What is ethnicity Essay Example | Topics and Well Written Essays - 1750 words

What is ethnicity - Essay Example Certainly, they often co-exist and it is hardly uncommon that the latter be invoked by the former but, both contemporary and historical events evidence the fact that nationalism can be independent from the nation.2 Not only may feelings of nationalism precede the geo-political realization of the nation, as in the case of Palestine or Kurdistan but it often survives the demise of the nation, as in the case of Armenia, to name but one example. While some scholars have disputed the separation between nationalism and the nation, others have maintained it to be an undeniable reality which is influenced by the ethnic roots of nationalism. Pending the presentation of definitions for both the nation and nationalism, through reference to several examples, this essay will show that nationalism is more ethnic-based than it is nation-based. Some political scientists maintain that nationalism and the nation are inseparable contrasts, wherein the one cannot exist without the other. This is precisely the argument forwarded by Seymour (1999), a political scholar. As he argues, defining the concept of nationalism without first defining that of the nation is nothing other than a futile and impossible undertaking. The nation must first be defined and to this end, Seymour proposes the following definition: "a sovereign state founded upon the will of the people," and an area which a people of specific ethnic origin claims to be theirs and are prepared to defend this claim against any aggression.3 The nation, in other words, is defined in specific geopolitical terms and refers to a well-defined geographic space. That space invokes nationalism, or feelings of pride, often even defensiveness when real or imagined threats are perceived. When invoked by real or imagined threats, whether internal, as in emanating from within that spac e, or external, as in emerging from without it, nationalism tends to assume an ethnic undertone. In such instance, the nationalism becomes ethno-nationalism, leading to the redefinition of the nation in ethnic terms.4 The implication here is that not only are the concepts of the nation and nationalism inextricably linked but that the invocation of nationalist sentiments, of nationalism, is dependant upon the existence of the nation. Should one reflect upon Seymour's definition and argument, however, one will find that it is somewhat self-contradictory. On the one hand, it maintains that nationalism can only be invoked by the nation, following which it proceeds to define the nation as a concrete geopolitical entity. On the other hand, however, it argues that when the nation, that concrete geopolitical entity, is exposed to threat, not only does nationalism become ethno-nationalism but that the nation itself is redefined along ethnic lines. The implication here is that the core of nationalism is not the nation but is ethnicity which, at the same time, is the center-force of the nation. This is precisely the argument forwarded by May, Modood and Squires (2005). As may be inferred from their argument, nations are formed by ethnic communities and are founded upon ethnicity, wherein nationalism becomes the celebration of a particular ethnic or religious group and the nation the space which protects and sustains this g roup. 5 Israel is a case in point. As Yiftachel (2006) points out, Jewish nationalism, sometimes referred to as Zionism, preceded formation of the Jewish nation and, indeed, the nation was predicated upon pre-existing nationalism6 and not, as Seymour (1999) argues,

Trifles by Susan Glaspell Essay Example | Topics and Well Written Essays - 500 words - 1

Trifles by Susan Glaspell - Essay Example Trifles, I believe, is feminist in the most true sense of that word: it does not seek to speak only about injustice or the place of women in a society which undervalues their importance; it goes deeper than this. Glaspell seeks to understand and, consequently, show how attitudes and perspectives shape these social constructs, and thus, when individuals are appreciated or cheapened in particular societal contexts. To elaborate on this point, consider the lines when the women decide to protect Mrs. Wright. Glaspell wants to focus upon the minds of the individuals involved; although some would like to interpret the women’s actions (to protect Mrs. Wright) as motivated by a shared gender or social status, the truth of their decision lies in what Mrs. Peters succinctly summarized by â€Å"the law is law†. That is, her motivation for helping Mrs. Wright does not consist of purely traditional feminist notions of womanhood, but of a concern for truth and objectivity. The women find evidence at Mrs. Wright’s home, gathered with an open-mind and interpreted fairly. When law enforcement—the Sherriff and the County Attorney—interpret this same evidence, they will do so differently. This, as Glaspell wishes to suggest, is a matter of epistemological difference, and not of the metaphysical difference which many feminists like to suppose exists between the different realm s of male and female. Centrally, Trifles is a work centered around the two separate stories, one male and one female, combined into one in the setting of a commonplace American location. To illustrate the separate perspectives between the different genders involved in the place, following the murder, the law enforcement, male-oriented crowd sees the scene as a place where a grievous crime was committed, whereas the female-oriented crowd sees the scene as a home, or as somewhere that they

Effects of Manipulating Individual Identity

Effects of Manipulating Individual Identity Abstract: This study examined how changing the perception of social distance changed the way in which subjects interacted in the Trust Game specifically looking into the social preferences they displayed. A discussion of both economic and sociological research demonstrates the inherent variability of social identity and social distance and the interconnected nature these concepts have with social preferences. A two-stage experiment involving subjects of different nationalities and genders was carried out with a different identity focus in each stage. Findings show that subjects exhibit greater social preferences when interacting with those of a similar focused identity yet the degrees of these preferences displayed vary in accordance to the identity focus. Results suggest that social distance, although easily manipulated, is a powerful force in interactions. The results are consistent with previous studies into group membership, identity, nationality, gender and social preferences. Given this studys far-reaching implications it should be viewed as the premise for future study of this topic. Introduction The concept of social distance as elucidated by Akerlof (1997) is profoundly linked with social identity and social preferences. It is the differences in individuals social identities, including for example, race, gender, class and status, that determine the benefits of interaction and to what extent of social preferences are displayed. Yet when individuals are not entirely familiar with each other, the perception of social identities is based on very few observations and is therefore not entirely accurate. The purpose of this dissertation is to examine whether or not variations in the perception of social identity, and thus social distance, will affect the extent to which social preferences are manifested. Studies on the effect of identity are in no way new. Akerlof and Kranton (2000) studied its relevance and magnitude with regards to gender discrimination in the workplace, poverty and social exclusion, and the household division of labour. Akerlof (1997) also studied the effect of social distance, asserting that the social identity of individuals can substantially affect their interactions. What has not been tested, however, is to what extent identity is merely a perception. Individuals can and do possess multiple identities varying in dominance from situation to situation. The hypothesis of this paper is that social preferences are relevant in experimental games, but these are dependent on how each player perceives the others social identity, a perception that is inherently variable. Players react with varying degrees of self-interest according to the identity they perceive, even when identical character profiles are involved. Recent economic studies fail to sufficiently incorporate current sociological thinking as to the nature of social identity and although this study will give evidence for the relevance of social distance in determining degrees of social preferences, it will attempt to shed light on individuals inconsistent perception of the distance between them. In order to add weight to this position, an experiment was organised in which participants of various profiles were invited to play the Trust Game. Each game was played face-to-face with no verbal communication. The experiment was divided into two stages, a nationality focused stage and a gender focused stage. Each participant played the game twice and never with the same opposing player. Before each game, participants were assigned to certain rooms in which video clips were played depending on the identity focused on. In the first stage, participants were split into three rooms, one for each nationality present: Scottish, English and Chinese. After one play of the Trust Game, the experiment commenced its second stage and participants were split into two rooms, one for each gender, and again asked to play the game. The results show that there is significant variation in the degrees of social preferences displayed depending on the identity being focused on hereafter referred to as the focused identity. When nationality was the focused identity, those with this common identity exhibited greater social preferences than those of differing nationalities, regardless of gender. When gender was the focused identity, those with this common identity exhibited greater social preferences than those of differing gender, regardless, to some extent, of nationality. This lack of consistency shows that the perception of social distance is not a constant through both stages and yet it is still proves to be a determining factor in how players interact. The following content of this paper is arranged into four sections. Section 2 will address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, discussing the application of various theories in the context of this study. Section 3 will describe the design and implementation of the experiment used in this study with the results, analysis and comparisons to similar studies presented in Section 4. An interpretation of these results and further conclusions will be offered in Section 5. Theories of Preferences and Identity To clearly understand the argument presented, a holistic discussion of current theories must be embarked upon. The relevance of social preferences and the forms of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will then be considered before discussing their relationship with social preferences. Social Preferences The assumption that man is motivated by self-interest is one that has dominated economic theory and is indeed fundamental to the very ideology of the vast majority of economists. As Adam Smith (1910:13) suggests, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Inherent in this analogy is the implication that self-interest is the primary motivator in our economic interactions, and it is through this impulse that equilibria are formed. In Game Theory, the Nash Equilibrium is obtained by each player assuming the other possesses purely selfish motives. This assumption, however, is not always consistent with reality. Many factors influence an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions can relate to social status, group membership, inequity aversion, reciprocity, s pite, envy, altruism and identity. These factors form a preference set, referred to in this study as social preferences. Although the theory of self-interest has been ingrained in traditional economics, modern economists have increasingly questioned this supposition. In fact the traditional authors of this theory were also wary of its realism. Even though Edgeworth (1881:16) writes that the first principle of Economics is that every agent is actuated only by self-interest, he concedes that Man is, in reality, for the most part an impure egoist, a mixed utilitarian, (Edgeworth 1881:104). It is evident that we are influenced by unselfish motives in our interactions with others and it follows that these interactions will in many circumstances involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977:336), in his seminal paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to being a social moron. He argues that theories that do not encompass the influence of sympathy and our commitment to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no society would be feasible (Johansen 1977). In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, inequity aversion, altruism and trust are all basic components of this preference set (Andreoni et al. 2002). When kindness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to rebel against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. Trust is the confidence in the future actions of another and is arguably the most variable of the social preferences and one that will be revisited in this study. Each of these attributes are far from abstract philosophical concepts, exert great influence on our economic interactions. Agell and Lundberg (1995) discovered that as a result of workers being influenced by fairness and equity customs, wage cuts were often unprofitable, with workers objecting to an unfair action. This can have a direct impact on the extent that a company vertically integrates, with out-sourcing often being far more viable given the reciprocal attitude of workers. Bewley (1999) also noted that a firms policy can affect worker morale and as such companies must take into account the perceived fairness of their policies. The extent of tax evasion has also been correlated to how fair it is perceived, and in fact the entire structure of tax systems are thoroughly debated and altered according to the principles of equity and merit (Seidl and Traub 2002). The perception of unreciprocated generosity has been one of the causes of the general reduction in support from the US w elfare state. People are disinclined to support welfare structures that give the impression that they are helping a poor segment of society that refuse to help themselves, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) also correlates economic prosperity with higher levels of trust, suggesting that social preferences are a very powerful force even in the current global economic system. Sequential games Although the examples given are wide-ranging in scope, involving relatively large economic issues, social preferences have also been proven to have a significant effect on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by assuming that all agents were exclusively self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game. There are two players in the game, one a Proposer and one a Responder. The Proposer must divide an amount of money X between the two players, offering the Responder any amount Y = X. If Responder accepts, the Proposer receives the remaining money X – Y, if they reject, both receive nothing. Under self-interested preferences, the efficient equilibrium is the one in which the Proposer gives the least amount possible to the Responder, who will accept any amount. In reality however, offers of less than a fifth of X are rejected about half time and Proposers anticipating this generally offer around 30 to 50 percent of X (Hoffman et al. 1996). This result clearly shows that factors other than self-interest are at play. It would be reasonable to assume that altruism and reciprocity both play a part in the decision-making process of both players. The Proposer may be influenced by a code of morals and a concept of fairness to offer more than the standard equilibrium distribution. The P roposer must also take into account the Responders sense of reciprocity and animosity towards a seemingly unfair distribution. Although the Responder is under no monetary incentive to reject a low offer, yet his social preferences mean that he is able to achieve some utility by spiting the Proposer, thereby valuing a certain amount of reciprocity over monetary value. Given the fact that the Proposers actions may be driven only by the fear of reciprocity and no sense of altruism, it is worthwhile to look into the Dictators Game first introduced by Kahneman et al. (1986) and refined by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the amount given by the Proposer. If the Proposer is motivated by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the case. Henrich et al. (2001) find that in most dictator game experiments there is a primary mode offer of zero percent of the Proposers total wealth and a secondary mode offer of 50 percent. Some groups show a primary mode offer of 20 percent and a secondary mode of 50 percent providing strong evidence of inequity aversion. In addition to supporting the notion that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present i n the Ultimatum Game and that Proposers apply backwards induction with average offers being lower in the Dictator Game (Roth et al. 1991). The Trust Game, developed by Berg et al. (1995) is a game that can be used to test the presence of altruism, inequity aversion, reciprocity and its namesake, trust. The game is played with an Investor and a Trustee, with the former being given an initial endowment of X and the latter given nothing. The Investor is then able to give any amount Y between 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z between 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X – Y + Z and 3Y – Z respectively. The Trustee is under no monetary incentive to return any amount and as such, under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictator Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that almost all Investors give so me amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given thus supporting the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to display inequity aversion by choosing to give or return amounts that will equalise final payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is interesting to note that there is substantial variation in the amounts given, with no clear average amount entrusted. The variation is not unsurprising, however, given the inherent inconsistency in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceived id entity of the individual in question. Identity Identity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the consideration of these two concepts that decisions are made. Descartes (1912:167) famously stated †¦I think, therefore I am, and in doing so sparked off the philosophical debate on what truly directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his belief that we can only perceive ourselves, and build our identity, by categorisation in the light of selected characteristics and never perceive our true reality in objective terms. It is out-with the bounds of this study to discuss in depth the sociological and psychological complexities of this topic, yet it is worth-while bringing to light some key concepts to further the understanding of the interactions between this studys participants. An identity is a tool of recognition. It allows us to recognise individuals, categories, groups and types of individuals, Wiley (1994:130). More than this, it is also a tool of categorisation and emotional cues. It implies a conscious awareness by members of a group, some positive or negative emotional feelings towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994:177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections: the personal identity, the ego identity and the social identity. The personal identity is the unique identification that each individual possesses to differentiate themselves technically, legally and realistically from all others. The ego identity is a purely subjective observation that is built from a multitude of social experiences and is a sense of ones own particular state and nature. The social identity pr ovides a way of categorising people and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be grouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and political views. It is important to stress that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation. Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant influence on our decisions and actions. Their theorem sheds light on a number of seemingly irrational choices. Actions that are of apparent detriment to an individual can be viewed as a form of behaviour that it used to create a more unique self identity. Similarly, steps may be taken to symbolise the assumption of a particular identity or the membership of a certain group, be they conscious or otherwise. Men do not generally wear dresses, and as such this behavioural code is unconsciously subscribed to by the majority of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of manhood itself. Attempts to manipulate an individuals decisions can be based on the notion of identity. In order to influence people to buy their products, companies create advertisements that often show a stylised form of a particular identity that people may aspire to. Finally, as identity can play such a large role in determining our economic decisions and behaviour, and assuming that individuals can choose their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a conclusion strengthened by the theory of role-identities. It is difficult to determine to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are deeply interconnected. Lyman and Scott (1970:136) clarify this link by stating that roles are identities mobilised in a specific situation; whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also assume a role. Despite that the fact that this role varies from situation to situation, it is at all times consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced by considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive positive feedback o r avoid negative feedback. In order to assess these expectations and act accordingly, we must first judge what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-specified contours of their social roles, (McCall and Simmons, 1978:70). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an objective character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing social distance. Identities and Social Preferences Akerlof (1997) defined social distance as a measure of social proximity between individuals. The model he created summarises that people gain benefits from interacting to those socially closer to themselves, with these benefits decreasing with isolation. This model is supported by empirical evidence that suggests that trust and reciprocity are linked with social connection and that members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results. Studying the effects of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. Through using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is that subjects react to membership in a very subjective manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most minimal connections within a group still give rise to in-group positive discrimination. Although subjects realised that the basis of group composition wa s entirely random, they still discriminated toward their fellow members in a very significant way. The fact that the weakest bonds are able to create positive in-group interaction is an important consideration when examining the relation between perceptions of social identity and expressions of social preferences. While group membership is a powerful force, transnational studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more trusting when paired with in-group members but that this is not the case for subjects from China and Japan, who are more trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations across genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and reciprocation levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingly irrelevant conversations significantly increa sed the levels of these social preferences. Regardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict how they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these imperfect images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. Taking into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept closely linke d with trust. The concept of trust, as mentioned earlier is based on confidence and at the heart of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, although proven in studies referred to above, is readily seen in everyday life. Trust can be unquestioned with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is dangerous and cannot be trusted. It is perceived as the expression of an identity, the perception of which ca n influence our attitudes and behaviour. The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however minimal, show the great influence groups have on these social preferences. One explanation of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their counterpart expects them to be. Akerlofs (1997:1008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The Conformist Model. A reduction of social distance between players can also be achieved by perceived acts of kindness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities. Two significant ways in which individuals identify themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal divider of the human race, preceding all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the opposite sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and privilege structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both f amily life and work life. Lockheed (1985) supposes that women are conceived as compliant followers and men dominant leaders only because of the common minority and majority balance that is common in social and work situations. The large disparity between the social identity and actual realities of members of the opposite sex provides a good opportunity to explore to what extent interaction is based on unqualified perceptions and to map the effect of variations in this perception. Unlike gender identities, nationalism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse nations such as India and Russia, but divided others as seen in the cases of North and South Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards fellow nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964:378) notes that governments utilise nationalistic instruments†¦ for the purpose of increasing the share of assets in a given assets in a given territory owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of investment and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The practice of promoting thes e nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups do. The membership of these nation-groups is defined according to several commonalities. Members share an economy, a historic territory, myths and memories, a public culture, and a set of legal rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary considerably in their social and personal identities. The minimal nature of the nation-group is accepted by many academics, some seeing nationalism as an ironic tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (1969:3) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through the stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed. Experimental Design and Implementation It is social identity and its inherently variable quality that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences manifested. Given its ability to expose these preferences, an extension of the Trust Game is used Effects of Manipulating Individual Identity Effects of Manipulating Individual Identity Abstract: This study examined how changing the perception of social distance changed the way in which subjects interacted in the Trust Game specifically looking into the social preferences they displayed. A discussion of both economic and sociological research demonstrates the inherent variability of social identity and social distance and the interconnected nature these concepts have with social preferences. A two-stage experiment involving subjects of different nationalities and genders was carried out with a different identity focus in each stage. Findings show that subjects exhibit greater social preferences when interacting with those of a similar focused identity yet the degrees of these preferences displayed vary in accordance to the identity focus. Results suggest that social distance, although easily manipulated, is a powerful force in interactions. The results are consistent with previous studies into group membership, identity, nationality, gender and social preferences. Given this studys far-reaching implications it should be viewed as the premise for future study of this topic. Introduction The concept of social distance as elucidated by Akerlof (1997) is profoundly linked with social identity and social preferences. It is the differences in individuals social identities, including for example, race, gender, class and status, that determine the benefits of interaction and to what extent of social preferences are displayed. Yet when individuals are not entirely familiar with each other, the perception of social identities is based on very few observations and is therefore not entirely accurate. The purpose of this dissertation is to examine whether or not variations in the perception of social identity, and thus social distance, will affect the extent to which social preferences are manifested. Studies on the effect of identity are in no way new. Akerlof and Kranton (2000) studied its relevance and magnitude with regards to gender discrimination in the workplace, poverty and social exclusion, and the household division of labour. Akerlof (1997) also studied the effect of social distance, asserting that the social identity of individuals can substantially affect their interactions. What has not been tested, however, is to what extent identity is merely a perception. Individuals can and do possess multiple identities varying in dominance from situation to situation. The hypothesis of this paper is that social preferences are relevant in experimental games, but these are dependent on how each player perceives the others social identity, a perception that is inherently variable. Players react with varying degrees of self-interest according to the identity they perceive, even when identical character profiles are involved. Recent economic studies fail to sufficiently incorporate current sociological thinking as to the nature of social identity and although this study will give evidence for the relevance of social distance in determining degrees of social preferences, it will attempt to shed light on individuals inconsistent perception of the distance between them. In order to add weight to this position, an experiment was organised in which participants of various profiles were invited to play the Trust Game. Each game was played face-to-face with no verbal communication. The experiment was divided into two stages, a nationality focused stage and a gender focused stage. Each participant played the game twice and never with the same opposing player. Before each game, participants were assigned to certain rooms in which video clips were played depending on the identity focused on. In the first stage, participants were split into three rooms, one for each nationality present: Scottish, English and Chinese. After one play of the Trust Game, the experiment commenced its second stage and participants were split into two rooms, one for each gender, and again asked to play the game. The results show that there is significant variation in the degrees of social preferences displayed depending on the identity being focused on hereafter referred to as the focused identity. When nationality was the focused identity, those with this common identity exhibited greater social preferences than those of differing nationalities, regardless of gender. When gender was the focused identity, those with this common identity exhibited greater social preferences than those of differing gender, regardless, to some extent, of nationality. This lack of consistency shows that the perception of social distance is not a constant through both stages and yet it is still proves to be a determining factor in how players interact. The following content of this paper is arranged into four sections. Section 2 will address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, discussing the application of various theories in the context of this study. Section 3 will describe the design and implementation of the experiment used in this study with the results, analysis and comparisons to similar studies presented in Section 4. An interpretation of these results and further conclusions will be offered in Section 5. Theories of Preferences and Identity To clearly understand the argument presented, a holistic discussion of current theories must be embarked upon. The relevance of social preferences and the forms of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will then be considered before discussing their relationship with social preferences. Social Preferences The assumption that man is motivated by self-interest is one that has dominated economic theory and is indeed fundamental to the very ideology of the vast majority of economists. As Adam Smith (1910:13) suggests, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Inherent in this analogy is the implication that self-interest is the primary motivator in our economic interactions, and it is through this impulse that equilibria are formed. In Game Theory, the Nash Equilibrium is obtained by each player assuming the other possesses purely selfish motives. This assumption, however, is not always consistent with reality. Many factors influence an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions can relate to social status, group membership, inequity aversion, reciprocity, s pite, envy, altruism and identity. These factors form a preference set, referred to in this study as social preferences. Although the theory of self-interest has been ingrained in traditional economics, modern economists have increasingly questioned this supposition. In fact the traditional authors of this theory were also wary of its realism. Even though Edgeworth (1881:16) writes that the first principle of Economics is that every agent is actuated only by self-interest, he concedes that Man is, in reality, for the most part an impure egoist, a mixed utilitarian, (Edgeworth 1881:104). It is evident that we are influenced by unselfish motives in our interactions with others and it follows that these interactions will in many circumstances involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977:336), in his seminal paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to being a social moron. He argues that theories that do not encompass the influence of sympathy and our commitment to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no society would be feasible (Johansen 1977). In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, inequity aversion, altruism and trust are all basic components of this preference set (Andreoni et al. 2002). When kindness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to rebel against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. Trust is the confidence in the future actions of another and is arguably the most variable of the social preferences and one that will be revisited in this study. Each of these attributes are far from abstract philosophical concepts, exert great influence on our economic interactions. Agell and Lundberg (1995) discovered that as a result of workers being influenced by fairness and equity customs, wage cuts were often unprofitable, with workers objecting to an unfair action. This can have a direct impact on the extent that a company vertically integrates, with out-sourcing often being far more viable given the reciprocal attitude of workers. Bewley (1999) also noted that a firms policy can affect worker morale and as such companies must take into account the perceived fairness of their policies. The extent of tax evasion has also been correlated to how fair it is perceived, and in fact the entire structure of tax systems are thoroughly debated and altered according to the principles of equity and merit (Seidl and Traub 2002). The perception of unreciprocated generosity has been one of the causes of the general reduction in support from the US w elfare state. People are disinclined to support welfare structures that give the impression that they are helping a poor segment of society that refuse to help themselves, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) also correlates economic prosperity with higher levels of trust, suggesting that social preferences are a very powerful force even in the current global economic system. Sequential games Although the examples given are wide-ranging in scope, involving relatively large economic issues, social preferences have also been proven to have a significant effect on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by assuming that all agents were exclusively self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game. There are two players in the game, one a Proposer and one a Responder. The Proposer must divide an amount of money X between the two players, offering the Responder any amount Y = X. If Responder accepts, the Proposer receives the remaining money X – Y, if they reject, both receive nothing. Under self-interested preferences, the efficient equilibrium is the one in which the Proposer gives the least amount possible to the Responder, who will accept any amount. In reality however, offers of less than a fifth of X are rejected about half time and Proposers anticipating this generally offer around 30 to 50 percent of X (Hoffman et al. 1996). This result clearly shows that factors other than self-interest are at play. It would be reasonable to assume that altruism and reciprocity both play a part in the decision-making process of both players. The Proposer may be influenced by a code of morals and a concept of fairness to offer more than the standard equilibrium distribution. The P roposer must also take into account the Responders sense of reciprocity and animosity towards a seemingly unfair distribution. Although the Responder is under no monetary incentive to reject a low offer, yet his social preferences mean that he is able to achieve some utility by spiting the Proposer, thereby valuing a certain amount of reciprocity over monetary value. Given the fact that the Proposers actions may be driven only by the fear of reciprocity and no sense of altruism, it is worthwhile to look into the Dictators Game first introduced by Kahneman et al. (1986) and refined by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the amount given by the Proposer. If the Proposer is motivated by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the case. Henrich et al. (2001) find that in most dictator game experiments there is a primary mode offer of zero percent of the Proposers total wealth and a secondary mode offer of 50 percent. Some groups show a primary mode offer of 20 percent and a secondary mode of 50 percent providing strong evidence of inequity aversion. In addition to supporting the notion that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present i n the Ultimatum Game and that Proposers apply backwards induction with average offers being lower in the Dictator Game (Roth et al. 1991). The Trust Game, developed by Berg et al. (1995) is a game that can be used to test the presence of altruism, inequity aversion, reciprocity and its namesake, trust. The game is played with an Investor and a Trustee, with the former being given an initial endowment of X and the latter given nothing. The Investor is then able to give any amount Y between 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z between 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X – Y + Z and 3Y – Z respectively. The Trustee is under no monetary incentive to return any amount and as such, under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictator Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that almost all Investors give so me amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given thus supporting the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to display inequity aversion by choosing to give or return amounts that will equalise final payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is interesting to note that there is substantial variation in the amounts given, with no clear average amount entrusted. The variation is not unsurprising, however, given the inherent inconsistency in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceived id entity of the individual in question. Identity Identity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the consideration of these two concepts that decisions are made. Descartes (1912:167) famously stated †¦I think, therefore I am, and in doing so sparked off the philosophical debate on what truly directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his belief that we can only perceive ourselves, and build our identity, by categorisation in the light of selected characteristics and never perceive our true reality in objective terms. It is out-with the bounds of this study to discuss in depth the sociological and psychological complexities of this topic, yet it is worth-while bringing to light some key concepts to further the understanding of the interactions between this studys participants. An identity is a tool of recognition. It allows us to recognise individuals, categories, groups and types of individuals, Wiley (1994:130). More than this, it is also a tool of categorisation and emotional cues. It implies a conscious awareness by members of a group, some positive or negative emotional feelings towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994:177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections: the personal identity, the ego identity and the social identity. The personal identity is the unique identification that each individual possesses to differentiate themselves technically, legally and realistically from all others. The ego identity is a purely subjective observation that is built from a multitude of social experiences and is a sense of ones own particular state and nature. The social identity pr ovides a way of categorising people and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be grouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and political views. It is important to stress that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation. Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant influence on our decisions and actions. Their theorem sheds light on a number of seemingly irrational choices. Actions that are of apparent detriment to an individual can be viewed as a form of behaviour that it used to create a more unique self identity. Similarly, steps may be taken to symbolise the assumption of a particular identity or the membership of a certain group, be they conscious or otherwise. Men do not generally wear dresses, and as such this behavioural code is unconsciously subscribed to by the majority of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of manhood itself. Attempts to manipulate an individuals decisions can be based on the notion of identity. In order to influence people to buy their products, companies create advertisements that often show a stylised form of a particular identity that people may aspire to. Finally, as identity can play such a large role in determining our economic decisions and behaviour, and assuming that individuals can choose their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a conclusion strengthened by the theory of role-identities. It is difficult to determine to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are deeply interconnected. Lyman and Scott (1970:136) clarify this link by stating that roles are identities mobilised in a specific situation; whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also assume a role. Despite that the fact that this role varies from situation to situation, it is at all times consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced by considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive positive feedback o r avoid negative feedback. In order to assess these expectations and act accordingly, we must first judge what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-specified contours of their social roles, (McCall and Simmons, 1978:70). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an objective character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing social distance. Identities and Social Preferences Akerlof (1997) defined social distance as a measure of social proximity between individuals. The model he created summarises that people gain benefits from interacting to those socially closer to themselves, with these benefits decreasing with isolation. This model is supported by empirical evidence that suggests that trust and reciprocity are linked with social connection and that members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results. Studying the effects of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. Through using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is that subjects react to membership in a very subjective manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most minimal connections within a group still give rise to in-group positive discrimination. Although subjects realised that the basis of group composition wa s entirely random, they still discriminated toward their fellow members in a very significant way. The fact that the weakest bonds are able to create positive in-group interaction is an important consideration when examining the relation between perceptions of social identity and expressions of social preferences. While group membership is a powerful force, transnational studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more trusting when paired with in-group members but that this is not the case for subjects from China and Japan, who are more trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations across genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and reciprocation levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingly irrelevant conversations significantly increa sed the levels of these social preferences. Regardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict how they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these imperfect images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. Taking into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept closely linke d with trust. The concept of trust, as mentioned earlier is based on confidence and at the heart of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, although proven in studies referred to above, is readily seen in everyday life. Trust can be unquestioned with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is dangerous and cannot be trusted. It is perceived as the expression of an identity, the perception of which ca n influence our attitudes and behaviour. The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however minimal, show the great influence groups have on these social preferences. One explanation of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their counterpart expects them to be. Akerlofs (1997:1008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The Conformist Model. A reduction of social distance between players can also be achieved by perceived acts of kindness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities. Two significant ways in which individuals identify themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal divider of the human race, preceding all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the opposite sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and privilege structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both f amily life and work life. Lockheed (1985) supposes that women are conceived as compliant followers and men dominant leaders only because of the common minority and majority balance that is common in social and work situations. The large disparity between the social identity and actual realities of members of the opposite sex provides a good opportunity to explore to what extent interaction is based on unqualified perceptions and to map the effect of variations in this perception. Unlike gender identities, nationalism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse nations such as India and Russia, but divided others as seen in the cases of North and South Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards fellow nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964:378) notes that governments utilise nationalistic instruments†¦ for the purpose of increasing the share of assets in a given assets in a given territory owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of investment and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The practice of promoting thes e nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups do. The membership of these nation-groups is defined according to several commonalities. Members share an economy, a historic territory, myths and memories, a public culture, and a set of legal rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary considerably in their social and personal identities. The minimal nature of the nation-group is accepted by many academics, some seeing nationalism as an ironic tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (1969:3) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through the stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed. Experimental Design and Implementation It is social identity and its inherently variable quality that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences manifested. Given its ability to expose these preferences, an extension of the Trust Game is used

Maya Angelo Essays -- biographies bio biography

If I could have the honor of meeting that one person it would be Maya Angelo. She was an inspirational and phenomenal woman of her decade. Not only was she an actress and poet, she was a mother too. Maya Angelo was a beautiful black woman in her time that stood for what was just. She experienced slavery, and even endured it. Her legacy and history is passed on through many of her books like â€Å"I know why the caged bird sings†, or through her poems such as â€Å"A raisin in the sun† and â€Å"phenomenal woman†. Thanks to her tenacity and considerateness this younger generation that I am growing up in can visit the past time and time again through her magnificent writings. Maya Angelo style of writing was very different from the many black authors I had read in the past. I say that because her choi...

Going global means new frontiers Essay

Introduction On the 19th Sep. 2014, the world’s largest initial public offering (IPO) was successfully completed in the New York Stock Exchange (NYSE), U.S., and the total IPO amount has reached up to $25 billion (Chen. Mac. Solomon. 2014). Alibaba, the miracle creator, used only 15-year’s development to take the seat in the Wall Street and build an e-commercial empire. The NYSE’s IPO is the signal to tell global investors and competitors that Alibaba is ready to join the global market competition. For Alibaba, going global means new frontier, however, the new frontier could be either a barren cliff or cornucopian grassland. In this essay, we will mainly discuss that why Alibaba want to expand global markets, and how Alibaba is going to make the global strategies to against global competitors in overseas market. by avoiding direct competition, targeting similar market as China and increasing firm size in the global market environment to step into a â€Å"grassland† mar ket for persistent development. Alibaba — the world’s largest online and mobile commerce company, was established in 1999 by the group of 18 people led by Jack Ma in Hangzhou, China. There are three main sites in Alibaba China, including T-mall, Taobao and Alibaba.com along with numbers of other companies to support Alibaba’s ecosystem development. Moreover, Alibaba also has Alibaba.com and AliExpress.com to provide worldwide online shopping services (Pressman 2014). Until 2013, Alibaba has more than 2 million merchants across more than 190 countries and regions. In 2013, there was amount of $248 billion transactions went through Alibaba’s online sites which is more than the total of eBay and Amazon. Furthermore, after the NYSE’s IPO, Alibaba’s market cap has reached up to 215 billion dollar, which only followed behind Microsoft, Google and Apple among the global tech firms (Lajoie & Shearman. 2014). Global Market Expansion (convention path: from domestic to overseas) Why Alibaba want to expand global market?  Alibaba is a typical Multi-national corporation, since Alibaba set up the headquarter in the China and operate e-commerce businesses in other  countries. in As a typical multi-national corporation, going global to exploit new distant market, to merge into larger and more efficient units and to exploit better social capital is an irresistible process for Alibaba. As the dominator in the China’s online shopping market, Alibaba has already controlled 80% of the market share, thus Alibaba needs new distant markets for persistent development. Moreover, For Alibaba, both the internal capabilities and external environment allows Alibaba to make the global market expansion decision. For the internal capabilities, Alibaba is a mature Internet corporation, which has controlled 80% of the China’s online shopping market. China’s market profits could constantly provide enormous capital support for Alibaba’s long-term market expansion. Moreover, after the NYSE’s IPO, Alibaba has won the trust from global investors and acquired sufficient capital for early market expansion. However, the challenges always exist during the process of the market expansion, especially from the local e-commercial corporations. Despite of the competition, high cost for setting up facilities, cultural shock, and different government policies would also be main concerns before the decision was made. Thus, I have listed three main strategies below to demonstrate Alibaba’s global market expansion. Avoiding direct competition Instead of â€Å"face to face† competition with those locally dominant e-commercial corporations, Alibaba decided to operate their business around the market edges and move partial of e-commercial businesses to cross-country trade. In 2004, The America’s largest e-commercial corporation–eBay entered the Chinese market by merger with a Chinese e-commercial corporation—EachNet. In order to against eBay, Alibaba decided to launch Taobao, one of the main sites under Alibaba for C2C (customer to customer) business model, compete with eBay. Because of Taobao’s preponderant business model and domestic advantages, eBay finally failed in China’s e-commercial market expansion (Wang, 2010). Right now, Alibaba faced the same challenge in the America’s market, but Alibaba will not make the same mistake as eBay did. In order to avoid direct competition with eBay and Amazon, Alibaba has launched AliExpress for cross-country trade wholesale by offering quality products at factory prices. As the advantages, Chinese  products have unbeatable prices to attract American customers; also Chinese customers have strong demands for American high quality products (like Cherry Farmers and Fisherman). Although it’s too earlier to claim the final result of Alibaba, to avoid direct competition is always a good way to enter a new market without too much pressure from local competitors. Finding similar market as China Alibaba’s global strategies are more likely targeting the large and potential e-commercial market as China’s market. For instance, Brazil, as one of the largest developing economy in the world, the economy status and e-commercial structure in Brazil is really similar as in China. ALthough, eBay and Amazon has already settled down in the Brazil’s market, it’s always not too late for Alibaba overtakes the dominance. In 2013, Alibaba set up a Portuguese e-commerce site to allow Brazil buyers directly purchase goods from Chinese wholesalers. Just in a year, Alibaba has became the third largest e-commercial website and took 20% of market share after Ebay and Amazon. In this July 12 millions of Brazilian customers visited the Alibaba.com, which is ten times than last year (Sciaudone, 2014). Moreover, in Brazil’s market, Alibaba wisely used the local sub-contractor to reduce investment and improve service quality, which subcontracted the online payment services to Boleto and delivery services to Brazil’s state-owned postal service (Pressman, 2014). To make it even better, Brazilian President Dilma Rousseff and Chinese President Xi Jingping have signed the agreement to open the â€Å"Green Channel† to support Alibaba’s business between two countries (Chao, 2014). All in all, the success in the Brazil’s market indicated that to find the similar market is a feasible strategy for future development. Increasing the firm size As a typical multi-national corporation, Alibaba effectively applied the law of increasing firm size, ‘which have rapidly growth in the representative size of the firm, culminating in the MNC, and the parallel growth in organizational complexity’ (Hymer, 1970). E-commercial is the fundamental business for Alibaba’s long-term development, but not the only business Alibaba does or will do. As the range of investments show below, Alibaba  made plenty of investments in smart phone, video websites, telecommunication and so on. Some of them are complement businesses to support Alibaba’s e-commercial, like Juhuasuan, Alipay and Alibaba pictures; and some of them are potential businesses for long-term development, like Kabam, Peel, and Tango. Like Jack Ma has said in the Stanford Business School’s presentation, Alibaba would always follow the market’s path, where is the market, where is the Alibaba. Alibaba believed those investments are the future market and opportunities. On the global market expansion, Alibaba’s strategy is to pursue dynamic, diversified, sustaining development. Impacts on global market and host region With the development of Alibaba, the global e-commerce businesses will absolutely more competitive than before. There will be more and more cheaper and quality products flow into global market from China. Other e-commercial corporations, like eBay and Amazon, have to find the way out to against Alibaba’s expansion. On the other hand, Alibaba’s global market expansion will provide more opportunities and channels for China’s manufactories and factories to enter into a larger market. As Alibaba’s mission said, ‘to make it easy to do business anywhere.’ Alibaba help China’s merchants to do business much easier and more efficient. Conclusion It is indeed that Alibaba made a great success in 15-year development, but some concerns still exist from investors. Some investors even thought it’s possible that Alibaba is too big to be expropriated by Chinese government (Crovitz, 2014). However, It’s a totally misunderstanding, Chinese government always encourage and support China’s corporations to exploit overseas market and welcome foreign investment. Furthermore, investors also consider the instability to an Internet company. Unlike other industries, such as auto or manufacture industry, Internet Company is highly volatile. Internet Company could create billions of fortunes overnight, but also could lose everything instantly. In this case, it’s a significant mission for Alibaba to keep investors’ trust and faith. Up to now, Alibaba’s steady-state growth and expansion is the best response to investors’ trust and support. For 15-year development, Alibaba completely followed the conventional path from serve domestic market to operate businesses overseas. Eventually, Alibaba has successfully built an e-commercial businesses bridge between China and overseas market. Alibaba will continue to grow, and it will continue to change China and change the world. As William Kirby, and expert on Chinese business in Harvard’s business school, demonstrated that Alibaba is ‘a private company that has done more for China’s national economy than most state-owned enterprises (Economist, 2013).’ References Chen, Liyan; Mac, Ryan; Solomon Brian. Alibaba Claims Title For Largest Global IPO Ever With Extra Share Sales. Forbes. Web. Available from: http://www.forbes.com/sites/ryanmac/2014/09/22/alibaba-claims-title-for-largest-global-ipo-ever-with-extra-share-sales/ [Accessed on: 14/11/2014] Crovit, Gordon L. 2014. Alibaba: Too Big to Expropriate? The Wall Street Journal. Web. Available from: http://online.wsj.com/articles/gordon-crovitz-alibaba-too-big-to-expropriate-1411339239 [Accessed on: 14/11/2014] Hymer, Stephen. 1970. Lecture notes distributed in Global Business Environment at The University of Birmingham U.K. on November 2014. INC. 2014. How Alibaba’s Jack Ma Conquered China. INC. Video. Web. Available from: http://www.inc.com/jack-ma/alibaba-jack-ma-reveals-his-global-strategy.html [Accessed on: 14/11/2014] Osawa, Juro. Alibaba Isn’t the Amazon of China. The Wall Street Journal. Web. Available from: http://blogs.wsj.com/digits/2013/10/16/alibaba-isnt-the-amazon-of-china/ [Accessed on: 15/11/2014] Pressman, Aaron. Alibaba a threat to eBay, Amazon outside the U.S., not within. Yahoo Finance. Web. Available from: http://finance.yahoo.com/news/alibaba-aims-at-ebay-and-amazon-outside-of-the-united-states-173757037.html [Accessed on: 14/11/2014] Sciaudone, Christiana. 2014. Alibaba in Brazil Challenges EBay-Amazon Market Grip. Bloomberg. Web. Available from: http://www.bloomberg.com/news/2014-09-05/alibaba-in-brazil-challenges-ebay-amazon-market-grip.html [Accessed on: 14/11/2014] Shearman, Nick; Lajoie, Marc. 2014. What is Alibaba?. The Wall Street Journal. Web. Available from: http://projects.wsj.com/alibaba/ [Accessed on: 14/11/2014] The Economist. 2013. The World’s greatest bazaar. The Economist. Web. Available from: http://www.economist.com/news/briefing/21573980-alibaba-trailblazing-chinese-internet-giant-will-soon-go-public-worlds-greatest-bazaar [Accessed on: 20/11/2014] Wang, Helen H. 2010. How eBay Failed in China. Forbes. Web. Available from: http://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/ [Accessed on: 20/11/2014] http://www.cnbc.com/id/102008330#.

Marketing Plan: Maybelline’s New Perfume

Marketing Plan: Maybelline’s new perfume The University of Sheffield Marketing Management (MTG 2410) Blagoy Savov (BS11124) 21 August 2012 Abstract L'Oreal’s Maybelline, a global, mass market cosmetic manufacturer, has decided to develop and market a new fragrance for women. This report includes research, analysis and evaluation of the market environment for female fragrances. Furthermore, it outlines a marketing strategy for the new product which describes the marketing mix to be used by Maybelline in order to sell its new product addition to the target market.Introduction The fragrance market is a very competitive one with large companies having a global presence and well established images and brands. This market is also very profitable and ever growing with signs of great potential. Maybelline is one of L'Oreal’s brands and is well known worldwide for its value based cosmetics products.Now Maybelline is entering the fragrance market with a new female perfume and this report describes how it will take on this challenge. The first part of the report introduces L'Oreal, which is Maybelline’s mother company, its vision and company profile including its financial success. Maybelline falls under L'Oreal’s Consumer Products Division, which offers mass-market products. The report continues by presenting an environmental analysis of the market as well as a competitive analysis. There are three main players in the industry, which represent 24. 5% of the global market in the face of Coty Inc. Maybelline’s mother company L'Oreal, and Procter & Gamble. The first part of the report concludes with a SWOT analysis of the Maybelline, which indicates that the strengths and opportunities outweigh the weaknesses and threats. Based on the market analysis, the second part of the report proposes a target market for the new female fragrance product and a specific marketing mix in order to successfully reach its customers. The company L'Ore al L’Oreal is one of the largest cosmetics companies in the world, producing and marketing a range of make-up, perfume, hair and skin care products in over 130 countries.The company is headquartered in Clichy, France and employs about 68,900 people worldwide in a total of 41 factories. With 613 registered patents in 2011 the company earned 20. 3 billion EURO of sales in that year and currently has a brand portfolio of 27 international brands (L'Oreal 2011). For more than a 100 years L'Oreal has devoted its efforts in the business of beauty. Its mission is to enable all individuals to express their personalities, gain self-confidence and open up to others by offering the best cosmetics innovation in terms of quality, efficacy and safety.The company pushes the boundaries of innovation by heavily investing in research in order to explore new territories and invent new products (L'Oreal 2012). Wrapping up another year of financial growth, in 2011 Company Responsibility (2005 â₠¬â€œ 2011) – Reduced greenhouse gas emissions by 29. 8% – Reduced waste generated by 24. 2% – Reduced water consumption by 22. 6% – 95. 7% of waste is reused, recycled or used for energy production – Reduced total energy consumption by 6. % for 2010/2011 Company Profile – A century of expertise in cosmetics – â‚ ¬20,3 billion sales in 2011 – 27 global brands – 130 countries – 68 900 employees – 613 patents filed in 2011. L'Oreal grew faster than the worldwide cosmetics market and confirmed its position as the world leader in beauty. The company also heavily invests in being socially, ethically and environmentally responsible to ensure a sustainable growth in the long-term. Compared to 2005 the organization significantly reduced its gas emissions, generated waste and water consumption and invested in research in order to foster sustainable innovation.Maybelline As described in the journal by Aaker and Joa chimsthaler (2000) brand architecture is a structure that organizes the company’s brand portfolio and specifies the brand roles and the relationship between them. Coherent brand architecture provides tools to: ? ? ? permit brands to stretch across products and markets, resolve conflicting brand strategy needs, preserve brand-building resources by leveraging existing brand equity, protect brands from being diluted by over-stretching, and signal a new and different offeringAs outlined in the journal by Harish (2008), L'Oreal’s brand architecture is organized around 27 international brands, which are clustered in separate business divisions, each of which focuses on a specific target market. As illustrated in Table 1, L'Oreal’s business is structured under three divisions (Consumer Products Division, Luxury Products Division and Professional Products Division), one department (Active Cosmetics Department) and an ethical cosmetics brand (The Body Shop). L'Oreal†™s brand architecture, showing brands, positioning and sales channels. Consumer Products Luxury Products Profess.Products Active Cosmetics The Body ShopMajor international umbrella brands: L'Oreal Paris Garnier Maybeline New York SoftSheen Carson Le Club des Createurs de Beute (LCCB) Lancome Biotherm Helena Rubinstein Kiehl’s Shu Uemure Perfumes: Giorgio Armani Ralph Lauren Cacharel Victor and Rolf Diesel Positioning: Quality products at affordable prices for the masses Up-market luxury products for discerning consumers Specialist products for use by professional hair stylists and salon professionals Sales Channels: Mass market retail outlets in the case of L'Oreal Paris, Garnier, Maybelline and SoftSheen CarsonDirect marketing for LCCB High-end international department stores, travel retail outlets, brands’ own boutiques and perfumeries Hair stylists and salon professionals Pharmacies and specialist retailers Predominantly through body Shop’s exclusive retail chain Cosmeceuticals with proven safety and effectiveness; backed by pharmacists and dermatologists Ethical cosmetics for socially and environmentally conscious consumers L'Oreal Professionnel Kerastase RedKen 5th Avenue NYC Matrix Mizani Vichy La Roche – Possay Inneov SkinCeuticals Sanoflore The Body Shop Table 1 Within the Consumer Products Division, L'Oreal Paris is the premium brand while Garnier and Maybelline New York are the neighbouring aspirational brands. The company offers these distinct brands in order to satisfy different target groups and avoid losing customers to a competitor (Harish, 2008). L'Oreal’s goal is to make Maybelline a leading global mass-market brand. This brand is sold in about 127 countries and makes up over 45% of the total revenues.Maybelline is positioned to be the leader of massmarket cosmetics targeted at women between the age of 15 and 49 at a reasonable price and it successfully promotes the â€Å"urban American chic† image a cross the globe. Maybelline includes five ranges of products – face, eyes, lips, nails and tools. Each range includes several lines and there are individual products with unique brands under each line. As per Harish (2008) the products of the Maybelline group are mainly promoted through TV advertising and brand ambassadors like the supermodels Christy Turlington and Adriana Lima. Since 1915, the brand has been empowering women everywhere with the impactful slogan â€Å"Maybe she is born with it. Maybe it’s Maybelline. Today Maybelline New York is the leading makeup brand worldwide, which combines technologically advanced cosmetics with trendy expertise to create accessible products with a spirited style that empower women to make a statement by exploring new tools, experimenting without risk, and flaunting their own artistry (L'Oreal, 2012). L'Oreal has a licensing agreement with five different fragrance brands, which complement the firm’s wide spectrum of prod uct offerings. As described in Table 1 these brands fall under the Luxury Products Division, target discerning consumers and are sold in high-end department stores, travel outlets and boutiques. L'Oreal is now developing a completely new perfume under its own Maybelline product line. Environmental Analysis Market AnalysisThe fragrance market experienced a steady growth in sales in the period between 2006 and 2011. Furthermore the overall market growth is expected to accelerate in the next five year period. In 2010 the global fragrance market generated total revenues of $36. 3 billion resulting in a compound annual growth rate of 4. 2% for the period spanning 2006 – 2010 shown in Figure 1 (Datamonitor Global, 2011). Global fragrances market volume: million units 40000 35000 30000 25000 20000 4. 2 3. 1 5. 6 7 6 5 3. 9 4 3 2 $ million % growth 15000 10000 5000 0 2006 2007 2008 Figure 1 1 0 2009 2010 Consumption volume in the fragrance market increased with a compound annual grow th of 4. % between 2006 and 2010 resulting in 1. 3 billion units in 2010. By the end of 2015 the consumption volume is expected to rise to 1. 6 billion units. As shown in Figure 2 female fragrances showed the highest sales numbers generating $23. 1 billion of revenues in 2010, equivalent to 63. 8% of the market’s overall value (Datamonitor Global, 2011). Global fragrances market segmentation by type: % share 5% 64% Female fragrance Male fragrance Unisex fragrance 31% Figure 2 The fragrance market segmentation is distributed between the three major continents.As shown in Figure 3 Europe leads the consumption of fragrances by 45. 1% followed by the Americas with 38. %, Asia-Pacific by 10. 5% and Africa and the Middle East by 6. 4% (Datamonitor Global, 2011). Global fragrance market segmentation by region: % share 6% 11% Europe Americas Asia-Pacific Affrica and Middle East 45% 38% Figure 3 Overall the current fragrance market condition and especially the sub-category of female f ragrances shows to be positive and creates opportunity for new product additions, which is an advantage for Maybelline’s idea to introduce a new perfume (Datamonitor Global, 2011). Market Environment In the book by Perreault et al (2011) it is described that when creating a new product the required marketing strategy planning process includes electing the best opportunities and developing a strategy that will provide superior value to the potential consumer and a competitive advantage to the company itself. In order to find the best opportunity and create a marketing strategy, the company has to analyze and evaluate the important elements of the marketing environment and the occurring trends. Perreault et al (2011) continues by stating that there are different forces that create the market environment. These forces include the direct marketing environment comprised of the customer, the company, and the competitors and the external market environment comprised of the economic, technological, political, legal, cultural and social aspects.In order to create the best marketing mix (product, place, promotion, price and personalization) for the new female fragrance of Maybelline, the marketing environment has to be analyzed. Economic Environment As per Perreault et al (2011) the economic environment refers to macro-economic factors, including economic growth, national income and inflation which affect the way consumers (individual customers? ) and businesses consume. Changes in the economy in general in certain industries or parts of the world could have an impact on the consumption. Technological Environment Technology uses the application of science to convert resources into output.In particular it affects marketing by creating opportunities for new products and new processes. Technological advances allow for better communication and promotion opportunities and it furthers globalization. It also provides for more effective and efficient ways of producing an d delivering products and services (Perreault et al, 2011). Political Environment The political environment of a country is affected by the attitudes and reactions of people, social critics, and the government. The political environment can affect selling opportunities at both local and international levels. In some markets nationalistic feelings can reduce or block marketing activities, which creates a challenge for companies (Perreault et al, 2011).Cultural and Social Environment These two factors have a significant impact on the marketing environment. The cultural and social environment affects the way people live and behave, which in turn affects their consumption behaviour as well as the economic, political, and legal environments. These factors consist of different variables including: language education religion style housing view on work, marriage and family The growth of the fragrance market is different across the various geographic zones depending on the economic conditio ns in that area. The consumption of perfume is largely dependent on demographics and lifestyle trends, in particular the importance of luxury and status.If a particular country is experiencing difficult economic conditions, usually the luxury products suffer the most, as they are not a needed product but rather a nice to have (ReportLinker, 2012). In contrast mass-market, value products are not as impacted by the economy. The US, with the highest market share of 33%,shows steady growth partly due to the fact that the country is coming out of the recession and into better economic conditions. The consumption of perfumes in Asia is relatively low, aside from Hong Kong and Singapore, due to the economic conditions and the perception of perfumes and heavy scents being used as a way to mask body odour.However, the growth potential in these demographics is immense, especially as Asian women are adhering to the Western trends in fashion and personal care, and are receptive to using well-kn own brands for building their self-image (ReportLinker, 2012). The penetration of private fragrance labels in China stands at the low 5%. Brand loyalty and higher levels of disposable income provide popularity for the European fragrance products. Suppliers are targeting the younger population in order to attract new customers, due to the changing age structures in the country. To this day, Chinese consumers favor specialty stores when shopping for fragrances, which is an important consideration for companies wanting to be successful in this market (ReportLinker, 2012). Competitive AnalysisPerreault et al (2011) defines the competitive environment as the number and types of competitors the company is facing and the way these competitors behave in the particular industry. There are four basic kinds of competitive market situations: Pure competition A market state where buyers and sellers trade a uniform commodity such as wheat, copper or financial securities and no single buyer or sel ler has much effect on the market price. In its pure form this market state eliminates the purpose of marketing research, product development, pricing, advertising and promotion. Oligopoly A market state with a few sellers who are highly sensitive and alert to each other’s marketing strategies and pricing.In this market it is difficult for new sellers to enter. Monopolistic competition A market state where many buyers and sellers trade over a range of prices, rather than a single market price. The range of prices occurs due to the fact that the sellers offer a differentiating factor of their product to the buyers. The differentiating factor can be achieved through segmenting, price fluctuations, branding, advertising, personal selling and other marketing tools. Pure Monopoly A market state where a single firm produces a product, for which there are no close substitutes and in which significant barriers to entry prevent other firms from entering the market to compete.The fragr ance market is definitely a monopolistic competition in which many vendors sell to many buyers and there is a range of prices based on differentiating factors created through segmenting, branding, advertising and other marketing tools. The global fragrance market is greatly fragmented with the top three selling companies accounting for 24. 5% of the market value. Most of the leading companies are either large manufacturers of personal care products or large fashion houses and are geographically diversified. As most companies operate large production facilities, fixed costs are high in this market the vast business diversification eases the competitive pressure.In conclusion the rivalry in the fragrance market is moderate. Shown in are the top three leading players in the fragrance market, which are Coty Inc. with 10. 2% share, L'Oreal S. A. with 7. 7% share and Procter & Gamble Company with 6. 6% share. The rest of the market is divided between much smaller fragrance vendors and acc ount for 75. 5% of the market (Datamonitor, 2011). Global Fragrance Market Share: % share, 2010 10% 8% 7% Coty Inc. L'Oreal S. A. Procter & Gamble Company Others 75% Figure 4 Coty Inc. Coty Inc. is a privately held company that manufactures and markets fragrances, color cosmetics, toiletries, skincare, sun care and personal care products.It is headquartered in New York City, employs more than 8,500 people and distributes its products to around 90 countries. The company distributes its products utilizing different channels including department stores, specialty retailers, upscale perfumeries, pharmacies, mass market retailers and duty free shops. The company recorded total revenues of $25. 8 billion in FY2010, an increase of 11. 6% over the previous year. Revenues from the fragrance product category for the company reached $2. 2 billion in FY2009. North America accounted for 32% of total revenues, whereas Europe as its largest ? geographical market accounts for 57% of the total reven ues in FY2010, Asia with 7% in FY2010 and the rest of the world with 4% in FY2010.L'Oreal Even though L'Oreal is the mother company of Maybelline it still needs to be considered as a competitor in a way since it does have five fragrance brands under its umbrella. These brands are placed under the Luxury Product Division and include Giorgio Armani, Ralph Lauren, Cacharel, Victor and Rolf, and Diesel. Procter & Gamble Company (P) P manufactures and markets consumer products with over 300 brands in over 180 countries. The company is headquartered in Cincinnati, Ohio and employs about 129,000 people. The company offers its prestige fragrance products under its beauty division which recorded revenues of $20. 2 billion in FY2011, an increase of 3. 4% over the previous year. P earned 36. 9% of its revenues in the United States and 63. 1% internationally. SWOT Analysis of MaybellinePerrault et al (2011) describes SWOT analysis as a marketing tool used to create a marketing strategy which id entifies screening criteria (and identifies) and outlines the company’s strengths and weaknesses, and its opportunities and threats. The analysis has two categories: internal factors such as strengths and weaknesses, which analyze the company’s resources and abilities; external factors such as opportunities and threats, which are observed by analyzing the external market environment, customers, and competitors. This marketing tool helps the marketing department create a marketing strategy that takes advantage of the company’s strengths and opportunities while avoiding its weaknesses and threats.SWOT analysis is usually illustrated with a diagram consisting of four squares and each one of them summarizes the company’s strengths, weaknesses, opportunities and threats. Maybelline’s SWOT analysis is illustrated in Figure 5. Helpful Harmful Strengths ? Owned by the biggest cosmetics company in the world Solid financial backing Distributed in 127 countri es Leader in mass-market beauty products ? ? Established image Established production and distribution infrastructureWeaknesses Lack of expertise in manufacturing fragrances Product division completely focused on females Lack of expertise in producing natural and organic products Internal Opportunities Growing presence in emerging markets (Asia, South America) Natural and organic fragrances Men’s fragrances   Threats Counterfeit of fragrances Established strong competition Weak economic conditions worldwide External ? ? Figure 5 Strengths Maybelline enjoys a few significant strengths when it comes to its entry into the female fragrance market. One of them is the fact that Maybelline is owned by the biggest cosmetics company in the world in the name of L'Oreal, which has a solid financial foundation, an established image and existing production facilities and distribution channels. Maybelline itself has strengths in terms of its already established image and worldwide presen ce in the mass-market of beauty products. WeaknessesThe most significant weakness of Maybelline is the fact that it has no realistic expertise in developing and manufacturing fragrances and specifically female perfumes. The brand is well known for making and selling makeup, but the fragrance industry poses its own unique challenges. Maybelline’s complete product set is targeted only towards female’s including their research and marketing departments. This is considered a weakness since the men’s fragrance segment of the market is (still) emerging, which is outlined in the opportunities section of this paper. Another opportunity, which Maybelline is not ready for is the emerging segment of natural and organic products, which makes it a weakness for the company.The production of natural fragrances requires investment in research and development and different know-how and expertise, which Maybelline has not fully developed. Opportunities By the year 2020 countries in Asia and South America (emerging market) may represent more than 50% of the total cosmetics market, which directly affects the fragrance portion of the market. Currently, people living in emerging countries consume fewer cosmetics products than the rest of the world (Western Europe, North America, Japan, etc. ), but as their GDP is increasing, the consumption level should increase accordingly creating a great potential for penetration (Marketline, 2012). This presents a serious opportunity for Maybelline to offer its new fragrance in these demographics. Threats According to Global Insight Inc. 2007) and research performed by the Global AntiCounterfeiting Group, counterfeit perfumes and cosmetics cost the industry 3. 0 billion EURO annually in lost revenue and 555 million EURO in lost profit. The effects of counterfeiting include loss of profit, reduced investment and innovation, and an overall slowing down of the economy as a result of lost jobs and reduced tax revenues. Counterf eiting poses one of the biggest threats to Maybelline and its plans to introduce a new female fragrance on the market. Another threat is the long-time established competition in the female fragrance market including stable companies with an established image. This makes it difficult for Maybelline to penetrate the market with yet another new product.Currently, the global economy in general is struggling and especially in some European countries and the United States. As fragrances and cosmetics in general are not a ‘need’ but rather a ‘want’ product, the effects of lower income and higher unemployment rates are posing a threat to this industry and Maybelline itself. SWOT Conclusion By performing a SWOT analysis for the opportunity for Maybelline to introduce a new female fragrance into the market, it becomes apparent that the strengths and opportunities outweigh the weaknesses and threats. An already established company such as Maybelline is more than halfw ay of creating and marketing a new fragrance regardless of its inexperience with this specific product type.The struggling global economy and counterfeit products are challenges that every fragrance company faces, still this industry is strong and has the potential for growth. Market Strategy Perrault et al (2011) describes that to plan a marketing strategy is to find attractive opportunities and develop a profitable marketing strategyThere are two interrelated parts to a marketing strategy and they are the target market and the marketing mix. As defined in this book, a target market is a fairly similar group of potential customers to whom the company wishes to appeal. A marketing mix is the controllable variables the company puts together to satisfy this target group.These variables include the characteristics of the product, the place where the product will be sold, the price the Figure 6 product will be offered at and the promotion that would be used to market it. As illustrated in Figure 6 at the centre of the marketing mix is of course the target customer. Perrault et al (2011) states that the customer is placed in the center of the diagram to show that the customer is the target of all the marketing efforts. Target Market Currently, Maybelline targets women between the ages of 15 and 49 in more than 127 countries worldwide. Based on this wide market the new fragrance being introduced will be targeted to a narrower target, which is women between the ages of 18 and 34 living in Europe.Although as outlined earlier in this report, the men’s fragrance market is rapidly growing and has great potential, Maybelline offers products only to the female part of the population and has an already Figure 7 established image as such a brand. The new perfume brand will follow that image and target females only. The decision to initially introduce the product in Europe only is based on the fact that this is the strongest market for fragrances. If the product succee ds in this market its reach can be expanded to North America and even Asia. Furthering the definition of the target market, Maybelline will focus its marketing efforts on women between ages of 18 and 34 that are either single or freshly married with little or no children, have an active lifestyle and are young professionals. The target market is summarized in Figure 7. Marketing MixAs described in the book by Perrault et al (2011) the marketing mix specifies the details of the new product being developed and includes four P’s (product, place, price and promotion).1. The first P for Product may involve a physical good (a perfume in our case), a service, or a blend of both as well as its branding, packaging, and warranties. The basic idea is that the product has to satisfy a specific customer need.2. The second P is for Place, which defines how the product will reach its customer when and where it is needed. This includes the distribution channels used for getting the product s old.3. The third P is for Promotion and it describes the way the product will be marketed or sold to the customer, which includes advertising and public relations.4. The fourth P is for Price and specifies the amount of money a customer has to pay to acquire the product. When setting the price, the producer must account for the competition in the target market and the cost of producing and marketing the product. Based on the marketing principles and the research described above in this document a marketing mix for Maybelline’s new female fragrance follows. Product Name Maybelline’s new perfume will be called DENI which is an abbreviation for Desire, Exquisite, Natural and Intimate. The name describes what the perfume stands for. When a woman wears the DENI fragrance, she is desired, the scent is exquisite, the product is natural and the connection with it is intimate.Scent The scent of the perfume will be light and fresh, to be worn by females with an active lifestyle when going to work or being active. It is meant for everyday use and does not intrude, since the individual wearing it will be around people interacting. The perfume will only be available in Eau de Parfum spray since it is the lighter and more affordable version of the original scent. Ingredients An increasing trend in the market is the demand for natural products; therefore the DENI perfume will be made out of natural ingredients. This will possibly raise the production cost but compensate with a differentiating factor and the increasing demand for such products. Packaging DENI will be offered only in a 50ml glass bottle, which is compact and utilizing a screw on cap.The bottle design is meant for being carried in a small purse or a bag without the possibility of the cap coming off and being sprayed inside. To keep with the company’s green ideology, the bottle utilizes an aluminum removable pump, which can be separated from the glass bottle before disposal, so the glass bot tle can be easily recycled. The bottles are packaged in a cardboard box made completely from recycled paper and painted with natural paints. The bottle can also be returned to one of the stores where DENI is offered for a refill. Place DENI perfume will be manufactured at the current Maybelline plant located in North Little Rock, Arkansas.There will be an additional facility built for the manufacturing of the new perfume adjacent to the current massive factory. The administrative and transportation functions of the existing plant will be utilized for the new product as well as the distribution channels. DENI will be sold in Specialist Retailers, Department stores (including Duty-Free Shops), supermarkets and hypermarkets as it is a mass-market product with a low profit-margin. Price DENI will cost 38 EURO for the 50ml bottle to the final customer. The perfume is a mass-market product under L'Oreal’s Consumer Product Division and it is meant for everyday use and hence the pric e must be lower than the more luxurious products that the company itself offers as well as the competition.Table 2 shows a comparison of the prices for 50ml Eau de Parfum spray bottles of some of the bestselling perfumes on the market. For instance Chanel No. 5, as one of the best perfumes on the market costs nearly double compared to the price of an equivalent DENI bottle. The product however cannot be the cheapest since it has to be corresponding to L'Oreal’s image of offering high quality products. Perfume price comparison (EURO per 50 ml) 79 62 43 43 40 38 36 30 Table 2 Promotion Even if Maybelline creates the best product at the best price, no one would buy it if customers do not know about it. A very important part of the marketing strategy is the way the product will be introduced and advertised to the target market. As mentioned above, the target is women