International Marketing Lecture 4 PDF

International Marketing - 24220 Week 4 – Lecture 4 Dr. Nigel Bairstow UTS CRICOS 00099F UTS CRICOS 00099F  Weekly themes International Marketing Introduction to...

International Marketing - 24220 Week 4 – Lecture 4 Dr. Nigel Bairstow UTS CRICOS 00099F UTS CRICOS 00099F  Weekly themes International Marketing Introduction to International Marketing The International Macroeconomic Environment Researching International Markets and Market Entry Culture in International Marketing SME’s in International Marketing Digital Transformation in International Marketing Product and Promotions in International Marketing Pricing and Distribution in International Marketing Ethics and Sustainability in International Marketing Contemporary Issues in International Marketing 2 Cultural Influences in International Marketing Objectives Explain the impact of culture on international marketing. Apply key cultural concepts when evaluating international marketing situations. Evaluate the ways in which cultural differences impede international communication. Undertake cross-cultural analysis and comparison. Recognise the need for cultural sensitivity when preparing for and conducting international negotiations. Importance of the Social and Cultural Environment Globalisation will not necessarily result in a common culture worldwide. Culture often transcends national boundaries. Nations and subcultures within nations differ from each other on various cultural dimensions. Knowledge of the culture is essential for effective decision making in international marketing. Concept of culture is undergoing fundamental change. Sophisticated communications technology is altering traditional notions of culture.  §Shared indicative definitions of culture: What Is Culture? o‘Culture is the total way of life in a society’ Culture is dynamic so (Fletcher, 1979) international marketers must map its changes and oCulture is the collective programming of the trends mind (Hofstede, 1980) §No single accepted definition of culture but a number of broad dimensions: oPrescriptive oLearned oDynamic oSubjective 5 What is Cross Border Culture CULTURE – SET OF COMMON AND ACCEPTED NORMS SHARED BY A SOCIETY  Understanding Culture will impact … … the way we … the way we negotiate … the way we develop our products, communicate and deals and contracts and manage marketing and business interact with one strategies another International Communication Negotiation Marketing Cross border culture There are no rights or wrongs Cross cultural understanding requires us to re-orient our mind-set and expectations to help us interpret what someone from another culture may act, say, or gesture to us Culture is not static and especially in our global world, cultures will continue to evolve, especially from generation to generation. It is important to be open and not be judgmental.  Cross Cultural Differences Cultural Unstable political system Negotiation styles Risk Inadequate legal system Decision-making styles Corruption and ethical blunders Ethical practices Economic mismanagement Buyer Behavior Government intervention, protectionism, trade barriers Risks in Commercial Risk International Country Business Risk Weak partner Foreign Exchange Fluctuations Operational problems Asset valuation Timing of entry Foreign taxation Competitive intensity Currency Transfer pricing Poor execution of strategy Risk Key Cultural Concepts Key Cultural Concepts Layers of Culture The Iceberg of Culture Hofstede Cultural Dimensions Hierarchy of Needs Cultural Context Layers of Culture NATIONAL INDUSTRY COMPANY FAMILY The Iceberg of Culture The visible daily behavior Language Body language Clothing Visible Lifestyle Drinking and eating habits Invisible Values and Social Morals Basic Cultural Assumptions Family values National identity Gender Roles Ethnic Culture Friendship patterns Religion HOFSTEDE CULTURAL DIMENSIONS  HOFSTEDE CULTURAL DIMENSIONS 0 = LOW USA versus China 100 = HIGH 40 80 more egalitarian POWER DISTANCE INDEX Embraces hierarchy 91 collectivist 20 INDIVIDUALISM individualistic Nurture more important FEMININE/MASCULINE 66 Power more important 62 30 46 More relaxed attitude UNCERTAINY AVOIDANCE Believes in rigid codes 26 87 Puts short term goals first LONG TERM ORIENTATION Puts long term goals first 24 68 Happiness can be bad RESTRAINT / INDULGENCE Happines is always good  Hierarchy of Needs between different culture groups West Asia Personal Self Actualization Status Prestige Admiration Social Social Belonging Affiliation Safety Safety Physical Physical Physiological Physiological Cultural Context of Various Countries HIGH CONTEXT Japanese EXPLICIT Latin American Italian British Australian North American German Swiss IMPLICIT LOW CONTEXT Business Culture in Asia Business Cultures in Asia Chinese entrepreneurs in Asia Family Conglomerates in Asia Japan’s Keiretsu Korea’s Chaebol China – Guanxi The Bamboo Network Network of overseas #1 Forbes 2018 #1 Forbes 2018 Chinese-owned Indonesia’s Malaysia’s Richest Richest businesses in Southeast Asia. Robert Robert Hartono Kuok Most dominant #1 #1 private business Forbes 2018 Forbes 2018 Singapore’s Philippines group outside of East Richest Richest Asia. Philip Ng Henry Sy  Crazy Rich Asian Top 5 Richest Family owned Asian conglomerates* 1. Ambanis, Reliance Industries, (India) 2. Lee family of Samsung (Korea) 3. Kwok family of Sun Hung Kai Properties (Hongkong) 4. Chearavanont family of Charoen Pokphand Group (Thailand) 5. Hartono family of Djarum Group (Indonesia) *Forbes, Asia’s 50 Richest Families 20 Japan from Zaibatsu to Keiretsu Zaibatsu – “wealthy clique” Family conglomerates that dominated the Japanese economy from the mid 1800s to WWII. Organized around a single family operating companies in different industries Dissolution of the Zaibatsu by the Allied forces after WWII Example: Mitsui, Sumitomo Keiretsu – “system” Informal grouping of companies with one and two- way agreements to favor each other in business deals, share in projects, and sometimes financial burdens Mitsui’s first building in 1870s Can be as much as 30 companies – example: Toyota South Korea Chaebol Chaebol – “rich clan” 45 active conglomerates Top 10 own about 27% of all business assets Top 5 Samsung SK Hyundai LG Lotte China Guanxi GUANXI is building a network of mutually beneficial relationships which can be used for personal or business purposes GUANXI is about spending time to get to know your Chinese counterparts beyond just formal meetings – dinners, entertainment, etc. GUANXI is not a be-all and end-all you but will still need a strong business proposition A strong guanxi can even lend money to one another. Keep your feet on the ground Dimensions of Culture  Dimensions of Culture Language and Communication Beliefs, Attitudes and Behaviors Time Learning Styles Rewards and Recognition Food Values, Norms and Agreements Relationships Religion Symbols and Rituals Self and Space Dress and Appearance Credit: National Institute of Technology Tiruchirappalli  Language and Communication VERBAL NON-VERBAL National languages, dialects, accents, Body language and translations complicate verbal Facial expressions communication Eye contact Top 5 languages in the world: Chinese Spanish English Hindi Arabic Greeting in japan Japanese bow People greet each other by bowing Different degrees of bows depending on the occasion: Exchanging business card Showing respect Expressing deep gratitude Saying goodbye Offering an apology Showing appreciation Return a bow when you’re bowed to. Greeting in Thailand the wai Thais greet each other with a "wai." Foreigners are not expected to initiate the wai gesture, but it is an insult not to return the wai. If a wai is not offered to you, shake hands with men and smile and nod to women. A Thai businessperson may shake hands with a foreigner.  Brand name translations GET IT RIGHT THE FIRST TIME The Good ones The Bad ones Reebok – “Rui bu” means “quick steps” KFC’s original translation: Tide Detergent – “Taizi” means “gets rid “We’ll eat your fingers all” of dirt” Coca-Cola’s original translation: “female Lay’s Snack Foods – ”Le shi” means horse fastened to wax” “happy things” Coca-Cola’s current translation “permit mouth to be able to rejoice” Pepsi’s English slogan: Come alive with Pepsi was translated to “Pepsi brings your ancestors back from the dead” PERCEPTIONS OF TIME “NOT ALL ASIANS ARE LATE!” Japan If a train arrives more than ONE minute after it is scheduled, it is considered late South Korea Puts a lot of value on punctuality and view being late as a sign of disrespect China It is not considered being late if you arrive within 10 minutes of the agreed time Malaysia 5 min = 60 min Being late is an accepted norm that does not require apology LEARNING STYLES Asia – “formula” based; rote learning West – “experience” based; discussion; critical thinking RECOGNITION AND REWARDS Rewards and Recognition are not the same thing so important to research the “right” mix for your company in any given country situation If giving Little red envelopes during Chinese New Years – make sure they are not in denominations of “4” In India, it learned that great importance is placed on awards and certificates that brandish a company’s logo. FOOD AND DINING Food types and preferences Food preparation Dining etiquette Food customs Dining  VALUES, NORMS AND AGREEMENTS How are business obligations honored? How are disagreements resolved? Some cultures rely on Some cultures rely on a formal legal system a relationships, friendships or a handshake VALUES BARBIE IN CHINA 2009 – world’s largest Barbie store in Shanghai opened 2012 - closed down Aspirational Chinese middle was more interested in educational toys than dolls RELIGION RAMADAN is one of the most important dates in the Islamic calendar and marks the holiest month of the year. It is one of the pillars of Islam where Muslims who are well and able, must fast from sunrise to sunset. 87% of Indonesians are Muslims, making them the largest Muslim country. For retail, it is like the Thanksgiving or Christmas in the West where retail sales spike up. Food & beverage also increase their sales despite the fasting – as families get together to break their fast with post sunset buffets or pre-dawn meals.  SYMBOLS, OBJECTS, NUMBERS JAPAN CHINA CRANE Things are sold in sets of 5, not 4 Lucky “8” Good fortune 8/8/2008 at 8:08pm Colours Pink (Korea): symbolizes trust Yellow (Japan): bravery, wealth and refinement Red (India): most powerful color; wealth, power, purity, fertility Red (China): fertility and good fortune example: giving red packets  Space Personal or public space Personal Space How close we stand to our colleagues, friends and strangers Generally, contact cultures like Southern Europe and South America stand closer than ”non-contact” cultures like Northern Europe, North Japan Known for their discipline and good public etiquette America and Asia Personal Space - Video Some universal business etiquettes Dress conservatively. Be clean and neat Research the business customs and culture if visiting another country Take introductions seriously Respect business cards Shake hands moderately Don’t use first names unless invited to Respect age Be on time Best practice is to turn off phone when in business meetings At a meal wait for your host to start Avoid discussing politics or religion Err on the side of formal Key Take Aways In international business, understanding culture is imperative as it impacts the way we communicate and interact with customers, employees and the way we develop our products and manage our marketing and business strategies. Cross cultural risks arises from a misunderstanding of a cultural situation or event. Culture is reflected by various dimensions,and can be interpreted through various models and concepts.