InternationalMarketingPan African e-NetworkThe course introduces the student to the various aspects of international marketing withthe principle objective of developing skills in the identification, analysis and solution ofthe problems encountered in the theories and the practice international marketing abroad. Amity University Mr. Nishant Singhai Semester II
Course Contents:Module I: Global Marketing: An OverviewIntroduction to Global MarketingReasons / ObjectivesEnvironment of International MarketingTransnational Marketing – Domestic to globalVarious termsEPRG frameworkDriving & Restraining ForcesModule II: Social & Cultural EnvironmentBasic aspects of cultureCultural KnowledgeCulture and its elementsAnalytical Approaches to Cultural FactorsMaslow’s hierarchy of needsHofstede’s Cultural TypologyThe SRCEnviromental SensitivityModule III: Global Advertising Global Advertising and Branding.Selecting an advertising agency Creating AdvertisingModule IV: Global Marketing Channels and Physical DistributionChannel objectives and ConstraintsDistribution Channels: Terminology and StructurePhysical Distribution and LogisticsModule V: Global Marketing Information SystemsOverview of GMISSources of Market InformationFormal marketing ResearchModule VI: Global segmentation Targeting & PositioningGlobal Market SegmentationGeographicPsychographicBehaviourBenefitVertical Vs HorizontalGlobal TargetingCriteria for Global targetingSelecting a GTMSGlobal PositioningMarketing in a Developing Country
Module VII: Global e-marketingThe Death of DistanceRelationship marketingLiving in an Age of Technological DiscontinuitiesComponents of the Electronic value chain
Index:Module I: Global Marketing: An Overview 5Module II: Social & Cultural Environment 39Module III: Global Advertising 66Module IV: Global Marketing Channels and Physical Distribution 83Module V: Global Marketing Information Systems 104Module VI: Global segmentation Targeting & Positioning 128Module VII: Global e-marketing 149
Introduction to Global MarketingWhether an organization markets its goods and services domestically orinternationally, the definition of marketing still applies. However, the scope ofmarketing is broadened when the organization decides to sell acrossinternational boundaries, this being primarily due to the numerous otherdimensions which the organization has to account for. When a company becomesa global marketer, it views the world as one market and creates products that willonly require weeks to fit into any regional marketplace. Marketing decisions aremade by consulting with marketers in all the countries that will be affected. Thegoal is to sell the same thing the same way everywhere.Whether an organisation markets its goods and services domestically orinternationally, the definition of marketing still applies. However, the scope ofmarketing is broadened when the organisation decides to sell acrossinternational boundaries, this being primarily due to the numerous otherdimensions which the organisation has to account for. For example, theorganisations language of business may be "English", but it may have to dobusiness in the "French language". This not only requires a translation facility, butthe French cultural conditions have to be accounted for as well. Doing business"the French way" may be different from doing it "the English way". This isparticularly true when doing business with the Japanese.Let us, firstly define "Marketing" and then see how, by doing marketing acrossmultinational boundaries, differences, where existing, have to be accounted for.S. Carter defines marketing as: "The process of building lasting relationships through planning, executing andcontrolling the conception, pricing, promotion and distribution of ideas, goodsand services to create mutual exchange that satisfy individual and organisationalneeds and objectives".
The long held tenants of marketing are "customer value", "competitiveadvantage" and "focus". This means that organisations have to study the market,develop products or services that satisfy customer needs and wants, develop the"correct" marketing mix and satisfy its own objectives as well as giving customersatisfaction on a continuing basis. However, it became clear in the 1980s that thisdefinition of marketing was too narrow. Preoccupation with the tactical workingsof the marketing mix led to neglect of long term product development, so"Strategic Marketing" was born. The focus was shifted from knowing everythingabout the customer, to knowing the customer in a context which includes thecompetition, government policy and regulations, and the broader economic,social and political macro forces that shape the evolution of markets. In globalmarketing terms this means forging alliances (relationships) or developingnetworks, working closely with home country government officials and industrycompetitors to gain access to a target market. Also the marketing objective haschanged from one of satisfying organisational objectives to one of "stakeholder"benefits - including employees, society, government and so on. Profit is stillessential but not an end in itself.Strategic marketing according to Wensley (1982) has been defined as: "Initiating, negotiating and managing acceptable exchange relationships withkey interest groups or constituencies, in the pursuit of sustainable competitiveadvantage within specific markets, on the basis of long run consumer, channeland other stakeholder franchise".Whether one takes the definition of "marketing" or "strategic marketing","marketing" must still be regarded as both a philosophy and a set of functionalactivities. As a philosophy embracing customer value (or satisfaction), planningand organising activities to meet individual and organisational objectives,marketing must be internalised by all members of an organisation, becausewithout satisfied customers the organisation will eventually die. As a set ofoperational activities, marketing embraces selling, advertising, transporting,market research and product development activities to name but a few. It isimportant to note that marketing is not just a philosophy or one or some of theoperational activities. It is both. In planning for marketing, the organisation has to
basically decide what it is going to sell, to which target market and with whatmarketing mix (product, place, promotion, price and people). Although thesetenents of marketing planning must apply anywhere, when marketing acrossnational boundaries, the difference between domestic and internationalmarketing lies almost entirely in the differences in national environments withinwhich the global programme is conducted and the differences in the organisationand programmes of a firm operating simultaneously in different nationalmarkets.It is recognised that in the "postmodern" era of marketing, even the assumptionsand long standing tenents of marketing like the concepts of "consumer needs","consumer sovereignty", "target markets" and "product/market processes" arebeing challenged. The emphasis is towards the emergence of the "customisingconsumer", that is, the customer who takes elements of the market offerings andmoulds a customised consumption experience out of these. Even further, postmodernisim, posts that the consumer who is the consumed, the ultimatemarketable image, is also becoming liberated from the sole role of a consumerand is becoming a producer. This reveals itself in the desire for the consumer tobecome part of the marketing process and to experience immersion into"thematic settings" rather than merely to encounter products. So in consumingfood products for example, it becomes not just a case of satisfying hunger needs,but also can be rendered as an image - producing act. In the post modern marketplace the product does not project images, it fills images. This is true in somefoodstuffs. The consumption of "designer water" or "slimming foods" is astatement of a self image, not just a product consuming act.Acceptance of postmodern marketing affects discussions of products, pricing,advertising, distribution and planning. However, given the fact that this textbookis primarily written with developing economies in mind, where theenvironmental conditions, consumer sophistication and systems are not suchthat allow a quantum leap to postmodernism, it is intended to mention theconcept in passing. Further discussion on the topic is available in theaccompanying list of readings.
When organisations develop into global marketing organisations, they usuallyevolve into this from a relatively small export base. Some firms never get anyfurther than the exporting stage. Marketing overseas can, therefore, beanywhere on a continuum of "foreign" to "global". It is well to note at this stagethat the words "international", "multinational" or "global" are now ratheroutdated descriptions. In fact "global" has replaced the other terms to all intentsand purposes. "Foreign" marketing means marketing in an environment differentfrom the home base, its basic form being "exporting". Over time, this may evolveinto an operating market rather than a foreign market. One such example is thePreferential Trade Area (PTA) in Eastern and Southern Africa where involvedcountries can trade inter-regionally under certain common modalities. Anotherexample is the Cold Storage Company of Zimbabwe.Case 1.1 Cold Storage Company Of ZimbabweThe Cold Storage Company (CSC) of Zimbabwe, evolved in 1995, out of the ColdStorage Commission. The latter, for many years, had been the parastatal (ornationalised company) with the mandate to market meat in Zimbabwe. However,the CSC lost its monopoly under the Zimbabwean Economic Reform Programmeof 1990-95, which saw the introduction of many private abattoirs. During itsmonopoly years the CSC had built five modern abattoirs, a number of which wereup to European Union rating. In addition, and as a driving force to the building ofEU rated abattoirs, the CSC had obtained a 9000 tonnes beef quota in the EU.Most of the meat went out under the auspices of the Botswana MeatCommission. For many years, the quota had been a source of volume andrevenue, a source which is still continuing. In this way, the CSCs exporting of beefto the EU is such that the EU can no longer be considered as " Foreign" but an"Operating" market.Organisations begin to develop and run operations in the targeted country orcountries outside of the domestic one. In practice, organisations evolve and Table1.1 outlines a typology of terms which describes the characteristics of companiesat different stages in the process of evolving from domestic to global enterprises.The four stages are as follows:
1. Stage one: domestic in focus, with all activity concentrated in the homemarket. Whilst many organisations can survive like this, for example raw milkmarketing, solely domestically oriented organisations are probably doomed tolong term failure. 2. Stage two: home focus, but with exports (ethnocentric). Probably believesonly in home values, but creates an export division. Usually ripe for the taking bystage four organisations. 3. Stage three: stage two organisations which realise that they must adapttheir marketing mixes to overseas operations. The focus switches tomultinational (polycentric) and adaption becomes paramount. 4. Stage four: global organisations which create value by extending productsand programmes and focus on serving emerging global markets (geocentric). Thisinvolves recognising that markets around the world consist of similarities anddifferences and that it is possible to develop a global strategy based onsimilarities to obtain scale economies, but also recognises and responds to costeffective differences. Its strategies are a combination of extension, adaptationand creation. It is unpredictable in behaviour and always alert to opportunities.There is no time limit on the evolution process. In some industries, likehorticulture, the process can be very quick.
Table 1.1 Stages of domestic to global evolution Management Stage one Stage two Stage three Stage four emphasis Domestic International Multinational GlobalFocus Domestic Ethnocentric Polycentric GeocentricMarketing Domestic Extension Adaption ExtensionstrategyStructure Domestic International Worldwide area Adaption creation matrix/mixedManagement Domestic Centralised top Decentralised Integratedstyle down bottom upManufacturing Mainly Mainly domestic Host country Lowest coststance domestic worldwideInvestment Domestic Domestic used Mainly in each Crosspolicy worldwide host country subsidizationPerformance Domestic Against home Each host Worldwideevaluation market country market country market share share share
EVOLUTIONARY PROCESS OF GLOBAL MARKETINGGlobal marketing ’a gradual process occurring in stages’. The evolution ofmarketing across national boundaries has identifiable stages, which are discussedin the following:DOMESTIC MARKETINGIn the initial stages, most companies focus solely on their domestic markets. Amarketing restricted to the political boundaries of a country, is called "DomesticMarketing". A company marketing only within its national boundaries only has toconsider domestic competition. The marketing mix decisions are invariably basedon the needs and wants of the domestic customers. These decisions are taken soas to respond competitively and effectively to the domestic environmentalfactors.Market Focus DomesticOrientation EthnocentricMarketing Mix Decisions Focused on domestic customersEXPORT MARKETINGThe stage models suggest that generally a firm focused on domestic marketsbegin to export unintentionally by receiving unsolicited orders from overseasmarkets. The firm tries to fulfill such orders reluctantly with little strategicorientation. Thus, the initial entry of a firm in international markets may becharacterized as a consequence of responding to unsolicited export enquiries.However, the positive experience in fulfilling such overseas market requirementsserves as a stimulus to look for repeat orders.Marketing Focus Overseas(Targeting and entering foreign markets)Orientation EthnocentricMarketing Mix Decisions Focussed mainly on domestic customers. Overseas marketing-generally an extension of domestic
marketing. Decisions made at headquarters. The major marketing decision areas at this stage include market identification and selection, timing and sequencing of entry and selection of an appropriate entry mode. The marketing mix decisions are primarily made at the headquarters.INTERNATIONAL MARKETING International marketing is defined as the marketing activities carried out across national boundaries. International marketing involves:1) Identifying needs and wants of customers in international markets2) Taking marketing mix decisions related to product, pricing, distribution andcommunication keeping in view the diverse consumer and market behaviouracross different countries on one hand and firm’s goals towards globalization onthe other hand3)penetrating into international markets using various mode of entry and takingdecisions in view of dynamic international marketing environment.Marketing Focus Differentiation in country markets by way of developing or acquiring new brandsOrientation PolycentricMarketing Mix Decisions Developing local products depending upon country needs. Decision by individual subsidiaries. The extreme form of international marketing is multi-domestic marketing, where a company establishes an independent foreign subsidiary in each and every foreign market. The foreign subsidiaries
operate independently without any measureable control from the headquarters.MULTINATIONAL MARKETINGOnce a company establishes its manufacturing and marketing operations inmultiple markets, it begins to consolidate its operations on regional basis so as totake advantage of economies of scale in manufacturing and marketing mixdecisions. Various markets are divided into regional sub-segments on the basis oftheir similarity to respond to marketing mix decisions. It is known asmultinational marketing.Marketing Focus Consolidation of operations on regional basis. Gains from economies of scale.Orientation RegiocentricMarketing Mix Decisions Product standardization within regions but not across them on regional basisGLOBAL MARKETINGThe extreme view of global marketing refers to the use of a single marketingmethod across the international markets with little adaptation.Marketing Focus Consolidating firm’s operations on global basisOrientation GeocentricMarketing Mix Decisions Globalization of marketing mix decisions with local variations. Joint decision making across firm’s global operations.The globalization of markets leads to: Reduction of cost in efficiencies and duplication of efforts among national and regional subsidiaries, Opportunities for the transfer of products, brands and other ideas across subsidiaries Emergence of global customers
Improved linkage among national marketing infrastructures leading to the development of a global marketing infrastructure.In practice, global marketing hardly means complete standardization of themarketing mix decisions, but it increasingly means a strategic approach to have aglobal perspective to have economies of scale.Transnational MarketingTransnational marketing involves entering foreign markets with a solid marketingplan that helps a company create a positive brand presence and resonates withresidents of the foreign country Transnational marketing requires extensivemarket research, a solid understanding of a countrys cultures and consumerbehavior trends and the identification of socio/cultural influences on consumerspending habits for particular products and services. Capitalizing on offshoreopportunities is only possible with an accurate assessment of a countrys overallspending habits, needs and desires; this requires ongoing research and analysis of
EPRGE: - Ethnocentric orientationP: - Polycentric orientationR: - Egocentric orientationG: - Geocentric orientationThe key assumption of EPRG is the degree of internationalization to which themanagement is committed or willing to move affects the specific internationalstrategies and decision rule of the firmEthnocentric Orientation • Domestic strategies, techniques, and personnel are perceived as superior • International customers are considered as secondary • Guided by domestic market extension concept: • International markets are regarded primarily as outlets for surplus domestic production • International marketing plans are developed in-house by the international division • try to market those product in other countries which have demand equal to domestic marketPolycentric Orientation • Guided by the multidomestic market concept:
• Focuses on the importance and uniqueness of each international market • Likely to establish businesses in each target country • Fully decentralized, minimal coordination with headquarters • Marketing strategies are specific to each country • in the effort to satisfy local customer needs and wants, full product modification is implemented or separate product lines are developed • Result: No economies of scale, duplicated functions, higher final product costsRegiocentric Orientation • Guided by the global marketing concept: • World regions that share economic, political, and/or cultural traits are perceived as distinct markets • Divisions are organized based on location • Regional offices coordinate marketing activitiesGeocentric Orientation • Guided by the global marketing concept: • The world is perceived as a total market with identifiable, homogenous segments • Targeted marketing strategies aimed at market segments, rather than geographic locations • Achieve position as low-cost manufacturer and marketer of product line • Provides standardized product or service throughout the world • analyze and manage the marketing strategies with integrated global marketing program • The objective of a geocentric company is to achieve a position as a low- cost manufacturer and marketer of its product line. Such firms achieve competitive advantage by developing manufacturing processes that add more value per unit cost to the final product than do their rivals.REASONS FOR ENTERING INTERNATIONAL MARKETS.The reasons for entering international markets vary from firm to firm and countryto country depending upon the market characteristics. However, firms oftendecide to enter into international market due to the following reasons:
Achieving Profitability economies of scale Risk spread Why should a firmSpreading Access to enter internationalR&D cost imported inputs market? Marketing opportunities due Growth Uniqueness ofGROWTH to life cycle product or servicesFirms enter international market when the domestic market potential saturatesand they are forced to explore alternative marketing opportunities overseas.It may be observed that countries with smaller market size such as Singapore,Hong Kong etc. had no other option but to internationalize.PROFITABILITYThe price differential among markets also serves as an important incentive tointernationalize. Exporters benefit from the higher profit margins in the foreignmarkets. Sometimes, strong competition in domestic market limits a firm’sprofitability in that market. Price differentials and enhanced profits in theinternational markets are some of the fundamentals motives of exporting.ACHIEVING ECONOMIES OF SCALE
Large scale production capacities necessitate domestic firms dispose of theirgoods in international markets once the domestic market become saturated.RISK SPREADA company operating in domestic markets is highly vulnerable to economicupheavals in the home market. Overseas markets provide an opportunity toreduce their dependence on one market and spread the market risks.ACCESS TO IMPORTED INPUTSThe national trade policies provide for import of inputs used for exportproduction, which are otherwise restricted. Besides, there are a number ofincentive schemes which provide duty exemption or remission on import ofinputs for export production. It helps the companies in accessing imported inputsand technical know-how to upgrade their operations and increase theircompetitiveness.UNIQUENESS OF PRODUCT OR SERVICEThe product with unique attributes is unlikely to meet any competition in theoverseas markets and enjoy enormous opportunities in international markets.E.g. herbal and medicinal plants, handicrafts, value added BPO services andsoftware development at competitive prices provide Indian firms an edge overother countries and smoothen their entry into international market.MARKETING OPPORTUNITIES DUE TO LIFE CYCLESEach market shows a different stage of life cycle for different products, whichvaries widely across country markets. When product or service get saturated inthe domestic or an international market, a firm may make use of such challengesand convert them into marketing opportunities by operating into internationalmarkets.SPREADING R&D COST
By way of spreading the potential market size, a firm recovers quickly the costincurred on research and development. It is especially true for products involvinghigher cost of R&D. International markets facilitate speedy recovery of such costsbecause of the large market size and also due to larger coverage of the rightmarket segments in international markets.There have been many underlying forces, concepts and theories which haveemerged as giving political explanation to the development of internationaltrade. Remarkably, despite the trend to world interdependency, some countrieshave been less involved than others. The USA, for example, has a remarkablypoor export record. About 2000 US companies only account for more than 70%of US manufacturers exports. This has been mainly due to its huge statewidedomestic market, which is almost tantamount to "international trade", forexample, Californian fruit being sold three thousand kilometres away in NewJersey. Japan has risen fast to dominate the export rankings, with countries ofAfrica struggling to make a significant mark, mainly because of their emphasis onexporting primary products. This section will briefly examine the forces whichhave been instrumental in the development of world trade.Elements of the global marketing mixProductA global company is one that can create a single product and only have to tweakelements for different markets.PricePrice will always vary from market to market. Price is affected by many variables:cost of product development (produced locally or imported), cost of ingredients,cost of delivery (transportation, tariffs, etc.), and much more. Additionally, theproduct’s position in relation to the competition influences the ultimate profitmargin.Placement
How the product is distributed is also a country-by-country decision influencedby how the competition is being offered to the target market. Using Coca-Cola asan example again, not all cultures use vending machines.PromotionAfter product research, development and creation, promotion (specificallyadvertising) is generally the largest line item in a global company’s marketingbudget. At this stage of a company’s development, integrated marketing is thegoal. The global corporation seeks to reduce costs, minimize redundancies inpersonnel and work, maximize speed of implementation, and to speak with onevoice. The goal of a global company is to send the same message worldwide.
DRIVING FORCES/ PUSH FACTORS Driving Forces: - Driving forces are the forces that help in achieving greaterglobalization. They are also known as the push factors. The main driving forcescan be explained under the following headings. Technology. Saturated Markets. Improvement of Communication/Transport. Removal of trade Barriers. Profitability Growth/Expansion Cost Consideration Image of the CompanyThe driving forces or the push forces are described briefly below:- 1. Technology: - Perhaps the single most important innovation has been the development of the micro processors, yet enabled the explosive growth of high power, low cost computing, vastly increasing the amount of information that can be processed by individuals and firms. The cost of micro processors continues to fall, while their power continues to increase. The rapid growth of the internet and the associated World Wide Web is the latest expression of this development. In 1990 fewer than 1 million users were connected to the internet. By the year 2005 about 1.12 billion or 18% of the world’s population were found to be using internet. The increasing use of better technology is resulting in better trade and business between different countries thus leading to globalization. 2. Saturated Markets: - When the companies face the problem of saturated markets in the home country they have to go to foreign markets in search of better markets. They find markets where there is demand for the
products that they produce and thus help in making the world a global market.3. Improvement of Communication/Transport: - As the technology improved the global communication have been revolutionized by the developments in satellite, optical fiber, and wireless technologies. Thus between 1930 and 2000 the cost of a three minute phone call between New York and London fell from $244.65 to 36 cents. Better and cheaper communication leads to better trade which eventually leads to globalization. In addition to developments in communication technology, several major innovations in transportation technology have occurred since World War II. In economic terms the most important are probably the development of commercial jet aircrafts and super freighters and the introduction of containerization, which simplifies transshipment from one mode of transport to another. The advent of commercial jet travel, by reducing the time needed to get from one location to another, has efficiently shrunk the globe. In terms of travel time, New York is now “closer” to Tokyo then it was to Philadelphia in the colonial days. Better transport led to doing better business by reducing the distances between two countries by great margins thus leading to globalization.4. Removal of trade Barriers: - With the establishment of World Trade Organization whose main objective was to remove the trade barriers that existed between two countries, doing trade has been much easier. WTO as it is known is one of the main factors why the average tariff rates of countries like France, Germany and United States have fallen from about 45% in 1920s to about 3.9% in 2000. Lower tariff allows the system of free trade in the global market thus helping in greater globalization.5. Profitability: - All the business firms have one common objective which is to earn profits. When the profit margin in the home country diminishes gradually the firms starts looking for other partners who are often from other countries thus leading to globalization.
6. Growth/ Expansion: - The firms also want to expand and grow with time. Therefore they spread their business to other parts of the world. They trade with different partners all over the world which leads to globalization. 7. Cost Consideration: - The firms often to minimize the cost of production start their operations in different parts of the world. For example a country from Europe may start its production operation in a country in Asia for reducing its cost of production since the cost of labor is cheaper in Asia then in Europe. By spreading their operations the firms are eventually helping in globalization. 8. Image of the company: - The Company often to enhance its image in the eyes of the customers starts its global operations. They join foreign partners for this reason thus leading to globalization.Restraining Forces/PULL FACTORS Restraining forces are the forces that act as obstacle in the process ofglobalization. They are also known as the pull factors of globalization. The mainrestraining forces can be explained under the following headings. Cultural Myopia Concentration of PowerThe restraining forces or the pull forces are described briefly below:-
1. Cultural MyopiaCulture is one of the major obstacles in the process of globalization. Since theculture of different countries all over the world is different sometimes thisacts as an obstacle in the globalization process. Different beliefs, rituals,customs and traditions which together are known as the culture of aparticular region or a country often become a problem. A country whichwants to start its global operation in a foreign country must first analyze theculture of that country which may be quite difficult in some cases.2. Concentration of Power Critics of globalization argue that despite the supposed benefits associatedwith free trade and investment, over the last hundred years or so the gapbetween the rich and the poor nations of the world has gotten wider. In 1870the average income per capita in the world’s 17 richest nations was 2.4 timesthat of all other countries. In 1990 the same group was 4.5 times as rich as therest. This proves that the globalization process is helping the rich grow richerand eventually making the poor poorer. The reasons behind this are theconcentration of power in the hands of few countries.
Extra Reading materialMarket forces and developmentOver the last few decades internationalism has grown because of a number ofmarket factors which have been driving development forward, over and abovethose factors which have been attempting to restrain it. These include marketand marketing related variables.Many global opportunities have arisen because of the clustering of marketopportunities worldwide. Organisations have found that similar basic segmentsexist worldwide and, therefore, can be met with a global orientation. Cotton, asan ingredient in shirtings, suitings, and curtain material can be globally marketedas natural and fashionable. One can see in the streets of New York, London, KualaLumpar or Harare, youth with the same style and brand of basketball shirts orAmerican Football shorts. Coca Cola can be universally advertised as "Adds Life"or appeal to a basic instinct " You cant beat the Feeling" or "Come alive" as withthe case of Pepsi. One can question "what feeling?", but that is not the point. Themore culturally unbounded the product is, the more a global clustering can takeplace and the more a standardised approach can be made in the design ofmarketing programmes.This standardised approach can be aided and abetted with technology.Technology has been one of the single most powerful driving forces tointernationalism. Rarely is technology culturally bound. A new pesticide isavailable almost globally to any agricultural organisation as long as it has themeans to buy it. Computers in agriculture and other applications are useduniversally with IBM and Macintosh becoming household names. The need torecoup large costs of research and development in new products may forceorganisations to look at global markets to recoup their investment. This iscertainly true of many veterinary products. Global volumes allow continuinginvestment in R & D, thus helping firms to improve quality. Farm machinery, forexample, requires volume to generate profits for the development of newproducts.
Communications and transport are shrinking the global market place. Valueadded manufacturers like Cadbury, Nestlè, Kelloggs, Beyer, Norsk Hydro, MasseyFerguson and ICI find themselves "under pressure" from the market place anddistributors alike to position their brands globally. In many cases this may meanan adaption in advertising appeals or messages as well as packaging andinstructions. Nestle will not be in a hurry to repeat its disastrous experience ofthe "Infant formula" saga, whereby it failed to realise that the ability to find,boiled water for its preparations, coupled with the literacy level to read theinstructions properly, were not universal phenomenon.Marketing globally also provides the marketer with five types of "leverage" or"advantages", those of experience, scale, resource utilisation and global strategy.A multi-product global giant like Nestle, with over £10 billion turnover annually,operates in so many markets, buys so much raw material from a variety ofoutgrowers of different sizes, that its international leverage is huge. If itconsumes a third of the worlds cocoa output annually, then it is in a position todominate terms. This also has its dangers.The greatest lift to producers of raw agricultural products has been the almostuniversal necessity to consume their produce. If one considers the whole rangeof materials from their raw to value added state there is hardly a market segmentwhich cannot be tapped globally. Take, for example, oranges. Not only areBrazilian, Israeli, South African and Spanish oranges in demand in their raw stateworldwide, but their downstream developments are equally in demand. Orangejuice, concentrates, segments and orange pigments are globally demanded. Inaddition the ancillary products and services required to make the orange industrywork, find themselves equally in global demand. So insecticides, chemicals,machinery, transport services, financial institutions, warehousing, packaging anda whole range of other production and marketing services are in demand, manyprovided by global organisations like Beyer, British Airways and Barclays Bank. Ofcourse, many raw materials are at the mercy of world prices, and so manydeveloping countries find themselves at the mercy of supply and demandfluctuations. But this highlights one important global lesson - the need to studymarkets carefully. Tobacco producing countries of the world are finding this out.With a growing trend away from tobacco products in the west, new markets orincreasing volumes into consuming markets have to be prospected and
developed. Many agricultural commodities take time to mature. An orange grovewill mature after five years. By that time another country may plant or have itstrees mature. Unless these developments are picked up by global intelligence theplans for a big profit may be not realised as the extra volume supplied depressesprices. This happened in 1993/94 with the Malawian and Zimbabwean tobaccocompanies. The unexpected release of Chinese tobacco depressed the tobaccoprice well below expectations, leaving farms with stock and large interestcarrying production loans.A number of suppliers of agricultural produce can take advantage of "off season"in other countries, or the fact that they produce speciality products. This is theway by which many East African and South American producers establishedthemselves in Europe and the USA respectively. In fact the case of Kenyavegetables to Europe is a classic, covering many of the factors which have justbeen discussed-improved technology, emerging global segments, shrinkingcommunications gaps and the drive to diversify product ranges.
Case 1.5 Kenya Off Season VegetablesKenyas export of off season and specialty vegetables has been such that from 1957 to theearly 1990s exports have grown to 26 000 tones per annum. Kenya took advantage of:a) Increased health consciousness, increased affluence and foreign travel of West Europeanconsumers;b) Improved technologies and distribution arrangements for fresh products in WesternEurope;c) The emergence of large immigrant populations in several European countries:d) programmes of diversification by agricultural export countries ande) Increased uplift facilities and cold store technologies between Europe and Kenya.Exports started in 1957, via the Horticultural Cooperation Union, which pioneered theEuropean "off season" trade by sending small consignments of green beans, sweet peppers,chilies and other commodities to a London based broker who sold them to up market hotels,restaurants and department stores. From these beginnings Kenya has continued to give highquality, high value commodities, servicing niche markets. Under the colonialists, productionremained small, under the misguided reasoning that Kenya was too far from major markets.So irrigation for production was limited and the markets served were tourists and the settlersin Kenya itself.The 1970s saw an increased trade as private investment in irrigation expanded, and airfreight space increased, the introduction of wide bodied aircraft, and trading relationshipsgrew with European distributors. Kenya emerged as a major supplier of high quality sweetpeppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra,chillies etc.) to the UK growing immigrant population. Kenya was favored because of itsability to supply all year round - a competitive edge over other suppliers. Whilst the UKdominated, Kenya began supplying to other European markets.
Kenyas comparative advantage was based on its low labor costs, the countrys locationand its diverse agro-ecological conditions. These facilitated the development of adiversified product range, all year round supply and better qualities due to laborintensity at harvest time. Kenyas airfreight costs were kept low due to governmentintervention, but lower costs of production were not its strength.This lay in its ability for continuance of supply, better quality and Kenyan knowledge ofthe European immigrant population. Kenyas rapidly growing tourist trade alsoaccelerated its canning industry and was able to take surplus production.In the 1980s Kenya had its ups and downs. Whilst losing out on temperature vegetables(courgettes etc.) to lower cost Mediterranean countries, it increased its share in Frenchbeans and other specialty vegetables significantly getting direct entry into thesupermarket chains and also Kenya broke into tropical fruits and cut flowers - a majorsuccess. With the development and organization or many small "out growers",channeled into the export market and thus widening the export base, the industry nowprovides an important source of income and employment. It also has a highly developedinformation system, coordinated though the Kenya Horticultural Crops DevelopmentAuthority.Kenya is thus a classic case in its export vegetable industry of taking advantage of globalmarket forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning todevelop as another source of flowers and vegetables, particularly the former.
Environment of International Marketing.The marketing environment consists of all factors that can affect theorganization’s marketing activities. These factors are largely uncontrollable.The global marketing environment comprises the intermediate and the macroenvironment.Intermediate environment: This is also known as Micro environment.The intermediate environment contains those factors which are semi-controllable through contracts. This environment influences the organizationdirectly. Micro tends to suggest small, but this can be misleading they will becategorized as:Employees: Labor of the company • Hire good people • Empower them • keep them happy otherwise how can they keep your customers happy ?Stockholders • Mergers and acquisitions require support • Institutional investors • can buy and sell huge volumes Shareholder valueSuppliers: The suppliers of a company are an important aspect of themicroenvironment because even the slightest delay in receiving supplies canresult in customer dissatisfaction. Marketing managers must watch supplyavailability and other trends dealing with suppliers to ensure that product will bedelivered to customers in the time frame required in order to maintain a strongcustomer relationship. • Crucial when there are lots of parts • Car industry • JIT • Few suppliers only (following Japanese)Customers: There are different types of customer markets including consumermarkets, business markets, government markets, international markets, andreseller markets. The consumer market is made up of individuals who buy goods
and services for their own personal use or use in their household. Businessmarkets include those that buy goods and services for use in producing their ownproducts to sell. This is different from the reseller market which includesbusinesses that purchase goods to resell as is for a profit. These are the samecompanies mentioned as market intermediaries. The government marketconsists of government agencies that buy goods to produce public services ortransfer goods to others who need them. International markets include buyers inother countries and includes customers from the previous categories. • Consumer Movement • Thus, the importance of relationship marketing particularly, when times are hardCompetitors: is also a factor in the microenvironment and include companieswith similar offerings for goods and services. To remain competitive a companymust consider who their biggest competitors are while considering its own sizeand position in the industry. The company should develop a strategic advantageover their competitors.Macro environmentThe macro environment refers to all forces that are part of the larger society andaffect the microenvironment. It includes concepts such as demography,economy, natural forces, technology, politics, and culture.DemographyDemography refers to studying human populations in terms of size, density,location, age, gender, race, and occupation. This is a very important factor tostudy for marketers and helps to divide the population into market segments andtarget markets. This can be beneficial to a marketer as they can decide who theirproduct would benefit most and tailor their marketing plan to attract thatsegment. Demography covers many aspects that are important to marketersincluding family dynamics, geographic shifts, work force changes, and levels ofdiversity in any given area.Economic environmentAnother aspect of the macro environment is the economic environment. Thisrefers to the purchasing power of potential customers and the ways in which
people spend their money. Within this area are two different economies,subsistence and industrialized. Subsistence economies are based more inagriculture and consume their own industrial output. Industrial economies havemarkets that are diverse and carry many different types of goods. Each isimportant to the marketer because each has a highly different spending patternas well as different distribution of wealth.Natural environmentThe natural environment is another important factor of the macro environment.This includes the natural resources that a company uses as inputs and affectstheir marketing activities. The concern in this area is the increased pollution,shortages of raw materials and increased governmental intervention. As rawmaterials become increasingly scarcer, the ability to create a company’s productgets much harder. Also, pollution can go as far as negatively affecting acompany’s reputation if they are known for damaging the environment. The lastconcern, government intervention can make it increasingly harder for a companyto fulfill their goals as requirements get more stringent.Technological environmentThe technological environment is perhaps one of the fastest changing factors inthe macro environment. This includes all developments from antibiotics andsurgery to nuclear missiles and chemical weapons to automobiles and creditcards. As these markets develop it can create new markets and new uses forproducts. It also requires a company to stay ahead of others and update theirown technology as it becomes outdated. They must stay informed of trends sothey can be part of the next big thing, rather than becoming outdated andsuffering the consequences financially.Political environmentThe political environment includes all laws, government agencies, and groupsthat influence or limit other organizations and individuals within a society. It isimportant for marketers to be aware of these restrictions as they can becomplex. Some products are regulated by both state and federal laws. There areeven restrictions for some products as to who the target market may be, forexample, cigarettes should not be marketed to younger children. There are alsomany restrictions on subliminal messages and monopolies. As laws andregulations change often, this is a very important aspect for a marketer tomonitor.
Cultural environmentThe final aspect of the macro environment is the cultural environment, whichconsists of institutions and basic values and beliefs of a group of people. Thevalues can also be further categorized into core beliefs, which passed on fromgeneration to generation and very difficult to change, and secondary beliefs,which tend to be easier to influence. As a marketer, it is important to know thedifference between the two and to focus your marketing campaign to reflect thevalues of a target audience.Globalization has generated increased demands on multinational enterprises(MNEs) to formulate and implement international strategies that respond topressures for both external flexibility and internal efficiency. Which internationalstrategy is pursued will depend upon the characteristics (e.g., opportunities,constraints) of the external environment, the firms internal capabilities, and thetradeoffs associated with responding to the pressures for external flexibility.SWOT analysisIt is a tool for auditing an organization and its environment. It is the first stage ofplanning and helps marketers to focus on key issues. SWOT stands for strengths,weaknesses, opportunities, and threats. Strengths and weaknesses are internalfactors. Opportunities and threats are external factors.Strength are: Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.Weaknesses are: Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation.Opportunity are:
A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor.Threats are: A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.
Case Studies ARIZONA SUNRAY, INC. Buy American or Look Abroad? JEFFREY A. FADIMAN San Jose State UniversityArizona Sunray is one of the pioneering companies in solar energy within that state. Itsfounding generation consisted of third-generation Arizonans, descendants of the statesearliest pioneers. The founders took great pride in that pioneering heritage, often boastingthat the familys rise to relative prosperity was a result of "thinking Arizona." To them, thephrase meant a ceaseless search for business opportunities within the state. In the late I 950s, one member of this generation emerged as a new type of pioneer-one of a cluster of scientists and businessmen who hoped to develop the first practicalapplications of solar energy on a scale available to home owners. In the early 1960s, he pio-neered the use of solar energy in offices and homes, incorporating, with other members of hisfamily, into what proved to be a surprisingly successful firm, eventually named Arizona Sunray.After some experimentation, the firm chose the slogan "Follow the Sun: Its Arizonas Way."Reasoning that the way to acquire new business was to follow the sun, the firm expanded intoevery area of Arizona, and then into Nevada and New Mexico. The next generation took control of the business in 1965. As a result, a decision wasmade to redirect expansion away from the relatively unpopulated states of the Southwest andmove due, west into the larger urban population centers of coastal California. The LosAngeles/Orange County area was considered particularly favorable for potential expansion,with relatively affluent target populations that might show considerable interest in the use ofsolar energy within their homes. Several aspects of the marketing program were reshaped toappeal more directly to coastal Californians, including a change in the firms slogan, whichbecame "Catch the Rays: Its Californias Way." The concept proved quite successful, and thefirm continued to expand. By 1995 members of the next generation were just beginning to reach positions ofinfluence and authority within the firm. Their relative affluence, however, had permitted themto acquire both travel experience and education abroad. As a consequence, they proposed afurther expansion, seeking to "follow the sun" on a scale undreamed of by their elders. Theyargued that Arizona Sunray should spread around the entire Pacific Rim, taking appropriateadvantage of new techniques in miniaturization to fulfill an entire range of solar-poweredneeds-from solar-powered calculators to rural solar cookers-permitting Arizona Sunray (to berenamed Pacific Sunray) to take maximum advantage of both current opportunity and long-range planning for expansion. Surviving members of the founding generation instantly rejected the proposal, refusingto contemplate such radical ideas. "Why even bother?" the firms first president asked. "Weredoing fine right in America. We know our product, we know our clientele, and we know theWest. This markets huge! Were making steady profits. Every member of this family and every
worker in this firm is doing fine. Why would we want to dissipate our capital in marketing toplaces we know next to nothing about? The moneys in America; why look abroad?" Members of all three generations met to thrash out the issue. The oldest, though nowretired held considerable influence. The youngest, though lacking power, felt they held a widerand more flexible perspective. The middle generation, though holding formal decision-makingpowers, felt pulled both ways and wondered if there might be ways to satisfy both sides.Questions1. As a member of the youngest generation, present your case. What advantages couldArizona Sunray derive from an attempt to expand its goods and services abroad?2. As a member of the oldest generation, present your case. Why should the firm remainwithin America? What hard questions could you ask of members of the youngest generationthat might suggest weaknesses in their proposal?3. As a member of the middle generation, what compromise can you propose that might proveacceptable to both sides?
Can Mac Fight Back?LEAD STORY-DATELINE: Marketing, 17 October 2002.McDonalds is the worlds biggest restaurant chain, and according to Interbrand, the 8th mostvaluable brand. It seems everyone recognizes the golden arches. The company is extremelysuccessful despite being a symbol of American imperialism, and being hated by animal rightsactivists, groups promoting healthy diets, and anti-capitalists. There are signs that McDonaldsis having difficulty keeping up with the trends in the restaurant industry, maintaining itspositive brand image, and getting the message out about its products. The companys shareprice stands at a seven-year low, and in September 2002; Salomon Smith Barney forecastedMcDonalds stock would under perform.McDonalds is experimenting with new restaurant designs, diversifying its menu offerings toinclude healthier choices or touches of cuisines favored in the local area, and lowering prices onvarious items to try to appeal to more people, keep its image fresh, and increase sales. Yet MarkKalinowski of Salomon Smith Barney says those things do not make up for rude McDonaldsworkers, order mistakes, or sluggish service. And Kalinowski is not the only one to have noticed.Many people around the world are questioning McDonalds ability to meet its commitment ofquality and service in its restaurants. Even the role of Ronald McDonald in the companyscommunications may be faltering. Leaked internal memos suggest company executives arequestioning his relevance for todays children.The companys commercials in the UK have taken a turn for the worse lately, lacking a cohesivemessage. The company has been beleaguered by bad press - vegetarians suing over eating itsbeef-based cooking oil, teenagers accusing the restaurant of making them fat, popular bookscriticizing the fast food industry, and fears of mad cow disease. The company seems to beresponding by supporting more community programs and increasing its sponsorship ofcharitable causes, such as funding Unicefs World Childrens Day. Whether McDonalds strategyto stay ahead of the competition will be effective remains to be seen.Questions 1. In general, where do you think McDonalds stands on the range from standardization to adaptation in terms of its global marketing? 2. What are some of the issues in having a mascot like Ronald McDonald in another culture besides the U.S.? How can it be effective in other national settings? 3. The text discussion refers primarily to manufactured products. However, do you think that it applies to the problems that McDonalds has in the restaurant business?
CULTURE is a pattern of shared basic assumptions that the grouplearned as it solved its problems of external adaptation and internal integrationthat has worked well enough to be considered valid and therefore, to be taughtto new members as the correct way to perceive, think, and feel in relation tothose problems. Culture is the way that we do things around here. Culture couldrelate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture). It is widely accepted that you arenot born with a culture, and that it is learned. So, culture includes all that wehave learned in relation to values and norms, customs and traditions, beliefs andreligions, rituals and artifacts.Organizational culture is an idea in the field of Organizational studies andmanagement which describes the psychology, attitudes, experiences, beliefs andvalues (personal and cultural values) of an organization. It has been defined as"the specific collection of values and norms that are shared by people and groupsin an organization and that control the way they interact with each other andwith stakeholders outside the organization. Organizational Culture refers to thevalues, beliefs and customs of an organization. Whereas Organizational structureis relatively easy to draw and describe, organizational culture is less tangible.CROSS CULTURAL MARKETING: culture is collective programming of the mindwhich distinguishes the members of one group or category from the others. Theoxford encyclopedia English dictionary defines culture as “the art and othermanifestation of human intellectual achievement regarded collectively as thecustoms, civilization and achievements of a particular time or people: the way oflife of a particular society or group”. The consumer behavior is greatly influencedby culture, which varies widely among countries. Most Indians find difficult tounderstand how people in the west eat cow which gives milk and is other EastAsian countries love for food such as blood worm soup, snake soup and dog meatis not easy to rationalize for the people of other cultures. Such unintentionalreference to context, known as self reference criteria (src), often interferes inanalyzing and interpreting the marketing problems in its true sense. A socialgroup acquires culture through learning and experience. Culture is shared amongthe members of a group, organization, or society and passed from onegeneration to the other. In-Culture Marketing is a methodology applied to
Marketing that recognizes the existence of cultural programming and that thereare consumer groups that have life experiences “in a different cultural setting”than ours, and therefore their tastes, values, expectations, beliefs, ways ofinteraction, ways of entertainment, music, dressing preferences, food, etc. theytend to be different than ours, because their cultural programming is different.What is culture?Much has been written on the subject of culture and its consequences. Whilst onthe surface most countries of the world demonstrate cultural similarities, thereare many differences, hidden below the surface. One can talk about "the West",but Italians and English, both belonging to the so called "West", are very differentin outlook when one looks below the surface. The task of the global marketer isto find the similarities and differences in culture and account for these indesigning and developing marketing plans. Failure to do so can be disastrous.Terpstran9 (1987) has defined culture as follows: "The integrated sum total of learned behavioral traits that are manifest andshared by members of society"Culture, therefore, according to this definition, is not transmitted genealogically.It is not, also innate, but learned. Facets of culture are interrelated and it isshared by members of a group who define the boundaries. Often differentcultures exist side by side within countries, especially in Africa. It is notuncommon to have a European culture, alongside an indigenous culture, say, forexample, Shona, in Zimbabwe. Culture also reveals itself in many ways and inpreferences for colours, styles, religion, family ties and so on. The color red isvery popular in the west, but not popular in Islamic countries, where sober colorslike black are preferred.Much argument in the study of culture has revolved around the "standardization"versus "adaption" question. In the search for standardization certain "universals"can be identified. Murdock7 (1954) suggested a list, including age grading,religious rituals and athletic sport. Levitt5 (1982) suggested that traditionaldifferences in task and doing business were breaking down and this meant thatstandardization rather than adaption is becoming increasingly prevalent.
Culture, alongside economic factors, is probably one of the most importantenvironmental variables to consider in global marketing. Culture is very oftenhidden from view and can be easily overlooked. Similarly, the need to overcomecultural myopia is paramount.Elements of culture:1. Religion: Generally the consumption patterns are considerably influenced by religious beliefs. As most of the Indian do not eat beef and India has the second largest Muslim (who do not eat pork) population in the world, McDonald’s serves neither beef nor pork in India. Besides Indian vegetarianism is too difficult for foreign to understand, where even changing of cooking utensils between two groups is frowned upon. As a result and in an effort to respect the sensibilities of the two large consumer groups. India is perhaps the only country where McDonald’s has separate kitchens for vegetarian and for non vegetarian’s food. In Islamic countries, the meat of animals slaughtered through the Halal process can alone be consumed. There fore all meat and Meta products exported to Muslim countries have to be certified by a recognized agency to this effect.Religion can affect marketing in a number of ways:· Religious holidays - Ramadan cannot get access to consumers as shops areclosed.· consumption patterns - fish for Catholics on Friday· economic role of women - Islam· caste systems - difficulty in getting to different costs for segmentation/nichemarketing· joint and extended families - Hinduism and organizational structures;· institution of the church - Iran and its effect on advertising, "Western" images· market segments - Maylasia - Malay, Chinese and Indian cultures making marketsegmentation· sensitivity is needed to be alert to religious differences.2. Value system: Values are the shared assumption of a group about how things ought to be or abstract ideas about what a group believes to be good or
desirable or right. The consumer behavior in international market is considerably affected by their value system.3. Norms: Norms are the guidelines or special rules that prescribe appropriate behavior in a given situation. For instance, aggressive selling in Japan is not taken in positive spirit. Many companies including Dell computers, instead of aggressive selling emphasize the benefits in terms of lower price by direct selling. Cultural norms affect the consumption patterns and habits too. Indians and other south Asian generally use spoons of different sizes while eating. Chinese and Japanese people use chopsticks as the meat is cut into small pieces, but European and Americans use knives and forks to cut the meat on the dining table. Norms are sub divided into a) Mores: Norms that carry a strong social sanction if violated because the members of a culture consider adherence to them essential to the well-being of the society e.g. The prohibition against destroying other peoples property b) Folkways: Norms that carry only a weak social sanction if violated because the members of the society do not consider adherence to them essential to the well-being of the society e.g. washing ones clothes, eating with your mouth closed c) Laws: Norms that the governing body of a society officially adopts to regulate behavior e.g. Speed limits d) Taboos: Norms so strongly held by the members of a society that to violate them is virtually inconceivable e.g. the prohibition against incest, the prohibition against cannibalism.4. Aesthetics: Ideas and perceptions that a cultural group in terms of beauty and good taste is referred to as aesthetics. It includes music, dance, painting, drama etc. Colors have different manifestations across cultures. For African consumers, bright colors are favorite colors, while in Japan pastel colors are considered to express softness and harmony and are preferred over bright colors. America’s corporate color blue is associated with the evil and the sinister in many African countries. In China, red color is lucky, while it is associated with death and witchcraft in a number of African countries. An international marketer has to address these issues especially in communication and product decisions.
5. Language: Language is a “systematic means of communicating ideas or feelings by the use of conventionalized signs, gestures, marks, or especially articulate vocal sounds. Language differs widely among the nations and even regions. Language reflects the nature and value system of culture. Despite of linguistic difference, English has become the lingua-franca to communicate with people around the world. Conducting cross country market research in English often fails to provide non- verbal cues to the respondents. Besides the issue related to translation of questionnaire or by use of interpretation needs to be addressed so as to ensure data compatibility. Therefore, use of initiative and communicating in local languages are of extreme importance in international market research across regions with linguistic diversity.6 Ideologies: Ideologies are integrated and connected systems of beliefs. Sets of beliefs and assumptions connected by a common theme or focus. They are often are associated with specific social institutions or systems and serve to legitimize those systems.1. Some prominent American ideologies.a. Capitalism.b. Christianity (Protestantism).c. Individualismd. Sexism.e. Racism.7 Statuses and Roles: Status, although related, is not a measure of a person’s wealth, power, and prestige. To speak of "high" or "low" status is somewhat misleading. A status is a slot or position within a group or society. They tell us who people are and how they "fit" into the group. Roles are norms specifying the rights and responsibilities associated with a particular status. The term role is often used to mean both a position in society and role expectations associated with it. Roles define what a person in a given status can and should do, as well as what they can and should expect from others. Roles provide a degree of stability and predictability, telling how we should respond to others and giving us an idea of how others should respond to us.
Analytical Approaches to Cultural FactorsMaslows Hierarchy of Needs: If motivation is driven by the existence ofunsatisfied needs, then it is worthwhile for a manager to understand whichneeds are the more important for individual employees. In this regard, AbrahamMaslow developed a model in which basic, low-level needs such as physiologicalrequirements and safety must be satisfied before higher-level needs such as self-fulfillment are pursued. Maslow’s hierarchy of needs is a theory in psychology,proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation.Maslow subsequently extended the idea to include his observations of humansinnate curiosity. Maslows Hierarchy of NeedsPhysiological Needs
Physiological needs are those required to sustain life, such as: air water nourishment sleepAccording to Maslows theory, if such needs are not satisfied then onesmotivation will arise from the quest to satisfy them. Higher needs such as socialneeds and esteem are not felt until one has met the needs basic to ones bodilyfunctioning.SafetyOnce physiological needs are met, ones attention turns to safety and security inorder to be free from the threat of physical and emotional harm. Such needsmight be fulfilled by: Living in a safe area Medical insurance Job security Financial reservesAccording to Maslows hierarchy, if a person feels that he or she is in harms way,higher needs will not receive much attention.Social NeedsOnce a person has met the lower level physiological and safety needs, higherlevel needs become important, the first of which are social needs. Social needsare those related to interaction with other people and may include: Need for friends Need for belonging Need to give and receive loveEsteemOnce a person feels a sense of "belonging", the need to feel important arises.Esteem needs may be classified as internal or external. Internal esteem needs arethose related to self-esteem such as self respect and achievement. External
esteem needs are those such as social status and recognition. Some esteemneeds are: Self-respect Achievement Attention Recognition ReputationMaslow later refined his model to include a level between esteem needs and self-actualization: the need for knowledge and aesthetics.Self-ActualizationSelf-actualization is the summit of Maslows hierarchy of needs. It is the quest ofreaching ones full potential as a person. Unlike lower level needs, this need isnever fully satisfied; as one grows psychologically there are always newopportunities to continue to grow.Self-actualized people tend to have needs such as: Truth Justice Wisdom MeaningSelf-actualized persons have frequent occurrences of peak experiences, which areenergized moments of profound happiness and harmony. According to Maslow,only a small percentage of the population reaches the level of self-actualization.Physiological needs are at the bottom of the hierarchy. These are basic needs tobe satisfied like food, water, air, comfort. The next need is safety - a feeling ofwell being. Social needs are those related to developing love and relationships.Once these lower needs are fulfilled "higher" needs emerge like esteem - selfrespect - and the need for status improving goods. The highest order is selfactualisation where one can now afford to express oneself as all other needshave been met.Whilst the hypothesis is simplistic it does give an insight into universal truisms. InAfrica, for example, in food marketing, emphasis may be laid on the three lower
level needs, whereas in the developed countries, whilst still applicable, food maybe bought to meet higher needs. For example, the purchase of champagne orcaviar may relate to esteem needs.The Case Of Maize Meat In AfricaIntroduced by the white settler, maize meat is the staple diet of thepopulation of countries in Eastern and Southern Africa, Zambia, forexample is capable of producing over 30 million x 90Kgs bags with amarketable surplus of 20 million x 90Kg bags, most of which goes tofeed the urban population. For a lot of people, unable to improve theirlot, this remains as the staple diet throughout their lives. However,many Africans who are able to improve their lot, progress on to otherforms of nourishment -fish. potatoes, good meat cuts and even fastfoods, some of this brought about by social interaction. Interestinglyenough, maize is still often eaten despite the social and economicprogression that an individual may make.
Hofstede’s ClassificationThe most widely used tool to study the cross-cultural behavior is Hofstede’sclassification. It identifies cross cultural differences by collecting data onemployee attitudes and values for 1, 16,000 respondents from 70 countriesworking in IBM subsidiaries. Hofstede isolated four dimensions that he claimedsummarized different cultures are defined as:1) Power Distance:The degree of inequality among the people that are viewed equitably is known aspower distance. It focused on how a society deals with the fact that people areunequal in physical and intellectual capabilities. Power Distance in Malaysia ishighest while it is lowest in the case of Austria. In UK, Scandinavia and the Dutchcountries managers expect their decision making to be challenged, while theFrench consider the authority to take decision as their right. Germans feel morecomfortable in formal hierarchies while Dutch have a more relaxed approachtowards their higher authorities.In countries with high power distances, hierarchical organizational structures arebased on inequality among the superiors and subordinates, and juniors blindlyfollow the orders of their superiors. Generally, high social inequalities aretolerated in culture with wide differentiation in power and income distribution.Small power distance is characterized by egalitarian societies, where superiorsand subordinates consider each other as equal. Organizations in such societiesare flat and decision making is decentralized.Power Distance greatly affects the customer’s decision making process. In view ofpower distance, researches have to find out the key persons involved in buyingdecisions and formulate their field surveys accordingly.2) Individualism vs. Collectivism Individualism Collectivism1 The tendency of people to look The tendency of people to belong to after themselves and their groups and to look after each other in immediate family’s interest alone exchange of loyalty is termed as is termed as Individualism collectivism.2 Such societies have strong ethics, Such societies do not have such
promotions are based on merits criteria. and involvement of the employee in the organizations is primarily calculative.3 Ability to be independent The interest of group have considered to be a key criterion for precedence over success in such societies. individual interest4 Examples of such countries are Examples of such countries are USA, France. Pakistan, Singapore, and Malaysia.International Marketing decisions are greatly influenced by individualism vs.collectivism appeal a product to be successful in collective societies should have aacceptability by a group while in individualistic societies there be no need of aproduct t be accepted by a group of people to be successful.3) Masculinity vs. Femininity Masculinity Femininity1 In masculine societies, the In feminine societies ,the dominant dominant values emphasize work values are achievement of personal goals such as earnings, goals such as quality of life, care for advancement, and success and others and friendly atmosphere material belongings.2 In masculine societies, people live In feminine societies, people ‘work to to work’ live’3 Examples of such countries are Examples of such countries are Japan, Austria, Italy and US. Sweden, Norway, Netherlands and Denmark.4 Sex roles are highly distinguished Sex roles were less sharply distinguished and there is little differentiation between men and women in the same job4) Uncertainty AvoidanceUncertainty Avoidance refers to the lack of tolerance for ambiguity and the needfor formal rules. It measures the extent to which people feel threatened by
ambiguous situations. Greece, Poland and Japan are the most uncertainty avoidance societies and thus lifetime employment is common while Singapore, Denmark and India are the least uncertainty avoidance societies and thus the job mobility is common in these countries. Culture context The context of a culture has crucial implications in communicating and interpreting verbal and non verbal messages .Different cultures interpret verbal and non –verbal cues differently . High-context Culture Low-context Culture1 Implicit communications such as non- Communication is more explicit and verbal and subtle situational cues are relies heavily on words to convey the extremely important, meaning2 Relationship is long-lasting Relationship is temporary3 Verbal communication are given greater Commitments are written. sanctity4 Knowledge is situational, relational. Knowledge is more often transferable5 Decisions and activities focus around Task-centered. Decisions and activities personal face-to-face relationships, often focus around what needs to be done, around a central person who has division of responsibilities. authority.6 EXAMPLES:-Large US airports, a chain EXAMPLES:- Small religious supermarket, a cafeteria, a convenience congregations, a party with friends, store, sports where rules are clearly laid family gatherings, expensive gourmet out, a motel. restaurants and neighborhood restaurants with a regular clientele, undergraduate on-campus friendships,
regular pick-up games, hosting a friend in your home overnight.7 Low context culture are common in U.S., High context cultures are more common Western Europe. in the eastern cultures than in western, and in countries with low racial diversity. For example:-INDIA. New Zealand and the Native Americans Difference in marketing decisions due to culture context Marketing decisions in High- Marketing decisions in Low- context culture context culture 1 Market promotion and advertising Market promotion and is subtle advertising focus on explicit display of information and facts 2 In this building relationship with Marketing firms rotate sales team clients is extremely important, more frequently therefore sales team tend to have longer duration of operation in the assigned territory. 3 Market researchers focus on Market researchers focus on subtle and non-verbal expressions factual information of the respondents. Factors/Dimensions High context Low context Lawyers Less important Very important A person’s word Is his or her bond Is not to be relied on, ”get it in writing” Responsibility for Taken at highest level Pushed to lowest level organization error Space People breathe on each People maintain a bubble of other private space and resent intrusions Time Polychromic - everything Monochromic - time is money. in life must be dealt with Linear-one thing at a time.
in its own timeNegotiations Are lengthy –a major Proceed quickly purpose is to allow the parties to get o know each other.Competitive bidding Infrequent CommonCountry /Regional Japan , Middle East United States, Northerne.g. Europe Cultural HomogeneityCultural homogeneity is defined as the number of shared facts across all possiblepairs of agents divided by the total possible number of shared facts across allagents in a population. Cultural homogeneity is equal to one only if all agentsknow precisely the same facts. A society that achieves a cultural homogeneity ofone is "perfectly stable." Perfect stability means that the society is in a steadystate and no further connections can change any agents knowledgeOn the basis of homogeneity, culture may be divided into following subsets:Homophilous Culture:In countries where people share same beliefs, speak the same language. Andpractices the same religions are known to have a Homophilous Culture. Japan,Korea and Scandinavian countries have homophilous culture. It takes less timefor new product diffusion in homophilous culture and relatively uniformmarketing mix decisions can be taken.Heterophilus Cultures: In countries with Heterophilus Cultures there is a fair amount of differentiationin language, beliefs and religion followed .India and China fall under this categorywherein he variations in culture within a single province is quite significant .Themarketing communication strategies, in such cases, will have to incorporate newchanges and adapt to given sets of cultural norms from region to region.
ENVIRONMENTAL SENSITIVITYEnvironmental sensitivity is the extent to which products must be adapted to theculture specific needs of different national markets. A useful approach is to viewproducts on a continuum of environmental sensitivity. At one end of thecontinuum are environmentally insensitive products that do not requiresignificant adaptation to the environments of various world markets. At the otherend of the continuum are products that are highly sensitive to differentenvironmental factors. A company with environmentally insensitive products willspend relatively less time determining the specific and unique conditions of localmarkets because the product is basically universal. The greater the product’senvironmental sensitivity, the greater the need for managers to address country-specific economic, regulatory, technological, social and cultural environmentconditions.The sensitivity of products can be represented on a two-dimensional scale asshown below: High FoodProduct ComputersAdaptation Integrated Low Circuits Low High Environmental sensitivity ENVIRONMENTAL SENSITIVITY PRODUCT ADAPTATION MATRIXAny product exhibiting low levels of environmental sensitivity e.g. highlytechnical products like microprocessors belongs in the lower left of the figure.Moving to the right on the horizontal axis, the level of sensitivity increases, asdoes the amount of adaptation. Computers are characterized by low level ofenvironmental sensitivity but variations in country voltage requirements requiresome adaptation.
At the upper right are the products with high environmental sensitivity. Food ,especially food consumed in the home, falls into this category because it issensitive to climate and culture. Particular food items such as chocolate, howevermust be modified for various differences in taste and climate. The consumers insome countries prefer a milk chocolate; others prefer a darker chocolate whileother countries in the Tropics have to adjust the formula for their chocolateproducts to withstand the high temperature. SELF REFERENCE CRITERIONWhen a company starts its international business, the most important thing is itsmarketing strategies .The key for successful international marketing is adaptationto the environmental differences from one market to another. The primaryobstacles to success in international marketing are person’s Self ReferenceCriterion. It is an unconscious reference to one’s own cultural values,experience, and knowledge as a basis for decisions.Definition:Having sold a product successfully in the domestic market a firm may assumethat the product will, without adaptation, also be successful in foreign markets.Frequently this assumption leads to failure. The SRC refers to the assumptionthat what is suitable for the home market will be suitable for the foreign marketand therefore there is no need to test whether or not the product should bealtered.When faced with a problem of another culture, the tendency is to reactinstinctively. The reaction is based on meanings, values, symbols, and behaviorrelevant to one’s culture a usually different from those of the foreign culture.Such decisions are not correct ones.The self reference criterion can prevent from being aware that there are culturaldifferences or from recognizing the importance of those difference. Thus onemight fail to recognize the need to take action, or might discount the culturaldifferences that exist among countries. One might also react to a situation in away offensive to the host. SRC can evaluate the appropriateness of a
domestically designed marketing mix for a foreign market. Example, In U.S apolite refusal to food or drink is acceptable but, but in Asia or Middle East a hostis offended if one refuses hospitality.When marketers take the time to look beyond their own self-reference criteriathe results are more positive. Example, British manufacture ignoring its SRC couldsell in Japan, McVitie’s chocolate biscuits are wrapped individually, packed inpresentation cardboard boxes, and priced about three times higher than in U.K.another best example is of Mc Donald’s which shifted to Big Mac in India where itis known as Maharaja Mac. This burger features two mutton patties becausemost Indians consider cow sacred and don’t eat beef.The most effective way to control the influence of SRC is to recognize the effecton one’s behavior.To avoid errors in business decisions, it is necessary to conduct a cross cultureanalysis that isolates the SRC influences and to maintain a vigilance regardingethnocentrism. The following steps are Define the business problem or goal in home-country cultural traits, habits or norms. Define the business problem or goal in foreign-country cultural traits, habits or norms through consultation with natives of the target country. Make no value judgments. Isolate SRC influence in the problem and examine it carefully to see how it complicates the problem. Redefine the problem without SRC influence and solve for the optimum business goal situation.The cross culture analysis approach requires an understanding of the culture ofthe foreign market as well as one’s own culture. It is accepted that you are notborn with a culture, and that it is learned. So, culture includes all that we havelearned in relation to values and norms, customs and traditions, beliefs andreligions, rituals and artifacts.
Case Studies CULTURE SHAPES FOREIGN MARKETINGInternational marketers all have stories to tell of their adventures-and misadventures-inforeign market cultures. These cultural constraints can affect all aspects of the marketingprogram. A couple of examples: 1. Cosmetics- Maybelline and Max Factor add brighter colors to their lipstick and makeup for Latin America. Vidal Sassiin adds more conditioner and a pine aroma to some shampoos in the Far East. Amway’s skin care line in Japan has less lather and Amway removes the pork proteins found in some of its products for Muslim markets, such as Malaysia. 2. Promotion- Hollywood has found the best way to promote its movies in Asia is to use popular local musicians. When Warner Bros released “Lethal Weapon 4” in Hong Kong, its major promotion was a music video with a very popular heavy-metal band. Though music didn’t relate to the film, scenes from the film were interspersed on the video. The song became the movie’s “Asian theme song”.In Taiwan, a leading female singer made a music video based on “The English Patient”. Thestudios usually don’t even have to pay the local artists because both parties benefit. IT’S NOT THE GIFT THAT COUNTS, BUT HOW YOU PRESENT ITGiving a gift in another country requires careful attention if it to be done properly. Here are afew suggestions:JapanDo not open gift in front of a Japanese counterpart unless asked and do not expect theJapanese to open your gift.Avoid ribbons and bows as part of gift-wrapping. Bows as we know them are consideredunattractive and ribbon colors can have different meanings. Do not offer a gift depicting a foxor badger. The fox is the symbol of fertility, the badger, and cunning.EuropeAvoid red roses and white flowers, even numbers, and the number 13. Do not wrap flowers inpaper. Do not risk the impression of bribery by spending too much on a gift.Arab WorldDo not give a gift when you first meet someone. It may be interpreted as a bribe. Do not let itappear that you contrived to present the gift when the recipient is alone. It looks bad unlessyou know the person well. Give the gift in front of others in less personal relationships.Latin AmericaDo not give a gift until after a somewhat personal relationship has developed unless it is givento express appreciation for hospitality. Gifts should be given during social encounters, not in
the course of business. Avoid the colors black and purple; both are associated with theCatholic Lenten season.ChinaNever make an issue of a gift presentation-publicly or privately. Gifts should be presentedprivately, with the exception of collective ceremonial gifts at banquets. CROSSING BORDERS 1 Jokes Dont Travel WellCross-cultural humor has its pitfalls. What is funny to you may not be funny to others. Humoris culturally specific and thus rooted in peoples shared experiences. Here are examples:President Jimmy Carter was in Mexico to build bridges and mend fences. On live televisionPresident Carter and President Jose Lopez Portillo were giving speeches. In response to acomment by President Portillo, Carter said, "We both have beautiful and interesting wives,and we both run several kilometers every day. In fact, I first acquired my habit of runninghere in Mexico City. My first running course was from the Palace of Fine Arts to the MajesticHotel where my family and I were staying. In the midst of the Folklorico performance) Idiscovered that I was afflicted with Montezumas Revenge; Among Americans this may havebeen an amusing comment but it was not funny to the Mexican. Editorials in Mexico and U.S.newspapers commented on the in appropriateness of the remark.Most jokes; even though well intended, dont translate well. Sometimes a translator can helpyou out. One speaker, in describing his experience, said,"1 began my speech with a joke thattook me about, two minutes to tell. Then my interpreter translated my story. About thirtysecond later the Japanese, audience laughed loudly. I continued with my talk which seemedwell received," he said, "but at the end, just to make sure, I asked the, interpreter, How didyou translate my joke so quickly? The interpreter replied, Oh I did not translate your story atall. I did not understand it. I simply said our foreign speaker has just told a joke so would youall please laugh. “Who can say with certainty that anything is funny? Laughter, more often than not,symbolizes embarrassment, nervousness, or even scorn. Hold your humor until you arecomfortable with the culture.