The Relationships between International Marketing and Culture - Essay Example

?International Marketing and Culture This essay aims to explore the relationships between international marketing and culture. It begins with defining both marketing and culture, presenting different forms and aspects of culture that affect global marketing. It then moves on to consider the impact of culture on different aspects of marketing, including marketing strategy and the marketing mix (product, price, place and promotion). Finally, a summary of the findings is provided as a conclusion. Definition of Terms It is important to understand the different meanings ascribed to terms, to provide a common framework for the discussion. Thus the key terms used within this essay will be defined, with others being defined as they are introduced in the discussion. Marketing has several definitions. Kotler and Armstrong (2010) provide a very simple definition of “managing profitable customer relationships” (p.28) and a more detailed one of “the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return” (p.29). Both put the focus on relationships rather than transactions, and consider the relationship as providing value for both companies and customers. Global marketing is defined as “the commitment of organisational resources to pursuing global market opportunities and responding to environmental threats in the global marketplace” (Keegan and Green, 2011, p.587). If marketing has several definitions, then so does culture, which has different meanings depending on the context within which the term is used. The Shorter Oxford English Dictionary (2002) lists seven meanings for the word culture (p.575), two of which are relevant here. The first is culture as “a particular form, stage, or type of intellectual development or civilisation in a society; a society or group characterised by its distinctive customs, achievements, products, outlook, etc.”, the second as “the distinctive customs, achievements, products, outlook, etc., of a society or group; the way of life of a society or group”. When discussing culture within the context of marketing, the obvious one requiring consideration is national culture, especially as organisations now market their products internationally, even if only by having on online presence. However, other cultural implications for marketing arise from corporate cultures, sub-cultures and social representations of culture. Usunier and Lee (2009, p.8) identify ten sources of culture that affect individuals: Figure 1: Sources of Culture (Source: Usunier and Lee 2009 p.8) Mullins (2010, p.829) defines organisational culture as “the collection of traditional values, policies, beliefs and attitudes that constitute a pervasive context for everything we do and think in an organisation”. Johnson et al (2008, p.195) identify the idea of subcultures within organisations, that exist within the overall organisational culture, but have specific characteristics of their own. These can be based on functional, geographical or business structures, for example, where different approaches can be seen based on the discipline or location of the office or department. On this basis, the marketing department of an organisation will not only exhibit the organisational culture, but also the marketing “department” sub-culture and the marketing “profession” subculture. Thus there are three organisational cultures affecting the department that deals with global marketing. The primary focus of this analysis is the impact of national culture, however, consideration will also be given to the impact of organisational culture where that is relevant. National Cultures and Marketing One of the challenges for marketers when dealing with global marketing issues is that culture cannot be easily seen or identified. Children are brought up within the national culture, and absorb the national values without conscious awareness – they simply learn from, and imitate, their parents (Keegan and Green, 2011, p.141). any study that sheds light on different national cultures helps the marketer to target their marketing more effectively. Perhaps the best known study in this area is that of Hofstede (1988, in Keegan and Green, 2011, p.155) who identified five dimensions of culture that can be used to help marketers in deciding their strategy and promotional approach. These are: Power distance – the distribution of power within a society and the degree to which this distribution is accepted by those with less power. Hofstede ranked the UK as having a ranking of 42-44 which means the UK is seen as having low power distance (ibid) Individualism – reflects the degree of integration within societies. The UK is ranked at 3, a very high individualist culture. Masculinity – indicates the roles assumed to be held by men and women in society and the degree to which they conform with the traditional view of the man as breadwinner and the woman as nurturer. The UK, ranked at 15, has relatively high masculinity. Uncertainty avoidance – the degree to which societies are comfortable with ambiguity or prefer a more “black and white” situation. The UK appears to be very comfortable with confusion, ranked at 47-48. Time duration orientation – whether society prefers immediate gratification or is prepared to wait. The UK clearly seeks immediate gratification with a ranking of 28-29. (adapted from Keegan and Green, 2011, pp.155-156) Keegan and Smith (2011) identify several learning points for marketers from Hofstede’s research. Where cultures are identified as having a longer term focus, for example, those cultures with a focus on the “now” will need to take a more relaxed approach to dealings. Uncertainty avoidance gives an insight into risk tolerance, with cultures having a low uncertainty avoidance threshold being more focused on brand names and brand loyalty than those with a high threshold focusing on guarantees and warranties. Power distance indicates the degree of trust – the higher the power distance, the lower the amount of trust. If setting up a business in an overseas territory, the UK would be comfortable using joint ventures, given its low power distance approach. Hard sell approaches would work well in the UK as a relatively high masculine nation, rather than a softer approach (although the actual target market would still need to be considered if sex is a key identifier of the segment). The more individualistic a nation, the less group consensus is required, with a single person making the decisions. All of these have implications for marketing strategy and the marketing mix adopted by organisations selling goods and services in overseas markets. Culture and Strategy Johnson et al (2008, p.196) highlight two effects of organisational culture on corporate strategy, namely that culture has to be managed so needs somehow to be identified, and that culture will affect both the choice and implementation of corporate strategy (and, arguably, the results of the strategy). If corporate strategy is influenced by organisational culture, and the organisation is itself influenced by, and part of, the national culture, then marketing strategy must be viewed through a lens that is filtered once by the national culture and then again by organisational culture. To this perspective must be added the marketing department’s subculture filter and the marketing profession filter. Any marketing strategy is likely to be influenced by at least five different cultural settings, before any international aspect is considered. One important part of marketing strategy is ensuring that the organisation has a marketing orientation, defined by Cravens and Piercy, 2009, p.4 as “a business perspective that makes the customer the focal point of a company’s total operations”. Achieving this marketing orientation has an impact on the quality of customer care and the associated value derived from the customer. Brettel et al (2008) considered how different cultures developed such an orientation, discovering that national culture had an impact in some instances, but not in all. It may, therefore, fall to the marketing department to sell the benefits of a marketing orientation to the organisation’s senior management and ensure that it becomes a reality to improve future organisational success. Zostautiene and Vaiciulenaite (2010) identified clear links between marketing culture and marketing effectiveness. Whether a marketing culture exists or not within an organisation has a direct impact on business results but whether marketing is effective or not is merely assumed. Thus an organisation’s culture needs to be customer focused, with the customer at the centre of everything the organisation does, for the business to generate income streams and profits. van Heerden and Barter (2008) considered how culture affected the nature of marketing strategy. The traditional choice between a standardised or localised strategy is dependent upon the interdependence between culture and marketing, causing different elements of the marketing strategy to be standard or local. The study did not reach definitive conclusions as to whether a standard or local marketing strategy was best, recommending that “a marketer’s strategy should suit the local culture in order to reach them and have the desired effect on the target market, and not the other way round because such evolutions could take an extensive amount of time in order to achieve marketing goals” (p.37). Given the identification by Hofstede of the time dimension in addition to uncertainty avoidance, the emphasis on the duration of marketing strategy and the achievement of goals may be indicative of the South African culture of the two authors of the article. Undertaking research to understand the local culture is useful in informing consumer behaviour, which can then inform any marketing strategy devised. de Mooij and Hofstede (2002) point out that retail strategies cannot simply be imported wholesale into a new market; account must be taken of national culture values and the impact of these on consumer buying behaviour. Culture and the Marketing Mix Product As branding appears to be an important consideration for some nation’s customers, a consideration of branding in international marketing should lead marketers to identify when brands are required and when not, and when brands are important for global marketing success. Cayla and Arnould (2008) argue that future global branding research “will need to be contextually and historically grounded, polycentric in orientation and acutely attuned to the symbolic significance of brands of all types (p.86). “Previous cross-cultural research has demonstrated a consistently positive effect of brand globality on consumer perceptions, attitudes and purchase intentions” according to Dimofte et al (2010, p.81). They seek to add to this research by considering the impact of consumer ethnicity on global brands. Their results indicate that the assertion with which they open their article does not necessarily hold across all ethnicities and that most customers view the global brand element as being of no importance. Having said that, though, they state that “the structural equation findings show a direct effect of globality on attitudes and purchases” (ibid): that is, although US customers indicated the brand didn’t matter to them, when purchasing items, they purchased brands as the same overall rate as to those for whom brands did matter. On that basis, organisations should work on their brands to make them distinctive as, despite apparent discounting of their effect by consumers, there is an effect when considering purchasing behaviour. A consideration of the decision between global and local products is also required. Steenkamp and de Jong (2010) conducted global research to find out more about consumer attitudes towards local and global products. They devised a standard two-by-two matrix using the dimensions of attitudes towards global and local products: Figure 2: Combinations of Consumer Attitudes Toward Global and Local Products (Source: Steenkamp and de Jong 2010 p.20) Their findings provide some interesting points for global marketing managers: “... international companies should be careful in relying too much on global brands because this strategy may not work well with large segments of consumers” (ibid, p.36). Instead, they advise to construct portfolios with carefully selected global and local products, rather than overemphasising their global brands. Product and portfolio managers can use publicly available information to calculate the likely response to global vs. local products Global account management must become more responsive to local needs, as advised by their local subsidiaries and customise products far more to fit local requirements Local firms can compete with global organisations in the area of local cultural relevance, rather than attempting to win with such things as economies of scale and scope Socio-demographic segmentation is more effective when coupled with customer views towards global and local brands, (adapted from Steenkamp and de Jong 2010 pp.36-37) The results of these studies demonstrate some of the impact of national culture on marketing product management and provide marketing managers with new strategies and approaches to improve their marketing success. Price Usunier and Lee (2009) identify nine different ways that meanings are conveyed by price: MEANING CONVEYED BY PRICE IN BY Buyer-seller interactions Bargaining rituals, price offers and relationship development Consumer behaviour Differences in consumer price-mindedness across cultures Product evaluation To what extent is quality inferred from price? (Tough) competition Signalling willingness to compete by dumping prices Distributors (grey markets) Signalling desire to avoid parallel imports from opportunistic distributors who disturb international price policy and may damage brand image (Peaceful) competition Signalling willingness to enter a market with cartels ‘peacefully’ Price increase policy Meaning conveyed by price in high-inflation contexts Relationship to suppliers Overcoming barriers for supplier to receive real price by over- or under-invoicing Table 1: Price-Based Signals (Source: Usunier and Lee 2009 p.285) For marketers, the issue of pricing is a sensitive, as the availability of information online means anyone can see how much the same item is costing anywhere in the world. For purchasers of DVDs in the UK, the price of DVDs in the USA is irritatingly low, even allowing for postage (see www.amazon.co.uk and www.amazon.com to make comparisons). For developing countries, the pricing issue is even more sensitive when it is a developed country that benefits from their hard-earned funds. Of the three main approaches to worldwide prices, two can take account of cultural factors: adaptation or polycentric pricing, and geocentric pricing. The adaptation or polycentric pricing allows local agents to set the price of imported goods, relative to the tax rates, wages and degree of competition in that area (Keegan and Green, 2011, p.383). However, such a system is open to abuse, with Keegan and Green citing examples including parallel importing of HIV/AIDS drugs that were intended for Africa, back into the EU to make a substantial profit, and textbooks which, contrary to the DVDs on Amazon, are cheaper in the UK than in the USA. The geocentric approach is the most likely to take account of culture when pricing goods and services. In addition to the factors above, geocentric pricing acknowledges that each local market is unique and this should be taken into account when prices are set. The price fits within the overall marketing strategy, requiring some form of control on the part of the selling organisation to avoid the problems associated with polycentric pricing (ibid). Away from the global companies, pricing can emphasise different things that are important in different cultures, such as relationships over prices. Bargaining is more important in developing countries because of the personal element involved, unlike the West were most aspects of sales have been depersonalised (Usunier and Lee, 2009). Most cultures equate price with quality in some way, including the UK with ideas such as “cheap and cheerful”, and a high price representing luxury. Such evaluations are driven by cultural information at the subconscious level. Social representations absorbed when growing up can colour individuals’ judgment of such things as quality, changing perceptions to fit within their cultural environment (ibid, p.289). There are some elements of pricing that are apparently universal, although they appear in different ways in different cultures. Usunier and Lee (2009) consider differences between the northern and southern countries within Europe, contrasting the limitation on availability of goods in the north, to limit consumption, with the freely available goods in the south (ibid, p.291). Price can also be used to reinforce social status by, for example, always buying the most expensive things to emphasise high class values. Pricing is one of the more difficult decisions facing global marketers and getting it wrong can have major consequences. Place How organisations get their goods to customers is another potential minefield for a company exporting overseas. The Japanese system of goods distribution has its roots in Japanese culture and causes the West problems because of its intricate nature, contrary to the idea of the shortest distance between two points being a straight line. Usunier and Lee (2009, pp.316-317) highlight five strategies for companies wishing to export to Japan, all rooted very firmly in Japanese culture, including the need for the exporter to be patient (tying in with Hofstede’s (1988) time dimension), and to develop relationships within the country to facilitate trade. Goldman (2001, p.221) identified six transfer strategies with “basic conditions affecting the extent of transfer change ... found to relate to differences in economic conditions between China and the home countries and the market segments that were targeted in China”. These six strategies, and their associated conditions are: 1. Global niche protection strategy, “to protect and help retail the retailer’s global niche position” (ibid, p.234) 2. Opportunism strategy, for “exploiting opportunities in the host country” (ibid). This strategy is favoured by entrepreneurs with no formal retail format or strategy, and retailers who believed their existing format would not transfer well, so decided to try a new format. 3. Format pioneering opportunity strategy “driven by retailers’ global strategic vision” (ibid, p.235), used by retailers who have extensive international operations and a great deal of experience in the field. 4. Format extension: compatible countries of origin, for transfer of existing formats that fit well within the new country, requiring no or minimal changes (ibid, p.236). 5. Portfolio-based format extension, resulting from the previous transfer of a non-native format into the home nation that is now being imported into a new country (ibid). This approach is usually used by large companies who have a portfolio of formats in different locations, such as Tesco. 6. Competitive positioning oriented, when the importing nation will be competing with local retailers who use the same format. As a result of this research, marketers have an idea of the type of location and the format to use when setting up overseas operations. Promotion Perhaps the most obvious expression of national cultures is the language used for communication. There have been several instances of marketing slogans that have not travelled well when translated into another language, such as the translation of the catchphrase “Avoid embarrassment – Use Parker Pens” into “Avoid pregnancy – Use Parker Pens” in Latin America, and Copenhagen Airport’s promise to “... take your baggage and send it in all directions” (Hollensen, 2008, pp.368-369). So marketers need to be careful when considering whether to translate something into another language in case the meaning becomes lost. The alternative to translation is to leave the tag line in the original language, as several US companies do. The decisions to be made in connection with promotional strategies are another aspect of the general vs. local debate: do you stick to the approach that you have used in your country, or do you tailor it specifically to each market within which the company operates? Usunier and Lee (2009, p.342) identify four aspects of communication that are relevant to business communications: 1. Verbal communication styles and contextual factors 2. Non-verbal communication, such as body language 3. How language shapes world views 4. How international business can deal with language differences. Marketers need to understand differences between low-context cultures with direct communication and literal messages, and high-context cultures who prefer a more relaxed, diffuse style that can move between subjects without involving confusion. Using direct communication styles with the Japanese, for example, can cause a Japanese person to say yes, when they really mean no (ibid, p.345). The idea that reality is socially constructed through dialogue is an idea advanced by Michel Foucault, and can be seen in action through stereotypes, unfortunately used by some marketers to portray different nationalities. The public face of marketing is advertising, in all of its forms. Get this wrong and there are major problems (as mentioned above). However, there may not be such large differences between nations as originally thought. Okazaki et al (2010) considered two sales approaches – the hard-sell (direct, information based) and the soft-sell (indirect, image based) – and the perceptions of US and Japanese citizens of both approaches. Previous research had indicated that the soft-sell approach would be perceived similarly by both cultures, and this proved to be the case with this study. But the surprising finding was that the hard-sell approach showed “relatively homogeneous acceptance” (ibid, p.20) as well, indicating that such approaches might be safe to use as part of marketing campaigns across both the US and Japan, possibly extending to other countries. The best form of marketing is considered to be word-of-mouth recommendation. Cultural differences can determine how effective word-of-mouth referrals are when using Hofstede’s (1988) model. Schumann et al (2010) conducted research in the retail banking industry to identify whether culture made any difference to the reaction following receipt of personal recommendations. Their findings linked the level of the effect to uncertainty avoidance: “received WOM has a stronger effect on the evaluation of customers in high-uncertainty-avoidance than in low-uncertainty-avoidance cultures” (ibid, p.62). Received word-of-mouth recommendations positively influenced the perception of customer service quality. The findings also implied that existing customers also value received personal referrals, requiring a change in strategy to match the country’s uncertainty avoidance level. Although Gordon Brown famously announced the end of the cycles of boom and bust, business cycles exist in every country. Advertising has been found to be more sensitive to business-cycle fluctuations than the overall economy. Deleersnyder et al (2009, p.623) studied the four key media (magazines, newspapers, radio and television) and their associated media spends in 37 countries. Their findings are extensive, but extremely informative for marketers. If a country has a high long-term orientation and power distance, advertising behaves less cyclically than a country with high uncertainty avoidance. If the country is subject to significant stock market pressure and few foreign-owned multinational corporations (implying a mainly local provision of products and services) advertising is more sensitive to the business cycle (again, this implies that local businesses are more aware of the local economy and therefore adjust their advertising spend accordingly). However, if businesses tie their advertising spending too tightly to the business cycle, there are long-term social and managerial losses incurred and the advertising industry grows more slowly. More cyclical advertising indicated higher private-label growth with the likelihood of significant losses for brand manufacturers. And stock price performance is lower for companies with a stronger pro-cyclical advertising spending pattern. Marketers dealing with brands appear to need to maintain their advertising presence regardless of the state of the business cycle to retain customers, especially if they are local rather than global companies. However, the comments relating to share price movement and company growth appear to be stating the obvious. Advertising would grow more slowly if media spending was restricted during the downturns of business cycles only if it is assumed a constant advertising spend regardless of the state of the economy; the lower spend associated with a downturn would seem naturally to lead to slower growth – lower revenue streams means lower profits. This would be reflected in the share price if the company is quoted. Perhaps the authors needed to indicate why this was an important finding or that it was different to what they expected to find, otherwise it is apparently a truism. Notwithstanding this possible criticism of the research, the findings regarding brand advertising is extremely important for global marketers. As promotion is so visible, it is important to get it right and consider the local market as well as that of the host nation before embarking on any promotional campaign. Conclusion Although this is only a relatively brief assessment of the impact of culture on marketing, it has revealed that culture can have a significant effect on the effectiveness of global marketing if it is considered properly and incorporated into global marketing strategies. Hofstede’s model, despite being over twenty years old, is still a useful framework for analysing cultural effects on different aspects of marketing, although it does have some drawbacks that should always be remembered when assessing research findings set within it. Marketing strategy appears to need a judicious mix of both global and local elements, integrated through the marketing mix, to deliver results for companies dealing in a global markeplace. Word Count: 4,042 words excluding diagrams and references but including table. References Brettel, M., Engelen, A., Heinemann, F. and Vadhanasindhu, P. (2008) ‘Antecedents of Market Orientation: A Cross-Cultural Comparison’ Journal of International Marketing Vol. 16, No. 2 pp.84-119 Cayla, J. and Arnould, E. J. (2008) ‘A Cultural Approach to Branding in the Global Marketplace’ Journal of International Marketing Vol. 16, No. 4 pp.86-112 Cravens, D. W. and Piercy, N. F. (2009) Strategic Marketing (9th edn.) McGraw-Hill, New York Deleersnyder, B., Dekimpe, M. G., Steenkamp, J. E. M. and Leeflang, P. S. H. 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