualism of standardization and adaptation has been exceeded because it was based on a market perspective, while today due to the customer centricity there is a persona perspective, which is influencing all the international marketing decisions. More in detail, big data is a tool that can generate a lot of hidden insights which allows companies to understand better what the customer thinks of their brand, how they react, and it also allows to lower the cultural barriers to better known possible new customers. Then we have customization which is a way to engage more customers, letting them undergo a better a more targeted experience. 49 4. METHODOLOGY This chapter will clarify which methodology has been applied in this work. In this section, the author will describe the research approach, the data collection, the sample and the data analysis method used. Last but not least, considerations regarding the validity and reliability of the study will be made. 4.1 Methodological approaches The research purpose of this thesis classifies it as an exploratory study which means discover what is happening; to seek new insights; to ask questions and to assess phenomena in a new light’ (Robson 2002: 59). In fact, the purpose of the work is to clarify the relationship among digitalisation and the degree of adaption and standardisation of the international marketing activities. Looking at research philosophies it can be seen as a term related to the development of knowledge and the nature of that knowledge, the research philosophy is significant due to the fact that it encloses the assumptions regarding “the way in which the researcher view the world” (Saunders et al. 2009.). This thesis can be catalogued under the realism philosophy since this phenomenon occurs “independently of human thoughts and beliefs but is interpreted through social conditioning” (Saunders et al. 2016). For what concerns the research strategy, the thesis will include –as the empirical part- a case study. More in detail, it will be used a multi-case approach to verify if the findings occur in all the companies interviewed (Saunders et al. 2016). 50 Figure 8. Research Onion (Adapted from Saunders et al. 2009). 4.2 Sample The sample has been chosen based on convenience combined with self-selection (Saunders et al. 2016) among those footwear companies which have at least 8 years of international activities or those that are classified as born-global which are those business organization that from the beginning get higher international business performance from the application of knowledge-based resources to the sale of outputs in multiple countries (Knight and Cavusgil 2004, Knight and Cavusgil 1996; Oviatt and McDougall 1994; Rennie 1993). 51 This work analyses the footwear industry, but the focus is only on those companies which are producing shoes for private end customers. This means that work and safety shoe producers will not be considered. At the beginning of the selection process, the author contacted eleven different companies: Awl & Sundry, AliveShoes, Shoes of Prey, Nike, Adidas, Sperry, New Balance, DIS, Undandy, Timberland and AnotherShoe. All these companies were respecting the selection criteria, but after that only six of them answered due to different reasons as time constraints and company privacy policy, in the end only three gave their availability for the interview. The companies have been reached firstly through their customer service with unsuccessful results, so the author contacted directly via LinkedIn in total thirty-five employees of the selected companies, all of these employees cover managerial positions which are related to digital strategy and/or marketing strategy. The final sample is composed of 3 companies in the footwear industry from different countries and of different sizes. They all produce customized shoes and some of them are using big data in their marketing activities. The choice in choosing the sample companies has been focused on finding those people willing to speak freely to obtain high-quality results (Malhotra and Birks 2007: 63). In some case, the person contacted through LinkedIn has not been the one interviewed because a more prepared person has been suggested. However, this helped to increase the quality of the data collected. The final sample is sum up in the table number 6. 52 Table 6. Sample. Company Headquarter Manager Job Position Main Focus Nr. of Employees Awl & Sundry New York Mario Lanzarotti Chief Operating Officer customized men’s shoes 5-10 Nike Beaverton, OR Markus Hangelin Digital Brand Specialist Sportwear, Sport shoes and sneakers 74.400 Undandy Lisbon Sophia Hunt Communicati on Manager customized men’s shoes 10-20 4.3 Data collection This work is investigating the problem through a qualitative data analysis, for this reason we can consider this research a mono-method one (Saunders et al. 2009: 151) Moreover, the thesis is a cross-sectional study due to time constraints and so it represents a “snapshot” time horizon (Saunders et al. 2016). The data collected are both primary and secondary. The first ones have been gathered through semi-structured interviews with employees of footwear industries in a management position -preferably in the marketing departments-. The choice of the semi- structured interview is due to its characteristic of being more flexible, to obtain in-depth answers and to be able to adapt the interview based on the context (Saunders et al. 2016). Due to the limit size of the sample, no test interview has been conducted, but to maintain a good level of reliability and validity of the work (Saunders et al. 2016), it has been asked to the company the opportunity to ask further questions in case some changes were necessary. After the firsts interviews, it appeared that changes where not required and so all the interviews have been conducted following the original draft. 53 For the interviews, companies have been contacted firstly using the customer care e-mail, but it brought only negative responses. For this reason, we proceeded to search for relevant managers of the selected companies on LinkedIn and firstly, establish a connection with them, in order to be able to send to them messages. This solution has been the successful one. For what concerns the interviews themselves they have been all conducted through Skype which is the best option to conduct the interviews is via Skype because it allows to see facial expressions and according to Talja and McKenzie (2007: 102) “paralinguistic cues such as gesture, facial expression, and tone of voice can both convey emotion and provide the hearer with clues for interpreting the meaning of an utterance”. The secondary data that are included in the work are multiple-source type and they include all the information about the companies interviewed that are available on their websites. This choice has led to the development of more appropriate questions for the interview and these data help to build a suitable background description of the firms analyzed. 4.4 Semi-structured interviews For this work, the use of qualitative data was the best choice since it allows obtain rich and wider information to be explored as close as possible to the reality (Robson, 2002). The choice of using semi-structured interviews was undertaken for their characteristic of being more flexible compared to structured interviews. In addition to this, with kind of interview, it is possible to obtain in-depth answers and to adapt the interview based on the context (Saunders et al. 2016). Last but not least, the questions were open-ended in order to gain the richest and longest answers (Saunders et al., 2016). As mentioned in the section before, due to the fact that the selected companies were chosen on a worldwide base, the tool uses to do the interviews was Skype. All the companies included in the study have been contacted and interviewed in March and April 54 2018. The interviews were conducted in all in English, so no further translation has been required, but all of them have been checked with the managers after being transcripted. Even if the interviews did not follow a strict structure, were mainly based on the topics area concisely summarized in the table number 7. Table 7. Topic area of the semi-structured interviews. TOPIC AREA INFORMATION ASKED THERORETICAL CONNECTION General information Name of the company, employees, international presence, information about the interviewee None International Marketing Mix Standardization or adaptation of price, place, product and promotion in their international markets Vrontis and Papasolomou (2005); Jain (1989); Onkvisit and Shaw (1987); Quelch and Hoff (1986); Theodosiou and Leonidou (2003) Digitalisation Changes occurred due to digitalization, in which activity these changes had the biggest impact, new projects Hagberg et al (2016); Lopez (2017); I-Scoop (2017); Gartner (2017) Big Data and Customization To know whether they are using big data to generate insights or if they are offering customization services and what kind of results they obtained Gandomi and Haider (2015); Labrinidis and Jagadish (2012); De Mers (2017); SAS (2018); Xu et al. (2016); Franke et al. (2010); Piller (2004); Mourtzis (2016); Chryssolouris (2006) Future/challenges of digitalisation Biggest advantages and biggest challenges of digitalization, opinion about the importance of personalized experiences, expectation for the future and most important things to take into account when dealing with digitalisation None 55 4.5 Data analysis Qualitative data are characterized by their “richness and fullness based on your opportunity to explore a subject in as real a manner as is possible” (Robson 2002). On the other hand, qualitative data can be difficult to be quantified in a meaningful way. For this reason, it is necessary to illustrate results summarizing and categorizing them in order to provide condensed, grouped or restructured as a narrative to support meaningful analysis. (Saunders et al., 2009). The first source of data is the one that comes from the primary data of the interviews, then some secondary data were used to provide more information regarding the companies interviewed this due to the possibility to find this information online and to focalize the interview on those issues and topics for which no information was provided Based on meanings expressed through words Collection results in non-standardised data requiring classification into categories Analysis conducted through the use of conceptualisation Figure 9. Qualitative Data Characteristics (Adapted from Saunders et al. 2009). 56 on the web. The data gathered during the interviews have been analysed connecting the results to the theoretical framework developed in chapter two and three. The interviews have been recorded and after that, a transcript of them has been created. During the interviews, we took notes also regarding the body language and the reaction of the interviewees to have additional non-verbal information to analyse. The transcripts have been then read carefully to understand the true meaning of what the interviewee said and to report appropriate results. To increase the precision of the analysis, the previous passage will be repeated to be sure to report the answers in the right way. Some of the answers of the interviews are illustrated through quotation to point out the most relevant points and to allow the reader to understand them. In addition to this, reporting direct quotation increase the meaningfulness of the qualitative data analysis (Saunders et al. 2009.). 4.6 Quality of the study “Scientific methodology needs to be seen for what it truly is, a way of preventing me from deceiving myself in regard to my creatively formed subjective hunches which have developed out of the relationship between me and my material” (Raimond 1993:55). In order to evaluate the quality of the study reliability and validity are widely used. Reliability regards the consistency of the findings, while validity is about whether the findings are what they seem (Saunders et al. 2016). Reliability and Validity are widely adopted in quantitative research, but this thesis is a qualitative one and for this reason, we will test the quality of this work following Shenton (2004) approach. According to Shenton (2004) method, a qualitative research needs to be proved to check four different elements: confirmability, credibility, dependability and transferability. Confirmability states that the results obtained in the study are originating from the subject and not from the researcher. (Shenton, 2004). In the case of this study, the questions have been checked to not influence the interviewee in the way they were formulated. In 57 addition to this, the open nature of the questions that characterize the semi-structured interview does not influence the results of the interview. Credibility is the measure to prove if the study is actually investigating what it was supposed to investigate. This thesis bases the interview question according to the theoretical considerations made. Even though, it is necessary to take into account the size of the sample, which is really small and as a consequence lower the credibility of the study. Dependability refers to the possibility of replicating the study, which -in qualitative studies- depends on the environment, context and participants. For what concerns this thesis, it can be replicated in other sectors similar to the footwear industry, selecting companies which have similar characteristics to the ones used in this study. Transferability is the possibility to scale the results, which means the possibility to draw the results obtained from a small sample to a bigger environment. In the case of this work, the results are scalable when the context is similar, meaning that the industry should be the same and the managers interviewed should cover similar positions. Overall, the quality of this study is supported mainly by the way interviews have been structured and conducted. The participants were all willing to speak freely and seemed really interested in answering the questions in addition to the fact that they seemed to be honest in what they were saying. The questions have been formulating in a really open way, to be sure not to influence the interviewees. For what concern the sample size, it could have been larger, but the focus has been on the quality of the interview rather than the quantity and for this reason, the sample includes only a few companies. 58 Figure 10. Summary of the quality of the study. Confirmability • Formulation check • Open questions Credibility • Link between theory and interview questions • small sample size Dependability • to other sectors • similar characteristics of the sample companies Transferability • scalable in a similar context 59 5. EMPIRICAL ANALYSIS AND RESULTS This chapter illustrates and examines the empirical results of this study. The analysis presented in this section will follow the methodology explained in the previous chapter to be able to answer the research question introduced at the beginning of the study. This chapter will present and discuss the effect of digitalisation over the international marketing activities of the interviewed companies. Finally, the author will link the results obtained with the theoretical framework that has been previously developed. 5.1 The footwear industry landscape “A shoe is not only a design, but it is a part of your body language, the way you walk. The way you are going to move is quite dictated by your shoes.” (Christian Louboutin) This quote by Christian Louboutin, a famous French fashion designer, bring to light the huge importance that shoes have in our lives. It is hard to define when the concept of the shoe was born, but the first traces of shoes go back to the prehistory, where shoes were crafted for practical need. Later, the importance of the shoes increased also from a social point of view and still today we are looking for the perfect pair of shoes to walk, to do sport, to work and to go to a social event. In addition to this, the footwear industry is a really dynamic one which has already been part of a big revolution in the past due to the introduction of specific equipment and machinery. Nowadays technologies and innovation are providing new opportunities every day, the characteristic of this new revolution - also known as industry 4.0 - is mainly the speed at which these changes are occurring, and the footwear industry is able to keep the pace and take advantage of it. Having this in mind, it is necessary to put into context what have just been said having a look at the size of this market. According to the World Footwear Yearbook 2017, the footwear production is stuck at 23 billion pairs since 2015, after seeing an increase of 60 15% from 2010 until 2014. The production leader -as it can be seen in figure 11- is Asia with a share of 87% which has not changed from the past years. It is interesting to point out that among the Asian area, China lost 2% production points compared to other countries like Indonesia, Vietnam and India. Figure 11. World Footwear Production (World Footwear Yearbook 2017). From a consumption point of view, figure 12 highlights how many pairs of shoes are bought worldwide, and it is clear that the USA, China and India are the top three countries. 61 Figure 12. Footwear Consumption (World Footwear Yearbook 2017). The revenue in the footwear market is about 357,930 million dollars in 2018 and this market is expected to grow annually by 4.2 % between 2018 and 2021 (Statista 2018) which represent an important growth for the sector and leave room for new business opportunities. Overall, the footwear industry is showing a positive trend and the combination of the market context with the innovation and technological revolution which is happening allows the footwear companies to take advantage of this opportunity to be more profitable and successful. 5.2 The selected companies This section is needed to allow the reader to have a broader understanding of the results that will be illustrated in the next paragraph. In addition to this, due to the small size of some of this companies, this part is useful to allow the reader to get to know the history 62 and the main activities of the selected companies. The information provided in this section have been gathered through the companies’ websites. Awl & Sundry Awl & Sundry is a New York based footwear company which produces customized men’s shoes and was founded with the aim to democratize the luxury of bespoke footwear. The idea came from Nikunj, the founder, who was faced with a dilemma that many men share: the fact that he couldn't find a normally priced pair of dress shoes that really fit. He found out that he had to choose between comfort, style and affordability. Mr Nikunj decided he wanted to change this situation and started looking for an artisanal cobbler who was able to produce a well-made, customized pair of shoes at a reasonable price. During his search, he found out that many big companies obtain really huge markup because the production cost for them is only about 15-20$. In addition to this, the quality of the materials used is usually not the greatest one and the construction process is harmful to our health and also to our environment. In the end, Mr Nikunj has been able to find artisanal cobblers who are still employing the age-old process of handcrafting shoes and so Mr Nikunj decided to share this find with all those men forced to walk through life in uncomfortable, mass-produced shoes through Awl & Sundry shoes. Awl & Sundry is an online e-shop where the customer can design his shoes, starting from defining the perfect size as it can be seen in figure 13 and then choosing the basic style, the design features, the materials, the colour, the soles and other personal customization. 63 Figure 13. Awl & Sundry E-shop Outlook. Nike Nike was founded in 1964, but at that time it was known as Blue Ribbon Sports and initially operated as a distributor for the Japanese shoe maker Onitsuka Tiger (now known as Asics), it became Nike Inc. in 1971. It has become the world's largest brand of athletic footwear and worldwide, the company's products are sold in more than 160 countries Nike is selling products in 8 different categories: Running, Basketball, Soccer, Men’s Training, Women’s Training, Action Sports, Sportswear and Golf. For what concerns the athletic footwear products they are designed primarily for athletic use, even though a large percentage of the products are worn for casual purposes. Nike has always invested in research, design and innovation efforts as key factors their success. Another key element for them is technical innovation in the design and manufacturing processes. 64 In 2012, Nike has launched a service called Nike iD, which allows customers to personalize the shoes they are buying on Nike e-shop. At the beginning customers were allowed to customize only one model of shoes, choosing only among available styles. Nowadays, the customizable offer is much wider, and the customer is fr