BUS615 Study Guide

2a. Describe issues that are important for culturally sensitive international marketing, such as language, gender, customs, and art

• What are the different kinds of cultures that exist?
• How does language impact the development of a marketing campaign in the global marketplace?
• What is the impact of customs, taboos, and values on consumer behavior across the globe?

National culture is defined by geographic and political boundaries and also includes regions within a nation. Consider the cultural differences across the US, which include American values, but also incorporate specific values of the many regions throughout the country. Additionally, there are influences from nearby countries that play a role in how culture impacts the populations. Since boundaries and borders change over time, there is a crossover and blending of cultural influences, which tend to change over time as trends evolve.
 
Subcultures embody the characteristics that are defined by ethnicity, gender, generation, religion, and other factors that are unique to a specific group of people. For example, Chinese business people tend to form one community, even if they are from different parts of Asia. This varies from how business people within one part of China are viewed.
 
Finally, organizational culture refers to the environment within a workplace. The ways in which people dress, how employees are valued, and how decisions are made all encompass the workplace setting. This can result in some challenges, however, when a company enters a global marketplace where values and behaviors are different from the company's home country. Hiring workers, how employees interact, and how the organizational structure is designed can all require changes or revisions when operating in a foreign market where cultural business norms differ.
 
With three thousand languages around the world, the importance of understanding these differences is essential when creating marketing messages. Even when countries share a common language, there are still variations that could impact the meaning and understanding of what is being communicated. Furthermore, using the wrong word, even in the same language, has the potential to be offensive and inappropriate.
 
Additionally, even within the same country, there are different dialects across regions, making translations that much more complex. Marketers also must be sensitive to current events and history to ensure that wording or language usage does not evoke negative feelings based on past experiences.
 
Every society has its own set of customs and taboos that shape consumer behavior and how we view the messages we receive. For example, certain numbers are considered unlucky in some societies but might not have any meaning in other locations. Clothing styles that cover up skin are important religious and societal factors in some countries, and gender segregation is common in those nations, as well. As marketers prepare their campaigns and marketing messages, it is important to consider these factors to ensure that proper care is taken to present images and wording that is appropriate and acceptable.
 
Values can be expressed individually, as part of a group, or as a part of an overall society. These factors identify what is acceptable and what is not acceptable and are learned throughout our lives. As a result, these values influence our behaviors in business, as consumers, and in our personal lives.
 
To review, see What is Culture? and Culture in Global Marketing.

2b. Explain Hofstede's cultural framework and how it provides marketers with important information about differences between countries and how to manage such differences

• What are the six key value dimensions of Hofstede's cultural dimensions?
• What are some of the countries that exhibit high and low power distance cultures?
• What are the characteristics of a masculine vs. feminine culture?
• What is the impact of uncertainty avoidance in the workplace?

The first dimension of Hofstede's cultural dimensions relates to power distance. This relates to how power is exerted over subordinates. The next dimension, uncertainty avoidance, refers to comfort levels of risk-taking and how this correlates to an organization's business environment. Individualism vs. collectivism is the degree to which an organization adopts a group mentality and encourages a sense of community or promotes independence within the company. The next factor is how a company identifies behavior as being masculine or feminine. A corporate environment that is highly competitive and aggressive is considered to have a masculine culture. A long-term orientation relates to the degree to which a company plans for the future or places greater emphasis on short-term goals. Indulgence vs. restraint relates to the organizational attitude toward corporate spending to meet organizational needs.
 
In high power distance cultures, it is generally accepted that the manager is the authoritative figure and deserves formal respect. This is typical of countries such as Japan, Mexico, and the Philippines. In these cultures, loyalty to senior leaders is expected.
 
In low power distance cultures, people at different levels see themselves as being more equal in power. Subordinates feel free to say what is on their minds, and there is respect for equality. Countries with low power distance cultures include Austria and Denmark. The United States leans more toward a low power distance culture, yet it is understood that managers are in control.
 
The characteristics of cultures that are perceived as masculine include assertiveness, materialism, and less concern for others. Roles in these cultures tend to be firmly defined and focus on performance and ambition. Japan and Latin America are considered masculine societies. On the other hand, feminine cultures are represented by a focus on gender role changes, quality of life, and independence. Feminine cultures include Switzerland and New Zealand. It is important to note that cultures can have both aspects of masculinity and femininity.
 
Uncertainty avoidance relates to the level of accepted risk. People with high levels of uncertainty avoidance tend to avoid conflict and competition and prefer stability to the unknown. In the workplace, this can lead to stagnation and a lack of forward movement and innovation.
 
In low-uncertainty cultures, people are more willing to take risks, and corporate environments are less formal. This encourages free thinking and helps to promote the generation of new ideas.
 
To review, see What is Culture? and Organizational Culture.

2c. Differentiate between ethnocentric, polycentric, and geocentric approaches in international marketing

• What does Thomas Friedman mean when he says that we live in a flat world?
• What are some of the challenges companies face when developing marketing strategies in the global marketplace?

The advancements in technology, collaborative communities, and the growth of digital media outlets have made it possible for companies to do business both domestically and internationally in a relatively seamless way. As a result, companies can be identified as being ethnocentric, where they are able to operate in their home countries as well as in foreign marketplaces through various elements of the marketing mix.
 
Even though companies actively promote their brands across borders, there are many issues that must be considered before developing a meaningful marketing strategy. While some products might easily be accepted across the globe (Coca-Cola, for example), there are still many factors that must be considered. Colors have different meanings in different cultures, so red labels might have negative connotations in some societies. Languages vary, so translations must be accurate and appropriate. The images presented on a brand should be in line with a country's values and beliefs. Therefore, a company that adopts a polycentric approach must be keenly aware of these and other factors and ensure that their strategies are suitable for different international environments.
 
A geocentric (or regiocentric) approach is where companies use a variety of strategies in foreign marketplaces. For example, they might integrate some aspects of a global approach while also seeking to make adjustments to meet the local needs of consumers. This can be a challenging strategy, but one that could enable the company to minimize the need to create an entirely new campaign and product line while also adapting to local cultural factors.
 
To review, see Introduction to International Marketing and The International Marketing Environment.

2d. Evaluate the demographic, geographic, behavioral, and psychographic bases for segmenting international markets

• What are the elements that encompass macro-segmentation?
• What are the four categories of micro-segmentation?
• What are the pros and cons of using demographic data for market segmentation?

Macro-segmentation includes countries with similar demands for products. Included in this kind of segmentation are demographic data, geographic data, size of population, income levels, and family size, among other factors. Companies can use this kind of segmentation to streamline their strategies, which enables them to save on production costs, logistics, and marketing activities. One of the problems with this approach is that it doesn't account for the many differences that exist between nations and populations. As a result, opportunities within a particular nation may be missed and can result in unnecessary losses.
 
Micro-segmentation is a consumer-based approach that focuses on behavioral, demographic, geographic, and psychographic characteristics.
 
Behavioral characteristics include the ways in which consumers use a particular product and the benefits they seek. Demographic data includes information about age, race, income levels, education, ethnicity, and other measurable statistics. Geographic data identifies the location of target audiences, how marketers can connect with consumers, and the products used in that area. Psychographic information encompasses consumer lifestyles, preferences, values, and attitudes.
 
Demographic characteristics enable marketers to identify specific groups of consumers within a population and have a clear picture of the characteristics of these segments. Marketers use this information to develop appropriate and meaningful marketing campaigns. Marketers can create a marketing mix that will connect with the target audience, and will fit the demographic profile of these consumers.
 
However, a demographic profile does not provide a complete picture of a group of consumers. The data defines groups of people but does not take into account individual differences, preferences, and other factors that impact consumer behavior. For example, a group of people with similar demographic characteristics are likely to have completely different lifestyles and will make purchase decisions based on those differences. Also, by using demographic profiles as defined in the home country of the company, generalizations might be made about consumers in another nation. This can result in incorrectly applying behaviors to consumers in other countries and cultures.
 
To review, see Global Market Segmentation and Using Demographics to Guide Global Marketing Strategy

2e. Identify cultural considerations that can be used in determining communication strategies in international markets

• What aspects of the cultural environment in Germany did Walmart miss when they expanded their operations in this marketplace?
• Why was Walmart's low-price strategy ineffective in the German marketplace?
• Why did Walmart experience a product and service failure in the German marketplace?

When Walmart decided to manage their stores in Germany from the US, they didn't take into account that many of their older German managers did not speak English. This caused a breakdown in communication, with many managers choosing to leave the company. This resulted in many major accounts choosing to take their business to other retailers, which caused a reduction in the variety of goods available for purchase. By improving communications and understanding the impact of language in overall operations, Walmart could have seen a completely different outcome.
 
When entering the German marketplace, Walmart did not properly anticipate the response from the competition or have a good understanding of strategies in place among the many grocery retailers in the country. Walmart didn't understand that the retail grocery marketplace in Germany is very competitive. Consumers were already used to shopping at different stores where low prices were consistently being offered. As a result, Walmart's everyday low price strategy was not sufficiently meaningful to consumers.
 
One aspect of Walmart's strategy in Germany was to provide consumers with high levels of customer service, since this was not a component of the competition's offerings. By implementing a "ten foot rule", Walmart planned to provide a service employee at frequent spaced intervals so that they would be available to assist customers throughout the store. However, Walmart did not expect a negative response to this strategy; German shoppers were quite comfortable with self-service and did not appreciate the annoyance of store employees offering help and requiring shoppers to have conversations. Additionally, the "greeter" who was placed at the entrance to the store proved to be unwelcomed, as well. Had Walmart taken the time to learn more about local shopping habits and consumer behavior, they might have been able to avoid this cultural mistake.
 
To review, see Marketing Failure: Walmart in Germany and How Global Are We?.

Unit 2 Vocabulary

This vocabulary list includes the terms that you will need to know to successfully complete the final exam.

• behavioral characteristics
• demographic characteristics
• ethnocentric
• geocentric
• Hofstede's cultural dimensions
• macro-segmentation
• micro-segmentation
• national culture
• organizational culture
• polycentric
• regiocentric
• subculture