The Effect of Culture on International Marketing - Coursework Example

INTERNATIONAL MARKETING MSc in Marketing 14 MN7331 Vasitti Tejagupta ID 139039659 Submitted: 14 May Word count: 3,374 Table ofContents Impact of Culture in International Marketing 4 Cultural Dimensions 9 Individualism versus Collectivism (IDV) 9 Masculinity versus Femininity (MAS) 10 Uncertainty Avoidance Index (UAI) 10 Pragmatic versus Normative (PRA) 10 Indulgence versus Restraint (IND) 11 Marketing Strategies for Multinational Company (MNC) 11 A] Marketing Mix 12 B] Communication 13 C] Supply Chain 14 Conclusion 16 Bibliography 23 Introduction Today in the globalised world, there is an increasing in the number of multinational organisations which means most firms have to face the competition more harshly every day. To be a strong company in the global market, many international companies try to meet the expectation in local market by understanding the real factors which affect the growth of their companies. In this case there are so many factors involved but culture understanding plays one of the most important roles to drive the company growth. Culture can be the arts and other appearances of human being in an intellectual manner to accomplish regard in a society (Belshek n.d.). Thus, any international organisations should focus on culture because it can provide what human want and this issue has influence on consumer’s preference. The purpose of existence is the same in all cultures, satisfying the groups of people, but what they expect from their members is widely various in many levels. Based on the variety of expectation, culture has significant influence to the performance of MNCs in the global business environment. In this regard, it can be affirmed that aspects related to culture such as belief, attitudes and perceptions often shape consumer purchasing behaviours. Nonetheless, it cannot be denied that cultural differences across the globe tend to create certain challenges for the MNCs in framing their broad strategies. Notably, the strategy of a company that is successful in the one country may not be able to deliver the same outcome while operating in the other country. It is thus crucial for MNCs to determine considerable understanding regarding the aspects of culture in order to succeed in the international business environment (Gerhart 2008, pp. 259-274). As mentioned above, it would be great for Multinational companies (MNCs) to concern and learn about different cultures around the world before they start their business in order to know the real need of all consumers so they can meet customers’ satisfaction. This paper will provide the different cultures that affect an organisation’s global marketing. It will start with the impact of culture in international marketing, elements of culture and how these elements affect to MNCs, cultural dimension. Finally, it will end with Marketing Strategies for Multinational Company and how these strategies are works for understanding the consumer behaviour in case of MNCs in an international market. Impact of Culture in International Marketing According to Hofstede (1980, pp. 21-23) culture is defined as “the collective programming of the mind which distinguishes the members of one group from another”. The basic elements of culture contain languages, symbols, values, beliefs and religion and so on. Along with the time culture tends to transformed such as, one generation to another generation. It is also essential from an organisational point of view. During the marketing activities an organisation focuses on few cultural symptoms for understanding the taste and preferences of the consumers’ (Belshek n.d.). Understanding regarding the different cultural factors helps organisation to comprehend the basic nature of the human kind and along with that it also helps to understand the choices and preference of the human being. Apart from that it also helps a firm to make decision regarding the manufacture, product and investment and so on. Such as, in case of product manufacturing an organisation can identify the potential of the customers from their self-representation and behaviours. From the different stand point, it can be asserted that for marketing activities product pricing and development is quite essential. Cultural values, beliefs and religion help an organisation to decide those product pricing and developing factors, as an instance most religious people would not love to spent money on brand image rather they will focus on quality of the product. Even, in case of international marketing organisations also ensure first whether the political influences can create the difficulties in future or not, and they can use this prediction for investment plan. Thus, it can be easily asserted that organisations should know the culture of human being before international marketing (Farooq 2011). On the contrary the elements of culture has also affected to consumer behaviour in different countries in a different manner. According to the observation, it can be asserted that consumer behaviour is highly dependent on cultural factors. In simple words consumer behaviour is the study of individuals or a group’s consuming behaviour, through the pattern, habit and lifestyle. In case of international marketing culture varies from one country to another as an instance American culture is completely different from the under developed countries’ such as China, India and other African nations. In this regard, it can be stated that the life-style and the behaviour of American men belongs to high status on the contrary in emerging African nation’s life-style and behaviour almost like an economical. Thus, it can be asserted that culture has always affected the consumer behaviour in different countries. In order to address this issue an international organisation must develop the market communication in domestic and global market. In addition with that organisation should segregate the market segment according to age group, financial status (Marsiglia 2010). Culture also plays an important role to significantly affect local companies as well as international companies. According to the observation, the culture effects on localising firms i.e. consumer behaviour, local demand, buying decisions and brand image. On the other hand, it can be asserted that culture also influences to managerial styles and management decisions. For an example, it can be asserted that Danone Group is a French based company which has already extended its business into several countries such as Spain, Brazil, Indonesia and China and others. During the introduction phase it has grown rapidly in major global market due to its quality control but in case of entering into the Chinese market it has found difficulties even the fact that its quality has been excellent. From the analysis and evaluation it has been identified that the behaviour of the Chinese consumers are different from other countries and along with that people of China tend to consume its own local food. In addition it has been also found that due to false alarm regarding bacterial infection, consumers have refused Danone dairy products (BBC 2014). On the other hand, local Chinese firms have operated its business smoothly. Thus, it can be asserted that, culture can put a massive inverse impact on a multinational organisation and it can also affect the nature of the business negotiation (Maitah n.d.). Elements of culture As the mentioned above, culture can impact a multinational company’s success so marketer should concern more about this issue in order to attract consumers’ preference around the world. There are a lot of elements of culture but in this essay it will be categorised into three groups which are Language, Education, and Religion. For Language, it is a part of symbols that people use for communication to each other and it can also be both verbal and non-verbal. There are more than 6,700 languages around the world so it might be hard for multinational company to access all the local market (Lee and Carter, 2012). In other words, marketers will find it difficult to create one key message to let all consumers understand in the same way. Many companies normally prefer to extend their business and establish subsidiaries in abroad by focusing on countries where English is an official language (Welch et al., 2001). Language is an important component of culture. The differences in the culture often impose difficulties for the multinational companies to communicate their messages to ultimate consumers. In this regard, it can be affirmed the language spoken in the UK is different from language spoken in India. In order to avoid the language barrier multinational enterprises use company logos and symbols, so the organisations can clearly convey the message about its product and services. For example, Nestle Company uses logo which involves mother birds feeding its two baby birds for communicating its product messages which represent healthy food to its customers. Regarding Education, there is an increasing in the number of educated people so marketers might get more opportunity to be more sophisticated. The higher number of educated people gives direct advantage to the global company to identify specific segmentation, proper communications, and attractive packaging and labelling. Moreover, it also affects human resource issue such as motivation, training and so on. Nowadays, most of educated people are adult so westernisation trend seems to be even more popular for this segment. Thus, this can be advantageous for marketers to launch the products following their need in order to impress consumers. Education is another important aspect that imposes difficulties to multinational companies while operating in overseas market. In this regard, educated people have more variety of perceptions and beliefs than people with little education. For example the perceptions of people in the UK are different from the perception of people in India; therefore, the impact on the demand of products and services can be clearly seen. Moreover, people with high education are more conscious towards quality and health factors while people with little education are more inclined towards price factors rather than quality. Concerning Religion, it is a main cultural variant. This factor is able to have influence to a company’s product and service as well as the way business conducted. There are many religions in the world and the different religions lead to different culture as well. Thus, the marketers should be concern about this issue when they launch the campaign because some culture can accept what they think but some cannot. For example, most Christian countries always communicate to others by shaking hand or greeting. On the others hand, Buddhists such as Thai people believe that it is not polite to touch someone at the first meet so they often communicate by doing the Thai salute of respect called “Whai” so some western advertising in Thailand might be banned by Thai people because they cannot accept some western culture. Cultural Dimensions Culture can affect business organisations’ and also can influence its performance in both ways. Thus, it can be asserted that comprehending culture is one of the vital tasks for the organizations particularly those aiming to or functioning in the international market. Moreover, it can be affirmed that culture can enforce serious restrictions on business strategy and can act as an inhibiting influence in the course of attaining the business related objectives (Gerhart 2008, pp. 259-274). Accordingly, it has been observed that culture differs between different countries in terms of its approaches. However, it does not directly impact the organization’s performance but on the contrary; it imposes certain barriers on the organizational culture as well as on the consumers’ behaviour. In other words, it is argued that national culture is a critical determining factor that forms the organizational culture (Gerhart 2008, pp. 241-259). According to Hofstede, there are five cultural dimensions which can influence to the consumer behaviour for a multinational company (MNCs). Those are illustrated below: Individualism versus Collectivism (IDV) Individualism is focused with socialism, and it refers to the degree to which people are anticipated to take care of only themselves. In order to describe it in simple words, it is the level where people expect their friends and relatives to take care of them in a society. The position of the society in this dimension can be described by the people’s self-oriented attitude. On the other hand people from collectivist society place more importance on group efforts (Itim n.d.). Masculinity versus Femininity (MAS) The masculinity refers a preference in society for archiving heroism, confidence and reward for success. This dimension concentrates on how much success can be achieved. Masculinity emphasizes on ambition, achievement of wealth and differentiated gender roles. On the contrary, femininity is generally seen on the aspect to caring and development behaviours, sexuality equality, environmental awareness and cooperation and others (Andrews University 2014). Uncertainty Avoidance Index (UAI) The uncertainty avoidance related index denotes the uncomfortable feelings of the participants of a particular society with indecision and vagueness. The vital concern in this regard is to deal with the fact of the future for a society. Apart from that, it can be asserted that countries representing on strong uncertainty avoidable index maintain the belief, behaviour and intolerant of unorthodox behaviour and ideas. On the other hand, countries scoring low in this dimension are more enthusiastic and are willing to take risks whenever there lays any exploitable opportunities (Clearly Cultural 2014). Pragmatic versus Normative (PRA) Pragmatic versus normative facet denotes the efficiency of human kind through which people can relate themselves with the external environment of the society. It has been observed in societies that most of the individuals have a tendency to elucidate as much as it is possible. On the contrary, some people have realistic orientation; they do not need to elucidate everything, as they keep in faith that it is difficult to comprehend the intricacy of the life. Thus, it can be asserted that, the test is not to know the reality but the aim is to live an honourable life (Hofstede and Hofstede n.d.). Indulgence versus Restraint (IND) Indulgence defines one challenge that satisfies humanity. This particular aspect is demarcated as the degree which human beings attempt to control their needs and desires. On the other hand, restraint is defined as a comparatively strong control. Thus, it can be asserted that, culture can be described as indulgence or restraint (Itim n.d.). In case of extending business in international market an MNC must need to analyse all of these factors depending on the situation and circumstance, otherwise it will be highly difficult for the organisation to adjust with the distinct cultural environment. Thus, this dimension can be seen in different countries in a different manner. Marketing Strategies for Multinational Company (MNC) Multinational Corporations control or operate their operation in more than one country (Jones 1996). In modern days MNCs are challenged by extraordinary levels of uncertainty. In this rapid economic globalisation phase MNCs are faced several difficulties like terrorism, global warning and so on. Instead of presence of this kind of complications, the MNCs have extended in international market due to the development of science and technology. However, the MNCs have also found difficulties to understand the consumer behaviour due the prevalent of different culture in different countries. In order to address to complications MNCs used to rely on three strategies to avoid those negative impacts. How these strategies work for understanding the consumer behaviour in case of MNCs in an international market are mentioned below: A] Marketing Mix1 McCarthy (1975) formulated the concept of the 4Ps namely product, price, place and promotion (Oh and Pizam 2008). Many years these fundamental principles have been used to formulate marketing plan for domestic and international market. However, after the globalisation the traditional concept has been started changing rapidly and a new trend has been introduced. That new trend is known as “service marketing”. Recently, most of the organisations’ directly and indirectly depended upon this concept. This service marketing concept has been introduced by Fifield and Gilligan (1996). The concept such as people process and physical are added to the 4Ps making it to 7Ps, which helps MNCs to analyse marketing mix and also helps to adapt strategies depending upon the situation and circumstances (Gilligan and Wilson, 2012). In order to analyse the importance of 7Ps for understanding the consumer behaviour, McDonald and Nestle have been chosen in this discussion, because it has implemented the 7Ps marking mix strategy for understanding the effect of culture in international marketing. These examples of two companies have been shown and analysed in the Appendix A. B] Communication On the contrary, communication also acts as one of the most effective strategy through which an organisation can predict the consumer behaviour. Language barriers are the most common challenge for an MNC in case of international marketing. MNCs should follow the subsequent strategies to ensure effective international marketing and understanding the consumer’s behaviour (Okoro 2012, pp. 130-138). In this regard, MNCs must focus on clearly and slowing down the speed of the speech. In case of rush communication misunderstanding can be created and ended up with confusion. It is also crucial for MNCs to seek for a clarification politely if the message is not understood clearly while communicating with the stranger citizen. In this case communication should ignore the abbreviation that can lead a problem on understanding. Furthermore, in order to understand the requirement of the consumer or people and to satisfy them MNC must need to specifically communicate the desired messages appropriately. In conjunction to that MNCs must be patient for communication particularly during the cross communication where more time is required to understand the moral, value and custom of the overseas customers. For example, Coca Cola in India uses celebrities to communicate its massages more efficiently with the target market by reflecting their cultural aspects. It believes that target customers will feel more comfortable when they see people from own cultural background communicating massages regarding products and will further ensure in seeking positive response towards its products. This strategy of the company has significantly facilitated it to acquire greater competitive traction. Choose a Medium for Effective Communication MNCs must need to choose a medium of communication such as, email, telecommunication, and video conference etc. Due to the comfort level and availability they should be chosen to reduce the communication gap in between couple of culture. MNCs must apply these strategies for communication to understand the consumer behaviour of different countries (Berardo 2007). C] Supply Chain The supply chain management process entails different actions such as movement as well as storing of raw materials, work-in-progress within a particular factory and finished goods and/or services distribution to consumers. Thus, in order to define supply chain management, it can be asserted as a planning, executing, directing, monitoring along with designing of supply channel activities, which helps to maximize profit output in case of domestic and international marketing. At the same time, it facilitates to decrease purchasing as well as inventory carrying cost. On the contrary, it empowers to provide better product related quality and higher extent of customer satisfaction. MNCs must need to focus on supply chain management for understanding the consumer behaviour and ensure profit maximization (Wisner 2011). For an example, Apple in China has established supplier code of conduct which has enabled the company to procure superior quality of raw materials. Apart from this, it has been also observed that Apple has used pre-payment strategies within its supply chain management in order to ensure strategic raw materials which have offered company with uninterrupted supply of required materials. There are few strategies which MNCs should adapt to understand the consumer behaviour. Those are illustrated below: Performance Management Through implementing plan and applying good project governance a MNC can ensure success in international marketing. It is also help people to understand its responsibility. On the contrary, rewards for the performance also play the role to motivate the supply chain team and multiple supply chain helps to ensure the reduction of communication gap between distinctive cultures (United Parcel Service of America 2005). Keep Communicating with Your Partners In case of planning for an effective supply chain management, a MNC must need to keep healthy communication with its supplier to reduce the communication gap and apart from that it also helps an MNC to understand the consumer behaviour that localize market along with the current trend and preference (United Parcel Service of America 2005). Thus, it can be asserted that in case of global marketing a MNC must have to focus on marketing mix, communication and supply chain management strategies to maximize its profitability and reduce the communication gap between two or more distinct cultures. Conclusion From the discussion it has been observed that culture has a massive impact on international marketing. Cultural element like languages, religion and political environment can influence to multinational corporations. It has been also identified that for international marketing MNCs must need to understand the consumer behaviour; otherwise, their profitability could suffer and the brand image might be negatively affected. Besides, it can be also affirmed that in order to understand the cross cultural approaches MNCs must need to analyse the five cultural dimensions identified by Geert Hofstede. These cultural dimensions generally help an organisation to understand the behaviour of the consumer and also pursuit Standardisation or adaptation strategy. Consequently, to meet the cross cultural gap an MNC must need to emphasis on marketing mix strategy along with communication and supply chain management. To recapitulate the discussion, to be successful in international market an organisation has to concentrate on these factors because proper choice of strategy and efficiently implementation of those strategy is highly required for marketing activities in international competitive market. In that case, distinct cultural approaches are the most effective and crucial factors. Thus, MNCs must give more importance on understanding cultural status and consumer behaviour. References Andrews University, 2014. Hofstede: Masculinity / Femininity. Andrews. Available from: http://www.andrews.edu/~tidwell/bsad560/HofstedeMasculinity.html [Accessed April 23, 2014]. Baker, M. J., 2001. 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The Cultural Dimension of International Business. Pearson Education India. Appendix A : Marketing Mix used by Multinational Companies (MNCs) Product Product is one the most essential element in case of international marketing activities. It includes features, quality and quantity. In order to produce a product in an international market a MNC should understand the test and preference of the consumers’. Otherwise it has been seen earlier that due to religious purpose a large number of consumers have rejected a certain product without any prior issues such as quality or quantity un-satisfaction (Sandhusen 2008). For example, in Israel at the early phase of McDonald’s launch people rejects Big Macs due to cheese containing in the various food items (Vignali 2001). Another example, according to the market demand Nestle has launched different products based on market segmentation such as vegetarian Maggi masala for those customers who don’t eat non-vegetarian products and non-vegetarian Maggi chicken for other people. Price Apart from product pricing is also highly important, as through pricing an organisation estimate the approximate profit outcomes. In case of international marketing MNCs must need to understand the behaviour of the consumers before determining price. It is quite simple because in case of developing countries pricing should be economical such as Bangladesh, Somalia and Liberia etc. On the contrary, pricing can be done for generating massive percentage of profit in case of developed countries for instance in the United Kingdom (U.K.) and the United States (U.S.) and so on (Codita 2011). For example, in the U.S. a Big Mac with fries costs equivalent to Chicago office worker’s earning during 14 minutes, where as in Nigeria the same meal costs is equivalent to a worker’s earning 11 hours 23 minutes (Vignali 2001). Another example, Nestle has used its non-price competition strategy in most of the countries. It offers one price for the whole countries distributer and apart from that it offers trade discount to distributers in order to attract them. Place In addition with product and price, place has been also quite important factor for an MNC in case of international marketing. Consequently, it can be asserted that place is the most important as culture is highly related with that, which is completely indivisible from an organisational point of view. Thus, it can affirm determining the place and understanding the consumers’ preference is highly important for an MNC (Gilmore 2003). For example, Starbuck’s has adopted joint venture format during the entry phase in Chinese and Japanese market in order to ensure better understanding of the local customers as well as the prevailing culture within the selected place of its operation. Starbuck has also acquired Seattle Coffee as an entry strategy to penetrate the United Kingdom market and gain greater competitive advantages. The selection of these entry strategies has significantly facilitated the company to establish its strong base within the respective market (Beatriz & Ni, 2008). Promotion Promotion is the most effective element of marketing activities. It consists of five major tools, such as advertising, direct marketing, public relation, sales promotion and personal selling. For implementing these tools in case of global marketing a MNC must need to consider the enormous range of culture. However, it can be asserted that, promotion is one short of communication with the consumers’ through which organisation can review the cultural purview (Mullin et al., 2007). For example, McDonald had not promoted its brand in China, since Chinese people do not see advertisement during the television programmes; during the interval instead they switch to another channel (Vignali 2001). People Understanding the people is also a hard task in different cultures. From an organisational point of view, for executing services skilled and competent people are highly needed. In that case understanding the culture and react in the situation according to understanding is crucial for an MNC in case of international marketing (Leadley and Forsyth 2004). Process Without the presence of perfect process and system an organisation will meet failure in course of business activities. Thus, it can be affirmed that, in order to ensure a suitable process a MNC must concentrate on understanding the culture and behaviour of human kind simultaneously, in international marketing (Baker 2001). Physical To focus on consistency in terms of quality, quantity and service an MNC should concentrate on physical environment. In order to that, understanding the consumer requirement is extremely needed (Zeithaml 1996). Theses marketing mix strategies help an MNC to understand the different culture around world. Read More