The Role of Culture in the Marketing Environment - Essay Example

Culture & Investment Opportunities for the Company LOREAL Research has shown that culture plays a vital role in marketing environment. Culture describes the attitudes, social norms and the working practices of people towards a particular product or service. The understanding of these differences in learning and thinking patterns is very important for advertisers or marketers since it determines how people will respond to marketing activities. According to Patwardhan (248), consumers are likely to perceive the same thing differently due to cultural differences. Moreover, Hofstede defines culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another” (Hofstede, 5). Hofstede also emphasized on the understanding of people’s behavior and thus their previous, present and future behavior can be predicted (Hofstede, 150). In this regard, five dimensions of culture have been identified: uncertainty avoidance, power distance, and masculinity versus femininity, individualism versus collectivism and long term versus short term orientation. France exhibit; 15-16 power distance, 10-11 individualism, 35-36 masculinity and 10-15 and uncertainty avoidance (Hofstede, 180). Individualism and collectivism have been cited as the most important aspects in which societies differ. According to Patwardhan (249), the understanding of the difference between individualistic and collectivist society is crucial in understanding consumer behavior (Patwardhan, 249). France with individualism versus collectivism index of 10th and 11th shows that it is highly individualistic. This shows that both countries are not compatible with direct selling as a strategy. Since France is highly individualistic, the ties between individuals are loose thus actions are rarely taken in a collective manner and everyone is expected to bother much about his or her immediate families (Patwardhan, 250). In this respect, the interest of French society does not prevail over the interest of individual members of the society. This is a very key factor L’OREAL Company in designing the brands and their respective marketing, promotional and advertisement campaigns. Unlike collectivism, the French think of themselves as “I” and do not act collectively or draw their identity from the society. This analysis therefore presents the consumer behavior of France which must be considered in marketing. France as an individualistic society does not promote direct selling as a mode of promotion of products. However, advertisement is likely to perform very well in this market. This is because highly individualist society exhibits a self sufficient lifestyle thus advertisement over television, newspaper and other forms of media is viewed as a useful source of information more than a word from a neighbor. As stated by Patwardhan (250), individualistic society such as that French tends to rely more on mass media and little on social networks a sources of useful information. L’OREAL Company has explored this in the recent past in which the company has concentrated more on television advertisement than any other channel of marketing campaign. Despite the direct selling being done by other competitors such as Oriflame, it is important to note that this distribution system is not good for L’OREAL Company. As stated by Fragrances Industry Profile (21), French consumers seem to be more skeptical with respect to direct selling. L’OREAL “Local Consumer Understanding” is a key aspect of the company as it relates to the cultural understanding of its consumers. This has not only propelled the company to be a world leader in cosmetics, but has also given the company a competitive edge beyond its major competitor. For instance, Innovative advertisements such as “because I am worth it” for the promotion of hair color was very instrumental and reached many consumers. Investment Opportunities in France France economy has witnessed great transition from government’s “well-to-do” modern economy characterized by extensive government ownership and intervention to free market economy that relies mostly on market mechanisms. The government has fully or partially privatized many large companies that were previously owned by the government including insurance and banks. The government has also ceded stakes in big companies such as France Telecom, Renault, air France, and Thales (France, 3). However the government still maintains a very strong presence in other industries such as public transport, power and defense industries. The privatization of many government owned companies has created opportunity for investments and reduced government interference with market mechanisms. France’s tourism industry is one of the fastest growing industries in France. As stated by France (4), France is the most visited country in the world and the third largest tourist income earner receiving close to over seventy five million foreign tourists. It is therefore important to note that France provides excellent opportunities for investment in the hospitality industry such as hotels and tourism. However, the governments of France have always committed to capitalism in which they strive to maintain social equity through laws, taxes, social spending, and free markets as a strategy to reduce income disparity. Compared to the other big European Union economies, France has weathered the global economic crisis better. This is attributed to relative resilience of the domestic consumer spending coupled by a large public sector. The government of France has created good environment for attraction of foreign investors thus create jobs and stimulate growth. The government also offers a range of financial incentives to foreign investors and provides simple investments regulation laws. The government has also established agency to manage potential investors in both within and foreign countries. According to France (5), “the formal French investment regime is among the least restrictive across the world with screening applying only to a total of eleven sectors described as “sensitive.” However, investment in these sensitive sectors is subject of approval by the minister and could include other ministers depending on the intended investment sector and the level of scrutiny of firm required (Country Conditions, 3). France has a labor force of 28.21 million divided into Service 71.8%, industry 24.3% and agriculture consisting of 3.8% (Country Conditions, 3). The exports stand at $ 508.7 billion ad include aircraft, iron and steel, machinery, pharmaceutical products, beverages and transport equipment. France imports an average of $ 577.7 billion in vehicles, aircraft, crude oil, chemicals, plastics, machinery and equipment. These statistics show that France is a potential investment hub for companies. According to Country Conditions (5), France provides an excellent investment opportunity due to availability of high skilled and productive labor, technology, excellent infrastructure, as well as the country’s proximity to other European union states. However, the government of France is still having its traditional preference for intervention in the market and has shown preference to European Union economies rather than U.S. One of the biggest threats to investment is tariff barriers especially the corporate tax. According to Country Conditions report (6), France has the highest corporate tax rates compared to other leading industrial countries. Others are regulations that are related to minimum wages, employment contracts rigidity, withholding tax and 35-hour legal work week among others. However, the current government of France is first tracking the law in order to implement flexible contracts for investors. Works Cited "Country Conditions." Political Risk Yearbook: France Country Report (2013): 1-22 "France." Political Risk Yearbook: France Country Report (2014): U-1-12 Hofstede Geert, Managerial values, The Business of International Business is Culture, From Cross-cultural Management, Oxford: Butterworth-Heinemann, 1995. Patwardhan, Abhijit M. "Consumers Intention To Adopt Radically New Products: A Conceptual Model Of Causal Cultural Explanation." Journal of Customer Behaviour 12.2/3 (2013): 247-259. Read More