The function of marketing is to earn profits from satisfying customers’ needs and wants. To do this, firms must understand the culture of their consumers. Culture is embedded in religion, language, education, and history. The culture consumers live in help answer questions such as: what type of food is eaten for lunch? Is black or white worn at funerals? Culture is pertinent to the study of international marketing. Culture is pervasive in all marketing activities – pricing, promotions, channels of distributions, product, packaging and styling. The priority of needs and wants and the manner in which they are satisfied are functions of culture that eventually dictate styles of living. Markets constantly change and markets and market behavior are part of a country’s culture. A good example would be how Walt Disney adapted to the culture in Europe after the first year loss of its Euro Disney venture. They adopted wine, beer, and differentiated prices (which was not done in its first year of operations), and it paid off.
Culture is difficult to navigate in international marketing. The right product, coupled with the right local marketing decisions can spell success in the form of market share, customer loyalty, and profits. One cannot truly understand how markets evolve or how they react to a marketer’s effort without appreciating that markets are a result of culture. In fact, markets are a result of the three-way interaction of a marketer’s efforts, economic conditions, and all other elements of the culture. Marketers are constantly adjusting their efforts to cultural demands of the market, but they are also acting as “agents of change” whenever the product or idea being marketed is innovative. To take advantage of global markets, it is imperative that firms attain a thorough understanding of what drives consumer behavior.
This is what you will be learning in this first chapter: the importance of culture to an international marketerdefinition and origins of culture, the elements of culture, the impact of cultural change and cultural borrowing, and strategies of planned and unplanned change
The opening vignette discusses culture as an overriding factor in online investing. Why are the Japanese so different from the Americans? Americans are risk-takers and Japanese are not and this can be seen in their portfolio of investments. Liberalization of the Japanese and the French capital markets have given Japanese consumers more freedom of choice in their investments and brought down transaction costs for institutional and retail investors in France. Culture is the overriding factor as e-Bay, the successful online auction site in America, is facing difficulties in Japan and France. For example, in Japan there is no American-style risk-taking culture (only 12% of households invest in stocks, while in America, about 55% invest in stocks) and in France there are laws that restrict operations.
Probably a great example of a multinational corporation using a multi-domestic strategy is Yahoo! It has web pages in almost 20 different countries, such as Yahoo! India and Yahoo! Australia. A good way to emphasize how important culture is, is to start the chapter showing this video on the Chinese view of “relationship.”
Culture affects every part of our lives, every day, from birth to death, and everything in between.As countries move from agricultural to industrial to services economies, birthrates decline and global changes in values are occurring. Consequences of the cultural impact: Birth rates - Japan (Year of the Dragon and Year of the Fire Horse), Consumption patterns – Alcohol and Tobacco, Consumption consequences – Life Expectancy, Stomach cancer. It is imperative for foreign marketers to learn to appreciate the intricacies of cultures different from their own if they are to effective in foreign markets.
Exhibit 4.1 examines data from three countries. As we just mentioned, it shows the gradual decline of birthrates beginning in the 1960s. But a closer look at the tables reveals even more interesting consequences of culture. Please notice the little peaks in 1976 and 1988 in the Singapore data. The same pattern can be seen in birthrate data from Taiwan. Those “extra” births are not a matter of random fluctuation. In Chinese cultures, being born in the Year of the Dragon (12 animals—dogs, rats, rabbits, pigs, etc – correspond to specific years in the calendar) is considered good luck. However, superstitions have an even stronger influence on the birthrates in Japan. A one-year 20 percent drop in Japanese fertility rates in 1966 was caused by a belief that women born in the Year of the Fire Horse, which occurs every 60 years, will lead unhappy lives and perhaps murder their husbands. This sudden and substantial decline in fertility, which has occurred historically every 60 years since Japan started keeping birth records, reflects abstinence, abortions, and birth certificate fudging. This superstition has resulted in the stigmatization of women born in 1966 and has had a large impact on market potential for a wide variety of consumer goods and services in Japan. It will be interesting to see how technological innovations and culture will interact in Japan in 2026, the next Year of the Fire Horse
Culture’s influence is also illustrated in the consumption data presented in Exhibit 4.2. The focus there is on the six European Union countries, but data from the two other major markets of affluence in the world – Japan and the United States – are also included. The products compared are those that might be included in a typical (American) romantic dinner date. First come the flowers and candy. The Dutch are the champion consumers of cut flowers, and this particular preference for petals will be further explored in the pages to come. The British love their chocolate. Perhaps the cooler temperatures have historically allowed for easier storage and better quality chocolate in the northern countries. At least among our six EU countries, per capita chocolate consumption appears to decline with latitude. How about alcohol and tobacco? Grapes grow best in France and Italy, thus a combination of climate and soil conditions explains at least part of the pattern of wine consumption seen here. Culture also influences the laws, age limits, and such.
Now any discussion of tobacco consumption leads immediately to consideration of the consequences of consumption. One might expect that a high consumption of the romance products—flowers, candy, and wine—might lead to a high birthrate. Reference to Exhibit 4.3 doesn’t yield any clear conclusions. The Germans have some of the highest consumption levels of the romantic three, but the lowest birthrate among the eight countries.The point is that culture matters. It is imperative for foreign marketers to learn to appreciate the intricacies of cultures different from their own if they are to be effective in foreign markets.
Although we are all from different cultures, as anthropologist Donald E. Brown correctly points out, we are all human. And, since we’re all of the same species, we actually share a great deal. Among the hundreds of traits we share are the use metaphors, having a system of status and roles, creating art, being ethnocentric, imitate outside influences and considering the aspects of sexuality to be private. We all express emotions with our faces. Most of us fear snakes, and some of us use mood altering drugs. All cultures recognize economic obligations in exchanges of goods and services, and trade and transport those goods. Indeed, the last two suggest we are that we might be characterized as the “exchanging animal.”
The best international marketers will not only appreciate the cultural differences pertinent to their businesses, they will also understand the origins of these differences. Possession of the latter, deeper knowledge will help marketers notice cultural differences in new markets and foresee changes in current markets of operation. Exhibit 4.4 depicts the several causal factors and social processes that determine and form cultures and cultural differences. Simply stated, humans make adaptations to changing environments through innovation. Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. Finally, people make decisions about consumption and production through application of their cultural-based knowledge.
Christianity (including Catholics and Protestants) stresses hard work and frugality and is linked to the development of capitalism and economic emancipation. Islam stresses education and industrial development. It bans the use of interest rates, the relationship between men and women in society and in the workplace, discouraging the consumption of pork and alcohol. Hinduism encourages a family orientation and dictates an nine-tier class structure and strict dietary constraints, which discourages the consumption of animal products, specifically beef. Buddhism stresses sufferance and avoidance of worldly desires, rejecting most aspects of business, at least in theory.
As shown in Exhibit 4.5, the United States scores the highest of all countries on individualism, at 91, with Japan at 46 and France at 71. In both Japan and France, where values favor group activities, face-to-face conversations with stockbrokers and neighbors might be preferred to impersonal electronic communications. Similarly, both Japan (92) and France (86) score quite high on Hofstede’s Uncertainty Avoidance Index, and America scores low (46). Based on these scores, both Japanese and French investors might be expected to be less willing to take the risks of stock market investments—and indeed, the security of post office deposits or bank savings accounts is preferred. So in both instances Hofstede’s data on cultural values suggest that diffusion of these innovations will be slower in Japan and France than in the United States. Such predictions are consistent with research findings that cultures scoring higher on individualism and lower on uncertainty avoidance tend to be more innovative.
According to www.ethnologue.com: A total of 7,413 known living languages exist in the world. 311 being spoken in the U.S.; 297 in Mexico, 13 in Finland, and 241 in China. EU has 20 official languages and India alone has 452 known languages! Needless to say understanding the language and its word meanings can be a daunting task. For example, in Hindi (India’s national language) there are two words that mean “you.” They are “Aap” and “Tu.” Both of these words have to be used in its context. The former is used when speaking to elders and the latter, to young people and your peers.
Student international marketing_15th_edition_chapter_4
Introduction (1 of 2) 4• Culture is pertinent to the study of international marketing.• Culture is pervasive in all marketing activities – pricing, promotions, channels of distributions, product, packaging and styling.• The priority of needs and wants and the manner in which they are satisfied are functions of culture that eventually dictate styles of living.• Markets constantly change and markets and market behavior are part of a country’s culture. Roy Philip 4-2
Introduction (2 of 2) 4• One cannot truly understand how markets evolve or how they react to a marketer’s effort without appreciating that markets are a result of culture.• In fact, markets are a result of the three-way interaction of a marketer’s efforts, economic conditions, and all other elements of the culture.• Marketers are constantly adjusting their efforts to cultural demands of the market, but they are also acting as “agents of change” whenever the product or idea being marketed is innovative. Roy Philip 4-3
Overview 4• The importance of culture to an international marketer• Definition and origins of culture• The elements of culture• The impact of cultural change and cultural borrowing• Strategies of planned and unplanned change Roy Philip 4-4
Global Perspective 4 Equities and eBay – Culture Gets in the Way• Liberalization of the Japanese and the French capital markets have given Japanese consumers more freedom of choice in their investments and brought down transaction costs for institutional and retail investors in France.• Culture is the overriding factor as e-Bay, the successful online auction site in America, is facing difficulties in Japan and France.• For example, in Japan there is no American-style risk- taking culture (only 12% of households invest in stocks, while in America, about 55% invest in stocks) and in France there are laws that restrict operations. Roy Philip 4-5
Example 4• Yahoo website is a great example of an organization that understands the importance of adapting to culture: – http://everything.yahoo.com/index.php?world• The Chinese view of “relationship” (2 min. video) – http://www.youtube.com/watch?v=qingy5JAt8w&fea ture=related Roy Philip 4-6
Culture’s Pervasive Impact 4• Culture affects every part of our lives, every day, from birth to death, and everything in between.• As countries move from agricultural to industrial to services economies, birthrates decline and global changes in values are occurring.• Consequences of the cultural impact: – Birth rates - Japan (Year of the Dragon and Year of the Fire Horse) – Consumption patterns – Alcohol and Tobacco – Consumption consequences – Life Expectancy, Stomach cancer• It is imperative for foreign marketers to learn to appreciate the intricacies of cultures different from their own if they are to effective in foreign markets. Roy Philip 4-7
Birthrates (per 1000 women) 4Exhibit 4.1 Roy Philip 4-8
Consumption Patterns 4 (annual per capita)Exhibit 4.2 Roy Philip 4-9
4 Consequences of ConsumptionExhibit 4.3 Roy Philip 4-10
4 Human Universals Use Metaphors Create Art Consider aspects of sexuality private Conceive of success and failure Are ethnocentricHave a fear of snakes Express emotions with Trade and transport face Reciprocate goods Imitate outside influences Resist outside influences Roy Philip 4-11
4 Human Universals Use Metaphors Create ArtConceive of success and Consider aspects of failure sexuality privateHave a fear of snakes Are ethnocentric Reciprocate Trade and transport emotions with Express face goodsResist outside influences Imitate outside influences Roy Philip 4-12
Definitions and 4 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.• Individuals learn culture in three ways – Socialization (growing up) – Acculturation (adjusting to a new culture) – Application (decisions about consumption and production) Roy Philip 4-13
Origins, Elements, 4 and Consequences of CultureExhibit 4.4 Roy Philip 4-14
Geography 4• 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 Roy Philip 4-15
Why do we all Love Flowers? 4 • Geography • History • Technology and economics • Social institutions • Cultural values • Aesthetics as symbols Roy Philip 4-16
History 4• 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 – American values and institutions influenced by Adam Smith’s book The Wealth of Nations – Military conflicts in the Middle East brought about new cola alternatives such as Mecca Cola, Muslim Up, and Arab Cola. Roy Philip 4-17
Political Economy and 4 Technology• 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 – Although America has the best healthcare technology, people in many countries have greater longevity; lifestyle choices are important Roy Philip 4-18
Social Institutions (1 of 4) 4• Family• Religion• School• The media• Government• Corporations Roy Philip 4-19
Social Institutions (2 of 4) 4• Family – Nepotism – Role of extended family – Favoritism of boys in some cultures – Gender equality is changing• Religion - Major Religions – First institution infants are exposed to outside the home – Impact of values systems – Misunderstanding of beliefs – An American women jailed in Saudi Arabia for sitting with man at Starbucks Next Roy Philip 4-20
Major Religions 4• Christianity – 2 Billion followers• Islam – 1.2 Billion followers• Hinduism – 860 Million followers• Buddhism – 360 Million followers• Confucianism – 150 Million followers Back Roy Philip 4-21
Social Institutions (3 of 4) 4• School – the most important social institution – Direct link between a nation’s literacy rate and its economic development – Difficult to communicate with a market when a company must depend on symbols and pictures• The media – it has replaced family time • TV and the Internet • American educational system produces a lower percentage of college graduates than 12 other countries including Russia, Japan, and France Roy Philip 4-22
Social Institutions (4 of 4) 4• Government - influences the thinking and behaviors of adult citizens – Propaganda through media – Passage, promulgation, promotion, and enforcement of laws• Corporations - most innovations are introduced to societies by companies – Spread through media – Change agents Roy Philip 4-23
Elements of Culture (1 of 4) 4 • Values • Rituals • Symbols • Beliefs • Thought processes Roy Philip 4-24
Elements of Culture (2 of 4) 4 • Cultural values – Geert Hofstede – Individualism/Collectivism Index • Reflects the preference of behavior that promotes one’s self interest – Power Distance Index • Measures the tolerance of social inequality – Uncertainty Avoidance Index • Measures the tolerance of uncertainty and ambiguity – Cultural Values and Consumer Behavior Roy Philip 4-25
Hofstede’s Indexes 4 Language, and Linguistic DistanceExhibit 4.6 Roy Philip 4-26
Elements of Culture (3 of 4) 4 • Rituals – patterns of behavior and interaction that are learned and repeated – Marriages , funerals, baptisms, graduations • Symbols – Language • Linguistic distance – relationship between language and international marketing – Aesthetics as symbols • Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective or even damaging Next Roy Philip 4-27
Language 4• According to www.ethnologue.com: – A total of 7,413 known living languages exist in the world – 311 being spoken in the U.S.; 297 in Mexico, 13 in Finland, and 241 in China – EU has 20 official languages – India alone has 452 known languages! Back Roy Philip 4-28
Elements of Culture (4 of 4) 4 • Beliefs – Superstitions play a large role in a society’s belief system and therefore, to make light of superstitions in other cultures can be an expensive mistake – The number 13 in the western hemisphere is considered unlucky, where as the number 8 in China connotes “prosperity” – The practice of “Feng Shui” • Thought processes – Difference in perception between the East and the West • Focus vs. big-picture Roy Philip 4-29
Cultural Sensitivity 4 and Tolerance• It is imperative that the marketer be 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 – There must be an appreciation of how cultures change and accept or reject new ideas Roy Philip 4-30
Cultural Change 4• 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 Roy Philip 4-31
Cultural Borrowing 4• A responsible effort to learn from others’ cultural ways in the quest for better solutions to a society’s particular problems – Imitating diversities of other cultures make cultures unique – Contact can make cultures grow closer or further apart• Habits, foods, and customs are adapted to fit each society’s needs• The marketer must eventually gain cultural empathy Roy Philip 4-32
Similarities – An Illusion 4• A common language does not guarantee a similar interpretation of word or phrases – Difference between British and American English – http://www.woodlands- junior.kent.sch.uk/customs/questions/americanb ritish/index.html• 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 Roy Philip 4-33
Resistance to Change 4• Gradual cultural growth does not occur without some resistance – New methods, ideas, and products are held to be suspect before they are accepted• Resistance to change varies between cultures• The most important factor in determining how much of an innovation will be accepted is the degree of interest in the particular subject, as well as how drastically the new will change the old Roy Philip 4-34
Planned and Unplanned 4 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 (unplanned change) – They can cause change (planned change)• Cultural congruence – Marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms Roy Philip 4-35
Summary (1 of 2) 4• 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 Roy Philip 4-36
Summary (2 of 2) 4• 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 Roy Philip 4-37
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