2. Cultural Dynamics in Assessing Global Markets Chapter 4 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. PowerPoint presentation prepared by: Professor Rajiv Mehta Associate Professor of Marketing New Jersey Institute of Technology Newark, N.J.

3. Chapter Learning Objectives 1. The importance of culture to an international marketer 2. The origins and elements of culture 3. The impact of cultural borrowing 4. The strategy of planned change and its consequences

4. Introduction Culture refers to “the human-made part of human environment— the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society” A successful marketer must be a student of culture Culture is pervasive in all marketing activities— in pricing, promotion, channels of distribution, product, packaging, and styling Importance of culture in international marketing Understanding culture can determine success or failure in international marketing

5. Culture’s Pervasive Impact Culture influences every part of our lives Cultures impact on birth rates in Taiwan, Japan, and Singapore Culture influences every part of our lives Cultures impact on birth rates in Taiwan, Japan, and Singapore Birthrates have implications for sellers of diapers, toys, schools, and colleges Consumption of different types of food influence is culture: Chocolate by Swiss, seafood by Japanese preference, beef by British, wines by France and Italy Even diseases are influenced by culture: stomach cancer in Japan, and lung cancer in Spain Consumption of different types of food influence is culture: Chocolate by Swiss, seafood by Japanese preference, beef by British, wines by France and Italy Even diseases are influenced by culture: stomach cancer in Japan, and lung cancer in Spain

9. Definitions and Origins of Culture Culture has been conceptualized as: 1.“Software of the mind” culture is a guide for humans on how to think and behave; it is a problem-solving tool (Hofstede) 2.An invisible barrier… a completely different way of organizing life, of thinking, and of conceiving the underlying assumptions about the family and the state, the economic system, and even Man himself” (Hall) 3.A “thicket” (U.S. Ambassador Hodgson) Culture is the sum of the “values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation”

11. Origins of Culture: Geography 1.Geography, which includes climate, topography, flora, fauna, and microbiology, influences our social institutions 2.Two researchers suggest that geography influences everything from history to present- day cultural values 3.First, Jared Diamond states that historically innovations spread faster east-to-west than north-to-south 4.Second, Philip Parker reports strong correlations between the latitude (climate) and the per capita GDP of countries

12. Origins of Culture: History 1.The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior 2.The military conflicts in the Middle East in 2003 bred new cola brands, Mecca Cola, Muslim Up, and Arab Cola For e.g., American trade policy depended on tobacco being the original source of the Virginia colony’s economic survival in the 1600s

13. Origins of Culture: The Political Economy 1.For most of the 20th Century three approaches to governance competed for world dominance: fascism, communism, and democracy/free enterprise 3.Necessary to appreciate the influence of the political economy on social institutions and cultural values and ways of thinking 2.Fascism fell in 1945; Communism crumbled in the 1990s

14. Origins of Culture: Technology 1.Technological innovations also impact institutions and cultural 2.Jet aircraft, air conditioning, televisions, computers, and the internet have all influenced culture 3.Arguably the greatest impact is the pill that has allowed women to have careers and freed men to spend more time with kids

15. Origins of Culture: Social Institutions Social institutions including family, religion, school, the media, government, and corporations all affect culture The family, social classes, group behavior, age groups, and how societies define decency and civility are interpreted differently within every culture (1) Family behavior varies across the world, e.g., extended families living together to Dad washing dishes (2) Religious value systems differ across the world, e.g., Muslims not allowed to eat pork to Hindus not allowed to consume beef

16. Origins of Culture: Social Institutions (3) School and education, and literacy rates affect culture and economic growth (4) Media (magazines, TV, the Internet) influences culture and behavior (5) Government policies influence the thinking and behaviors citizens of adult citizens, e.g., the French government offers new “birth bonuses” of $800 given to women as an incentive to increase family size (6) Corporations influence culture via the products they market, e.g., MTV

17. Elements of Culture International marketers must design products, distribution systems, and promotional programs with due consideration to culture, which was defined as including five elements: 1.Cultural values 2.Rituals 3.Symbols 4.Beliefs, and 5.Thought processes

18. Elements of Culture: Cultural Values Differences in cultural values, which is found to exist among countries, affects consumer behavior Hofstede, who studied over 90,000 people in 66 countries, found that the cultures differed along four primary dimensions: Differences in cultural values, which is found to exist among countries, affects consumer behavior Hofstede, who studied over 90,000 people in 66 countries, found that the cultures differed along four primary dimensions: 1.Individualism/Collective Index (IDV), which focuses on self-orientation 2.Power Distance Index (PDI), which focuses on authority orientation 3.Uncertainty Avoidance Index (UAI), which focuses on risk orientation; and 4.Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement

19. Individualism/Collectivism Index Individualism/Collectivism Index: 1.The Individualism/Collective Index refers to the preference for behavior that promotes one’s self-interest 2.High IDV cultures reflect an “I” mentality and tend to reward and accept individual initiative 3.Low IDV cultures reflect a “we” mentality and generally subjugate the individual to the group 4.Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which protect them in exchange for unquestioning loyalty

20. Power Distance Index Power Distance Index: 1.The Power Distance Index measures power inequality between superiors and subordinates within a social system 2.Cultures with high PDI scores tend to be hierarchical and value power and social status 3.High PDI cultures the those who hold power are entitled to privileges 4.Cultures with low PDI scores value equality and reflect egalitarian views

21. Uncertainty Avoidance Index Uncertainty Avoidance Index: 1.The Uncertainty Avoidance Index measures the tolerance of uncertainty and ambiguity among members of a society 2.High UAI cultures are highly intolerant of ambiguity, experience anxiety and stress, accord a high level of authority to rules as a means of avoiding risk 3.Low UAI cultures are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks

23. Elements of Culture: Rituals, and Symbols Rituals are patterns of behavior and interaction that are learned and repeated vary from country to country, e.g., extended lunch hours in Spain and Greece French attempting to preserve the purity of their language Language as Symbols: the “languages” of time, space, things, friendships, and agreements

24. Elements of Culture: Rituals, and Symbols In Canada, language has been the focus of political disputes including secession Aesthetics as Symbols: the arts, folklore, music, drama, and dance of a culture influences marketing Differences in language vocabulary varies widely

26. Fractured Translations Product Equivalent to Japanese Spam Toilet Paper Ready to Eat Pancakes Antifreeze Spray Pediatrician’s Slogan Product Equivalent to Japanese Spam Toilet Paper Ready to Eat Pancakes Antifreeze Spray Pediatrician’s Slogan English Translation Liver Putty My Fanny Brand Strawberry Crap Dessert Hot Piss Brand Specialist in Deceased Children English Translation Liver Putty My Fanny Brand Strawberry Crap Dessert Hot Piss Brand Specialist in Deceased Children English Translations made by Japanese firm that were added to labels to increase prestige for their products being sold in China SOURCE: “Some Strawberry Crap Dessert, dear?” South China Morning Post, Dec 9,1996 p. 12.

27. Elements of Culture: Beliefs and Thought Processes Beliefs, which stem from religious training, vary from culture to culture In summary, marketers must consider larger cultural consequences of marketing actions Thought processes also vary across cultures Examples: The western aversion to the number 13 or refusing to walk under a ladder Japanese concern about Year of the Fire Horse The Chinese practice of Feng Shui in designing buildings Examples: “Asian and Western” thinking

28. Factual versus Interpretive Cultural Knowledge There are two kinds of knowledge about cultures both of which are necessary Factual knowledge is usually obvious and must be learned, e.g., different meanings of colors, and different tastes; it deals with a facts about a culture Factual knowledge is usually obvious and must be learned, e.g., different meanings of colors, and different tastes; it deals with a facts about a culture Interpretive knowledge is the ability to understand and appreciate the nuances of different cultural traits and patterns, e.g., the meaning of time, and attitudes toward people Interpretive knowledge is the ability to understand and appreciate the nuances of different cultural traits and patterns, e.g., the meaning of time, and attitudes toward people Interpretive knowledge requires a degree of insight It is dependent on past experience for interpretation It is prone to misinterpretation if one’s SRC is used Interpretive knowledge requires a degree of insight It is dependent on past experience for interpretation It is prone to misinterpretation if one’s SRC is used

29. Cultural Change and Cultural Borrowing International marketers should appreciate how cultures change and accept or reject new ideas How cultures change, e.g., war (changes in Japan after World War II) or by natural disaster Hofstede has shown that consumers’ acceptance of innovations varies across cultures – innovation was associated with higher individualism (IDV), and lower power distance (PDI) and uncertainty avoidance (UAI) International marketers should be aware the extent to which cultures borrow ideas and learn from other cultures Helps in the marketing of products from one culture to a different culture

30. Whose English? United States 1.Trunk 2.Hood 3.Convertible Top 4.Elevator 5.Toilet 6.Bathroom 7.Vacuum United States 1.Trunk 2.Hood 3.Convertible Top 4.Elevator 5.Toilet 6.Bathroom 7.Vacuum United Kingdom 1.Boot 2.Bonnet 3.Hood 4.Lift 5.W.C. 6.Tub or Shower 7.Hoover United Kingdom 1.Boot 2.Bonnet 3.Hood 4.Lift 5.W.C. 6.Tub or Shower 7.Hoover

31. Resistance to Change Acceptance of genetically modified foods (or “Frankenfood”) in Europe Acceptance of genetically modified foods (or “Frankenfood”) in Europe Working women in Masculine societies like Saudi Arabia Working women in Masculine societies like Saudi Arabia Although some cultures embrace change, others are resistant to it Although some cultures embrace change, others are resistant to it Examples of cultures that resist change:

32. Planned and Unplanned Cultural Change Cultures that are resistant to change represent a major hurdle in marketing products Cultural change can be accomplished by: First, determine which cultural factors conflict with an innovation, thus creating resistance to its acceptance Second, change those factors from obstacles to acceptance into stimulants for change Third, marketers can cause change by introducing an idea or product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance Firms can use a strategy of planned change by deliberately changing those aspects of the culture offering resistance to predetermined marketing goals, e.g., introducing western foods and baseball into Japan