The Impacts of Marketing Strategies on Performance of International Expansion in Cosmetics industry, Case study the MAC in the UK and China

Acknowledgment

I world like to thank my tutor, Emma Neale who thoughtfully offered specific guidance and constructive suggestions. She reviewed my draft carefully and pointed out its flaws and problems. Each meeting costed her a lot of time, but every meeting was very helpful to me. I really appreciate her help and kindness. Meanwhile, I am grateful to those respondents who spent their time in providing primary data.

Abstract

This research aims at the comparison of MAC’s localisation-based penetration strategy in the UK and China to identify the effectiveness of the strategy in the two countries respectively by measuring the impact of the strategy on consumer buying behaviour. To study the company’s localisation-based penetration strategy, this research considers localisation strategy in marketing mix, culture distance, Upsala learning theory and the motives of internationalisation. The purpose of this research is to critically evaluate the effectiveness of the company penetration strategy and the make recommendations.

The dissertation used realism as its philosophical base and implemented a mixed research by deductive approach. It adopted case study as its research strategy to carry both quantitative and qualitative analysis. Cross-sectional time horizon was applied, and primary data was collected by questionnaires.

This research finds that MAC adopts low level of localised strategy while uses high level of localised strategy in China throughout its marketing mix. It finds that MAC’s marketing mix is more effective in the UK than China, which can be explained by the fact that MAC faces larger culture differences in China than the UK. As a result, MAC has a higher customer satisfaction rate, repurchase and customer recommendation in the UK than in China.

MAC’s localised product, promotion, price and distribution moderately affect consumer behaviour, respectively. Localised product, price and distribution significantly affect consumer behaviour. MAC still is constricted by culture differences in China and it needs to grow its culture knowledge. Further developing partnership and business networks is suggested to the company. The company needs to increase its commitment and involvement in product localisation and design more localised product packages. Especially in China, the company should identify Chinese customer’s needs and wants and develop its products accordingly. The company’s promotion activities focus on product and less on brand culture and the development of brand community. However, increasing efforts to improve brand culture and brand community based on understanding on Chinese culture is advised.

1.0 Introduction

1.1 Research Context

1.1.1 Internationalisation

1.1.2 M.A.C. and Cosmetic Market

1.2 Research Significance

1.3 Research Aim

2.0 Literature Review

2.1 Internationalisation

2.1 Cross-Cultural Challenges

2.1.1 Culture

2.1.2 Hofstede Cultural Dimensions

2.1.3 Uppsala Model

2.3 Penetration Strategy

2.3.1 Standardisation

2.3.2 Localisation/Adaptation

2.4 Standardisation and Adaptation Marketing Mix

2.4.1 Product

2.4.2 Pricing

2.4.3 Promotion

2.4.4 Distribution

2.5 Consumer Behaviour

3.0 Research Methodology

3.1 Research philosophy

3.2 Research Approach

3.3 Research Strategy

3.4 Mixed Research

3.5 Questionnaires

3.6 Sampling Technique & The sample

3.6 Ethics

4.0 Data Analysis

4.1 Qualitative Analysis

4.1.1 Cross-cultural Issues

4.1.2 Developing Business Network

4.1.3 Localisation in MAC’s Marketing Mix

4.2 Quantitative Analysis

4.2.1 Demographics

4.2.2 Consumption of MAC

4.2.1 Product

4.2.2 Promotion

4.2.3 Price

4.2.4 Place

4.3 Correlation Analysis

4.4 Regression Analysis

5.0 Discussion

6.0 Conclusions

6.1 Summary of Findings

6.2 Recommendations for Further Research

Reference

Appendix I – Online Questionnaires

Appendix II – Promotion of MAC

Appendix III – Price of MAC

1.0 Introduction

1.1 Research Context

1.1.1 Internationalisation

With the rise of emerging markets and IT, increasingly more MNCs have been increasing their commitment and involvements in international market. Exploring emerging markets and using unique resources and capabilities to obtain competitive advantage in these markets have become a mainstream strategy of MNCs in developed countries.

1.1.2 M.A.C. and Cosmetic Market

MAC is a cosmetic brand founded in Toronto in 1984 but its headquarter has been in New York City after it was acquired by Estee Lauder Companies in 1996. MAC refers to ‘Make-up Art Cosmetics’. The mission of the company is to offer innovative products with high quality to fulfil the demands of customers in all races, ages and gender, act as a global brand and covey its philosophy and value throughout the world, by focusing on fashion trends and constantly offering creativity and ensuring trustworthiness (Quaatey, 2018). The company is highly concerned about diversity and individuality and devotes to conveying the value of diversity, individuality and inclusion throughout the world (Mac cosmetics, 2020). Currently, it aims to embrace and exploit the opportunities of new retailing and focuses on omnichannel shop (Lim, 2019).

The concept of new retailing focuses on improved customer experience empowered by Industry 4.0 technologies including Artificial Intelligence (AI), big data, etc. By these technologies, retailers are allowed to collect each customer’s data, build customer profiles covering each customer’s preference, consumption capability, habits, etc., provide customer personalised experience, identify customers’ demands and use this information in product innovation accordingly. In the UK, new retail concept focuses on digitalisation, sustainability and improvement in transparency (Deloitte, 2019). British consumers pay more attention to business ethics and corporate social responsibilities (Deloitte, 2019)

The concept of new retailing in China however focuses more on customer relationship. It integrates digital and offline experience by integrating the business of physical and online networks. In alignment with the concept of new retailing around the world, Chinese new retailing also focuses on personalisation, data-driven business and customer centralisation (Daxue Consulting, 2019). However, digitalisation in Chinese market is much more intensive. Chinese consumers have been used to mobile payment and adopt QR Codes. Meanwhile, the model of immediate shopping is rising in Chinese fashion industry. Chinese consumers can purchase the latest fashion product via the internet and enjoy a prompt delivery (Marketing to China, 2019). To improve customer experience, many retailers have implemented the retail-entertainment strategy that allows customers to spend their leisure time in physical stores (Daxue Consulting, 2019).

1.1.2.1 MAC in the UK and China

The consumption of cosmetics in the UK was about £ 9.35 billion in 2019 slightly decreased from £ 9.56 billion in 2018 (Sabanogulu, 2020). Despite of the fact that the market size of Great Britain cosmetics has been huge, the market has been saturated where has intensive competition and sophisticated customers. There is a trend that British consumers are growing their concerns to business ethics and sustainability including cosmetics industry. According to Culliney (2019), two top concerns of most UK consumers are ethics and sustainability. British consumption of sustainable products climbed to £29.7 billion in 2018 whereas the figure was £3.1 billion in 1999 (Bounds, 2019).

In China, the revenue of cosmetic retailing reached CNY 21.49 billion (£2.42 billion) in 2017 increased from CNY 19.5 billion in 2016 and it was projected to rise by 9.6% CAGR between 2020 and 2023 (Statista, 2020). The potential in this market has increased the international cosmetic brands’ involvement and commitment, including MAC. However, sustainability and ethics concerns in China are relatively weaker than the UK.

1.2 Research Significance

This research has managerial contribution that evaluates MAC’s penetration strategy in the UK and China to make recommendations. It is significant because it helps the company to address cross-cultural issues. MAC has to address cross-cultural issues to have great performance in a host country. These issues are related with culture differences and have strong impacts on their performance. The use of Uppsala model allows them to gradually improve their cultural capabilities and develop their networks and partners who are helpful to transfer culture knowledge in a host country (Darley et al, 2013). Meanwhile, culture differences result in divergences in customer demands, needs, attitude, communication style, and opinion (Ekerete, 2001 and Jiang and Wei, 2012). Hence, an MNC needs to develop localised products, prices, promotion and distribution to meet local customers’ needs and fit in a foreign market. This is associated with localisation strategy which however rises the MNC’s operating costs and reduces the consistency of its global brand (Ciszewska-Mlinaric and Trapczyn´ ski, 2019). Generally, it is challenging for any MNC in any industry to successfully penetrate into any foreign market, including cosmetic industry.

MAC is a strong global cosmetics brand which has been operating in the UK and China. As a subsidy of Estee Lauder Companies, the company is viewed as an US company. In accordance with Uppsala theory, it faces fewer and smaller culture challenges when it expands into those countries which are culturally and geographically close to the US, such as the UK. On the other hand, it tends to face more and larger culture challenges in China because the culture differences between China and USA are large and prominent. This dissertation studies how MAC address culture issues to have a desirable performance in the UK and China. It makes the comparison of penetrating into a culturally similar market (the UK) and a culturally different market (China).

1.3 Research Aim

This research aims at the comparison of MAC’s localisation-based penetration strategy in the UK and China to identify the effectiveness of the strategy in the two countries respectively by measuring the impact of the strategy on consumer buying behaviour. To study the company’s localisation-based penetration strategy, this research considers localisation strategy in marketing mix, culture distance, Upsala learning theory and the motives of internationalisation. The purpose of this research is to critically evaluate the effectiveness of the company penetration strategy and the make recommendations.

This research has following objectives:

· To develop the literature review that discusses the theories including internationalisation, market seekers, cross-cultural challenges, Hofstede national culture dimensions, standardisation / localisation, and marketing mix

· To analyse MAC’s business conducts in the UK and China by secondary and primary data

· To discuss findings of MAC’s business conducts with the literature review to generate conclusions and recommendations

Research Question:

What is the penetration strategy of MAC in the UK and China, respectively?

How is effective MAC’s localised strategy in the two countries, respectively?

2.0 Literature Review

This chapter critically discusses the literature related with international penetration. It starts with internationalisation and the motives of internationalisation. Then, it moves to cross-cultural issues that negatively affect international penetration. To discuss cross-cultural issues, this chapter considers culture, Hofstede’s national culture dimensions, and Uppsala model. Furthermore, this chapter critically discusses localisation / adaptation and standardisation. Additionally, it reviews standardised/localised marketing mix and consumer behaviour.

2.1 Internationalisation

Dunning (1993) summarises four groups of internationalisation motives of MNCs including marketing seekers, resource seekers, efficiency seekers and strategic resource seekers. Dunning (2000) recognises network seekers who view networks as important factors affecting their internationalisation process. More internationalisation activities are encouraged by business opportunities in overseas rather than threats (Dunning, 2000). Meanwhile, Francis and Collins-Dodd (2000) agree that the opportunities of rising sales encourage companies to engage in internationalisation. They find the empirical evidences supporting that strategic alliances are significant and critical for MNCs to improve their performance in their foreign market (Francis and Collins-Dodd, 2000). This finding is consistent with Uppsala theory and Dunning (2000)’s argument about the importance of network in internationalisation process.

Market seekers means those MNCs which identified business opportunities in a foreign market or the significance and benefits of expanding into a foreign market and directly communicating with their target customers in a foreign market. Dunning (1993) identified several reasons explaining a company becoming a market seeker. Firstly, the company desires to exploit business opportunities and potentials in a new market in order to growth its own size and revenue. With this purpose, the company tends to use localisation strategy to effectively response local demands

Secondly, the company could be stimulated by its rivalry’s international expansion such as Starbucks VS Costa. It is urgent to develop their presence in a foreign market to complete with its rivalry. The first enter could gain competitive advantages such as customer loyalty a head of its rivalry, thus growing its economic size and strengths against its rivalry.

Secondly, the company could be pressed by its home market which has been saturated, entered the stage of decline and facing intensive competitions, so it chooses to exploit foreign market. Hollenstein (2005) also agree with this motive. Therefore, the company seeks opportunities in foreign markets in which has less competition but abundant target customers. Internal and external environment analysis is one of the major considerations of a company’s internationalisation. A company trends to believe that it can gain competitive advantages in foreign market and thus launches internationalisation.

2.1 Cross-Cultural Challenges

2.1.1 Culture

Culture refers to a group of people’s collective thinking in a society. It shows beliefs, customs and attitudes of a different group of people (Baack et al., 2011). Culture causes the differences in attitudes, perceptions, tastes, preferences and values (Suh and Kwon, 2002).

Culture difference acts an important role in internationalisation process (Hutzschenreuter et al, 2011). They find that high level of cultural distance tends to have negative influences on international expansion due to adjustment costs. Culture difference is a high barrier to a company’s internationalisation, causing misunderstanding, conflicts and ineffective marketing communications. They further explain that management of subsidiaries in host country with strong culture differences faces the difficulties and complexities of rising environmental and internal governance.

Many scholars agree that high culture difference negatively affects international expansion (Darley et al, 2013; Ekerete, 2001; Jiang and Wei, 2012 and Peprah, Ocansey and Mintah, 2017). Culture has impacts on marketing activities, free trade policies, branding, localisation and standardisation decisions, international negotiation, business relationship, consumer behaviour as well as global marketing (Darley et al, 2013). These however are important tasks for a company’s internationalisation. Cultural differences cause barriers to international marketing communication by language, religions and ethnic values (Ekerete, 2001). Peprah et al. (2017) highlight that culture has significant impacts on global marketing strategies. They explain that culture differences can cause misunderstanding and misinterpretations in marketing communications. International marketers need to pay heavy attention to cross-cultural issues. MNC tends to adopt localisation strategy to develop international branding and advertising because of cultural differences (Jiang and Wei, 2012). The study also underlines the increasing phenomenon that international companies are more concerned about local cultures. Jawal (2014) argue that companies need to attach importance to cultural influence on their products when they conduct international expansion. A study focusing on the impact of culture negotiating on international market proves that cultural barriers including language, religions, social environment, legal and political environment, and technologies act important role in the performance of companies’ internationalisation (Antunes et al., 2013). Kaur and Chawla (2016) illustrate that companies have to acquire cultural knowledge of specific group to develop marketing strategies for global penetration of a product. This study reveals that culture has impacts on promotion activities in different foreign markets because the divergences in customs, norms, and cultural values. Peprah, Ocansey and Mintah (2017) further explain that culture causes obstacle to communication and divergences in consumer behaviour, buying pattern, lifestyle and belief, and different religions have influences on consumer behaviour. Terpstra and Sarathy (2000) argue with this explanation and find the evidence supporting that divergences in technological, social and legal environment can differences in customer behaviour. Given that far-reaching and deep influences of culture difference, Rao-Nicholson and Khan (2016) underlines the necessity of studying culture and developing cultural competencies and knowledge before globalisation process. Because of cultural differences, MNCs are unable to use standardisation strategy (Jiang and Wei, 2012).

Cultural distance means the differences in value, attitudes, perceptions and communication styles deeply rooted in culture (Hofstede, 1980). Converged with the impact of cultural difference, many scholars prove that cultural distance has impacts on corporate internationalisation (Beguelsdijk et al., 2017). Scholars explains that the broad concept of cultural distance includes geographic differences (Elden and Miller, 2004), economic policy and system (Ghemwat, 2001), and institutional differences and language differences (Dow and Karunaratna, 2006). These distances cause a highly different external environment and difficulties for international companies. Therefore, cultural distance has strong impacts on a company’s internationalisation (Beguelsdijk et al., 2017).

2.1.2 Hofstede Cultural Dimensions

Hofstede (2001) revisits its national cultural dimensions to measure national culture differences and there are six cultural dimensions including power distance, individualism, masculinity, uncertainty avoidance, long-term orientation and indulgence. Power distance measures the degree to which people of a society tolerate inequal distribution of power (Hofstede, 2001). Individualism addresses the extent to which people of a society are independent among others (Hofstede, 2001). Uncertainty avoidance measures how people of a society define success and refers to the emotion role of men and women (Hofstede, 1991). Long-term orientation examines how people of a society view future and the extent to which these people concern the present future (Hofstede, Hofstede and Minkov, 2010). Indulgence evaluates the degree to which members of a society to suppress their desires and impulses (Hofstede, Hofstede and Minkov, 2010).

2.1.3 Uppsala Model

Uppsala internationalisation model realises the significant impacts of culture and elaborates a learning process for international companies to increase their cultural and market knowledge. Johanson and Vahlne (2009) revisit the model to adapt to the change in market environment since 1977. The model effectively interprets a company’s internationalisation process. Based on the 1977’s model, they propose a new model as figure 1 shows. The new model still focuses on market knowledge and adds the intention of network position. The model highlights the importance of knowledge and networks. This means that foreign companies need to develop business networks in host countries and rely on the networks to grow its presence, activities and commitment in these countries. By developing relationship commitment, an MNC can gain more knowledge from partnership which in return contributes to knowledge transferring. Knowledge acts an important role in internationalisation of a company enabling the company to overcome cultural and regulatory barriers. The new model is consistent with knowledge transferring between a foreign company and its business network in host country. In other words, it argues that importance of business network and relationship with local partners in a MNC’s international expansion. The MNC’s commitment to a foreign market is related with the extent of its business network and relationship.

Figure 1: Uppsala Internationalisation Model

(Johanson and Vahlne, 2009)

Furthermore, Uppsala model highlights a learning curve of a company’s internationalisation. It suggests that a company increases knowledge for global expansion during its internationalisation process. In this theory, a company expands into a country which is geographically and culturally close to its home market and then gradually expand into those markets which are geographically and culturally far away its home market. The model uses the concept of culture distance to explain the learning curve. Companies grow their knowledge and competencies to relieve the impacts of cultural distance. Thus, the older Uppsala model focuses on market knowledge and suggests a company to decides its commitment and activities in host country based on its market knowledge as figure 2 shows.

Figure 2: Upsala Model

(Johanson and Vahlne, 1977)

2.3 Penetration Strategy

2.3.1 Standardisation

Culture acts an important role in determining standardisation and adaptation approach (Heerden and Barter, 2008). Standardisation and adaptation are two contrasting strategy for a company’s international expansion.

Standardisation highlights the trend of globalisation and homogeneity of culture and customer demands. Melewar and Vemmervik (2004) highlight that global market is moving toward convergence allowing MNCs to provide standardised products. Meanwhile, Herbig (1998) highlights that global culture is converging that results in a similar global demand. Standardisation allows MNCs to increase economies of scale and reduce costs and ensure global consistency and coherency.

On the other hand, adaptation highlights the significant impacts of culture making standardisation less effective. Due to cultural differences, consumer behaviours are varied. As the result, standardisation is unable to help companies to meet local demands (Melewar and Vemmervik, 2004). Adaptation requires companies to have in-depth marketing knowledge and high customised costs, whereas it allows them to effectively and fast response local needs and demands. In the market in which competitors have strong competitive advantage and cultural impacts on demand is relevant, MNCs tend to adopt adaptation strategy.

2.3.2 Localisation/Adaptation

In the process of internationalisation, MNCs have to address cross-culture differences and tend to adopt localisation to effectively response a foreign market (Gerhart, 2008). Localisation strategy is important for MNCs to penetrate into those countries that have a large culture difference with their home country (Ang and Massingham, 2007).

Gerhart (2008) finds that the divergence in global consumer behaviour is large and prominent while it shows a slow converging trend. The demand for technology is converged throughout the world, whereas the utilisation of technology shows a high level of convergence (Gerhart, 2008). As a result, product standardisation is unable to satisfy local customers’ demands.

Meanwhile, local competitors are growing their capabilities against MNCs, which requires MNCs to develop their local responsiveness. Local companies apparently have deeper and more understanding on local customers and generally have a greater relationship with them and government (Rugman and Hodgetts, 2001). Therefore, they enjoy advantages in both social and political environment. The pressure for local responsiveness results from a variety of local needs, different distribution, local competition, culture differences, and political environment (Akaka and Alden, 2010).

Localisation enables MNCs to effectively response local demands, competitions, culture, legal systems, and context (Ang and Massingham, 2007). As a result, it improves their competitive advantages, customer satisfaction, revenue and market share (Ang and Massingham, 2007). Localisation is an effective approach to address culture differences in a host country and allows MNCs to develop appreciated marketing mix (Ciszewska-Mlinaric and Trapczyn´ ski, 2019). However, effective localisation requires MNCs to have sufficient and accurate understanding on a foreign market’s culture and market (Ciszewska-Mlinaric and Trapczyn´ ski, 2019). Furthermore, localisation has the following limitations: higher operating costs, threats to consistency of a global brand, low transfer of experience and knowledge, low economies of scale, weaker control over quality (Ciszewska-Mlinaric and Trapczyn´ ski, 2019).

2.4 Standardisation and Adaptation Marketing Mix

2.4.1 Product

In alignment with localisation strategy, MNCs have to offer those products that are appropriate in local culture. A product directly determines customer satisfaction by meeting customers’ needs and demands. However, culture differences cause the divergences in needs and wants of customers. Thus, MNCs have to consider local culture in the process product development (Onkvisit and Shaw, 2004). Hollenstein (2005) illustrates that MNCs need to consider both objectives and culture difference when they decide their products in a foreign market.

Nevertheless, standardised products are more cost-effective and conductive a company’s economies of scale (Hollenstein, 2005). Onkvist and Shaw (2004) illustrate that a MNC can measure the similarities in customer needs and preference between its home market and a foreign market when it determines to export. Czinkota and Ronanen (1995) illustrate that standardised products are more suitable and effective to industrial goods. Many products do not need any localisation to be welcomed in many countries around the world regardless of culture differences, such as iPhone.  Douglas and Craige (1995) highlight that an MNC must determine extent of product localisation. Keegan and Green (1999) highlight that it is necessary to consider culture when designing brand name, image, logo, packages, colour and so on.

2.4.2 Pricing

There are many factors affecting the decisions on pricing strategy. Price localisation (differentiation) are positive affected by customer preferences, competitive situation, cost, inflation and exchange rate as well as regulations, tax and tariffs (Hollenstein, 2005). However, some factors motivate a MNC to adopt price standardisation including reduction of trade barriers, low transportation costs, global sourcing/active retailers, greater communication / information flow and brand globalisation (Hollenstein, 2005).

Price standardisation is effective if target customers are less price conscious (Hollenstein, 2005). It is less risky, but it has no local responsiveness and no contribution to profit maximum (Hollenstein, 2005). On the other hand, price localisation helps an MNC to adapt to local market and thus facilitates organisational success (Onkvisit and Shaw, 2004). MNCs have to consider foreign market and the foreign revenue when they design prices (Keegan and Green, 1999). Price localisation allows companies to take advantages of price differences to maximise profits and sales and improve competitive advantages (Keegan and Green, 1999).

2.4.3 Promotion

Due to culture differences, it is necessary to consider localisation in promotion. As mentioned, cross-cultural issues cause differences in perception, attitude, opinion and communication style and these differences can arouse misunderstanding and conflicts in marketing communication (Kaur and Chawla, 2016). It is important to adopt localisation promotion in cross-culture communication (Douglas and Craige, 1995). Theodosiou and Leonidous (2002) illustrate that many factors push an MNC to localise its promotion strategy and activity, including language, religions, laws, economic differences and media. Hollenstein (2005) illustrates that modifying promotion to adapt to local market is cost effective.

2.4.4 Distribution

Standardisation of distribution is challenging due to the differences in channel distribution in different countries (Keegan and Green, 1999). In a foreign country, distribution channels and places are different with home country. MNCs rely subsidiary to adopt localised distribution in a host country. Furthermore, customers have different preferences and purchase habits toward distribution (Onkvisit and Shaw, 2004). MNCs have to develop distribution channels in accordance with target customers’ preferences.

2.5 Consumer Behaviour

Consumers measure the gap between perceived quality and expected quality after their purchase (Kotler, 2000). If perceived quality does not reach their expectations, they are dissatisfied, tend to share negative Word-of-Mouth (WOM) and are unlikely to repurchase and recommend the product to others (Kotler, 2017). On the other hand, they are satisfied if perceived quality meets or exceeds their expectations. Satisfied customers tend to repurchase in the future, generate positive WOM and recommend the product or brand to others.

3.0 Research Methodology

This chapter explains and justifies the rationality of research methods used to collect data. To be noticed, these research methods were designed based on Saunders et al. (2009)’s framework (Figure 3). The dissertation used realism as its philosophical base and implemented a mixed research by deductive approach. It adopted case study as its research strategy to carry both quantitative and qualitative analysis. Cross-sectional time horizon was applied, and primary data was collected by questionnaires.

Figure 4

Source from: (Saunders, Lewis, and Thorhill, 2009)

3.1 Research philosophy

This dissertation adopts a realism philosophy depending on the standpoint that independent reality exists in the human mind. Realism is built on the assumption that a scientific approach generates and develops knowledge. Realism focuses on both scientific approach and subjectivities, which is suitable for social studies (Kervin, 1999). By realism philosophy, this research can conduct both quantitative and qualitative analysis for the case study of ‘M.A.C.’ expansion in China’.

Positivism and interpretivism philosophy are not suitable for this dissertation. Positivism generates law-like findings by scientific approach, which is more suitable for experiments in laboratory, but it is not appreciated for human and social studies, as its strict research framework can hinder researchers to discover potential variables (Kervin, 1999). Interpretivists criticise that positivism is not appreciated for social study and to investigate human behaviour as its structure is more suitable for experiments in laboratory. Meanwhile, interpretivism is criticised for its overmuch dependence on subjectivities. Interpretivism relies on researchers’ feelings and experience to perceive research phenomenon, so the results of interpretivism-based studies are arguable and unreliable (Kervin, 1999). Realism can be viewed as the integration of positivism and interpretivism philosophy. It does not adopt the rigorous framework of positivism which could hinder researchers to explore variables. Also, realism is much more objective than interpretivism because it relies on a scientific approach.

3.2 Research Approach

Deductive approach is applied into this dissertation. Deductive approach is workable under realism philosophy, which explains a research phenomenon based on the existing theories and knowledge (Bernard, 2011). Deductive approach uses reliable theories to explain a research phenomenon. It sticks to the path of logic in a most closely way. This research approach is effective and timesaving because it directly targets at research questions and phenomenon. The approach makes reasoning from the general to the particular. It means that this dissertation adopts general theories and knowledge to explain MAC in China and UK markets. It relies on a large collection of literature to collect and analyse a wide scope of knowledge and it allows researchers to complete study tasks within short time. Deductive approach has the advantages to make explanations of causal relationships, measure concepts in quantitative way, and make generalisation of research findings.

Based on deductive approach, this dissertation has the following stages: 1) collecting and analysing existing theories and knowledge; 2) designing and developing research questions; 3) collecting data from the research phenomenon; 4) discussing the results of primary data with the theories and knowledge; and 5) generating conclusions and recommendations for the Chinese comestics markets.

Inductive approach is not applicable for this dissertation because it targets to generate new theories. It emphasises on understanding dynamics, robustness, emergence, and resilience. In social studies, the approach is normally used to explore research questions and generate insights (Goddard and Melville, 2004). However, this dissertation already has specific research questions and has no plan to prove any new theory. Thus, inductive approach is not suitable for this research.

3.3 Research Strategy

By case study, this research studies the marketing strategies and outcome of MAC. Aligning with interpretivism, case study allows inquirers to focus on one or a few of samples to generate deepening findings and understandings (Patton, 2002). Furthermore, it allows inquirers to incorporate into research context and is suitable to address those phenomena incorporated into its contexts. Even though case study cannot generate universals, its results are deep. By case study, this research can analyse specific marketing strategies and performance within the boundaries of a certain environment (Saunders and Lewis, 2012). More importantly, case study allows this research to use and analyse multi-sources of data including primary data, secondary data, qualitative data, newspaper, document, articles and dialogues (Saunders and Lewis, 2012).

3.4 Mixed Research

As a mixed research, this dissertation adopts both quantitative and qualitative analysis, which aligns with realism and case study. Qualitative analysis enables the research gains insights by allowing inquirers to directly perceive the research phenomenon. Secondly, by using quantitative analysis, this research can generate reliable and convincing findings. The qualitative analysis is used to explore variables and study the expansion strategy of MACs. Then, the quantitative analysis is used to test the research hypotheses based on Chapter two – Literature Review and findings from the qualitative analysis. The aim of the quantitative analysis is to identify whether or not the strategy of MACs can be applied to other comestics brands from Australia and other countries.

3.5 Questionnaires

Questionnaire is applied in this research to collect quantitative data used to test research hypotheses. It is effective in gathering quantitative data because it can gather a mass of numerical data from a large research population (Kervin, 1999). The numerical data from questionnaires can be analysed by statistical package in an effective way. Online questionnaires can be widely and rapidly spread via the Internet. Inquirers can share the link of online questionnaires by e-mail and in social medias to reach research populations. Although the design process of questionnaires can be complicated, the data analysis of questionnaires can be effective and efficient by using statistical software package such as SPSS. More importantly, online questionnaires are more affordable to student researches than other data collection measures such as experiments.

The online questionnaires for this research were developed in two websites Survey Monkey.com for the UK and WJX.cn for China. They offered services allowing researchers to build the webpage for their own questionnaire and share the link of their webpages to potential respondents. They automatically recorded data collected from questionnaires. The links of the questionnaires are showed in the below:

https://zh.surveymonkey.com/r/RPYR8PN (the link for British respondents) (Appendix I)

https://www.wjx.cn/jq/90136950.aspx (the line for Chinese respondents) (Appendix I)

The first section of the questionnaire measures the MAC consumption of respondents to identify whether or not they had enough experience to offer valid data.

The second section is designed to test research hypotheses. Questions in this section provides Likert-scale options ranging from strongly disagree, disagree, neutral, agree and strongly agree. This section collected data for following aspects:

Localised product	Designed based on localisation strategy and marketing mix (product, promotion, price and distribution)
Localised promotion
Localised price
Localised distribution
Consumer behaviour	Designed to measure customer satisfaction, repurchase, and customer recommendation

Table 1

The final section gathered demographics of respondents including gender, disposable income, age, and education background.

This research collected 155 questionnaires in China and the UK respectively and the total sample size was 310. To test the research hypotheses, the questionnaires target at those participants who are customers of MAC.

3.6 Sampling Technique & The sample

Self-selection is applied to access participants of the online questionnaire. By this sample technique, they involve in this research based on their own willingness rather than their financial rewards. By this way, the research can prevent those participants who do not have cosmetics consumption habit but fulfil the questionnaires for financial rewards. Self-selection enables the researcher to build a big sample size within short-term (Saunders et al., 2012). More importantly, this sample technique enables the researchers to collect data from those participants which are easy to access.

Although self-selection has a low representation of research population, probability sampling techniques are not applicable in this research. They require researchers to build a mechanism ensuring that each individual of their research population has the equal opportunity to be selected to provide data. This means that these researchers have to build research database covering all research population. Nevertheless, it is impossible for this dissertation to develop a database covering all high-end cosmetics consumption population. Thus, non-probability sampling technique is appreciated.

This research spread the link of the online questionnaires in Chinese social medias including WeChat, Weibo, Zhihu, and Douban to directly access research population. Also, it directly sends the link to potential participants by e-mail or WeChat.

More importantly, by self-selection sampling technique, the researcher used personal social connections and found four saleswomen of MAC in China and two saleswomen of MAC in the UK. The researcher actively communicated with them and explained the purpose and confidentiality of this research and then required their help. The researcher entered two chatgroups of MAC customers and five chatgroups for make-up consumers in WeChat (a Chinese social media). Each chatgroup has 200 to 400 members. The researcher shares the link of the online questionnaire to these chatgroups and attracted many Chinese participants. In the UK, the researcher also focused on social media by posting the link of the questionnaires in comments and attract participants. The researcher focused on Instagram, YouTube, Facebook and Twitter and engaged those groups which assemble make-up lovers. These people have strong interests in cosmetics and view make-up as one of their habits. They concern cosmetics products and constantly improve their make-up skills.

3.6 Ethics

The research attaches importance to ethical conducts. Firstly, it involves no deception and is fully honest to research participants and respondents. It illustrates its purposes, aims and objectives to potential respondents and participants by a consent letter. Secondly, this is an innominate research that does not collect name, contract and identity information of participants and respondents. Thirdly, all data is reserved in the researcher’s work laptop and only the University and the researcher can access the data. This research does not debrief its results in order to avoid disputes. More importantly, it involves no commercial secretes.

4.0 Data Analysis

4.1 Qualitative Analysis

4.1.1 Cross-cultural Issues

4.1.1.1 Hofstede Cultural Dimensions

MAC was founded in Toronto, Canada in 1984, whereas its headquarter has been in New York and it was acquired by Estee Lauder Companies in 1996. To be noticed, Estee Lauder is an US-based multinational company. Therefore, it is safe to say that MAC is rooted deeply in American culture. This research compares the difference among Chinese, British and American culture by Hofstede’s national culture dimensions.

As figure 4 shows, British culture is close to American culture in all six dimensions. Their major differences are long term orientation and uncertainty avoidance and other small differences include power distance and masculinity. In the UK, the power distance is smaller than that in the US, which means that British show less tolerance to unequal distribution of power. They pay more attention to equality and autonomy. The score on masculinity in US is higher than that in the UK, which means that American people are more motivated by material success. Furthermore, British people show more tolerance to unambiguity than American people (Hofstede-Insights, 2020). Moreover, they have a 51 score on long-term orientation. This means that British people either focus on past nor future. However, American people are much more future-oriented who are very practical and have a strong idea distinguishing good and evil. They focus on short-term performance.

On the other hand, Chinese culture is largely different with American culture in every dimension expect masculinity. With a high-power distance, Chinese people show more tolerance to unequal power distance who accept specific orders from people with greater power. They embrace social hierarchy and are strongly affected by authority and sanctions. Meanwhile, China has a collectivist culture in which people have strong sense of belongness and are loyal to extended family. They are very concerned about harmony and consider difficulty as a threat to harmony. Chinese people value relationship and face-saving in communication and gift-given is prevalent (Hofstede-Insight, 2020). However, American culture value individual’s interests, privacy and rights. In terms of masculinity, both Chinese and American people consider achievement and material rewards as success. However, in terms of uncertainty avoidance, Chinese people are more willing to tolerate uncertainties than American people. Chinese people use relationship to reduce uncertainties, whereas American people adopt rules and regulation. Moreover, Chinese people are highly long-term oriented making them very pragmatic who believe trust is related with situation, context and time and have strong preference to save and invest. This is very different with American culture, as discussed, which pays short-term performance. Additionally, in dimension of indulgence, Chinese people have strong control over their desires and impulses and are inclined to cynicism and pessimism (Hofstede-Insight, 2020). Nevertheless, American people believe in word hard and play hard.

To be noticed, an important factor affecting MAC’s marketing communication is in individual dimensions. Chinese people prefer to send ambiguous messages and use intermediates in communication in order to avoid conflicts and save faces. However, American people use direct communication and pursue high efficiency of communication. This could affect MAC’s marketing communication in China.

Figure 5: US VS UK VS China in Hofstede National Culture Dimension

(Source from: Hofstede-Insight, 2020)

Even though British culture is close to American culture, there are still many cultural differences between two cultures. Thus, MAC still adopted localised approaches in the UK. Meanwhile, the cultural differences between China and the US is huge. Therefore, MAC has to adopt localisation strategy.

4.1.2 Developing Business Network

MAC has been actively developing its business networks in China to address cross-culture challenges, which are consistent with Uppsala model. It takes advantages of market knowledge and customer insights of partners to improve its localisation. To be specific, MAC collaborates with Tencent (one of three top high-tech companies in China) to implement localised promotion activities. By this partnership, MAC was allowed to promote its limited lipsticks to game players of the online video game developed by Tencent. Meanwhile, MAC has been working with Tmall (Alibaba) to timely understand customer demands (Global Cosmetics News, 2019). It collaborates with Alibaba Group to address counterfeit issues in China, which contributes to its brand identity and awareness (Milnes, 2017). Also, the brand collaborates with Tik Tok to promote its products and brand image (Global Cosmetics News, 2019). Therefore, it is safe to conduce that MAC develops business networks and partnerships to improve its localisation, which is consistent with Uppsala model

4.1.3 Localisation in MAC’s Marketing Mix

4.1.3.1 Product

MAC adopts localised products for Chinese and British consumers respectively. The brand develops products especially for Asian consumers and selects those products which are suitable for Chinese consumers. More importantly, the brand focuses on localised product packages in China. It offers gift-package for Chinese consumers especially during Chinese festivals such as Valentine’s Day.

Meanwhile, in the UK, MAC offers customers its products designed especially for Caucasian, African, and other races. Its products in the UK are slightly different with those in the US. However, its package in the UK are basically same with its in the US. Generally, MAC’s localisation in China is heavier than that in the UK.

4.1.3.2 Price

MAC also has a localised pricing strategy in China whereas it adopts standardised pricing strategy in the UK. As Appendix III shows, the same foundation of MAC is sold at US$ 35 in USA and at £27 (US$36.16) in the UK. Based on exchange currency between GBP and USD, the price is basically same. However, MAC offers a small bottle version for British customers which is £9 for 10ml.

On the other hand, the same foundation of MAC is more expensive in China, which is sold at ¥320 Yuan (USD 46.83). Therefore, it is clearly that the price of MAC is different. Chinese government charges a 2.9% import tariff imposed on imported cosmetics and has a Value-added Tax (VAT) at 17%. Meanwhile, the average VAT of the UK for cosmetics is 20%. Therefore, MAC has a generally close costs in the UK and China. However, the prices in China are much higher suggesting that the brand adopts a localised pricing strategy.

4.1.3.3 Promotion

In the UK, MAC adopts some different promotion techniques and communication messages to meet British culture. As Appendix II shows, the company’s official website has different versions for different markets. Its UK’s version has the same style with its US’s version. The second page of two versions is same. However, its US version is more colourful and adopts an image of African women with darker skin. Its UK version also has an image of African women with a whiter skin. This could be explained by the fact that race issues are more sensitive in the US than the UK. Hence, MAC has to use an African woman with a darker skin to demonstrate its equality policy in the US. However, it does not need to do this in the UK. The UK’s version appears to be more conservative which does not have the image of a lips with a range which exists in the US version. More importantly, the UK’s version does not have the video section that teach customers to do make-up, whereas the US’ version does.

In China, MAC’s official website is very different with the US and UK version. In the two countries, MAC focuses on models to develop a colourful and attractive webpage. However, the brand emphases on product and show no model in its Chinese website (Appendix). Its Chinese version shows its flag products and other products. Its Chinese version focuses on products, whereas its US and UK version emphases on brand culture and community especially for the US market. The Chinese version appears to be cleaner and product focused. This can be explained by the common sense that Chinese people are more conservative. Overall, for official websites of MAC, it is clear that the company adopts localisation strategy.

In terms of social media marketing, MAC also used localised promotion strategy. To be specific, it has one English Instagram account for all English-speaking markets (Appendix II). Meanwhile, the brand sets one Instagram account especially for Hong Kong market to offer localised communication strategy (Appendix II). Given that mainland Chinese people are not allowed to access Instagram by Chinese government, MAC engages in Chinese social media including Weibo and WeChat to deliver fully localised marketing messages and communication (Appendix II). For mainland Chinese market, the brand’s marketing messages focus on a male celebrity who is famous in this market.

In MAC’s English Instagram, the front page shows the brand’s logon that ‘all ages, all races, all genders’. However, its social media account in China has no such content. This can be explained by cultural value differences between Chinese value and universal value. In English speaking countries especially the UK and US, ethnic and gender equality are critical and rooted in the mind of customers. Nevertheless, Chinese traditional value is more conservative that advocate clear gender role between male and female. In other words, the role of genders is clearly different and expected by Chinese ethics.

4.1.3.4 Distribution

MAC also adopts localised distribution strategy to penetrate into China and the UK. In the UK, the brand focuses on both online and offline stores. Its offline stores in the UK have similar decoration with those in the US. In the UK and US, MAC engages in the same distribution channels including its own website (mac cosmetics), other distributors such as look fantastic, Debenhams, star performance, and social media platform include Instagram and Facebook.

In China, MAC focuses on online retailing giants in the country, including Alibaba (Tmall) and Jindong Mall. By working with these online retailing giants, MAC is allowed to address counterfeit issues in China (Global Cosmetics News, 2019). More importantly, these giants hold a large number of active users and market share in the country’s cosmetics retailing. This is because Chinese consumers have strong preference to online purchase and they tend to give more trust to large online retailers such as Alibaba.

Overall, MAC adopts more localised strategies in China than the UK throughout all marketing mix. This can be explained by the fact that British and American culture are close. To be noticed, MAC also adopts localised strategies in China including smaller bottle of products for lower prices and specially selected products for British customers. However, the localised strategy is insignificant in the UK.

4.2 Quantitative Analysis

This research collected 155 questionnaires in China and the UK respectively and 310 totally.

4.2.1 Demographics

There are more British male respondents (6.7%) than Chinese male respondents (3.8%), while male participants are minorities in both two countries. The age distribution of two countries is close. In both two countries, the largest age group is 26-to-30-year old, followed by 31-to-35-year old, 36-to-40-year old, 20-to-25-year old and over 40. There are more Chinese (29.7%) than British respondents (31.6%) in the age group of 20 to 25 years old. Meanwhile, there are more British respondents (27.1%) than Chinese respondents (24.5%) in the age group of 31 to 35 years old. For those who are 20 to 25 years old, Chinese respondents (18.1%) are more than British respondents (16.1%). 11.0% of Chinese respondents are over 40 years old than 8.4% of British respondents who are older than 40.

In terms of education background, British respondents generally accepted more education than Chinese respondents. There are 33.5% of Chinese respondents who graduate from high school, while only 12.3% of British respondents graduate from high school. 31.0% of British respondents have a college degree, whereas only 20.6% of Chinese respondents have such degree. Furthermore, 36.8% of Chinese respondents have a Bachelor degree, which is 3.8% lower than British respondents (40.6%). In terms of Master degree, 9.0% of Chinese respondents, lower than 14.2% of British respondents. 3 British respondents have doctor degree, whereas no Chinese respondents have it.

British respondents generally have larger disposable income than Chinese respondents. To be specific, 40.0% of British has £1,001 to £1,500 disposable income, while only 36.1% of Chinese respondents have such. 19.4% of Chinese respondents have over 15,000 disposable income, whereas 34.2% of British respondents have it. In the group of below £ 500, there are 14.8% Chinese respondents and 7.1% British respondents. 29.7% of Chinese respondents have CNY 5,000 – 10,000 disposable income, while 18.7% of British respondents have such level.

China VS UK

	China 155 respondents	UK 155 respondents
Gender	Male: 6 (3.8%) Female: 149 (96.2%)	Male: 15 (9.7%) Female: 140 (92.3%)
Age	20 – 25: 28 (18.1%) 26 – 30: 46 (29.7%) 31 – 35: 38 (24.5%) 36 – 40: 26 (16.8%) Over 40: 17 (11.0%)	20 – 25: 25 (16.1%) 26 – 30: 49 (31.6%) 31 – 35: 42 (27.1%) 36 – 40: 26 (16.8%) Over 40: 13 (8.4%)
Education	High school: 52 (33.5%) College: 32 (20.6%) Bachelor: 57 (36.8%) Master Degree: 14 (9.0%) Doctor degree: 0 (0%)	High school:19 (12.3%) College:48 (31.0%) Bachelor:63 (40.6%) Master Degree:22 (14.2%) Doctor degree:3 (1.9%)
Disposable Income	Below CNY 5,000: 23 (14.8%) CNY 5,000 – 10,000: 46 (29.7%) CNY 10,001 – 15,000: 56 (36.1%) Over 15,000: 30 (19.4%)	Below £ 500: 11 (7.1%) £500 – 1,000: 29 (18.7%) £1,001 – 1,500: 62 (40.0%) Over 1,500: 53 (34.2%)

Table 2: Demographics, China and UK

4.2.2 Consumption of MAC

Generally, British respondents have more consumption on MAC’s products than Chinese respondents in terms of both frequency and amount. Within a month, 52.9% of Chinese respondents only purchase MAC once, followed by 2-4 times (32.90%), 5-6 times (12.23%) and over 6 times (1.94%). Nevertheless, British respondents show a higher frequency. In a month, 32.9% of respondents purchase MAC 2 to 4 times, followed by 2 to 4 times (32.9%), 5 to 6 times (25.2%), more than 6 times (12.3%). Furthermore, British respondents purchased slightly more than Chinese respondents.

China VS UK

		China 155 respondents	UK 155 respondents
How often do you usually purchase MAC’s products?	Once a month	82 (52.9%)	46 (29.7%)
	Twice to four times a month	51 (32.90%)	51 (32.9%)
	Five to six times a month	19 (12.23%)	39 (25.2%)
	Over six times a month	3 (1.94%)	19 (12.3%)
How much do you spend in MAC’s products in a month, averagely?	CNY 500 to 1,000 (£50 - £100)	33 (21.2%)	34 (21.9%)
	CNY 1,001 to 1,500 (£100 - £150)	68 (43.87%)	62 (40.0%)
	CNY 1,500 – 2,000 (£ 150 - 200)	43 (27.74%)	40 (25.8%)
	Over CNY 2,000 (£ 200)	11 (7.1%)	19 (12.3%)

Table 3

Strongly Disagree	Disagree	Neutral	Agree	Strongly Agree
1	2	3	4	5

Table 4

4.2.1 Product

In terms of product, Chinese and British respondents are converged. To be specific, both of them believe that they can purchase the cosmetics especially designed for their country’s customers (China mean = 3.39 and UK mean = 3.45).

However, fewer British and Chinese respondents agree that MAC’s packages are designed for their country and can fit their preference and appetite (China mean = 2.51 and UK mean = 2.46).

Furthermore, fewer Chinese and British respondents agree or strongly agree that MAC’s products can meet customers’ specific needs in their country (China mean = 2.56 and UK mean = 2.49).

Totally, 55.4% of respondents agree that MAC’s products are especially for Chinese people including 20.6% strongly agree and 34.8%). However, this does not mean that these localised products can meet their needs.  25.8% and 31.0% strongly disagree and disagree that MAC’s products can meet Chinese people’s especially needs. Also, the figures on product package shows that the company has a weak package localisation in China. Generally, MAC has intention to design localised products in China while it only meets fewer Chinese people’s especial needs and its package has a low level of adaptation.

Based on the figures from British respondents, MAC’s has the same problem in the UK. 57.4% of British respondents agree that they can purchase the cosmetics especially designed for British customers. However, 60% of British respondents disagree that MAC’s products can meet Chinese people’s especial needs (27.7% strongly disagree and 32.3% disagree). Also, the mean of product package is low (mean = 2.46).

Therefore, MAC has intention to design localised products while it only meets fewer local customers’ especial needs and its package has a low level of adaptation in the UK and China.

China (%)	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I can purchase the cosmetics which are especially designed for Chinese people from MAC	15.5	6.5	22.6	34.8	20.6	3.39
MAC has packages designed especially for Chinese that really fit my preference and appetite.	29.7	29.7	12.9	15.5	12.3	2.51
MAC’s products can meet Chinese people’s especial needs	25.8	31.0	16.8	14.2	12.3	2.56

Table 5

UK%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I can purchase the cosmetics which are especially designed for British people from MAC	14.2	5.8	22.6	36.1	21.3	3.45
MAC has packages designed especially for the UK that really fit my preference and appetite.	30.3	31.6	12.3	12.9	12.9	2.46
MAC’s products can meet British people’s especially needs	27.7	32.3	15.5	12.3	12.3	2.49

Table 6

4.2.2 Promotion

By comparing with mean, this research finds that MAC’s localised promotion has a similar performance in both UK and China. Also, these results in Table 6 show that MAC generally has a good localised promotion in both China and the UK.

In details, totally 69.6% of Chinese respondents agree that they understand and appreciate advertising of MAC including 36.1% strongly agree and 33.5% agree (mean = 3.82). Meanwhile, 68.4% of British respondent agree with this including 32.9% agree and 35.5% strongly agree (mean = 3.77). This means that MAC’s localised advertising has a relatively high level of effectiveness.

Secondly, 44.5% of Chinese respondents perceive that MAC concerns and respects all Chinese customers in its marketing communication including 24.5% agree and 20.0% strongly agree (Mean = 3.25). For UK respondents, the mean is 3.31, and 46.4% of British respondents agree with that including 24.5% agree and 21.9% strongly agree. This means that the effectiveness of MAC’s concern and respects to local customers is medium.

Thirdly, 56.8% of Chinese participants that MAC inputs some Chinese elements such as culture and norms into its marketing messages (Mean = 3.61). Meanwhile, 65.8% of British participants agree this (mean =3.62). This mean that MAC in the UK is better than in China in terms of inputting host country’s culture and norms in its marketing messages. These results show that the effectiveness of inputting some local culture’s elements such as culture and norms into its marketing messages is above medium.

Generally, MAC’s localised advertising has a relatively high level of effectiveness. The effectiveness of MAC’s concern and respects to local customers is medium. The effectiveness of inputting some local culture’s elements such as culture and norms into its marketing messages is above medium.

China%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
As a Chinese, I understand and appreciate the advertising of MAC in my country.	9.0	5.8	15.5	33.5	36.1	3.82
As a Chinese, I perceive that MAC concerns and respects all Chinese customers in its marketing communication.	11.0	17.4	27.1	24.5	20.0	3.25
As a Chinese, I perceive that MAC inputs some Chinese elements such as culture and norms into its marketing messages.	5.2	14.8	23.2	27.1	29.7	3.61

Table 7

UK%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
As a British, I understand and appreciate the advertising of MAC in my country.	10.3	5.8	15.5	32.9	35.5	3.77
As a British, I perceive that MAC concerns and respects all British customers in its marketing communication.	12.3	12.9	28.4	24.5	21.9	3.31
As a British, I perceive that MAC inputs some British elements such as culture and norms into its marketing messages.	14.2	4.5	15.5	35.5	30.3	3.63

Table 8

4.2.3 Price

The following results that MAC’s localised pricing strategy is generally effective while fewer respondents in both countries agree that prices of MAC are appreciate.

In details, only 32.9% of Chinese respondents agree the appropriateness of MAC’s prices (mean = 2.88). Meanwhile, British respondents also shows the similar pattern (mean = 2.89).

However, when these respondents compare MAC’s prices with its competitors, more respondents agree that the prices of MAC are attractive. In China, the mean is 3.56 while the mean of the UK is 3.63. These results mean that MAC’s pricing strategy is generally effective against its competitors.

Moreover, 60.0% of Chinese respondents agree that MAC’s prices motivate Chinese people to purchase more including 24.5% agree and 35.5% strongly agree (mean = 3.55). In the UK, totally 64.2% of respondents agree with that including 24.5% agree and 35.5% totally agree (mean = 3.67). Therefore, the pricing strategy of MAC is slightly more effective in the UK than China.

Despite of the fact that fewer respondents feel that the pricing is appropriate in their country, more respondents agree that the pricing is attractive in relative to MAC and can motivate customers to buy more in both China and UK.

China%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
The prices of MAC in China are appropriate for consumers in the country.	20.0	18.7	28.4	19.4	13.5	2.88
As a Chinese, the prices of MAC are attractive to me comparing to MAC’s competitors in China.	14.2	6.5	16.8	34.2	28.4	3.56
I perceive that MAC’s prices motivate Chinese people to purchase more.	11.0	18.1	11.0	24.5	35.5	3.55

Table 9

UK%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
The prices of MAC in the UK are appropriate for consumers in this country.	18.7	19.4	29.7	18.7	13.5	2.89
As a British, the prices of MAC are attractive to me comparing to MAC’s competitors in the UK.	14.2	4.5	15.5	35.5	30.3	3.63
I perceive that MAC’s prices motivate British people to purchase more.	9.0	16.8	11.0	24.5	38.7	3.67

Table 10

4.2.4 Place

In term of localised place strategy, MAC has a good performance while its performance in the UK is better than China.

To be specific, 60.0% of respondents agree that they purchase MAC by many convenient ways in my country (mean = 3.52) including 32.9% strongly agree and 27.1% agree. 62.5% of British participants agree this (mean = 3.61), slightly higher than Chinese.

In term of counterfeit issues, more Chinese respondents concern it than British. 39.8% of Chinese participants agree that they do not need to worry counterfeit (Mean = 3.13). However, the figure in the UK is 41.3% (Mean = 3.21).

Moreover, 53.6% of Chinese respondents agree that the process of buying a MAC’s product fit Chinese consumers’ habits and preference including 26.5% agree and 27.1% strongly agree (mean = 3.37). Meanwhile, 55.5% of British respondents agree with this including 24.5% agree and 31.0% strongly agree (mean = 3.43). The figure of British respondents is slightly higher than that of Chinese respondents, which suggests that MAC’s localised distribution is tingly more effective in the UK than China.

Generally, the effectiveness of MAC’s localised distribution is medium while that in UK is better than in China.

China%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I can purchase MAC by many convenient ways in my country.	16.8	7.1	16.1	27.1	32.9	3.52
I do not need to worry about counterfeit issues when I purchase MAC in my country	15.5	17.4	27.7	16.8	22.6	3.13
The process of buying a MAC’s product fit Chinese consumers’ habits and preference.	16.1	11.6	18.7	26.5	27.1	3.37

Table 11

UK%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I can purchase MAC by many convenient ways in my country.	15.5	5.2	16.8	27.7	34.8	3.61
I do not need to worry about counterfeit issues when I purchase MAC in my country	14.8	16.8	27.1	15.5	25.8	3.21
The process of buying a MAC’s product fit British consumers’ habits and preference.	16.1	11.0	17.4	24.5	31.0	3.43

Table 12

2.2.5 Consumer Buying Behaviour

MAC has a higher customer satisfaction rate in the UK than in China. 57.4% of Chinese respondents agree that they satisfy with MAC’s products including 36.1% agree and 21.3% strongly agree (Mean = 3.47). However, 62% of British respondents agree with it (Mean = 3.55).

In terms of repurchase behaviour, British respondents are stronger than Chinese respondents. 40.0% of Chinese respondents agree that they will continue to purchase MAC’s products in the future (mean = 3.08), while the figure in the UK is 42.6% (mean = 3.17).

For customer’s recommendations, 39.4% of Chinese respondents agree that they would like to recommend MAC’s products to my friends (mean = 3.05) including 21.1% agree and 12.3% strongly agree. However, 42.0% of British respondents agree this (mean = 3.09), higher than Chinese respondents.

China%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I am very satisfied with MAC’s products.	11.0	9.7	21.9	36.1	21.3	3.47
I will continue to purchase MAC’s products in the future.	15.5	14.8	29.7	25.8	14.2	3.08
I would like to recommend MAC’s products to my friends.	16.8	13.5	30.3	27.1	12.3	3.05

Table 13

UK%	Strongly disagree	Disagree	Neutral	Agree	Strongly Agree	Mean
I am very satisfied with MAC’s products.	10.3	9.7	18.1	38.1	23.9	3.55
I will continue to purchase MAC’s products in the future.	13.5	14.8	29.0	25.8	16.8	3.17
I would like to recommend MAC’s products to my friends.	19.4	13.5	25.2	22.6	19.4	3.09

Table 14

4.3 Correlation Analysis

As Table 15 shows, correlation co-efficient of product is 0.522 (> 0.399 and < 0.799), suggesting a moderate relationship between product and consumer behaviour. For promotion, co-efficient is 0.482 (> 0.399 and < 0.799), implying a moderate relationship between promotion and consumer behaviour. In terms of price, co-efficient is 0.614, showing a moderate relationship between price and consumer behaviour (> 0.399 and < 0.799). Additionally, the co-efficient of place is 0.572 (> 0.399 and < 0.799), suggesting a moderate relationship between place and consumer behaviour.

China	Correlation	Status of Relationship with
Product	0.522	Moderate
Promotion	0.482	Moderate
Price	0.614	Moderate
Place	0.572	Moderate

Table 15

As Table 16, correlation coefficient of product is 0.561, which suggests a moderate relationship between product and consumer behaviour. Coefficient of promotion is 0.487, which implies a moderate relationship between product and consumer behaviour. The coefficient of price is 0.664, showing a moderate relationship between price and consumer behaviour. Additionally, place receives a 0.602 coefficient showing a moderate relationship between place and consumer behaviour.

UK	Correlation	Status of Relationship with
Product	0.561	Moderate
Promotion	0.487	Moderate
Price	0.664	Moderate
Place	0.602	Moderate

Table 16

4.4 Regression Analysis

This research runs the following equation to examine the relationship between localised distribution, localised product, localised promotion as well as localised price and consumer behaviour.

Consumer behaviour = beta + beta (localised distribution) + beta (localised product) + beta (localised promotion) + beta (localised price)

4.4.1 China

The research the equation to test the data from China. As Table 16 shows, R value is 0.712, suggesting a strong relationship between distribution, product, promotion, price and consumer behavior. The R Square is 0.507, showing that 50.7% of variants in Chinese customer behaviour can be explained by localised distribution, product, promotion and price. This also suggests that 49.3% of variants in Chinese customer cannot be explained by these variables.

Model Summary
R	R Square	Adjusted R Square	Std. Error of the Estimate
0.712a	0.507	0.494	0.69086
a. Predictors: (Constant), Distribution, Product, Promotion, Price

Table 17

The p-value is 0.000, suggesting a significant relationship between those independent variables and the dependent variable in China.

ANOVAa
		Sum of Squares	df	Mean Square	F	Sig.
	Regression	73.650	4	18.413	38.577	0.000b
	Residual	71.594	150	.477
	Total	145.244	154

Table 18

In Table 18, P-value of localised promotion is 0.066 (larger than 0.05) suggesting an insignificant relationship between localised products and Chinese customer behaviour. Also, P-value of localised products, localised price and localised distribution are lower than 0.05, implying that their relationship with Chinese customer behaviour is significant.

Coefficientsa
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	0.596	0.235		2.541	0.012
	Product	0.183	0.062	0.211	2.974	0.003
	Promotion	0.131	0.071	0.129	1.853	0.066
	Price	0.253	0.067	0.290	3.746	0.000
	Distribution	0.233	0.062	0.274	3.794	0.000
a. Dependent Variable: Customer behaviour

Table 19

4.4.2 The UK

The research run the equation for data from the UK and the results are showed in the below. As Table 19 shows, the R value is 75.8, suggesting a strong relationship between localised distribution, product, promotion, price and British customer behaviour. 57.4% of variants in British customer behaviour can be explained by these localised practices. Meanwhile, they cannot explain 47% of variants in British customer behaviour.

Model Summary
R	R Square	Adjusted R Square	Std. Error of the Estimate
0.758a	0.574	0.563	0.68333
a. Predictors: (Constant), distribution, product, promotion, price

Table 20

The p-value is 0.000, suggesting a significant relationship between those independent variables and the dependent variable in the UK.

ANOVAa
Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	94.508	4	23.627	50.600	0.000b
	Residual	70.041	150	.467
	Total	164.549	154
a. Dependent Variable: customer
b. Predictors: (Constant), distribution, product, promotion, price

Table 21

As Table 21 shows, P-value of localised promotion is 0.247 (larger than 0.05) suggesting an insignificant relationship between localised products and British customer behaviour. However, P-value of localised products, localised price and localised distribution are less than 0.05, implying that their relationship with British customer behaviour is significant.

Coefficientsa
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	0.327	0.239		1.365	0.174
	Product	0.204	0.061	0.223	3.316	0.001
	Promotion	0.086	0.074	0.077	1.163	0.247
	Price	0.335	0.068	0.350	4.949	0.000
	Distribution	0.272	0.060	0.298	4.533	0.000
a. Dependent Variable: customer behaviour

Table 22

5.0 Discussion

What is the penetration strategy of MAC in the UK and China, respectively?

Generally, MAC adopts stronger localisation strategies in China than the UK throughout all marketing mix. This can be explained by the fact that culture difference between China and the US is larger than that between the UK and the US. This finding is consistent with Ang and Massingham (2007)’s argument that localisation is important to penetrate into those countries that have a large culture difference with their home country. This research finds that the company has stronger localisation in China and its localised product, price and place have a significant relationship with customer behaviour. This is supported by Ang and Massingham (2007)’s argument that localisation ensures a high local responsiveness to local demands, competitions, culture, legal systems, and context and thus improve competitive advantages, customer satisfaction, revenue and market share.

To be noticed, MAC also has a certain level of localisation in the UK including smaller bottle of products for lower prices and specially selected products for British customers even though the culture difference between the UK and the US is less. However, the impact of localised strategy on consumer behaviour is insignificant in the UK.

Furthermore, this research finds that MAC takes advantage of business networks and partnership to improve it localisation. This is consistent with Uppsala model that foreign companies need to develop business networks in host countries and rely on the networks to grow its presence, activities and commitment in these countries (Johanson and Vahlne, 2009). By developing relationship commitment, an MNC can gain more knowledge from partnership which in return contributes to knowledge transferring. MAC developed its relationship with major Chinese high-tech companies including Tencent, Alibaba and Tik Tok to improve its localised distribution and promotion.

Furthermore, this research analyses MAC’s localised marketing mix. To begin with product, the brand focuses on localised product packages in China by offering gift-package for Chinese consumers especially during Chinese festivals. This can be explained by high collectivism and low indulgence in Chinese culture (Hofstede-Insight, 2020). Under such culture, Chinese people prefer to use gifts to maintain social connections and release their desires during special events such as festivals.

MAC has a localised pricing strategy in China whereas it adopts standardised pricing strategy in the UK. In China, MAC sets higher prices, which can be explained by customer preferences, competitive situation, cost, inflation and exchange rate as well as regulations, tax and tariffs (Hollenson, 2001). Competition in Chinese cosmetics industry is less intensive than that in the US and the UK and customers have preference to international brands, which allowed the company to set higher prices. Also, in accordance with Keegan and Green (1999), price localisation allows MAC to take advantages of price differences to maximise its profits.

In terms of promotion, MAC adopts both localisation in both the UK and China. In the UK, MAC adopts some different promotion techniques and communication messages to meet British culture. Its marketing messages are relatively conservative in the UK than the US. It focuses on models in both two countries. Nevertheless, it emphases on product and less on model in its Chinese marketing messages. Its US and UK marketing activities emphases on brand culture and community especially for the US market. However, its Chinese marketing activities focuses on products. This may suggest that the company is unable to develop a brand community due to its lack of knowledge of Chinese culture. The differences in MAC’s promotion among the three countries are consistent with Jiang and Wei (2012)’s argument that MNCs use localisation strategy to develop international branding and advertising because of cultural differences. Furthermore, many scholars support localisation in promotion level (Douglas and Craige, 1995; Kaur and Chawla, 2016; and Theodosiou and Leonidous, 2002).

In terms of distribution, MAC adopts localised distribution strategy to penetrate into China and the UK. The company works with different distribution partners in the two countries. It focuses more on online retailing in China by engaging large online retailing platforms (Alibaba and JD Mall). This practice of MAC is to meet Chinese consumers’ strong preference to online purchase and they tend to give more trust to large online retailers such as Alibaba. The company focuses on localised distribution which is supported by Keegan and Green (1999)’s argument that distribution standardisation is challenging due to the differences in channel distribution in different countries. Onkvisit and Shaw (2004) support that customers have different preferences and purchase habits toward distribution. Indeed, Chinese consumers have stronger preferences to online purchase. Thus, MAC has to develop distribution channels in accordance with target customers’ preferences.

How is effective MAC’s localised strategy in the two countries, respectively?

This research finds that the company has a high level of perceived product localisation in the two countries. Its localised products can moderately and significantly affect customer behaviour. Both Chinese and British perceive that they can purchase the cosmetics especially designed for their country’s customers. However, the company only meets fewer local customers’ especial needs and its package has a low level of adaptation in the UK and China. This suggests that the company needs to increase its commitment and involvement in product localisation and design more localised product packages. Especially in China, the company should identify Chinese customer’s needs and wants and develop its products accordingly.

This research finds that MAC’s localised promotion has a close performance in both UK and China. MAC generally has a good localised promotion in both China and the UK. MAC’s localised pricing strategy is generally effective while fewer respondents in both countries agree that prices of MAC are appreciate. The research finds that its localised promotion moderately affects consume behaviour.

In term of localised place strategy, this research finds that MAC’s distribution localisation moderately and significantly affects consumer behavior. Generally, the effectiveness of MAC’s localised distribution is medium while that in UK is better than in China even though the company adopts lower level of localised distribution in the UK. This can be explained by the fact that MAC faces greater culture differences in China than the UK.

As a result, MAC has a higher customer satisfaction rate in the UK than in China. In terms of repurchase behaviour, British respondents are stronger than Chinese respondents. For customers’ recommendations, more British customers are willing to recommend the brand to their friends. This result is consistent with the arguments of Ang and Massingham (2007), Ciszewska-Mlinaric and Trapczyn´ ski (2019) and Gerhart (2008).

6.0 Conclusions

6.1 Summary of Findings

This research finds that MAC adopts low level of localised strategy while uses high level of localised strategy in China throughout its marketing mix. It finds that MAC’s marketing mix is more effective in the UK than China, which can be explained by the fact that MAC faces larger culture differences in China than the UK.

MAC still is constricted by culture differences in China and it needs to grow its culture knowledge. Further developing partnership and business networks is suggested to the company. The company needs to increase its commitment and involvement in product localisation and design more localised product packages. Especially in China, the company should identify Chinese customer’s needs and wants and develop its products accordingly. The company’s promotion activities focus on product and less on brand culture and the development of brand community. However, increasing efforts to improve brand culture and brand community based on understanding on Chinese culture is advised.

Relationship with Customer Behaviour	China	UK	Frequency Analysis
Product	Moderate/ Significant	Moderate/ Significant	High perceived product localisation in the two countries
Promotion	Moderate/ Insignificant	Moderate/ Insignificant	A good localised promotion in the two countries
Price	Moderate/ Significant	Moderate/ Significant	Localised pricing is generally effective in the two countries
Distribution	Moderate/ Significant	Moderate/ Significant	MAC’s performance in localised distribution is good, while it is better in the UK

Table 24

6.2 Recommendations for Further Research

This research adopts realism philosophy and focuses on a case study to investigate the expansion strategy of MAC in the UK and China. By quantitative and qualitative analysis, this research explores out insights. However, to improve generalisation of these results, further researches are expected to adopt positivism philosophy and quantitative analysis targeting at the whole cosmetics industry. By comparing with the UK and Chinese market, further research could make suggestions for American cosmetics brand to penetrate into Chinese market in a more efficient way.

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Appendix I – Online Questionnaires

The questionnaire in Survey Monkey.com

https://zh.surveymonkey.com/r/RPYR8PN

The Questionnaire in WJX

https://www.wjx.cn/jq/90136950.aspx

Appendix II – Promotion of MAC

MAC in the US

https://www.maccosmetics.com.us/

MAC in the UK

https://www.maccosmetics.com.uk/

MAC in China

https://www.maccosmetics.com.cn/

MAC in Instagram

MAC’s English Instagram page for all English-speaking market.

MAC Chinese Instagram Page for Hong Kong Market

MAC WeChat for mainland China

Appendix III – Price of MAC

MAC foundation in the US

MAC’s Price in the UK

MAC Price in China

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