I n t e r n a t i o n a l M a r k e t i n g I n t e r n a t i o n a l M a r k e t i n g

Cultural Dynamics in Assessing

Global Markets

Chapter 4

1 4 t h E d i t i o nP h i l i p R. C a t e o r a

M a r y C. G i l l yJ o h n L . G r a h a m

McGraw-Hill/IrwinInternational Marketing 14/e

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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What Should You Learn?What Should You Learn?

• The importance of culture to an international marketer

• The origins and elements of culture

• The impact of cultural borrowing

• The strategy of planned change and its consequences

4-3

Global Perspective Equities and eBay – Culture Gets in the Way

Global Perspective Equities and eBay – Culture Gets in the Way

• Culture deals with a group’s design for living

• The successful marketer clearly must be a student of culture

• Markets are the result of the three-way interaction of a marketer’s– Economic conditions– Efforts– All other elements of culture

• The use of something new is the beginning of cultural change– The marketer becomes a change agent

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Culture’s Pervasive ImpactCulture’s Pervasive Impact

• Culture affects every part of our lives, every day, from birth to death, and everything in between

– Japan – the year of the Fire Horse

• As countries move from agricultural to industrial to services economies’ birthrates decline

• Consequences of consumption

– Tobacco

• Culture not only affects consumption, it also affects production

– Stomach cancer in Japan

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Birthrates (per 1000 women)Birthrates (per 1000 women)

Exhibit 4.1

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Patterns of Consumption (annual per capita)

Patterns of Consumption (annual per capita)

Exhibit 4.2

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Consequences of ConsumptionConsequences of Consumption

Exhibit 4.3

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Human Universals – Myth of DiversityHuman Universals – Myth of Diversity

• Use metaphors

• Have a system of status and roles

• Are ethnocentric

• Create art

• Conceive of success and failure

• Create groups antagonistic to outsiders

• Imitate outside influences

• Resist outside influences

• Consider aspects of sexuality private

• Express emotions with face

• Reciprocate

• Use mood altering drugs

• Overestimate objectivity of thought

• Fear of snakes

• Recognize economic obligations in exchanges of goods and services

• Trade and transport of goods

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Definitions and Origins of CultureDefinitions and Origins of Culture

• Traditional definition of culture

– Culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation

• Humans make adaptations to changing environments through innovation

• Individuals learn culture from social institutions

– Socialization (growing up)– Acculturation (adjusting to a new culture)– Application (decisions about consumption and production)

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Origins, Elements, and Consequences of Culture

Origins, Elements, and Consequences of Culture

Exhibit 4.4

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The visible and invisible parts of culture

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The visible and invisible parts of culture

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Levels at which Culture OperatesLevels at which Culture Operates Culture is a mark of identity, not of superiority.

Elements of culture impact differently on different aspects of the marketing programme.

• National

• Industry

• Organisational

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Individual behaviour/ decision maker

Company culture

Business/industry culture

National culture

The different layers of culture

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NationalNationalThe national culture impacts on dealings with governments and is reflected in the values on which laws and institutions are based.

This explains why some cultures’ nepotism and cronyism can cause no punishment at all.

Family affairs,

Traditions,

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IndustryIndustry

Culture impacts on negotiations with industry.

Industry culture is reflected in the values and norms governing the activities performed by the industry in the other country.

• Credit policy

• Bribing

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OrganizationalOrganizational

Organizational culture impacts on negotiations with firms, as opposed to individuals. For example, when entering into alliances or arranging takeovers.

Hofstede found that at the national level, cultural differences reside more in values and less in practices.

At the organisational level, cultural differences reside more in practices and less in values.

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Needs Hierarchy of Maslow Needs Hierarchy of Maslow

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Self-actualizationSelf-actualization

EsteemEsteem

AffiliationAffiliation

Safety NeedsSafety Needs

Physiological NeedsPhysiological Needs

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Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs

West East

Self-actualization Status

Prestige Admiration

Belonging Affiliation

Safety Safety

Physiological Physiological

• Maslow’s model has been used by international marketers to appreciate how consumers in different countries behave in response to cultural stimuli.

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GeographyGeography

• Exercises a profound control

– Includes climate, topography, flora, fauna, and microbiology– Influenced history, technology, economics, social institutions and

way of thinking

• The ideas of Jared Diamond and Philip Parker

– Jared Diamond► Historically innovations spread faster east to west than north to south

– Philip Parker► Reports strong correlations between latitude (climate) and per capita GDP► Empirical data supports climate’s apparent influence on workers’ wages► Explain social phenomena using principles of physiology

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We All Love Flowers – Why?We All Love Flowers – Why?

• Geography

• History

• Technology and economics

• Social institutions

• Cultural values

• Aesthetics as symbols

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History, the Political Economy, and Technology

History, the Political Economy, and Technology

• History

– Impact of specific events can be seen reflected in technology, social institutions, cultural values, and even consumer behavior

► Tobacco was the original source of the Virginia colony’s economic survival in the 1600s

• Political Economy

– Three approaches to governance competed for world dominance► Fascism► Communism► Democracy/free enterprise

• Technology

– Jet aircraft, air conditioning, televisions, computers, Internet, etc.

– None more important than the birth control pill

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Social InstitutionsSocial Institutions

• Family

• Religion

• School

• The media

• Government

• Corporations

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Social InstitutionsSocial Institutions• Family

– Nepotism – Role of extended family– Favoritism of boys in some cultures

• Religion– First institution infants are exposed to outside the home– Impact of values systems– Misunderstanding of beliefs

• School– Affects all aspects of the culture, from economic development to

consumer behavior– No country has been successful economically with less than 50%

literacy

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Social InstitutionsSocial Institutions

• The media– Media time has replaced family time

► TV► Internet

• Government– Influences the thinking and behaviors of adult citizens

► Propaganda► Passage, promulgation, promotion, and enforce of laws

• Corporations

– Most innovations are introduced to societies by companies

– Spread through media

– Change agents

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Elements of CultureElements of Culture

• Cultural values

– Individualism/Collectivism Index

– Power Distance Index

– Uncertainty Avoidance Index

– Cultural Values and Consumer Behavior

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Verbal CommunicationVerbal CommunicationVerbal communication differs from one culture to another. It differs not only in terms of language but also in terms of the relative importance of the variables involved:

– Who communicates the message and to whom– What message is communicated– How the message is communicated– Where the message is communicated– When the message is communicated– Why the message is communicated

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The role of language in global marketingThe role of language in global marketing

• Language is important in information- gathering and evaluation efforts

• Language provides access to local society

• Language capability is important to company communications

• Language enables the interpretation of context

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Language and CommunicationLanguage and Communication

• Speaking English around the Globe

– There are more people who speak English as a foreign language than native speakers

– 85% of European teens study English

– Sony, Nokia, Matsushita require managers to speak English

• Nonverbal Communication

– Westerners tend to be verbal; Asians value nonverbal communication

– In Japan, bowing has many nuances

– In the Middleast, Westerners should not show the soles of shoes or pass documents with the left hand

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What is this? What is this?

_____ includes time, space, material possessions, friendship patterns and business agreements. It is more important in high-context than low-context cultures.

Non-verbal language

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Non-verbal CommunicationNon-verbal Communication

Care should be taken to spot non-verbal signals, as these can supplement the verbal signals to yield a more accurate picture of reality. The most important signals according to Morris are:

– Body stress signals– Lower body signals– Body posture signals– Random gestures– Facial gestures

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Sensuality and touch culture in Saudi Arabian versus European advertising

Sensuality and touch culture in Saudi Arabian versus European advertising

Drakkar Noir: Sensuality and touch culture in Europe and Saudi ArabiaSource: Field (1986)

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Language and CommunicationLanguage and Communication• Speaking English around the

Globe

– There are more people who speak English as a foreign language than native speakers

– 85% of European teens study English

– Sony, Nokia, Matsushita require managers to speak English

• Nonverbal Communication

– Westerners tend to be verbal; Asians value nonverbal communication

– In Japan, bowing has many nuances

– In the Middleast, Westerners should not show the soles of shoes or pass documents with the left hand

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SRC!SRC!

The lesson that the SRC teaches is that a vital, critical skill of the global marketer is unbiased perception, the ability to see what is so in a culture.

Although this skill is as valuable at home as it is abroad, it is critical to the global marketer because of the widespread tendency toward ethnocentrism and use of the self-reference criterion. The SRC can be a powerful negative force in global business, and forgetting to check for it can lead to misunderstanding and failure.

How might the European Disneyland been different if Disney executives had used the four-step approach?

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European Disneyland ?European Disneyland ?

Step 1. Disney executives believe there is virtually unlimited demand for American cultural exports around the world. Evidence includes the success of McDonald's, Coca-Cola, Hollywood movies, and American rock music. Disney has a track record in exporting its American management system and business style. Tokyo Disneyland, a virtual carbon copy of the park in California, has been a success. Disney policies prohibit sale or consumption of alcohol inside its theme parks.

Step 2. Europeans in general and the French in particular are sensitive about American cultural imperialism. Consuming wine with the midday meal is a long-established custom. Europeans have their own real castles, and many popular Disney characters come from European folk tales.

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European Disneyland ?European Disneyland ?

Step 3. The significant differences revealed by comparing the findings in steps 1 and 2 suggest strongly that the needs upon which the American and Japanese Disney theme parks were based did not exist in France. A modification of this design was needed for European success.

Step 4. This would require the design of a theme park that is more in keeping with French and European cultural norms. Allow the French to put their own identity on the park.

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Marketing ImplicationsMarketing Implications

• Cultural factors must be considered when marketing consumer and industrial products

• Environmental sensitivity reflects the extent to which products must be adapted to the culture-specific needs of different national markets

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Hofstede’s Indexes Language, and Linguistic DistanceHofstede’s Indexes

Language, and Linguistic Distance

Exhibit 4.5

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

Hofstede undertook a global survey of IBM and came up with four underlying dimensions of culture:

• Power Distance

• Individualism/Collectivism

• Masculinity

• Uncertainty Avoidance

• Long-term Orientation

• 90.000 respondents in 66 countries

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Individualism vs. CollectivismIndividualism vs. Collectivism• Hoftsede’s study defines individualism as a person’s

desire for personal freedom, time, and challenge.

• His/her dependence on the organization is low, and self-actualization is a prime motivator. On the other hand, collectivism indicates a person’s dependence on and allegiance to the organization, as well as his/her desire for training, collaboration, and shared rewards.

– High individualism countries: Australia, Britain, and the United States.

– High collectivism countries: China, Mexico, and Japan

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Individualism vs. CollectivismIndividualism vs. Collectivism• Collectivistic cultures

– people belong to groups that are supposed to look after them in exchange for loyalty

• Individualistic cultures

– People look after only themselves and the immediate family

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

Individualism/CollectivismIndividualism/Collectivism

extent to which people in a culture look after their own interests and those of their

immediate family, and where ties are loose

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

PowerPower distancedistance

degree to which less powerful persons in a culture accept the existence of inequality and the unequal distribution of power as a normal

situation

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Power DistancePower Distance• Power distance describes the relationship between

superiors and subordinates. Hoftsede’s study states that when power distance is high, the management style is generally distant, i.e., autocratic or paternalistic. When power distance is low, managers tend to interact with and consult their subordinates during the decision-making process.

– High power distance countries: people blindly obey superiors; centralized, tall structures (e.g., Mexico, South Korea, India)

– Low power distance countries: flatter, decentralized structures, smaller ratio of supervisor to employee (e.g., Austria, Finland, Ireland)

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Large versus Small Power DistanceLarge versus Small Power Distance• Power distance

– the extent to which members of a society accept the unequal distribution of power among individuals

► In large-power-distance societies

–employees believe their supervisors are right; employees do not take any initiative in making non-routine decisions

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Individualism and Power DistanceIndividualism and Power Distance

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

Uncertainty avoidance

extent to which people in a culture feel threatened by uncertain or unknown situations

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Uncertainty Avoidance Uncertainty Avoidance• Hofstede’s study describes uncertainty avoidance as

one’s tolerance of risk:

– When the score is high, workers need precise directions and the prospect of long-term employment, while consumers are wary about trying new products.

– When the score is low, workers are willing to be creative and to move to new jobs, while consumers accept the risk of being the first to try new products.

– Examples of countries ranking high on uncertainty avoidance are Greece, Belgium, and Portugal; those ranking low are Britain, Denmark, and Singapore.

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Power distance and Uncertainty Avoidance

Power distance and Uncertainty Avoidance

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Uncertainty AvoidanceUncertainty Avoidance Risk Taking Behavior

Trust. – While Norwegians tend to exhibit a high degree of trust,

Brazilians tend to be skeptical.

Future Orientation. – While a future orientation tends to be higher in Canada, the

Netherlands, and Switzerland, it tends to be lower in Italy, Poland, and Russia.

Fatalism. – Fatalism represents the belief that life is predestined, that every

event is inevitable, that occurrences represent “the will of God.”

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Strong versus Weak Uncertainty Avoidance

Strong versus Weak Uncertainty Avoidance

• Uncertainty avoidance

– Degree to which members of a society feel threatened by ambiguity and are rule-oriented

– Employees in high uncertainty-avoidance cultures tend to stay with their organizations

► Japan, Greece, and Portugal– Those from low uncertainty-avoidance nations are more mobile

► United States, Singapore, and Denmark

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

Masculine/Feminine

reflected in the different social roles for men and women

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Masculinity versus FemininityMasculinity versus Femininity• Masculinity: dominant social values are success,

money, and things

– High masculine countries: stress earnings, recognition, advancement, challenge, wealth; high job stress (e.g., Germanic countries)

– High feminine countries: emphasize caring for others and quality of life; cooperation, friendly atmosphere., employment security, group decision making; low job stress (e.g., Norway)

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Masculinity versus FemininityMasculinity versus Femininity• the degree to which the dominant values in a

society emphasize assertiveness, acquisition of money and status

– Masculinity► achievement of visible and symbolic organizational rewards

– Femininity► emphasize relationships, concern for others, and the overall

quality of life

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Hofstede’s Cultural TypologyHofstede’s Cultural Typology

Long-term vs. short-term orientations

extent to which cultures exhibit a pragmatic, future-oriented perspective as opposed to a

historic short-term point of view

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Elements of CultureElements of Culture

• Rituals– Marriage– Funerals

• Symbols– Language

► Linguistic distance

– Aesthetics as symbols► Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render

marketing efforts ineffective or even damaging

• Beliefs– To make light of superstitions in other cultures can be an expensive

mistake

• Thought processes– Difference in perception

► Focus vs. big-picture

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Metaphorical Journeys through 23 Nations

Metaphorical Journeys through 23 Nations

Exhibit 4.6

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Cultural KnowledgeCultural Knowledge

• Factual knowledge

– Has meaning as a straightforward fact about a culture – Assumes additional significance when interpreted within the

context of the culture► Needs to be learned

• Interpretive knowledge

– Requires a degree of insight that may best be described as a feeling

► Most dependent of past experience for interpretation► Most frequently prone to misinterpretation► Requires consultation and cooperation with bilingual natives with marketing

backgrounds

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Cultural Sensitivity and ToleranceCultural Sensitivity and Tolerance

• Being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated and appreciated

– Cultures are not right or wrong, better or worse, they are simply different

– The more exotic the situation, the more sensitive, tolerant, and flexible one needs to be

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Cultural ChangeCultural Change

• Dynamic in nature – it is a living process

• Paradoxical because culture is conservative and resists change

– Changes caused by war or natural disasters– Society seeking ways to solve problems created by changes in

environment– Culture is the means used in adjusting to the environmental and

historical components of human existence

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Cultural BorrowingCultural Borrowing

• Effort to learn from others’ cultural ways in the quest for better solutions to a society’s particular problems

– Imitating diversity of other makes cultures unique– Contact can make cultures grow closer or further apart

• Habits, foods, and customs are adapted to fit each society’s needs

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Similarities – An IllusionSimilarities – An Illusion

• A common language does not guarantee a similar interpretation of word or phrases

– May cause lack of understanding because of apparent and assumed similarities

• Just because something sells in one country doesn’t mean it will sell in another

– Cultural differences among member of European Union a product of centuries of history

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Resistance to ChangeResistance to Change

• Gradual cultural growth does not occur without some resistance

– New methods, ideas, and products are held to be suspect before they are accepted, if ever

• Resistance to genetically modified (GM) foods

– Resisted by Europeans– Consumed by Asians– Not even labeled in U.S. until 2000

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Planned and Unplanned Cultural Change

Planned and Unplanned Cultural Change

• Determine which cultural factors conflict with an innovation

• Change those factors from obstacles to acceptance into stimulants for change

• Marketers have two options when introducing and innovation to a culture– They can wait– They can cause change

• Cultural congruence

– Marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms

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Consequences of InnovationConsequences of Innovation

• May inadvertently bring about change that affects very fabric of a social system

• Consequences of diffusion of an innovation

– May be functional or dysfunctional► Depending on whether the effects on the social system are desirable or undesirable

• Introduction of a processed feeding formula into the diet of babies in underdeveloped countries ended up being dysfunctional

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SummarySummary

• A complete and thorough appreciation of the origins and elements of culture may well be the single most important gain to a foreign marketer in the preparation of marketing plans and strategies

• Marketers can control the product offered to a market – its promotion, price, and eventual distribution methods – but they have only limited control over the cultural environment within which these plans must be implemented

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Summary Summary

• When a company is operating internationally each new environment that is influenced by elements unfamiliar and sometimes unrecognizable to the marketer complicates the task

• Special effort and study are needed to absorb enough understanding of the foreign culture to cope with the uncontrollable features