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Culture & Global Marketing. Importance of Culture  Culture affects market demand.  Managerial behavior is driven by his/her cultural knowledge  Knowledge.

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Presentation on theme: "Culture & Global Marketing. Importance of Culture  Culture affects market demand.  Managerial behavior is driven by his/her cultural knowledge  Knowledge."— Presentation transcript:

1 Culture & Global Marketing

2 Importance of Culture  Culture affects market demand.  Managerial behavior is driven by his/her cultural knowledge  Knowledge of Native culture is useful when dealing with home markets but it has little value when dealing in foreign markets  Culture affects the nature of business negotiations  Culture acts as a hidden entry barrier, but it can be overcome with cultural sensitivity, hard work & quality

3 Culture Defined  Culture is the underlying value framework that guides an individual’s behavior.  Culture is reflected perceptions, social interactions, business interactions  Culture guides the selection of appropriate responses in social situations  Culture is a learned behavior. People learn do’s & don’t as they grow up

4 Culture across Countries  Some countries are multicultural:- India, China, US, Russia. These countries have several sub-cultures.  While many are monocultural. UK, France, Germany, Columbia, Peru etc.  Culture is the “Silent Language” in International business  Relationship with Time, Space & Energy  High Context – Low context cultures  Body language

5 Need for cultural Adaptation  Self-Referencing : Process by which one judges others actions with reference to one’s own native culture. Usually “Right” & “Wrong” decisions  Often leads to wrong opinions, Mistakes  Avoid self-referencing mistakes by cultural adaptation.  Cultural adaptation is a learned skill & must be mastered by Global Managers

6 Hofstede’s Cultural Dimensions  Individualism Vs Collectivism  Masculine Vs Feminism  Uncertainty Avoidance Vs Risk Taking  Power Distance  Confucian Dynamism: Long term outlook, work ethic of Chinese

7 Gannon’s Metaphors  Gannon’s Metaphors offer a mental anchor for manger who has to deal with a new culture and cannot foresee contingencies  It is a simplified, holistic representation of a culture:  USA- Football: Individualistic, specialized, competitive  China – Harmony : Roundness, Harmony & Fluidity  Germany – Symphony : Discipline under a leader, Skilled workers working together, a well oiled machine  India – Cyclical Hindu Philosophy: Life follows a cyclical pattern

8 Rapaille’s Archetypes  Dr Rapaille simplified cultures for easier understanding by explaining it in 7 steps of decoding culture: 1.People don’t buy products, People buy relationships 2.Culture can make or break your marketing plan, sales or public relationship plans 3.Time, Space & Energy are the building blocks of all cultures 4.Design & create products/Services to solve the right problem

9 Rapaille’s Archetypes  The more Global, The more Local: Global companies have to localize. Quality is the key to succeed, but word quality means different things in different countries:  USA : It works  Japan: Perfection  Germany: Made according to the standard  France: Quality = Luxury  India: Quality = Reliable  Cultural Awareness is the key to global success

10 Culture: How to do Business  The aim of business is same everywhere, but the way to do it varies across countries  Global Managers must be able to handle Culture shock  Similar business situations in different countries does not imply similar opportunities. E.g: Nestle in Africa  Culture influences Management skills. So in a new country, its “Back-to-Basics” w.r.t learning local culture

11 Culture & Managerial Skills  Culture defines a set of acceptable & unacceptable behaviors, which forms the basis of “Way of doing Business”  Managers learn how to do business. This process is called Enculturalization and Socialization  How consumers behave  How to manage people, supplier & subordinates  What guides the consumer behavior  Acceptable Behavior in business is usually acceptable behavior in society

12 Culture & Managerial Skills  Successful mangers tend to be good at acceptable behaviors and avoid unacceptable behaviors  Lessens from past managerial experience in other countries has little value in other cultures.  Success & Failures in the past will be repeated elsewhere, before learning the local implications

13 Managerial Styles  Cultures tend to generate different managerial styles. Management styles is heavily influenced by home country culture.  Japan High Context culture influences mangers to read body language while in US, a low context culture tends to ignore body language  Managers are usually inadequately trained to handle different cultures.  Time, Money pressure compromise training.

14 Cultural Dilemmas  Managers face cultural dilemmas due to differences in cultures  Universalism Vs Particularism : Doing the right thing or doing things right?  Individualism Vs Collectivism in decision making  Neutral Vs Emotional  Specific Vs General : Is it just business or the whole person, individual or the entire firm  Attitudes towards Time  Attitudes towards Environment

15 Culture & Negotiations  Global business involves cross cultural negotiations, establishing relationships with suppliers, customers, distributors & other partners  Know whom you are dealing with “In some cultures, 10AM means ‘Sometime in the morning’. Actual time on the clock has little significance.”

16 Cross Cultural Negotiations  First Establish Trust. Skilled negotiators identify genuine behavior of their counterparts and work towards establishing trust  Know their “Silent Language”  Body behavior  Cultural signaling  Culturally sensitive subjects  Know what to say and when to say

17 Stages of Negotiations 1.Non-Task Sounding: An initial period to know each other better 2.Task related exchange of Information: An extended Period where main issues are brought up & positions clarified 3.Persuasion: Attempt to make the other side see your point of view. Explaining positions, giving evidence & questioning other party’s position. 4.Concessions & Agreements: Concessions are made and agreements are signed

18 Limits to Cultural Sensitivity  When not to be culturally sensitive  Global Culture: Globalization is creating a global business culture. In business it may be inappropriate to dress in a local way.  Cultural Sensitivity must be inline with the business model. If the product/Service offering does not meet the buyer requirement, no amount of cultural sensitivity will help  Cultural Sensitivity does not mean giving up one’s own culture. Successful manager will know both the cultures

19 Culture in B2B markets  Business Marketing Tasks  Cultural Conditioning  Organizational Culture  Relationship Marketing  Culture & Networks

20 Business Marketing Tasks  Establish the global firm as a dependable supplier operating in the local market  Understand buyer’s position  People who influence the buying decision  Role of the supplier’s product/Service in the buyer’s business success  This will make the local buyer treat the global supplier as a local firm.  E.g: Cognizant in US, BASF in US, ABB in India

21 Cultural Conditioning  Buyers tend to develop different styles of dealing with vendors  Equal or unequal relationship between supplier and buyer  Culture’s openness to change influences buyer’s attitude toward Risk  Changing vendors is seen as a Risk  Often Buyer’s prefer local suppliers  Terminating Local supplier carries bad publicity & political risks for the buyer  CEO or high executive from the vendor firm may have to visit prospective buyer as a signal of commitment

22 Organizational Culture  Organizational culture of the buyer influences the buying decisions  Single Buyer & decision maker  Engineers, staff who use the product  Top management which signs the contract  Power Brokers who influence the final decision  Global firm must be aware of the decision making process

23 Relationship Marketing  B2B sales is usually more than one single sale  Relationship marketing means marketing efforts involving various personalized services, creation of new & additional services and customizing a firm’s offering to the needs of the buyer  Build trust for a long term business relationship  Upfront costs are high but it acts as a competitive advantage & an entry barrier  Adopt Buyer’s viewpoint  Accept & Demand transparency  Grow with the relationship  Be Proactive

24 Culture & Networks  Relationship marketing creates a Network between various buyers and sellers over a period of time.  Independent companies would have built up dependencies with one another creating a semi-independent companies  Network of companies often share common culture  Outside companies find the network hard to penetrate, Network form a barrier  E.g: Keiretsu network in Japan, Glaxing in China  Military-Industry network in US

25 Foreign Entry  Culture defines “The way to do Business”  Learn & analyze local cultures before entry  Do’s & don’ts  Identify trustworthy local agents or middlemen  Identify danger signals  Know the strengths & weakness as perceived by the local culture  Establish trust & friendships  New Culture is an operational risk

26 Local Marketing  Culture affects  Consumer behavior  Local demand  Buying decisions  Brand Image  First hand experience in local markets is a must  Lessons from home country may not be applicable abroad

27 Global Management  Culture influences managerial styles and management decisions  Global managers must be knowledgeable of both cultures (Local & Home)  A new global business culture is emerging  Sensitivity to local issues is necessary for success  Global coordination is a must for global companies

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