UNIVERSITY OF LJUBLJANA SCHOOL OF ECONOMICS AND BUSINESS MASTER´S THESIS A COMPARATIVE STUDY OF MANAGEMENT OF MISTAKES IN CROSS-CULTURAL MARKETING Ljubljana, September 2020 KLEMEN AHMETOVIĆ AUTHORSHIP STATEMENT The undersigned Klemen Ahmetović, a student at the University of Ljubljana, School of Economics and Business, (hereafter: SEB LU), author of this written final work of studies with the title “A comparative study of management of mistakes in cross-cultural marketing”, prepared under supervision of doc. dr. Tamara Pavasović Trošt, PhD. 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June 1st, 2012 TABLE OF CONTENTS INTRODUCTION ............................................................................................................... 1 1 THE IMPORTANCE OF CULTURAL UNDERSTANDING IN MARKETING 5 1.1 A New Age of Marketing..................................................................................... 5 1.2 National and Organizational Culture ................................................................ 6 1.3 Hofstede’s Cultural Dimensions ......................................................................... 8 1.4 Cultural Intelligence .......................................................................................... 12 2 CROSS-CULTURAL MARKETING MISTAKES ............................................... 14 2.1 The Why of Cross-Cultural Marketing Mistakes ........................................... 15 2.2 Categorization of Cross-Cultural Marketing Blunders ................................. 17 2.3 Strategies for Avoiding Cross-cultural Marketing Mistakes ........................ 19 3 METHODOLOGY .................................................................................................... 20 3.1 Research Purpose and Goals ............................................................................ 20 3.2 Research Design and Case Selection ................................................................ 20 3.3 Critical Analysis and Comparison ................................................................... 22 4 GUCCI: BLACKFACE CONTROVERSY ............................................................ 22 4.1 Description of the Blackface Advertisement ................................................... 23 4.2 The Troubling History of Blackface ................................................................ 24 4.3 The Role of Blackface in Modern Times ......................................................... 25 4.4 Media Reaction to Gucci’s Blackface Incident ............................................... 26 4.4.1 Social Media .................................................................................................... 26 4.4.2 Online Newspaper Outlets ............................................................................... 28 4.5 Company’s Response and Aftermath .............................................................. 30 4.5.1 The Apology .................................................................................................... 30 4.5.2 The Four step Action Plan and CSR ................................................................ 31 4.6 Effect on Sales .................................................................................................... 33 5 NIVEA:” WHITE IS PURITY” ADVERTISEMENT .......................................... 34 5.1 Description of Nivea´s Facebook Advertisement ............................................ 34 5.2 Background of the Affected Culture ................................................................ 35 5.3 Media Reaction .................................................................................................. 37 5.3.1 Social Media .................................................................................................... 37 i 5.3.2 Newspaper Articles ......................................................................................... 38 5.4 Company’s Response and Aftermath .............................................................. 40 5.4.1 The Apology .................................................................................................... 40 5.4.2 The Aftermath ................................................................................................. 42 5.5 Effect on Sales .................................................................................................... 43 6 DOLCE & GABBANA ADVERTISEMENT ......................................................... 44 6.1 Description of the “DG Loves China” Incident .............................................. 45 6.2 The Complexities of Doing Business in China ................................................ 45 6.3 Media Reaction .................................................................................................. 47 6.3.1 Social Media .................................................................................................... 47 6.3.2 Online Newspaper Outlets .............................................................................. 49 6.4 Company’s Response and Aftermath .............................................................. 51 6.4.1 Video Apology ................................................................................................ 51 6.4.2 The Aftermath ................................................................................................. 52 6.5 Effect on Sales .................................................................................................... 53 7 DISCUSSION AND IMPLICATIONS.................................................................... 53 7.1 Summary of Findings ........................................................................................ 53 7.2 Limitations of the Research .............................................................................. 56 7.3 Practical and Theoretical Implications ........................................................... 56 CONCLUSION .................................................................................................................. 59 REFERENCE LIST .......................................................................................................... 60 APPENDICES ................................................................................................................... 73 LIST OF FIGURES Figure 1: Hofstede´s dimensions of culture .......................................................................... 9 Figure 2: Five assumptions underlying Hofstede´s model according to McSweeney ........ 11 Figure 3: Low Context and High Context countries ........................................................... 12 Figure 4: Top 10 most valuable luxury brands worldwide in 2019 (in million US dollars) 23 Figure 5: The controversial sweater .................................................................................... 24 Figure 6: A vintage poster promoting a minstrel show ....................................................... 24 Figure 7: Popular cartoons and comics with racist imagery ............................................... 26 Figure 8: Gucci´s Twitter apology ...................................................................................... 30 Figure 9 :Likelihood of financial performance above national industry median % ............ 32 Figure 10: Gucci´s year-over-year sales growth ................................................................