Cultural Differences and Relationships in International Marketing - Essay Example

RELATIONSHIPS AND CULTURE: THE IMPORTANCE OF CULTURAL DIFFERENCES AND RELATIONSHIP MARKETING IN INTERNATIONAL MARKETING Introduction This paper aims to discuss why marketing internationally requires a good understanding of Relationship Marketing and of cultural differences. International Marketing is the application of marketing principles in the international domain, which is said to be a product of the process of internationalisation. There is a growing importance for small and medium-sized companies to market internationally, which implies the need for a strategy such as relationship marketing. This need is exemplified by concern of international business for an increase in turnover, turnover leveling in cases of weak economy, and intensive knowledge of competition and market possibilities (Theodosiou and Leonidou, 2003). Cultural distance and differences are widely used constructs in making international business relating to expansion of foreign investments, entry mode choice, and performance of affiliates (Shenkar, 2001). Likewise, relationship marketing emphasises on customer retention and satisfaction instead of focusing dominantly on transactions and sales. It is said that an organisation needs to improve its level of competitiveness in a globalised market in order to survive the competition if not to dominate it, and marketing tactics help tremendously in achieving this endeavor. Literatures say that among these tactics is the employment of relationship marketing that aids the firm to market internationally its product or service. Why a Good Understanding of Cultural Differences is Important in International Marketing A firm's external operations entail an understanding of how cultural differences affect international marketing decisions. This understanding can be utilised in predicting strategic movements and responses of competitors and thus enables the firm to design effective competitive strategies. International sales negotiations are the primary focal point of this understanding (Tse, et al., 1988, p. 81). The internal conduct of multinational firms also needs knowledge of the impact of culture on marketing decisions. In line with this, firms are required to produce well-orchestrated responses from executives of various cultural backgrounds and create internal coordination. For organisations with diverse cultural backgrounds, the interpretation of cues for standard operating procedures may vary because of these cultural backgrounds, imploring the need to understand cultural differences in international marketing. Another reason as to why a good understanding of cultural differences is important in international marketing is because this knowledge of cultural influences permits the firms to adapt to such differences, enabling it to reduce the so called 'noisy communications" as well as eliminate errors in decision-making. These are said to occur likely out of lack of common understanding, which stems from lack of understanding of cultural differences (Montgomery and Weinberg, 1979 in Tse, et al., 1988, p. 81). It is already a given knowledge that in the past, especially prior to the globalised era, Western managerial culture dominated multinational firms. However, this trail has changed a long way as shown by the recent trends' increase in international trade and foreign direct investment of Asian multinational firms and North American subsidiaries that operate in Asian countries. This implies furtherance of salient understanding of cultural impact on an organisation's internal operations (Tse, et al., 1988). This emphasis on cultural differences is exemplified by the case of China's businesses, which experience isolation from contacts with international markets for many years. Thus, their marketing decision processes have relatively represented pure form of cultural influence on business behavior caused by cultural impacts. It is suggested that an Oriental business community with strong and continuous interaction with the Western businesses is what Chinese firms in Hong Kong represent. However, in the new globalised market, Hong Kong executives are not expected to behave according to North American and Western procedures and behaviour. In a study conducted by Tse, et al. (1988), the cultural traits that may be addressed in terms of cultural differences include individual face saving, attitude toward competition and repayment of dues, participation in decision process, ethical orientation to problems, and fatalistic view, which must be given emphasis by organisations. The importance of the dynamics of cultural influence on consumer behaviour abounds in several literatures on International Marketing, supporting the idea that cultural differences in marketing internationally is an important aspect of making business globally. Culture should thus be involved in sales and marketing since it governs the interactive aggregates of common characteristics that influence how a group responds to its environment (Hofstede, 1980 in Tse, 1988, p. 82). Culture may reflect the persistent tendencies for certain preferences for particular social and business processes over others as well as responses to environmental cues. It is a given knowledge that culture provides specific prescriptions and situations while leaving other situations unregulated. It is thus implied that national and ethnic cultures provide certain specific regulations for behaviour, attitudes, values, laws, and belief systems. In a globalised market however, issues on diversity are very important to consider in sustaining competitive advantage and increasing levels of competitivess among firms. Thus, understanding cultural differences among different firms from different nations is an important task. For instance, the prime distinction between North American and Chinese cultures is pointed out on the individualistic orientation of the former and the collective orientation of the latter, which affect the level of marketing processes employed in their businesses. An individualistic orientation connotes functional aspects of relationships, utilitarian approach to problem solving, emphasis on competition and freedom of choice, and shorter time perspective (Tse, et al., 1988). All of these are however opposed to the collective orientation of the Chinese, which involves emphasis on diffused relationships, a pan-ethical approach to action, consideration of the past and present generation, and emphasis on collective harmony and disciple (Tse, et al., 1988). Generally, a collective orientation tends to submit to perceived individual fates while an individualistic orientation points out to seeking control over one's fate and directing oneself. Thus, without a good understanding of cultural differences in international marketing, firms might encounter difficulties in dealing with other countries in their sales and marketing strategies. It thus implies that cultural norms may tend to influence problem definitions and hence, problem solution for firms. Because of the presence of features sustaining distinct cultural interpretations, a generic marketing problem might appear as another type of problem for a firm. Dealing with these different interpretations due to the presence of cultural differences thus needs careful attention. These considerations lead one to confer that ethnic cultures matter in marketing decision making since a general comparative analysis of culture helps organisations to assess their actions based on their rival organisations, anticipate the responses of their rivals in the globalised market, and deal with colleagues of diverse nationalities on matters that need joint decision making (Shenkar, 2001). Culture allows organisations to pursue different ways of problem identification and solution. The communication of problems and recommendations are also influenced by culture, particularly in the aspect of decisiveness of recommendations. Unnecessary and unlikely results lead to failure in understanding these differences such as misinformation, noisy communication, misunderstanding, and misinterpretation. Individual strategies are also influenced by culture in regard to adjustment in decision situations in facilitating choice and mitigating undesirable consequences for the organisation (Shenkar, 2001). The process of globalisation on the supply side is reflected by the disappearance of intensive communications, standardization, and utilisation of similar decision techniques and technologies, which used to characterise the marketing world prior to the new world order. The importance of considering cultural differences in international marketing is supported by a study that points out to debate on international marketing strategy standardization vs. adaptation being too fragmented to yield clear insights for organisations. The decisions of standardising or adapting to a particular marketing strategy in achieving superior business performance depend largely on the set of circumstances confronted by the firm (Theodosieu and Leonidou, 2003). Ethical perceptions are usually aspects of culture that govern how firms operate and are measured based on different industry types, cultures, and modes of entry into international markets. Mode of entry refers to how firms enable to enter foreign markets through selection of methods, in which cultural differences govern the transaction of firms. It was suggested that culture and a firm's mode of entry into international market have significant effects on how ethical problems are perceived (Armstrong and Sweeney, 1994). The focus on cultural differences in pursuing international marketing is no longer new in the corporate domain. The emergence of diversity in the business setting is an exemplification of this emphasis, traced mainly on differences on culture of participants. In the global market, this diversity is likewise present and is in fact characteristic of international transactions. There is thus a need for an organisation to understand levels of culture and cultural differences governing each nationality, ethnic group, and nation. This way, the firm would heighten its level of profitability and strengthen its relationship with international players participating in the global transactions. It is also noteworthy to mention that not only is it important that a firm's voice be heard in the domains of international market but must also learn how to listen and understand others' voices in order for it to operate strategically. Such ability to listen and understand may only be acquired through a clear and good understanding of cultural differences. Why an Understanding of Relationship Marketing is Important in International Marketing Relationship marketing is a marketing concept that emphasises on customer retention and satisfaction rather than a dominant focus on transactions and sales (Theodosiou and Leonidou, 2003). It is an approach that focuses on the relationship that must exist between the organisations and its customers. It recognises the long-term value of keeping customers as opposed to acquisition of new clients and targeting business demographics. It is applied to competitive product alternatives from which customers can choose, alongside an ongoing and periodic desire for a certain product or service (Theodosiou and Leonidou, 2003). Certain strategies to pursue marketing relationship are launched by forms, such as "defensive marketing" which aims to reduce customer turnover and increase customer loyalty. This construct is opposed to "offensive marketing," which mainly involves obtaining new customers and likewise increasing the frequency of customers' purchase. In a nutshell, defensive marketing, which is the focus of relationship marketing, is geared towards managing customer dissatisfaction as opposed to offensive marketing, which gears for liberating dissatisfied customers from the system and generating new ones in replacement of them (Shenkar, 2001). Based on these facts, an understanding of relationship marketing is important in international marketing because there is a need in this globalised era to analyse customer preferences, tastes, likes, dislikes, and complaints. In international marketing, relationship marketing is seen in the usage of event-driven tactics of customer retention marketing schemes while treating marketing as a process instead of a set of single unconnected events (Shenkar, 2001). When firms mold their marketing message and strategies to the preferences of the customer, a very high customer satisfaction and profitability are generated. Since the motive of every organisation is to increase its level of competitive advantage, this may be achieved by focusing on strategies that promote relationship marketing through customisation of programs for individual consumer groups. The task is not to liberate dissatisfied consumers and generate new ones but to minimise levels of dissatisfaction among consumers. This way, relationship marketing enables the firm to compete globally through international marketing and realise its goals. Moreover, customer feedbacks serve as a barometer of satisfaction level, in which the firm is able to evaluate its strategies and motives and act out based on targeted results. It is also noteworthy that all marketing decisions are triggered by customer behaviour and the customers' actions are assessed by their activity or lack of it. If the organisation is able to track these (in)activities, it can then predict them, which becomes that basis for targeting marketing efforts internationally. This approach removes unnecessary marketing spending that are in reality products of mishandled marketing strategies and creates a high return of investments on aspects of marketing campaigns (Theodosiou and Leonidou, 2003). In effect, the firm spends lesser in its pursuit of marketing internationally and is able to spend its finances more effectively. Thus, relationship marketing is important in marketing internationally since it points out the importance of customer service and quality and the necessity of developing continuous transitions with customers. Since international marketing is focused on delivering high value products or services, relationship marketing is an effective means in pursuing this. Along with this, relationship marketing is likewise suitable in circumstances involving industrial products, customers' preference for continuous relationship, and customers' involvement in the production phase, which are all involved in the process (Theodosiou and Leonidou, 2003). The strengths of benefits of relationship marketing are seen in its focus on providing value to customers, customer retention, and emphasis on service and quality, which are all aimed at by international marketing. Moreover, the costs entailed in keeping an existing customer are just a fraction of the costs entailed in acquiring a new customer, making the concept pursue goals that are aligned with the objectives of marketing internationally. Likewise, the globalised market welcomes strategies that aim to retain customers rather than ones that acquire them after losing some out of dissatisfaction. In a heightened competitive market in which several firms and nations compete, it would be more practical for an organisation to aim at keeping its customers and working on ways by which it can increase their level of satisfaction rather than losing them and working on ways to acquire new ones. The usage of relationship marketing with characteristics already mentioned is beneficial to firms as exemplified by studies that show long-term customers initiating free word of mouth promotions and referrals, which help increase a firm's profitability. A satisfied customer becomes a long-term customer and is less likely to switch to competitors, making it more difficult for competitors to enter the market. Happier customers may also lead to happier employees who in turn are able to produce in a heightened level of productivity (Shenkar, 2001). This is why an understanding of relationship marketing is important in international marketing. In today's era of globalisation, it is important for firms to ensure its profitability through different mechanisms that may be employed. Marketing internationally, the firm needs to have established its name and reputation to customers who avail of the same product or service out of a satisfying experience from the past. Had the customers wanted to repeat the experience, they would surely avail of the same product and/or service from the same company and will continue to make it a part of their lives. As already mentioned, a satisfied customer creates free word-of-mouth advertisements, enabling the firm to save on financial marketing aspects and allows for an almost effortless flow of additional customers. The level of quality and branding identification are thus important aspects of the product or service requirements, which the firm should ensure in its international marketing. Integrity is very important as well in ensuring that customers put their trust on the product and the firm. This way, customers continue to patronise the products or service offered by the firm. Had the firm focused not on relationship marketing but on offensive marketing although it may have acquired new customers to replace unsatisfied old ones, its trail is on the activity of losing old ones and acquiring new ones instead of keeping old ones and acquiring new ones. Keeping the old and acquiring new ones is more beneficial and practical for the organisation that transacts and competes internationally where competitive advantage is an important aspect. Literatures abound on how organisations may increase its level of competitiveness and central to this is customer satisfaction. The domain of customer satisfaction is thus the primary concern that an organisation must give significant focus on. It shall likewise persist on improving the level of satisfaction of the already satisfied customers so that rival firms will not snatch their preference away. Conclusion The importance of understanding cultural differences in regard to marketing internationally is a very timely and relevant issue in today's globalisation. Since competitive advantage is an important concern of each firm that ventures globally, an understanding of cultures and norms governing the marketing system of a certain organisation is a necessity. This is because the organisation deals and transacts with different nations that possess various ethnic and indigenous cultures which cannot be expected to adapt or comply with a "standard culture." This is so since regional, political, and geographical barriers are removed in the transactions among nations and firms. Organisations must thus employ various techniques on how cultural differences may be pursued as an important concept in the marketing strategy. Relationship marketing is also an important concept that governs the movement and decisions of the firm in its marketing goals. In international markets in which competition is heightened through globalised trends, keeping and acquiring customers through "defensive marketing" are important points to consider. This may be sustained by developing strategies that allow for customer satisfaction which is said to entail lesser costs than adopting an otherwise pattern of marketing, which is losing customers and acquiring new ones, considered more costly and not practical. References Armstrong, R. and Sweeney, J. (1994) Industry type, culture, mode of entry and perceptions of international marketing ethics problems: A cross-cultural comparison, Journal of Business Ethics, Vol. 13 (10), 775-785. Montgomery, D. and Weinberg, C. (1979) Toward strategic intelligence systems, Journal of Marketing, 43 (Fall) 41-52. Shenkar, O. (2001) Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences, Journal of International Business Studies, Vol. 32 (3) 519-535. Theodosiou, M. and Leonidou, L. (2003) Standardization versus adaptation or international marketing strategy: an integrative assessment of the empirical research, International Business Review, Vol. 12 (2), 141-171. Tse, D., Lee, K., Vertinsky, I. and Wehrung, D. (1988) Does culture matter A cross-cultural study of executives' choice, decisiveness, and risk adjustment in international marketing, Journal of Marketing, Vol. 52 (October) p. 81-95. Read More