Chapter 4 Cultural Dynamics in Assessing global Markets

International Marketing 15th edition Chapter 4 Cultural Dynamics in Assessing global Markets Philip R. Cateora, Mary C. Gilly, and John L. Graham

Introduction (1 of 2) • 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

Introduction (2 of 2) • 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

Overview • 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

Global Perspective 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

Example • 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&feature=related • http://www.youtube.com/watch?v=yA_D29BkXNk&feature=related Roy Philip

Culture’s Pervasive Impact • 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

Birthrates (per 1000 women) Exhibit 4.1 Roy Philip

Consumption Patterns (annual per capita) Exhibit 4.2 Roy Philip

Consequences of Consumption Exhibit 4.3 Roy Philip

Human Universals Use Metaphors Create Art Consider aspects of sexuality private Conceive of success and failure Are ethnocentric Have a fear of snakes Express emotions with face Trade and transport goods Reciprocate Imitate outside influences Resist outside influences Roy Philip

Human Universals Use Metaphors Create Art Consider aspects of sexuality private Conceive of success and failure Are ethnocentric Have a fear of snakes Express emotions with face Reciprocate Trade and transport goods Resist outside influences Imitate outside influences Roy Philip

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. • Individuals learn culture in three ways • Socialization (growing up) • Acculturation (adjusting to a new culture) • Application (decisions about consumption and production) Roy Philip

Origins, Elements, and Consequences of Culture Exhibit 4.4 Roy Philip

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 Roy Philip

Why do we all Love Flowers? • Geography • History • Technology and economics • Social institutions • Cultural values • Aesthetics as symbols Roy Philip

History • 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

Political Economy and 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

Social Institutions (1 of 4) • Family • Religion • School • The media • Government • Corporations Roy Philip

Social Institutions (2 of 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

Major Religions • Christianity – 2 Billion followers • Islam – 1.2 Billion followers • Hinduism – 860 Million followers • Buddhism – 360 Million followers • Confucianism – 150 Million followers Back Roy Philip

Social Institutions (3 of 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

Social Institutions (4 of 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

Elements of Culture (1 of 4) • Values • Rituals • Symbols • Beliefs • Thought processes Roy Philip

Elements of Culture (2 of 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

Hofstede’s Indexes Language, and Linguistic Distance Exhibit 4.5 Roy Philip

Elements of Culture (3 of 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

Language • 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

Elements of Culture (4 of 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

Cultural Sensitivity 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

Cultural Change • Dynamic in nature – it is a living process • Paradoxical because culture is conservative and resists change • Changes caused by war or natural disasters • Society seeking ways to solve problems created by changes in environment • Culture is the means used in adjusting to the environmental and historical components of human existence Roy Philip

Cultural Borrowing • 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

Similarities – An Illusion • 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/americanbritish/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

Resistance to Change • Gradual cultural growth does not occur without some resistance • New methods, ideas, and products are held to be suspect before they are accepted • 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

Planned and Unplanned Cultural Change • Determine which cultural factors conflict with an innovation • Change those factors from obstacles to acceptance into stimulants for change • Marketers have two options when introducing and innovation to a culture • They can wait (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

Summary (1 of 2) • 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

Summary (2 of 2) • 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

Chapter 4 Cultural Dynamics in Assessing global Markets