Cultural Dynamics in Assessing Global Markets

1. 4 Cultural Dynamics in Assessing Global Markets Chapter

2. Key Areas • The importance of culture to an international marketer • The origins and elements of culture • The impact of cultural borrowing • The strategy of planned change and its consequences

3. This can happen to anyone, anywhere, at anytime if you don’t understand other people’s culture. - Finn Hansen Hansen, head of international operations at Arla Foods, referring to the boycott of Danish products by Muslims and the political debacle that followed the publication of images of the prophet Mohammed in a Danish newspaper. Introduction

4. Introduction • Markets change constantly  they are dynamic and evolve, expand & contract in response to the 3-way interaction between (i) marketing efforts, (ii) economic conditions & (iii) all other cultural elements/ influences. • Imperative for international marketers to appreciate cultural intricacies different from their own to be effective in a foreign market  vast majority of mistakes made by international businesses due to lack of understanding of some aspect of a country’s culture.

5. Culture’s Pervasive Impact • Culture deals with a group’s design for living. • Culture affects every part of our lives, every day, from birth to death, and everything in between. • The successful marketer clearly must be a student of culture. • The use of something new is the beginning of cultural change, and the marketer becomes a change agent. • As countries move from agricultural to industrial to services economies’ birthrates decline. • Consequences of consumption • e.g. Tobacco (Spain) • Culture not only affects consumption, it also affects production • e.g. Stomach cancer in Japan

6. Birthrates (per 1000 women)

7. Patterns of Consumption (annual per capita)

8. Consequences of Consumption

9. Definitions and Origins of Culture • Traditional definition of culture • Culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation • Humans make adaptations to changing environments through innovation • Individuals learn culture from social institutions • Socialization (growing up) • Acculturation (adjusting to a new culture) • Application (decisions about consumption and production)

10. Origins, Elements, and Consequences of Culture

11. Geography • Exercises a profound control • Includes climate, topography, flora, fauna, and microbiology • Influenced history, technology, economics, social institutions and way of thinking • The ideas of Jared Diamond and Philip Parker • Jared Diamond • Historically innovations spread faster east to west than north to south • Philip Parker • Reports strong correlations between latitude (climate) and per capita GDP • Empirical data supports climate’s apparent influence on workers’ wages • Explain social phenomena using principles of physiology

12. History, the Political Economy, and Technology • History • Impact of specific events can be seen reflected in technology, social institutions, cultural values, and even consumer behavior • Tobacco was the original source of the Virginia colony’s economic survival in the 1600s • Political Economy • Three approaches to governance competed for world dominance • Fascism • Communism • Democracy/free enterprise • Technology • Jet aircraft, air conditioning, televisions, computers, Internet, etc. • None more important than the birth control pill

13. Social Institutions • Family • Nepotism • Role of extended family • Favoritism of boys in some cultures • Religion • First institution infants are exposed to outside the home • Impact of values systems • Misunderstanding of beliefs • School • Affects all aspects of the culture, from economic development to consumer behavior • No country has been successful economically with less than 50% literacy

14. Social Institutions • The media • Media time has replaced family time • TV • Internet • Government • Influences the thinking and behaviors of adult citizens • Propaganda • Passage, promulgation, promotion, and enforce of laws • Corporations • Most innovations are introduced to societies by companies • Spread through media • Change agents

15. Elements of Culture • Cultural values • Individualism/Collectivism Index • Power Distance Index • Uncertainty Avoidance Index • Cultural Values and Consumer Behavior

16. Cultural Values • Fundamental differences in cultural values underlie the existing cultural diversity among countries. Researchers have determined that a wide variety of business & consumer behavior patterns are associated with 3 important dimensions: • (a)      Individualism/ Collective Index (IDV) focuses on self-orientation; • (b)   Power Distance Index (PDI) focuses on authority orientation; & • (c)    Uncertainty Avoidance Index (UAI) focuses on risk orientation.

17. Hofstede’s IndicesLanguage, and Linguistic Distance

18. Individualism/ Collective Index (IDV) • Refers to the preference for behavior that promotes one’s self-interest – cultures that score high in IDV reflect an “I” mentality and accept & reward individual initiative, while those with low scores reflect a “WE” mentality & consider group interests as being more important than the individual. • Individualism societies where ties between individuals are loose – everyone expected to look after themselves & their immediate families. • Collectivism opposite of individualism – societies where people are integrated into strong, cohesive groups from birth, which throughout their lifetimes continue to protect them in exchange for unquestioning loyalty.

19. Power Distance Index (PDI) • Measures the tolerance of social inequality i.e. power inequality between superiors & subordinates within a social system. Cultures with low PDI scores  value equality, citing knowledge & respect as sources of power – power more legitimate rather than coercive – reflects more egalitarian views. • Cultures with high PDI scores  hierarchical, with social role, manipulation & inheritance cited as sources of power & social status – more prone to have general distrust of others since power is coercive rather than legitimate – indicate a perception of differences between superior & subordinate & a belief that those who hold power are entitled to privileges.

20. Uncertainty Avoidance Index (UAI) • Measures the tolerance of uncertainty & ambiguity among society members. Cultures with low UAI scores  low level of anxiety & stress – tolerance of deviance & dissent – willingness to take risks – take a more empirical approach to understanding & knowledge. • Cultures with high UAI scores  highly intolerant of ambiguity & distrustful of new ideas/ behaviors – tend to have high levels of anxiety & stress – concerned with security & rule following – stick to historically tested patterns of behavior & give a high level of authority to rules as a means of avoiding risk – seek absolute truth.

21. Elements of Culture • Rituals • Marriage • Funerals • Symbols • Language • Linguistic distance • Aesthetics as symbols • Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective or even damaging • Beliefs • To make light of superstitions in other cultures can be an expensive mistake • Thought processes • Difference in perception • Focus vs. big-picture

22. Religion • People find in religion a reason for being, the belief in a higher power and the belief that they are part of the ‘bigger picture’. • Religion provides the basis for transcultural similarities. • Religion has an impact on international marketing. • seen in a culture’s values and attitudes towards entrepreneurship, consumption and social organisation • The dominant religions of the world • Christianity (2.1 billion) • Islam (1.3 billion) • Hinduism (900 million) • Confucianism (394 million) • Buddhism (376 million) • Judaism (14 million) • Major holidays are often tied to religion.

23. Religion - Religion impacts the value systems of a society and affects people’s habits, their outlook on life, the products they buy, the way they buy them, & even the newspapers they read. - Acceptance of certain types of food, clothing, & behavior frequently affected by religion – such influence can also extend to acceptance/ rejection of promotional messages  what might seem innocent & acceptable in 1 culture may be considered too personal/ vulgar/ unacceptable in another. - Religion is 1 of the most sensitive elements of a culture  easy to offend (although unintentionally) when 1 has little/ no understanding of a religion.

24. Quibla Cola Products

25. Superstitions • Superstitions play a much larger role in the belief systems of some societies than others – what might be considered mere superstition in 1 culture can be a critical aspect of another culture’s belief system  e.g. ghosts, spirits, fortune telling, palmistry, soothsayers, astrology, feng shui, etc. • 1 person’s beliefs are often another’s funny story  mistake to discount importance of myths, superstitions & other cultural beliefs because they are an important part of a society’s culture & influence behavior.

26. Manners and customs • Potential problem areas for marketers arise from an insufficient understanding of: • different ways of thinking • the necessity of saving face • knowledge and understanding of the host country • the decision-making process and personal relations • the allocation of time for negotiations • The number eight in Chinese culture is of great significance. • Its pronunciation in Cantonese sounds like the same as the words for ‘to make money’. • The Beijing Olympic Games will begin at 8 a.m. on 8/8/08. • Six, eight and nine are considered lucky numbers. • One, four, and seven are considered unfortunate.

27. Manners and customs • Gift giving requires sensitivity.

28. Manners and customs • Products are used differently according to manners and customers. • International marketers must ask the following questions: • What are we selling? • What are the benefits we should be providing? • Who or what are we competing against? • Focus groups help to answer these questions.

29. Aesthetics - includes a society’s arts, folklore, music, drama & dance – closely interwoven with the effect of people & the universe on a culture. - Important to marketers because of their role in interpreting symbolic meanings of various methods of artistic expression, colour, & standards of beauty in each culture  many marketing problems can arise without a culturally correct interpretation of a society’s aesthetic values. - Insensitivity to aesthetic values can offend, create a –ve impression & render marketing efforts ineffective  product styling, advertisements, & package designs must be aesthetically sensitive & pleasing.

30. Aesthetics • What is good taste? • What is and what is not acceptable? • For example, attitudes towards sex in advertising differ across cultures. • Colours can have symbolic value (e.g. white is the colour of mourning in India and Japan). • International firms must be mindful of local tastes and concerns when designing their facilities.

31. Aesthetics and Color • Red—associated with blood,wine-making, activity, heat, and vibrancy in many countries but is poorly received in some African countries • White—identified with purity and cleanliness in the West, with death in parts of Asia • Gray—means inexpensive in Japan and China, but high quality and expensive in the United States

32. Language - Understanding the language of a society is important & marketers should attempt to achieve expert communication. - Language is 1 of the most difficult cultural elements to master  but the most important to study in trying to acquire some degree of empathy. - Foreign marketers should never take it for granted that they are communicating effectively in another language. - A dictionary translation is often insufficient & carelessly translated advertising/ promotional statements not only lose their intended meaning but can suggest something very different, obscene, offensive or just ridiculous.

33. Language • Very often, mastery of the language is needed before a person become acculturated to a new culture. • Local language capabilities play an important role in international marketing. • aids in information gathering and evaluation • provides access to local society • important to company communications • allows for interpretation of contexts • Marketers often use back-translation to help detect omissions and mistakes.

34. Speaking English around the globe There are more people who speak English as a foreign language than native speakers. 85% of European teens study English Sony, Nokia, Matsushita require managers to speak English. Nonverbal communication Westerners tend to be verbal, Asians value nonverbal communication. In Japan, bowing has many nuances. In the Mideast, Westerners should not show the soles of shoes or pass documents with the left hand. Language and Communication

35. Non-verbal language • Managers must become familiar with the hidden language of cultures. • time flexibility and sensibility • social acquaintance and rapport • personal physical space and personal touching • non-verbal gestures and signaling

36. Cultural Knowledge • Factual knowledge • Has meaning as a straightforward fact about a culture • But assumes additional significance when interpreted within the context of the culture • e.g.Mexico is 98% Catholic Being Catholic within Mexico • Needs to be learned • e.g. different meanings of colors, different tastes, & other traits indigenous to a culture  facts that marketers can anticipate, study & absorb.

37. Cultural Knowledge • Interpretive knowledge • Requires a degree of insight that may best be described as a feeling • Most dependent of past experience for interpretation • Most frequently prone to misinterpretation esp. if one’s home-country frame of reference (SRC) is used • Requires consultation and cooperation with bilingual natives with marketing backgrounds • e.g. meaning of time, attitudes toward other people & certain objects, understanding one’s role in society, & meanings of life  can differ considerably from 1 culture to another & may require more than factual knowledge to be fully appreciated. • Foreign marketers should ideally possess both kinds of knowledge about a market. • In interpersonal relations too, conflict can arise if 1 possesses factual knowledge but little interpretive knowledge.

38. Cultural Sensitivity and Tolerance • Being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated and appreciated • Cultures are not right or wrong, better or worse, they are simply different • Marketers must understand how their own cultures influence their assumptions about other cultures –the more exotic the situation, the more sensitive, tolerant, and flexible one needs to be  to reduce conflict & improve communications, increasing success in collaborative relationships.

39. Cultural Change • Culture is dynamic in nature – it is a living process • Paradoxical because culture is conservative and resists change • Changes caused by war or natural disasters • Culture is the means used in adjusting to the environmental and historical components of human existence • Society seeking ways to solve problems created by changes in environment • Some problems solved by accident, while others solved by invention  but usually, problems solved by ideas borrowed from other cultures, as most problems confronting all societies are similar in nature. Cultural borrowing is common to all cultures.

40. Cultural Borrowing • Effort to learn from others’ cultural ways in the quest for better solutions to a society’s particular problems • Imitating diversity of other makes cultures unique • Contact can make cultures grow closer or further apart • Habits, foods, and customs are adapted to fit each society’s needs • Culture is learned – societies pass on to succeeding generations solutions to problems, constantly building on & expanding the culture so that a wide range of behavior is possible. But although many behaviors are borrowed from other cultures, they are combined in a unique way that becomes typical for a particular society  this similar-but-different feature of cultures is important to foreign marketers in their attempt to gain cultural understanding.

41. Similarities – An Illusion • Although several nationalities may speak the same language or have similar race & heritage  does not mean they are similar in other respects. Even though people have a common approach/ idea, cultural borrowing & assimilation to meet individual needs translate over time into quite distinct cultures. • A common language does not guarantee a similar interpretation of words/ phrases – neither does an apparently similar approach to life, values & concepts of acceptable/ unacceptable behavior necessarily mean there are no profound differences. • Each country (culture) has its own unique national character. International marketers must assess each country thoroughly in terms of the proposed products/ services & never assume that if it sells in 1 country it will surely sell in another.

42. Resistance to Change • Cultural change occurs continually & gradually over time – but not without resistance  new methods, ideas & products are held to be suspect before they are accepted, if ever. • The degree of resistance to change varies – the most important factors in determining what kind & how much of an innovation will be accepted are :- (i) the degree of interest in the particular subject ; & (ii) how disruptive the innovation will be to presently acceptable values & behavior patterns. • The most readily accepted innovations are those holding the greatest interest within society & which are least disruptive.

43. Resistance to Change • Cultures resist innovations for many reasons. Even when an innovation is needed, a culture may resist it if the people are unaware that they need it  if there is no perceived need within the culture, then there is no demand. • Innovations may also be resisted if acceptance would require modification of important values, customs or beliefs. • However, cultural resistance to change can be overcome. Cultures are dynamic & change occurs when resistance slowly gives way to acceptance as the basis for resistance becomes unimportant/ forgotten. Historically, most cultural borrowing & the resulting change has occurred without a deliberate plan, but changes are increasingly occurring in society as a result of planned change  purposeful attempts by some acceptable institution to bring about change.

44. Planned and Unplanned Cultural Change Planned Cultural Change • Deliberately setting out to change those aspects of the culture offering resistance to predetermined marketing goals. • 1st step – determine which cultural factors are conflicting with an innovation & creating resistance to its acceptance. • 2nd step – make an effort to change those factors from obstacles to acceptance into stimulants for change. • When introducing an innovation to a culture, marketers have 2 options :- • (i)    wait hopefully waiting for eventual cultural changes that prove their innovations of value to the culture; or (ii) cause change introducing an idea/ product & deliberately setting about to overcome resistance & to cause change that accelerates the rate of acceptance.

45. Planned and Unplanned Cultural Change • Cultural Congruence involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. • Unplanned Cultural Change introducing a product & hoping for the best !! • Marketing strategy is judged culturally in terms of acceptance, resistance or rejection. How marketing efforts interact with a culture determines the degree of success/ failure  but even failures leave their imprint on a host culture.

46. Consequences of Innovation • When acceptance (diffusion) of an innovation occurs, social changes may also occur as a result & there are consequences associated with these changes  which may be functional/ dysfunctional depending on whether the effects on the social system are desirable/ undesirable. • In most instances, the marketer’s concern is with perceived functional consequences – the positive benefits of product use. • However, dysfunctional consequences of the introduction of an innovation can be serious for society as well as the company responsible  & marketers have responsibility for the dysfunctional results of marketing efforts, whether the act was intentional or not.

47. Summary • 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.

48. Summary (cont.) • 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.