International Marketing - Part 3 PDF

International Marketing - Part 3 Guanxi - Chinese Business Mentality The network of relationships among various parties that cooperate together and support one another – pre-existing relationships from school, village, family, workmates are all important The Chinese Business Mentality...

International Marketing - Part 3 Guanxi - Chinese Business Mentality The network of relationships among various parties that cooperate together and support one another – pre-existing relationships from school, village, family, workmates are all important The Chinese Business Mentality relies on exchanging favors, which are expected to be done regularly and voluntarily. Two approaches to business relationships: 1. Guanxi-based relationship (common in China): The company and customer first build a relationship. Once trust is established, transactions follow. 2. Western-style relationship marketing: The company and customer first engage in transactions. Over time, these transactions develop into a relationship. Abstract Culture - Values and Norms Values: Beliefs that a given behavior or outcome is desirable or good Norms: Rules dictating what is right or wrong, acceptable or unacceptable Enacted norms: Explicitly decided Crescive norms: Not formally established, but deeply embedded in a culture Custom: A norm handed down from the past that controls basic behaviors ⟶ Example: Giving red envelopes (hongbao) with money during Chinese New Year. Mores: A custom with a strong moral overtone ⟶ Example: In many cultures, cheating on a spouse is seen as morally unacceptable. Conventions: Norms regarding the conduct of everyday life ⟶ Example: Shaking hands when meeting someone in Western cultures Cultural (internal) elements - (Ethnic) Subgroups Subcultures: Smaller groups of people with their own shared subsets of attitudes, beliefs, & values (e.g., vegetarians) Ethnic subcultures: A self-perpetuating consumer group with shared cultural or genetic ties. Characteristics of ethnic group members: Descend from common ancestors Often live in close-knit enclaves Tend to marry within their group Share a strong sense of togetherness Assign unique meanings to objects within their culture Ethnicity and Marketing Strategies: Ethnicity-based segmentation can be effective, but avoid ethnic stereotypes in marketing! Cultural (internal) elements - Aesthetics The sense of what is beautiful and what is not beautiful What represents good taste as opposed to tastelessness or even obscenity Visual-embodied in the color or shape of a product, label, or package Styles-various degrees of complexity, for example, are perceived differently around the world Consists of: Design Color: Red represents witchcraft and death in many African countries, but is a positive color in Denmark White is identified with purity and cleanliness in the West, with death in parts of Asia Grey means inexpensive in Japan and China, but high quality and expensive in the U.S  Music: Found in all cultures, Rhythm is universal Styles are associated with countries or regions: salsa ⟶ Cuba, reggae ⟶ Jamaica, blues, rap, rock, country ⟶ U.S. Understand what music style is appropriate in advertising; varies by culture and government regulations Cultural (internal) elements - Religion Nature and complexity of different religions is pretty diverse An organization needs to make sure that their products and services are not offensive, unlawful or distasteful to a local nation Example: In 2011 United Colors of Benetton had to stop its “Unhate” campaign. The Italian firm withdrew the photograph featuring Pope Benedict XVI kissing a senior Egyptian imam on the lips after the Vatican denounced it as an unacceptable provocation Example: In China, 2007 was the year of the pig. All advertising with pigs was banned to maintain harmony with the country’s Muslim population. The ban included pictures of sausages that contained pork, and even advertising that included (cartoon) pigs. Cultural (internal) elements - Upbringing and Education Widespread illiteracy has to be considered when creating advertising material, brand communication, product packaging, etc. Example: Countries with the lowest literacy rates ⟶ Niger 15%, Guinea 25%, South Sudan 27%, Benin 29%, Burkina Faso 29% Type and medium of messages for advertising and product labeling have to be adapted, e.g., in countries with low literacy levels, advertisers have to avoid written messages ⟶ better: radio advertising with audio messages or visual media which show pictures and symbols Example: Gillette Guard in India with picture of a man shaving; ARIEL in India with picture of washing machine Cultural (internal) elements - Language (verbal and nonverbal) What might help to avoid language fails in general? Be aware of the self-reference criterion Unconscious reference to one’s own cultural values; creates cultural myopia How to reduce cultural myopia: Define the problem or goal in terms of home country cultural traits Define the problem in terms of host-country cultural traits; make no value judgments Isolate the SCR influence and examine it Redefine the problem without the SCR influence and solve for the host country situation Typologies of culture - High vs. low context cultures (Hall)  High-Context Cultures Low-Context Cultures Information resides in context Messages are explicit and specific Emphasis on background, basic values, societal Words carry all information status Less emphasis on legal paperwork Reliance on legal paperwork Focus on personal reputation Focus on non-personal documentation of credibility Examples: Saudi Arabia, Japan Examples: Switzerland, USA, Germany ⟶ In advertising, it is important to consider cultural ⟶ In advertising, spoken language is the primary nuances and nonverbal communication, as hidden focus of communication, meaning the message is cultural meanings and body language can conveyed directly through words. significantly impact how a message is perceived. Typologies of culture - The cultural dimensions of Hofstede Power Distance (high vs. low) The degree of inequality among people that is viewed as being normal The extent to which the less powerful members of organizations and institutions (like family) accept and expect that power is distributed unequally Countries with high power distance: South American countries, India, China Countries with low power distance: USA, Denmark, Netherlands, Great Britain Implications for international marketing: This dimension affects the evaluation of alternatives for entering international markets Companies in high power distance cultures prefer sole ownership of subsidiaries, because of more control Companies in low power distance cultures are more apt to use joint ventures Individualism vs. collectivism The degree to which people prefer to act as individuals rather than members of a group A reflection of the degree to which individuals in a society are integrated into groups In individualistic cultures, each member of society is primarily concerned with his or her own interest and those of the immediate family ⟶ e.g. Germany, Netherlands, Great Britain, USA, France In collectivistic cultures, people are integrated into strong, cohesive in-groups, often extended families which continue protecting them in exchange for unquestioning loyalty ⟶ e.g. China, Colombia, Pakistan, West Africa, Indonesia Implications for international marketing: This dimension affects adaptation of communication In individualistic cultures, one person should be featured In collectivistic cultures, a group should be featured Masculinity vs. femininity Masculinity describes a society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer and are concerned with issues such as the welfare of children Femininity describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior The importance of “male” values (assertiveness, success, competitive drive, achievement) versus “female” values (solidarity, quality of life) Examples of masculine countries: Arab countries, India, Germany, Great Britain, USA Examples of feminine countries: France, Sweden, Norway, Netherlands, Denmark Implications for international marketing: This dimension affects the choice of sales personnel Aggressive, achievement-orientated salespersons are better matched to customers from a masculine culture than to a feminine culture Managers from masculine cultures tend to prefer male business partners Uncertainty avoidance The degree to which people in a given culture prefer structured situations with clear rules over unstructured situations The extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured (novel, unknown, surprising, different from usual) situations Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and by a belief in absolute Truth ⟶ They are also more emotional, and motivated by inner nervous energy, e.g. Japan, France, Mexico, Brazil, Argentina, Greece Uncertainty accepting cultures, are more tolerant of opinions different from what they are used to ⟶ They try to have as few rules as possible, and they are relativist and allow many currents to flow side by side People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions,, e.g. Denmark, Jamaica, China, USA, Great Britain Implications for international marketing: This dimension affects brand loyalty and product-related services Customers of uncertainty avoiding cultures: Are conscious of brand names Are likely to exhibit high brand loyalty, and Prefer money-back guarantees, warranties, and other risk-reducing features Long-term orientation Future vs. past and present orientations Is interpreted as concerning “a society’s search for virtue”, rather than a search for truth. It assesses the sense of immediacy within a culture, whether gratification should be immediate or deferred Values associated with Long Term Orientation are thrift and perseverance Values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’ Both the positively and the negatively rated values of this dimension are found in the teaching of Confucius (Chinese philosopher who lived around 500 BC) Long-term oriented countries: India, China, Japan, Thailand Short-term oriented countries: Germany, Australia, Poland, USA, East and West Africa Implications for international marketing: This dimension affects the relationship with business partners: In long-term orientated cultures building a relationship with a potential business partner takes precedence over transacting the deal  Managers from short-term oriented cultures must adapt to the slower pace of business in these countries Indulgence vs. restraint Indulgence stands for a tendency to enable the relatively free gratification of basic and natural human desires associated with enjoying life and having fun. Restraint reflects a conviction that such gratification needs to be regulated by strict social norms Indulgent society (USA) Restraint society (Russia) Higher percentage of happy people Lower percentage of happy people A perception of helplessness; what happens to me is A perception of personal life control not my own business High importance of leisure / having friends Low importance of leisure / having friends Less moral discipline Moral discipline Loosely prescribed gender roles Strictly prescribed gender roles Smiling as a norm Smiling as suspect Freedom of speech is important Freedom of speech is not a primary concern Cultural differences have a strong influence on brand perception Red Bull brand analysis conducted in six countries: Germany, UK, Netherlands, Austria, Singapore, and the USA. Highly standardized brand but differs in brand personality perception across cultures. "Success" as a brand trait is emphasized more in individualistic countries (e.g., USA) than in collectivist countries (e.g., Singapore). National culture significantly impacts how brand images are perceived and evaluated. A consistent global brand image requires localized marketing strategies that consider cultural differences. Typologies of culture - Inglehart’s World Value System Cross-cultural variation can be simplified into two key dimensions: 1. Secular-Rational Values (Community Focus) Weak values → Move toward a mythical, sacred community. Strong values → Move toward a rational, secular community. Represents ideals of the community. 2. Self-Expression Values (Individual Focus) Weak values → Move toward a conformist, restrained individual. Strong values → Move toward an expressive, independent individual. Represents ideals of the individual. Usefulness of the World Values Survey (WVS) for Marketing Decisions Market Selection & Segmentation  Helps identify country segments based on value orientations. Acts as a criterion to assess market potential in different regions. Islamic, South Asian, and African countries: Driven by survival and security needs (low self-expression values - SEV). Follow traditional values (low secular-rational values - SRV), emphasizing religion and family. Post-industrial economies (Protestant Europe, English-speaking countries): Driven by self-expression needs (high SEV). Economic stability fosters secular and individualistic values (high SRV). Marketing Applications New product development tailored to cultural values. Communication strategies & brand positioning adapted to value orientations. Time dimension: Understanding how needs evolve creates business opportunities. Typologies of culture - The Schwartz Value System Two Theories of Value-Related Constructs 1. Individual-Level Theory Individual values: Represent personal goals based on human nature and social interaction. Help individuals adapt to group life and societal expectations. Part of an individual’s personality system. 2. Culture-Level Theory Cultural values: Represent societal goals needed for coordination and adaptation. Ensure individuals fulfill roles in line with social norms. Part of a society’s cultural system. Key Idea Values act as standards for judging actions, events, and people as good or bad. Cultures of actual societies are distinguished along three dimensions Societal Challenges & Cultural Value Orientations Key Problems Societies Must Address: Balancing individual and group relations. Coordinating people to produce goods/services while maintaining social stability. Regulating the use of human and natural resources. Role of Cultural Value Orientations: Guide institutional functions and social behavior. Help societies effectively address these fundamental challenges. Autonomy vs. Embeddedness ⟶ individualism vs collectivism Relates to the first problem: To what extent should people be treated as autonomous versus as embedded in their groups? “Autonomy”: people should cultivate and express their own preferences, feelings, ideas, and abilities “Embeddedness”: people are treated as entities embedded in the collectivity Egalitarianism vs. Hierarchy ⟶ power distance Relates to the second problem: How can human interdependencies be managed in a way that elicits coordinated, productive activity rather than disruptive behavior or withholding of effort? “Egalitarian culture”: urges people to recognize one another as moral equals who share basic interests as human beings “Hierarchy culture”: relies on hierarchical systems of ascribed roles to insure responsible, productive behavior Harmony vs. Mastery Relates to the third problem: To what extent should individuals and groups control and change their social and natural environment vs. leaving it undisturbed and unchanged? “Harmony cultures”: emphasis on fitting into the social and natural world (preservation and acceptance) “Mastery cultures”: encouragement of active self-assertion by individuals or groups in order to aster the natural and social environment and thereby attain group or personal goals Using stereotypes positively ⟶ Example: Consumers make inferences based on a brand’s country-of-origin. This ad for Barilla pasta shows pictures of Parma, Italy, and of delicious looking Italian pasta. Barilla wants consumers to infer that since the Barilla brand is Italian, it must produce great tasting pasta. Ethnocentrism Originally the beliefs held by American consumers about the appropriateness, indeed morality, of purchasing foreign-made products ⟶ understanding of what purchase behavior is (un)acceptable to the ingroup Purchasing imported products is wrong because it hurts the domestic economy, causes loss of jobs, and is plainly unpatriotic Managerial relevance Strength of ethnocentric tendencies: use of “Make American/Hire American” promotional campaigns Identification of specific regional areas: broadcast, newspaper advertising customized to ethnocentric inclinations Store location depending on product portfolio (balance of imported vs. “local” products)