International marketing

International
Marketing
Pan African e-Network
The course introduces the student to the various aspects of international marketing with
the principle objective of developing skills in the identification, analysis and solution of
the problems encountered in the theories and the practice international marketing abroad.

Amity University
Mr. Nishant Singhai
Semester II

Course Contents:

Module I: Global Marketing: An Overview
Introduction to Global Marketing
Reasons / Objectives
Environment of International Marketing
Transnational Marketing – Domestic to global
Various terms
EPRG framework
Driving & Restraining Forces

Module II: Social & Cultural Environment
Basic aspects of culture
Cultural Knowledge
Culture and its elements
Analytical Approaches to Cultural Factors
Maslow’s hierarchy of needs
Hofstede’s Cultural Typology
The SRC
Enviromental Sensitivity

Module III: Global Advertising
Global Advertising and Branding
.Selecting an advertising agency
Creating Advertising

Module IV: Global Marketing Channels and Physical Distribution
Channel objectives and Constraints
Distribution Channels: Terminology and Structure
Physical Distribution and Logistics

Module V: Global Marketing Information Systems
Overview of GMIS
Sources of Market Information
Formal marketing Research

Module VI: Global segmentation Targeting & Positioning
Global Market Segmentation
Geographic
Psychographic
Behaviour
Benefit
Vertical Vs Horizontal
Global Targeting
Criteria for Global targeting
Selecting a GTMS
Global Positioning
Marketing in a Developing Country

Module VII: Global e-marketing
The Death of Distance
Relationship marketing
Living in an Age of Technological Discontinuities
Components of the Electronic value chain

Index:
Module I: Global Marketing: An Overview 5

Module II: Social & Cultural Environment 39

Module III: Global Advertising 66

Module IV: Global Marketing Channels and Physical Distribution 83

Module V: Global Marketing Information Systems 104

Module VI: Global segmentation Targeting & Positioning 128

Module VII: Global e-marketing 149

Introduction to Global Marketing

Whether an organization markets its goods and services domestically or
internationally, the definition of marketing still applies. However, the scope of
marketing is broadened when the organization decides to sell across
international boundaries, this being primarily due to the numerous other
dimensions which the organization has to account for. When a company becomes
a global marketer, it views the world as one market and creates products that will
only require weeks to fit into any regional marketplace. Marketing decisions are
made by consulting with marketers in all the countries that will be affected. The
goal is to sell the same thing the same way everywhere.

Whether an organisation markets its goods and services domestically or
internationally, the definition of marketing still applies. However, the scope of
marketing is broadened when the organisation decides to sell across
international boundaries, this being primarily due to the numerous other
dimensions which the organisation has to account for. For example, the
organisation's language of business may be "English", but it may have to do
business in the "French language". This not only requires a translation facility, but
the French cultural conditions have to be accounted for as well. Doing business
"the French way" may be different from doing it "the English way". This is
particularly true when doing business with the Japanese.

Let us, firstly define "Marketing" and then see how, by doing marketing across
multinational boundaries, differences, where existing, have to be accounted for.

S. Carter defines marketing as:

"The process of building lasting relationships through planning, executing and
controlling the conception, pricing, promotion and distribution of ideas, goods
and services to create mutual exchange that satisfy individual and organisational
needs and objectives".

The long held tenants of marketing are "customer value", "competitive
advantage" and "focus". This means that organisations have to study the market,
develop products or services that satisfy customer needs and wants, develop the
"correct" marketing mix and satisfy its own objectives as well as giving customer
satisfaction on a continuing basis. However, it became clear in the 1980s that this
definition of marketing was too narrow. Preoccupation with the tactical workings
of the marketing mix led to neglect of long term product development, so
"Strategic Marketing" was born. The focus was shifted from knowing everything
about the customer, to knowing the customer in a context which includes the
competition, government policy and regulations, and the broader economic,
social and political macro forces that shape the evolution of markets. In global
marketing terms this means forging alliances (relationships) or developing
networks, working closely with home country government officials and industry
competitors to gain access to a target market. Also the marketing objective has
changed from one of satisfying organisational objectives to one of "stakeholder"
benefits - including employees, society, government and so on. Profit is still
essential but not an end in itself.

Strategic marketing according to Wensley (1982) has been defined as:

"Initiating, negotiating and managing acceptable exchange relationships with
key interest groups or constituencies, in the pursuit of sustainable competitive
advantage within specific markets, on the basis of long run consumer, channel
and other stakeholder franchise".

Whether one takes the definition of "marketing" or "strategic marketing",
"marketing" must still be regarded as both a philosophy and a set of functional
activities. As a philosophy embracing customer value (or satisfaction), planning
and organising activities to meet individual and organisational objectives,
marketing must be internalised by all members of an organisation, because
without satisfied customers the organisation will eventually die. As a set of
operational activities, marketing embraces selling, advertising, transporting,
market research and product development activities to name but a few. It is
important to note that marketing is not just a philosophy or one or some of the
operational activities. It is both. In planning for marketing, the organisation has to

basically decide what it is going to sell, to which target market and with what
marketing mix (product, place, promotion, price and people). Although these
tenents of marketing planning must apply anywhere, when marketing across
national boundaries, the difference between domestic and international
marketing lies almost entirely in the differences in national environments within
which the global programme is conducted and the differences in the organisation
and programmes of a firm operating simultaneously in different national
markets.

It is recognised that in the "postmodern" era of marketing, even the assumptions
and long standing tenents of marketing like the concepts of "consumer needs",
"consumer sovereignty", "target markets" and "product/market processes" are
being challenged. The emphasis is towards the emergence of the "customising
consumer", that is, the customer who takes elements of the market offerings and
moulds a customised consumption experience out of these. Even further, post
modernisim, posts that the consumer who is the consumed, the ultimate
marketable image, is also becoming liberated from the sole role of a consumer
and is becoming a producer. This reveals itself in the desire for the consumer to
become part of the marketing process and to experience immersion into
"thematic settings" rather than merely to encounter products. So in consuming
food products for example, it becomes not just a case of satisfying hunger needs,
but also can be rendered as an image - producing act. In the post modern market
place the product does not project images, it fills images. This is true in some
foodstuffs. The consumption of "designer water" or "slimming foods" is a
statement of a self image, not just a product consuming act.

Acceptance of postmodern marketing affects discussions of products, pricing,
advertising, distribution and planning. However, given the fact that this textbook
is primarily written with developing economies in mind, where the
environmental conditions, consumer sophistication and systems are not such
that allow a quantum leap to postmodernism, it is intended to mention the
concept in passing. Further discussion on the topic is available in the
accompanying list of readings.

When organisations develop into global marketing organisations, they usually
evolve into this from a relatively small export base. Some firms never get any
further than the exporting stage. Marketing overseas can, therefore, be
anywhere on a continuum of "foreign" to "global". It is well to note at this stage
that the words "international", "multinational" or "global" are now rather
outdated descriptions. In fact "global" has replaced the other terms to all intents
and purposes. "Foreign" marketing means marketing in an environment different
from the home base, it's basic form being "exporting". Over time, this may evolve
into an operating market rather than a foreign market. One such example is the
Preferential Trade Area (PTA) in Eastern and Southern Africa where involved
countries can trade inter-regionally under certain common modalities. Another
example is the Cold Storage Company of Zimbabwe.

Case 1.1 Cold Storage Company Of Zimbabwe

The Cold Storage Company (CSC) of Zimbabwe, evolved in 1995, out of the Cold
Storage Commission. The latter, for many years, had been the parastatal (or
nationalised company) with the mandate to market meat in Zimbabwe. However,
the CSC lost its monopoly under the Zimbabwean Economic Reform Programme
of 1990-95, which saw the introduction of many private abattoirs. During its
monopoly years the CSC had built five modern abattoirs, a number of which were
up to European Union rating. In addition, and as a driving force to the building of
EU rated abattoirs, the CSC had obtained a 9000 tonnes beef quota in the EU.
Most of the meat went out under the auspices of the Botswana Meat
Commission. For many years, the quota had been a source of volume and
revenue, a source which is still continuing. In this way, the CSC's exporting of beef
to the EU is such that the EU can no longer be considered as " Foreign" but an
"Operating" market.

Organisations begin to develop and run operations in the targeted country or
countries outside of the domestic one. In practice, organisations evolve and Table
1.1 outlines a typology of terms which describes the characteristics of companies
at different stages in the process of evolving from domestic to global enterprises.

The four stages are as follows:

1. Stage one: domestic in focus, with all activity concentrated in the home
market. Whilst many organisations can survive like this, for example raw milk
marketing, solely domestically oriented organisations are probably doomed to
long term failure.

2. Stage two: home focus, but with exports (ethnocentric). Probably believes
only in home values, but creates an export division. Usually ripe for the taking by
stage four organisations.

3. Stage three: stage two organisations which realise that they must adapt
their marketing mixes to overseas operations. The focus switches to
multinational (polycentric) and adaption becomes paramount.

4. Stage four: global organisations which create value by extending products
and programmes and focus on serving emerging global markets (geocentric). This
involves recognising that markets around the world consist of similarities and
differences and that it is possible to develop a global strategy based on
similarities to obtain scale economies, but also recognises and responds to cost
effective differences. Its strategies are a combination of extension, adaptation
and creation. It is unpredictable in behaviour and always alert to opportunities.

There is no time limit on the evolution process. In some industries, like
horticulture, the process can be very quick.

Table 1.1 Stages of domestic to global evolution

Management Stage one Stage two Stage three Stage four
emphasis Domestic International Multinational Global
Focus Domestic Ethnocentric Polycentric Geocentric
Marketing Domestic Extension Adaption Extension
strategy
Structure Domestic International Worldwide area Adaption
creation
matrix/mixed
Management Domestic Centralised top Decentralised Integrated
style down bottom up
Manufacturing Mainly Mainly domestic Host country Lowest cost
stance domestic worldwide
Investment Domestic Domestic used Mainly in each Cross
policy worldwide host country subsidization
Performance Domestic Against home Each host Worldwide
evaluation market country market country market
share share share

EVOLUTIONARY PROCESS OF GLOBAL MARKETING
Global marketing ’a gradual process occurring in stages’. The evolution of
marketing across national boundaries has identifiable stages, which are discussed
in the following:

DOMESTIC MARKETING
In the initial stages, most companies focus solely on their domestic markets. A
marketing restricted to the political boundaries of a country, is called "Domestic
Marketing". A company marketing only within its national boundaries only has to
consider domestic competition. The marketing mix decisions are invariably based
on the needs and wants of the domestic customers. These decisions are taken so
as to respond competitively and effectively to the domestic environmental
factors.

Market Focus Domestic
Orientation Ethnocentric
Marketing Mix Decisions Focused on domestic customers

EXPORT MARKETING
The stage models suggest that generally a firm focused on domestic markets
begin to export unintentionally by receiving unsolicited orders from overseas
markets. The firm tries to fulfill such orders reluctantly with little strategic
orientation. Thus, the initial entry of a firm in international markets may be
characterized as a consequence of responding to unsolicited export enquiries.
However, the positive experience in fulfilling such overseas market requirements
serves as a stimulus to look for repeat orders.

Marketing Focus Overseas(Targeting and entering
foreign markets)
Orientation Ethnocentric
Marketing Mix Decisions Focussed mainly on domestic
customers.
Overseas marketing-generally
an extension of domestic

marketing.
Decisions made at
headquarters.

The major marketing decision areas at this stage include market
identification and selection, timing and sequencing of entry and selection
of an appropriate entry mode.
The marketing mix decisions are primarily made at the headquarters.

INTERNATIONAL MARKETING
International marketing is defined as the marketing activities carried out
across national boundaries.
International marketing involves:

1) Identifying needs and wants of customers in international markets

2) Taking marketing mix decisions related to product, pricing, distribution and
communication keeping in view the diverse consumer and market behaviour
across different countries on one hand and firm’s goals towards globalization on
the other hand

3)penetrating into international markets using various mode of entry and taking
decisions in view of dynamic international marketing environment.

Marketing Focus Differentiation in country markets by way of
developing or acquiring new brands
Orientation Polycentric
Marketing Mix Decisions Developing local products depending upon
country needs. Decision by individual
subsidiaries.

The extreme form of international marketing is multi-domestic
marketing, where a company establishes an independent foreign
subsidiary in each and every foreign market. The foreign subsidiaries

operate independently without any measureable control from the
headquarters.

MULTINATIONAL MARKETING
Once a company establishes its manufacturing and marketing operations in
multiple markets, it begins to consolidate its operations on regional basis so as to
take advantage of economies of scale in manufacturing and marketing mix
decisions. Various markets are divided into regional sub-segments on the basis of
their similarity to respond to marketing mix decisions. It is known as
multinational marketing.

Marketing Focus Consolidation of operations on
regional basis. Gains from economies
of scale.
Orientation Regiocentric
Marketing Mix Decisions Product standardization within
regions but not across them on
regional basis

GLOBAL MARKETING
The extreme view of global marketing refers to the use of a single marketing
method across the international markets with little adaptation.

Marketing Focus Consolidating firm’s operations on global basis
Orientation Geocentric
Marketing Mix Decisions Globalization of marketing mix decisions with
local variations. Joint decision making across
firm’s global operations.
The globalization of markets leads to:

Reduction of cost in efficiencies and duplication of efforts among
national and regional subsidiaries,
Opportunities for the transfer of products, brands and other ideas
across subsidiaries
Emergence of global customers

Improved linkage among national marketing infrastructures leading to
the development of a global marketing infrastructure.

In practice, global marketing hardly means complete standardization of the
marketing mix decisions, but it increasingly means a strategic approach to have a
global perspective to have economies of scale.

Transnational Marketing
Transnational marketing involves entering foreign markets with a solid marketing
plan that helps a company create a positive brand presence and resonates with
residents of the foreign country Transnational marketing requires extensive
market research, a solid understanding of a country's cultures and consumer
behavior trends and the identification of socio/cultural influences on consumer
spending habits for particular products and services. Capitalizing on offshore
opportunities is only possible with an accurate assessment of a country's overall
spending habits, needs and desires; this requires ongoing research and analysis of

EPRG
E: - Ethnocentric orientation

P: - Polycentric orientation

R: - Egocentric orientation

G: - Geocentric orientation

The key assumption of EPRG is the degree of internationalization to which the
management is committed or willing to move affects the specific international
strategies and decision rule of the firm

Ethnocentric Orientation

• Domestic strategies, techniques, and personnel are perceived as superior
• International customers are considered as secondary
• Guided by domestic market extension concept:
• International markets are regarded primarily as outlets for surplus
domestic production
• International marketing plans are developed in-house by the international
division
• try to market those product in other countries which have demand equal
to domestic market

Polycentric Orientation
• Guided by the multidomestic market concept:

• Focuses on the importance and uniqueness of each international market
• Likely to establish businesses in each target country
• Fully decentralized, minimal coordination with headquarters
• Marketing strategies are specific to each country
• in the effort to satisfy local customer needs and wants, full product
modification is implemented or separate product lines are developed
• Result: No economies of scale, duplicated functions, higher final product
costs

Regiocentric Orientation
• Guided by the global marketing concept:
• World regions that share economic, political, and/or cultural
traits are perceived as distinct markets
• Divisions are organized based on location
• Regional offices coordinate marketing activities

Geocentric Orientation
• Guided by the global marketing concept:
• The world is perceived as a total market with identifiable, homogenous
segments
• Targeted marketing strategies aimed at market segments, rather than
geographic locations
• Achieve position as low-cost manufacturer and marketer of product line
• Provides standardized product or service throughout the world
• analyze and manage the marketing strategies with integrated global
marketing program
• The objective of a geocentric company is to achieve a position as a low-
cost manufacturer and marketer of its product line. Such firms achieve
competitive advantage by developing manufacturing processes that add
more value per unit cost to the final product than do their rivals.
REASONS FOR ENTERING INTERNATIONAL MARKETS.
The reasons for entering international markets vary from firm to firm and country
to country depending upon the market characteristics. However, firms often
decide to enter into international market due to the following reasons:

Achieving Profitability
economies of scale Risk spread

Why should a firm
Spreading Access to
enter international
R&D cost imported inputs
market?

Marketing
opportunities due Growth Uniqueness of
GROWTH
to life cycle product or services

Firms enter international market when the domestic market potential saturates
and they are forced to explore alternative marketing opportunities overseas.

It may be observed that countries with smaller market size such as Singapore,
Hong Kong etc. had no other option but to internationalize.

PROFITABILITY
The price differential among markets also serves as an important incentive to
internationalize. Exporters benefit from the higher profit margins in the foreign
markets. Sometimes, strong competition in domestic market limits a firm’s
profitability in that market. Price differentials and enhanced profits in the
international markets are some of the fundamentals motives of exporting.

ACHIEVING ECONOMIES OF SCALE

Large scale production capacities necessitate domestic firms dispose of their
goods in international markets once the domestic market become saturated.

RISK SPREAD
A company operating in domestic markets is highly vulnerable to economic
upheavals in the home market. Overseas markets provide an opportunity to
reduce their dependence on one market and spread the market risks.

ACCESS TO IMPORTED INPUTS
The national trade policies provide for import of inputs used for export
production, which are otherwise restricted. Besides, there are a number of
incentive schemes which provide duty exemption or remission on import of
inputs for export production. It helps the companies in accessing imported inputs
and technical know-how to upgrade their operations and increase their
competitiveness.

UNIQUENESS OF PRODUCT OR SERVICE
The product with unique attributes is unlikely to meet any competition in the
overseas markets and enjoy enormous opportunities in international markets.
E.g. herbal and medicinal plants, handicrafts, value added BPO services and
software development at competitive prices provide Indian firms an edge over
other countries and smoothen their entry into international market.

MARKETING OPPORTUNITIES DUE TO LIFE CYCLES
Each market shows a different stage of life cycle for different products, which
varies widely across country markets. When product or service get saturated in
the domestic or an international market, a firm may make use of such challenges
and convert them into marketing opportunities by operating into international
markets.

SPREADING R&D COST

By way of spreading the potential market size, a firm recovers quickly the cost
incurred on research and development. It is especially true for products involving
higher cost of R&D. International markets facilitate speedy recovery of such costs
because of the large market size and also due to larger coverage of the right
market segments in international markets.

There have been many underlying forces, concepts and theories which have
emerged as giving political explanation to the development of international
trade. Remarkably, despite the trend to world interdependency, some countries
have been less involved than others. The USA, for example, has a remarkably
poor export record. About 2000 US companies only account for more than 70%
of US manufacturer's exports. This has been mainly due to its huge statewide
domestic market, which is almost tantamount to "international trade", for
example, Californian fruit being sold three thousand kilometres away in New
Jersey. Japan has risen fast to dominate the export rankings, with countries of
Africa struggling to make a significant mark, mainly because of their emphasis on
exporting primary products. This section will briefly examine the forces which
have been instrumental in the development of world trade.

Elements of the global marketing mix
Product

A global company is one that can create a single product and only have to tweak
elements for different markets.

Price

Price will always vary from market to market. Price is affected by many variables:
cost of product development (produced locally or imported), cost of ingredients,
cost of delivery (transportation, tariffs, etc.), and much more. Additionally, the
product’s position in relation to the competition influences the ultimate profit
margin.

Placement

How the product is distributed is also a country-by-country decision influenced
by how the competition is being offered to the target market. Using Coca-Cola as
an example again, not all cultures use vending machines.

Promotion

After product research, development and creation, promotion (specifically
advertising) is generally the largest line item in a global company’s marketing
budget. At this stage of a company’s development, integrated marketing is the
goal. The global corporation seeks to reduce costs, minimize redundancies in
personnel and work, maximize speed of implementation, and to speak with one
voice. The goal of a global company is to send the same message worldwide.

DRIVING FORCES/ PUSH FACTORS
Driving Forces: - Driving forces are the forces that help in achieving greater
globalization. They are also known as the push factors. The main driving forces
can be explained under the following headings.

 Technology.
 Saturated Markets.
 Improvement of Communication/Transport.
 Removal of trade Barriers.
 Profitability
 Growth/Expansion
 Cost Consideration
 Image of the Company

The driving forces or the push forces are described briefly below:-

1. Technology: - Perhaps the single most important innovation has been the
development of the micro processors, yet enabled the explosive growth of
high power, low cost computing, vastly increasing the amount of
information that can be processed by individuals and firms. The cost of
micro processors continues to fall, while their power continues to increase.
The rapid growth of the internet and the associated World Wide Web is
the latest expression of this development. In 1990 fewer than 1 million
users were connected to the internet. By the year 2005 about 1.12 billion
or 18% of the world’s population were found to be using internet. The
increasing use of better technology is resulting in better trade and business
between different countries thus leading to globalization.

2. Saturated Markets: - When the companies face the problem of saturated
markets in the home country they have to go to foreign markets in search
of better markets. They find markets where there is demand for the

products that they produce and thus help in making the world a global
market.

3. Improvement of Communication/Transport: - As the technology improved
the global communication have been revolutionized by the developments
in satellite, optical fiber, and wireless technologies. Thus between 1930
and 2000 the cost of a three minute phone call between New York and
London fell from $244.65 to 36 cents. Better and cheaper communication
leads to better trade which eventually leads to globalization. In addition to
developments in communication technology, several major innovations in
transportation technology have occurred since World War II. In economic
terms the most important are probably the development of commercial jet
aircrafts and super freighters and the introduction of containerization,
which simplifies transshipment from one mode of transport to another.
The advent of commercial jet travel, by reducing the time needed to get
from one location to another, has efficiently shrunk the globe. In terms of
travel time, New York is now “closer” to Tokyo then it was to Philadelphia
in the colonial days. Better transport led to doing better business by
reducing the distances between two countries by great margins thus
leading to globalization.

4. Removal of trade Barriers: - With the establishment of World Trade
Organization whose main objective was to remove the trade barriers that
existed between two countries, doing trade has been much easier. WTO as
it is known is one of the main factors why the average tariff rates of
countries like France, Germany and United States have fallen from about
45% in 1920s to about 3.9% in 2000. Lower tariff allows the system of free
trade in the global market thus helping in greater globalization.
5. Profitability: - All the business firms have one common objective which is
to earn profits. When the profit margin in the home country diminishes
gradually the firms starts looking for other partners who are often from
other countries thus leading to globalization.

6. Growth/ Expansion: - The firms also want to expand and grow with time.
Therefore they spread their business to other parts of the world. They
trade with different partners all over the world which leads to
globalization.

7. Cost Consideration: - The firms often to minimize the cost of production
start their operations in different parts of the world. For example a country
from Europe may start its production operation in a country in Asia for
reducing its cost of production since the cost of labor is cheaper in Asia
then in Europe. By spreading their operations the firms are eventually
helping in globalization.

8. Image of the company: - The Company often to enhance its image in the
eyes of the customers starts its global operations. They join foreign
partners for this reason thus leading to globalization.

Restraining Forces/PULL FACTORS

Restraining forces are the forces that act as obstacle in the process of
globalization. They are also known as the pull factors of globalization. The main
restraining forces can be explained under the following headings.

 Cultural Myopia
 Concentration of Power

The restraining forces or the pull forces are described briefly below:-

1. Cultural Myopia
Culture is one of the major obstacles in the process of globalization. Since the
culture of different countries all over the world is different sometimes this
acts as an obstacle in the globalization process. Different beliefs, rituals,
customs and traditions which together are known as the culture of a
particular region or a country often become a problem. A country which
wants to start its global operation in a foreign country must first analyze the
culture of that country which may be quite difficult in some cases.

2. Concentration of Power
Critics of globalization argue that despite the supposed benefits associated
with free trade and investment, over the last hundred years or so the gap
between the rich and the poor nations of the world has gotten wider. In 1870
the average income per capita in the world’s 17 richest nations was 2.4 times
that of all other countries. In 1990 the same group was 4.5 times as rich as the
rest. This proves that the globalization process is helping the rich grow richer
and eventually making the poor poorer. The reasons behind this are the
concentration of power in the hands of few countries.

Extra Reading material
Market forces and development

Over the last few decades internationalism has grown because of a number of
market factors which have been driving development forward, over and above
those factors which have been attempting to restrain it. These include market
and marketing related variables.

Many global opportunities have arisen because of the clustering of market
opportunities worldwide. Organisations have found that similar basic segments
exist worldwide and, therefore, can be met with a global orientation. Cotton, as
an ingredient in shirtings, suitings, and curtain material can be globally marketed
as natural and fashionable. One can see in the streets of New York, London, Kuala
Lumpar or Harare, youth with the same style and brand of basketball shirts or
American Football shorts. Coca Cola can be universally advertised as "Adds Life"
or appeal to a basic instinct " You can't beat the Feeling" or "Come alive" as with
the case of Pepsi. One can question "what feeling?", but that is not the point. The
more culturally unbounded the product is, the more a global clustering can take
place and the more a standardised approach can be made in the design of
marketing programmes.

This standardised approach can be aided and abetted with technology.
Technology has been one of the single most powerful driving forces to
internationalism. Rarely is technology culturally bound. A new pesticide is
available almost globally to any agricultural organisation as long as it has the
means to buy it. Computers in agriculture and other applications are used
universally with IBM and Macintosh becoming household names. The need to
recoup large costs of research and development in new products may force
organisations to look at global markets to recoup their investment. This is
certainly true of many veterinary products. Global volumes allow continuing
investment in R & D, thus helping firms to improve quality. Farm machinery, for
example, requires volume to generate profits for the development of new
products.

Communications and transport are shrinking the global market place. Value
added manufacturers like Cadbury, Nestlè, Kelloggs, Beyer, Norsk Hydro, Massey
Ferguson and ICI find themselves "under pressure" from the market place and
distributors alike to position their brands globally. In many cases this may mean
an adaption in advertising appeals or messages as well as packaging and
instructions. Nestle will not be in a hurry to repeat its disastrous experience of
the "Infant formula" saga, whereby it failed to realise that the ability to find,
boiled water for its preparations, coupled with the literacy level to read the
instructions properly, were not universal phenomenon.

Marketing globally also provides the marketer with five types of "leverage" or
"advantages", those of experience, scale, resource utilisation and global strategy.
A multi-product global giant like Nestle', with over £10 billion turnover annually,
operates in so many markets, buys so much raw material from a variety of
outgrowers of different sizes, that its international leverage is huge. If it
consumes a third of the world's cocoa output annually, then it is in a position to
dominate terms. This also has its dangers.

The greatest lift to producers of raw agricultural products has been the almost
universal necessity to consume their produce. If one considers the whole range
of materials from their raw to value added state there is hardly a market segment
which cannot be tapped globally. Take, for example, oranges. Not only are
Brazilian, Israeli, South African and Spanish oranges in demand in their raw state
worldwide, but their downstream developments are equally in demand. Orange
juice, concentrates, segments and orange pigments are globally demanded. In
addition the ancillary products and services required to make the orange industry
work, find themselves equally in global demand. So insecticides, chemicals,
machinery, transport services, financial institutions, warehousing, packaging and
a whole range of other production and marketing services are in demand, many
provided by global organisations like Beyer, British Airways and Barclays Bank. Of
course, many raw materials are at the mercy of world prices, and so many
developing countries find themselves at the mercy of supply and demand
fluctuations. But this highlights one important global lesson - the need to study
markets carefully. Tobacco producing countries of the world are finding this out.
With a growing trend away from tobacco products in the west, new markets or
increasing volumes into consuming markets have to be prospected and

developed. Many agricultural commodities take time to mature. An orange grove
will mature after five years. By that time another country may plant or have its
trees mature. Unless these developments are picked up by global intelligence the
plans for a big profit may be not realised as the extra volume supplied depresses
prices. This happened in 1993/94 with the Malawian and Zimbabwean tobacco
companies. The unexpected release of Chinese tobacco depressed the tobacco
price well below expectations, leaving farms with stock and large interest
carrying production loans.

A number of suppliers of agricultural produce can take advantage of "off season"
in other countries, or the fact that they produce speciality products. This is the
way by which many East African and South American producers established
themselves in Europe and the USA respectively. In fact the case of Kenya
vegetables to Europe is a classic, covering many of the factors which have just
been discussed-improved technology, emerging global segments, shrinking
communications gaps and the drive to diversify product ranges.

Case 1.5 Kenya Off Season Vegetables
Kenya's export of off season and specialty vegetables has been such that from 1957 to the
early 1990s exports have grown to 26 000 tones per annum. Kenya took advantage of:

a) Increased health consciousness, increased affluence and foreign travel of West European
consumers;

b) Improved technologies and distribution arrangements for fresh products in Western
Europe;

c) The emergence of large immigrant populations in several European countries:

d) programmes of diversification by agricultural export countries and

e) Increased uplift facilities and cold store technologies between Europe and Kenya.

Exports started in 1957, via the Horticultural Cooperation Union, which pioneered the
European "off season" trade by sending small consignments of green beans, sweet peppers,
chilies and other commodities to a London based broker who sold them to up market hotels,
restaurants and department stores. From these beginnings Kenya has continued to give high
quality, high value commodities, servicing niche markets. Under the colonialists, production
remained small, under the misguided reasoning that Kenya was too far from major markets.
So irrigation for production was limited and the markets served were tourists and the settlers
in Kenya itself.

The 1970s saw an increased trade as private investment in irrigation expanded, and air
freight space increased, the introduction of wide bodied aircraft, and trading relationships
grew with European distributors. Kenya emerged as a major supplier of high quality sweet
peppers, courgettes and French beans and a major supplier of "Asian" vegetables (okra,
chillies etc.) to the UK growing immigrant population. Kenya was favored because of its
ability to supply all year round - a competitive edge over other suppliers. Whilst the UK
dominated, Kenya began supplying to other European markets.

Kenya's comparative advantage was based on its low labor costs, the country's location
and its diverse agro-ecological conditions. These facilitated the development of a
diversified product range, all year round supply and better qualities due to labor
intensity at harvest time. Kenya's airfreight costs were kept low due to government
intervention, but lower costs of production were not its strength.

This lay in its ability for continuance of supply, better quality and Kenyan knowledge of
the European immigrant population. Kenya's rapidly growing tourist trade also
accelerated its canning industry and was able to take surplus production.

In the 1980's Kenya had its ups and downs. Whilst losing out on temperature vegetables
(courgettes etc.) to lower cost Mediterranean countries, it increased its share in French
beans and other specialty vegetables significantly getting direct entry into the
supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major
success. With the development and organization or many small "out growers",
channeled into the export market and thus widening the export base, the industry now
provides an important source of income and employment. It also has a highly developed
information system, coordinated though the Kenya Horticultural Crops Development
Authority.

Kenya is thus a classic case in its export vegetable industry of taking advantage of global
market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to
develop as another source of flowers and vegetables, particularly the former.

Environment of International Marketing.
The marketing environment consists of all factors that can affect the
organization’s marketing activities. These factors are largely uncontrollable.
The global marketing environment comprises the intermediate and the macro
environment.

Intermediate environment: This is also known as Micro environment.
The intermediate environment contains those factors which are semi-
controllable through contracts. This environment influences the organization
directly. Micro tends to suggest small, but this can be misleading they will be
categorized as:

Employees: Labor of the company
• Hire good people
• Empower them
• keep them happy otherwise how can they keep your customers happy ?

Stockholders
• Mergers and acquisitions require support
• Institutional investors
• can buy and sell huge volumes
Shareholder value

Suppliers: The suppliers of a company are an important aspect of the
microenvironment because even the slightest delay in receiving supplies can
result in customer dissatisfaction. Marketing managers must watch supply
availability and other trends dealing with suppliers to ensure that product will be
delivered to customers in the time frame required in order to maintain a strong
customer relationship.
• Crucial when there are lots of parts
• Car industry
• JIT
• Few suppliers only (following Japanese)

Customers: There are different types of customer markets including consumer
markets, business markets, government markets, international markets, and
reseller markets. The consumer market is made up of individuals who buy goods

and services for their own personal use or use in their household. Business
markets include those that buy goods and services for use in producing their own
products to sell. This is different from the reseller market which includes
businesses that purchase goods to resell as is for a profit. These are the same
companies mentioned as market intermediaries. The government market
consists of government agencies that buy goods to produce public services or
transfer goods to others who need them. International markets include buyers in
other countries and includes customers from the previous categories.

• Consumer Movement
• Thus, the importance of relationship marketing
particularly, when times are hard

Competitors: is also a factor in the microenvironment and include companies
with similar offerings for goods and services. To remain competitive a company
must consider who their biggest competitors are while considering its own size
and position in the industry. The company should develop a strategic advantage
over their competitors.

Macro environment
The macro environment refers to all forces that are part of the larger society and
affect the microenvironment. It includes concepts such as demography,
economy, natural forces, technology, politics, and culture.

Demography

Demography refers to studying human populations in terms of size, density,
location, age, gender, race, and occupation. This is a very important factor to
study for marketers and helps to divide the population into market segments and
target markets. This can be beneficial to a marketer as they can decide who their
product would benefit most and tailor their marketing plan to attract that
segment. Demography covers many aspects that are important to marketers
including family dynamics, geographic shifts, work force changes, and levels of
diversity in any given area.

Economic environment

Another aspect of the macro environment is the economic environment. This
refers to the purchasing power of potential customers and the ways in which

people spend their money. Within this area are two different economies,
subsistence and industrialized. Subsistence economies are based more in
agriculture and consume their own industrial output. Industrial economies have
markets that are diverse and carry many different types of goods. Each is
important to the marketer because each has a highly different spending pattern
as well as different distribution of wealth.

Natural environment

The natural environment is another important factor of the macro environment.
This includes the natural resources that a company uses as inputs and affects
their marketing activities. The concern in this area is the increased pollution,
shortages of raw materials and increased governmental intervention. As raw
materials become increasingly scarcer, the ability to create a company’s product
gets much harder. Also, pollution can go as far as negatively affecting a
company’s reputation if they are known for damaging the environment. The last
concern, government intervention can make it increasingly harder for a company
to fulfill their goals as requirements get more stringent.

Technological environment

The technological environment is perhaps one of the fastest changing factors in
the macro environment. This includes all developments from antibiotics and
surgery to nuclear missiles and chemical weapons to automobiles and credit
cards. As these markets develop it can create new markets and new uses for
products. It also requires a company to stay ahead of others and update their
own technology as it becomes outdated. They must stay informed of trends so
they can be part of the next big thing, rather than becoming outdated and
suffering the consequences financially.

Political environment

The political environment includes all laws, government agencies, and groups
that influence or limit other organizations and individuals within a society. It is
important for marketers to be aware of these restrictions as they can be
complex. Some products are regulated by both state and federal laws. There are
even restrictions for some products as to who the target market may be, for
example, cigarettes should not be marketed to younger children. There are also
many restrictions on subliminal messages and monopolies. As laws and
regulations change often, this is a very important aspect for a marketer to
monitor.

Cultural environment

The final aspect of the macro environment is the cultural environment, which
consists of institutions and basic values and beliefs of a group of people. The
values can also be further categorized into core beliefs, which passed on from
generation to generation and very difficult to change, and secondary beliefs,
which tend to be easier to influence. As a marketer, it is important to know the
difference between the two and to focus your marketing campaign to reflect the
values of a target audience.

Globalization has generated increased demands on multinational enterprises
(MNEs) to formulate and implement international strategies that respond to
pressures for both external flexibility and internal efficiency. Which international
strategy is pursued will depend upon the characteristics (e.g., opportunities,
constraints) of the external environment, the firm's internal capabilities, and the
tradeoffs associated with responding to the pressures for external flexibility.

SWOT analysis
It is a tool for auditing an organization and its environment. It is the first stage of
planning and helps marketers to focus on key issues. SWOT stands for strengths,
weaknesses, opportunities, and threats. Strengths and weaknesses are internal
factors. Opportunities and threats are external factors.

Strength are:
Your specialist marketing expertise.
A new, innovative product or service.
Location of your business.
Quality processes and procedures.
Any other aspect of your business that adds value to your product or service.

Weaknesses are:
Lack of marketing expertise.
Undifferentiated products or services (i.e. in relation to your competitors).
Location of your business.
Poor quality goods or services.
Damaged reputation.

Opportunity are:

A developing market such as the Internet.
Mergers, joint ventures or strategic alliances.
Moving into new market segments that offer improved profits.
A new international market.
A market vacated by an ineffective competitor.

Threats are:
A new competitor in your home market.
Price wars with competitors.
A competitor has a new, innovative product or service.
Competitors have superior access to channels of distribution.
Taxation is introduced on your product or service.

Case Studies

ARIZONA SUNRAY, INC.
Buy American or Look Abroad?
JEFFREY A. FADIMAN
San Jose State University

Arizona Sunray is one of the pioneering companies in solar energy within that state. Its
founding generation consisted of third-generation Arizonans, descendants of the state's
earliest pioneers. The founders took great pride in that pioneering heritage, often boasting
that the family's rise to relative prosperity was a result of "thinking Arizona." To them, the
phrase meant a ceaseless search for business opportunities within the state.
In the late I 950s, one member of this generation emerged as a new type of pioneer-
one of a cluster of scientists and businessmen who hoped to develop the first practical
applications of solar energy on a scale available to home owners. In the early 1960s, he pio-
neered the use of solar energy in offices and homes, incorporating, with other members of his
family, into what proved to be a surprisingly successful firm, eventually named Arizona Sunray.
After some experimentation, the firm chose the slogan "Follow the Sun: It's Arizona's Way."
Reasoning that the way to acquire new business was to follow the sun, the firm expanded into
every area of Arizona, and then into Nevada and New Mexico.
The next generation took control of the business in 1965. As a result, a decision was
made to redirect expansion away from the relatively unpopulated states of the Southwest and
move due, west into the larger urban population centers of coastal California. The Los
Angeles/Orange County area was considered particularly favorable for potential expansion,
with relatively affluent target populations that might show considerable interest in the use of
solar energy within their homes. Several aspects of the marketing program were reshaped to
appeal more directly to coastal Californians, including a change in the firm's slogan, which
became "Catch the Rays: It's California's Way." The concept proved quite successful, and the
firm continued to expand.
By 1995 members of the next generation were just beginning to reach positions of
influence and authority within the firm. Their relative affluence, however, had permitted them
to acquire both travel experience and education abroad. As a consequence, they proposed a
further expansion, seeking to "follow the sun" on a scale undreamed of by their elders. They
argued that Arizona Sunray should spread around the entire Pacific Rim, taking appropriate
advantage of new techniques in miniaturization to fulfill an entire range of solar-powered
needs-from solar-powered calculators to rural solar cookers-permitting Arizona Sunray (to be
renamed Pacific Sunray) to take maximum advantage of both current opportunity and long-
range planning for expansion.
Surviving members of the founding generation instantly rejected the proposal, refusing
to contemplate such radical ideas. "Why even bother?" the firm's first president asked. "We're
doing fine right in America. We know our product, we know our clientele, and we know the
West. This market's huge! We're making steady profits. Every member of this family and every

worker in this firm is doing fine. Why would we want to dissipate our capital in marketing to
places we know next to nothing about? The money's in America; why look abroad?"
Members of all three generations met to thrash out the issue. The oldest, though now
retired held considerable influence. The youngest, though lacking power, felt they held a wider
and more flexible perspective. The middle generation, though holding formal decision-making
powers, felt pulled both ways and wondered if there might be ways to satisfy both sides.

Questions

1. As a member of the youngest generation, present your case. What advantages could
Arizona Sunray derive from an attempt to expand its goods and services abroad?
2. As a member of the oldest generation, present your case. Why should the firm remain
within America? What hard questions could you ask of members of the youngest generation
that' might suggest weaknesses in their proposal?
3. As a member of the middle generation, what compromise can you propose that might prove
acceptable to both sides?

Can Mac Fight Back?
LEAD STORY-DATELINE: Marketing, 17 October 2002.

McDonald's is the world's biggest restaurant chain, and according to Interbrand, the 8th most
valuable brand. It seems everyone recognizes the golden arches. The company is extremely
successful despite being a symbol of American imperialism, and being hated by animal rights
activists, groups promoting healthy diets, and anti-capitalists. There are signs that McDonald's
is having difficulty keeping up with the trends in the restaurant industry, maintaining its
positive brand image, and getting the message out about its products. The company's share
price stands at a seven-year low, and in September 2002; Salomon Smith Barney forecasted
McDonald's stock would under perform.

McDonald's is experimenting with new restaurant designs, diversifying its menu offerings to
include healthier choices or touches of cuisines favored in the local area, and lowering prices on
various items to try to appeal to more people, keep its image fresh, and increase sales. Yet Mark
Kalinowski of Salomon Smith Barney says those things do not make up for rude McDonald's
workers, order mistakes, or sluggish service. And Kalinowski is not the only one to have noticed.
Many people around the world are questioning McDonald's ability to meet its commitment of
quality and service in its restaurants. Even the role of Ronald McDonald in the company's
communications may be faltering. Leaked internal memos suggest company executives are
questioning his relevance for today's children.

The company's commercials in the UK have taken a turn for the worse lately, lacking a cohesive
message. The company has been beleaguered by bad press - vegetarians suing over eating its
beef-based cooking oil, teenagers accusing the restaurant of making them fat, popular books
criticizing the fast food industry, and fears of mad cow disease. The company seems to be
responding by supporting more community programs and increasing its sponsorship of
charitable causes, such as funding Unicef's World Children's Day. Whether McDonald's strategy
to stay ahead of the competition will be effective remains to be seen.

Questions

1. In general, where do you think McDonald's stands on the range from standardization to
adaptation in terms of its global marketing?
2. What are some of the issues in having a mascot like Ronald McDonald in another culture
besides the U.S.? How can it be effective in other national settings?
3. The text discussion refers primarily to manufactured products. However, do you think
that it applies to the problems that McDonald's has in the restaurant business?

CULTURE is a pattern of shared basic assumptions that the group
learned as it solved its problems of external adaptation and internal integration
that has worked well enough to be considered valid and therefore, to be taught
to new members as the correct way to perceive, think, and feel in relation to
those problems. Culture is the way that we do things around here. Culture could
relate to a country (national culture), a distinct section of the community (sub-
culture), or an organization (corporate culture). It is widely accepted that you are
not born with a culture, and that it is learned. So, culture includes all that we
have learned in relation to values and norms, customs and traditions, beliefs and
religions, rituals and artifacts.

Organizational culture is an idea in the field of Organizational studies and
management which describes the psychology, attitudes, experiences, beliefs and
values (personal and cultural values) of an organization. It has been defined as
"the specific collection of values and norms that are shared by people and groups
in an organization and that control the way they interact with each other and
with stakeholders outside the organization. Organizational Culture refers to the
values, beliefs and customs of an organization. Whereas Organizational structure
is relatively easy to draw and describe, organizational culture is less tangible.

CROSS CULTURAL MARKETING: culture is collective programming of the mind
which distinguishes the members of one group or category from the others. The
oxford encyclopedia English dictionary defines culture as “the art and other
manifestation of human intellectual achievement regarded collectively as the
customs, civilization and achievements of a particular time or people: the way of
life of a particular society or group”. The consumer behavior is greatly influenced
by culture, which varies widely among countries. Most Indians find difficult to
understand how people in the west eat cow which gives milk and is other East
Asian countries love for food such as blood worm soup, snake soup and dog meat
is not easy to rationalize for the people of other cultures. Such unintentional
reference to context, known as self reference criteria (src), often interferes in
analyzing and interpreting the marketing problems in its true sense. A social
group acquires culture through learning and experience. Culture is shared among
the members of a group, organization, or society and passed from one
generation to the other. In-Culture Marketing is a methodology applied to

Marketing that recognizes the existence of cultural programming and that there
are consumer groups that have life experiences “in a different cultural setting”
than ours, and therefore their tastes, values, expectations, beliefs, ways of
interaction, ways of entertainment, music, dressing preferences, food, etc. they
tend to be different than ours, because their cultural programming is different.

What is culture?

Much has been written on the subject of culture and its consequences. Whilst on
the surface most countries of the world demonstrate cultural similarities, there
are many differences, hidden below the surface. One can talk about "the West",
but Italians and English, both belonging to the so called "West", are very different
in outlook when one looks below the surface. The task of the global marketer is
to find the similarities and differences in culture and account for these in
designing and developing marketing plans. Failure to do so can be disastrous.

Terpstran9 (1987) has defined culture as follows:

"The integrated sum total of learned behavioral traits that are manifest and
shared by members of society"

Culture, therefore, according to this definition, is not transmitted genealogically.
It is not, also innate, but learned. Facets of culture are interrelated and it is
shared by members of a group who define the boundaries. Often different
cultures exist side by side within countries, especially in Africa. It is not
uncommon to have a European culture, alongside an indigenous culture, say, for
example, Shona, in Zimbabwe. Culture also reveals itself in many ways and in
preferences for colours, styles, religion, family ties and so on. The color red is
very popular in the west, but not popular in Islamic countries, where sober colors
like black are preferred.

Much argument in the study of culture has revolved around the "standardization"
versus "adaption" question. In the search for standardization certain "universals"
can be identified. Murdock7 (1954) suggested a list, including age grading,
religious rituals and athletic sport. Levitt5 (1982) suggested that traditional
differences in task and doing business were breaking down and this meant that
standardization rather than adaption is becoming increasingly prevalent.

Culture, alongside economic factors, is probably one of the most important
environmental variables to consider in global marketing. Culture is very often
hidden from view and can be easily overlooked. Similarly, the need to overcome
cultural myopia is paramount.

Elements of culture:

1. Religion: Generally the consumption patterns are considerably influenced by
religious beliefs. As most of the Indian do not eat beef and India has the
second largest Muslim (who do not eat pork) population in the world,
McDonald’s serves neither beef nor pork in India. Besides Indian
vegetarianism is too difficult for foreign to understand, where even changing
of cooking utensils between two groups is frowned upon. As a result and in an
effort to respect the sensibilities of the two large consumer groups. India is
perhaps the only country where McDonald’s has separate kitchens for
vegetarian and for non vegetarian’s food. In Islamic countries, the meat of
animals slaughtered through the Halal process can alone be consumed. There
fore all meat and Meta products exported to Muslim countries have to be
certified by a recognized agency to this effect.

Religion can affect marketing in a number of ways:

· Religious holidays - Ramadan cannot get access to consumers as shops are
closed.
· consumption patterns - fish for Catholics on Friday
· economic role of women - Islam
· caste systems - difficulty in getting to different costs for segmentation/niche
marketing
· joint and extended families - Hinduism and organizational structures;
· institution of the church - Iran and its effect on advertising, "Western" images
· market segments - Maylasia - Malay, Chinese and Indian cultures making market
segmentation
· sensitivity is needed to be alert to religious differences.

2. Value system: Values are the shared assumption of a group about how things
ought to be or abstract ideas about what a group believes to be good or

desirable or right. The consumer behavior in international market is
considerably affected by their value system.

3. Norms: Norms are the guidelines or special rules that prescribe appropriate
behavior in a given situation. For instance, aggressive selling in Japan is not
taken in positive spirit. Many companies including Dell computers, instead of
aggressive selling emphasize the benefits in terms of lower price by direct
selling. Cultural norms affect the consumption patterns and habits too.
Indians and other south Asian generally use spoons of different sizes while
eating. Chinese and Japanese people use chopsticks as the meat is cut into
small pieces, but European and Americans use knives and forks to cut the
meat on the dining table. Norms are sub divided into

a) Mores: Norms that carry a strong social sanction if violated because the
members of a culture consider adherence to them essential to the well-being
of the society e.g. The prohibition against destroying other people's property
b) Folkways: Norms that carry only a weak social sanction if violated because
the members of the society do not consider adherence to them essential to
the well-being of the society e.g. washing one's clothes, eating with your
mouth closed
c) Laws: Norms that the governing body of a society officially adopts to
regulate behavior e.g. Speed limits
d) Taboos: Norms so strongly held by the members of a society that to violate
them is virtually inconceivable e.g. the prohibition against incest, the
prohibition against cannibalism.

4. Aesthetics: Ideas and perceptions that a cultural group in terms of beauty and
good taste is referred to as aesthetics. It includes music, dance, painting,
drama etc. Colors have different manifestations across cultures. For African
consumers, bright colors are favorite colors, while in Japan pastel colors are
considered to express softness and harmony and are preferred over bright
colors. America’s corporate color blue is associated with the evil and the
sinister in many African countries. In China, red color is lucky, while it is
associated with death and witchcraft in a number of African countries. An
international marketer has to address these issues especially in
communication and product decisions.

5. Language: Language is a “systematic means of communicating ideas or feelings
by the use of conventionalized signs, gestures, marks, or especially articulate
vocal sounds. Language differs widely among the nations and even regions.
Language reflects the nature and value system of culture. Despite of linguistic
difference, English has become the lingua-franca to communicate with people
around the world. Conducting cross country market research in English often
fails to provide non- verbal cues to the respondents. Besides the issue related
to translation of questionnaire or by use of interpretation needs to be
addressed so as to ensure data compatibility. Therefore, use of initiative and
communicating in local languages are of extreme importance in international
market research across regions with linguistic diversity.

6 Ideologies: Ideologies are integrated and connected systems of beliefs. Sets
of beliefs and assumptions connected by a common theme or focus. They are
often are associated with specific social institutions or systems and serve to
legitimize those systems.
1. Some prominent American ideologies.
a. Capitalism.
b. Christianity (Protestantism).
c. Individualism
d. Sexism.
e. Racism

.
7 Statuses and Roles: Status, although related, is not a measure of a person’s
wealth, power, and prestige. To speak of "high" or "low" status is somewhat
misleading. A status is a slot or position within a group or society. They tell us
who people are and how they "fit" into the group. Roles are norms specifying
the rights and responsibilities associated with a particular status. The term
role is often used to mean both a position in society and role expectations
associated with it. Roles define what a person in a given status can and should
do, as well as what they can and should expect from others. Roles provide a
degree of stability and predictability, telling how we should respond to others
and giving us an idea of how others should respond to us.

Analytical Approaches to Cultural Factors
Maslow's Hierarchy of Needs: If motivation is driven by the existence of
unsatisfied needs, then it is worthwhile for a manager to understand which
needs are the more important for individual employees. In this regard, Abraham
Maslow developed a model in which basic, low-level needs such as physiological
requirements and safety must be satisfied before higher-level needs such as self-
fulfillment are pursued. Maslow’s hierarchy of needs is a theory in psychology,
proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of humans'
innate curiosity.

Maslow's Hierarchy of Needs

Physiological Needs

Physiological needs are those required to sustain life, such as:

air
water
nourishment
sleep

According to Maslow's theory, if such needs are not satisfied then one's
motivation will arise from the quest to satisfy them. Higher needs such as social
needs and esteem are not felt until one has met the needs basic to one's bodily
functioning.

Safety

Once physiological needs are met, one's attention turns to safety and security in
order to be free from the threat of physical and emotional harm. Such needs
might be fulfilled by:

Living in a safe area
Medical insurance
Job security
Financial reserves

According to Maslow's hierarchy, if a person feels that he or she is in harm's way,
higher needs will not receive much attention.

Social Needs

Once a person has met the lower level physiological and safety needs, higher
level needs become important, the first of which are social needs. Social needs
are those related to interaction with other people and may include:

Need for friends
Need for belonging
Need to give and receive love

Esteem

Once a person feels a sense of "belonging", the need to feel important arises.
Esteem needs may be classified as internal or external. Internal esteem needs are
those related to self-esteem such as self respect and achievement. External

esteem needs are those such as social status and recognition. Some esteem
needs are:

Self-respect
Achievement
Attention
Recognition
Reputation

Maslow later refined his model to include a level between esteem needs and self-
actualization: the need for knowledge and aesthetics.

Self-Actualization

Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of
reaching one's full potential as a person. Unlike lower level needs, this need is
never fully satisfied; as one grows psychologically there are always new
opportunities to continue to grow.

Self-actualized people tend to have needs such as:

Truth
Justice
Wisdom
Meaning

Self-actualized persons have frequent occurrences of peak experiences, which are
energized moments of profound happiness and harmony. According to Maslow,
only a small percentage of the population reaches the level of self-actualization.

Physiological needs are at the bottom of the hierarchy. These are basic needs to
be satisfied like food, water, air, comfort. The next need is safety - a feeling of
well being. Social needs are those related to developing love and relationships.
Once these lower needs are fulfilled "higher" needs emerge like esteem - self
respect - and the need for status improving goods. The highest order is self
actualisation where one can now afford to express oneself as all other needs
have been met.

Whilst the hypothesis is simplistic it does give an insight into universal truisms. In
Africa, for example, in food marketing, emphasis may be laid on the three lower

level needs, whereas in the developed countries, whilst still applicable, food may
be bought to meet higher needs. For example, the purchase of champagne or
caviar may relate to esteem needs.

The Case Of Maize Meat In Africa
Introduced by the white settler, maize meat is the staple diet of the
population of countries in Eastern and Southern Africa, Zambia, for
example is capable of producing over 30 million x 90Kgs bags with a
marketable surplus of 20 million x 90Kg bags, most of which goes to
feed the urban population. For a lot of people, unable to improve their
lot, this remains as the staple diet throughout their lives. However,
many Africans who are able to improve their lot, progress on to other
forms of nourishment -fish. potatoes, good meat cuts and even fast
foods, some of this brought about by social interaction. Interestingly
enough, maize is still often eaten despite the social and economic
progression that an individual may make.

Hofstede’s Classification
The most widely used tool to study the cross-cultural behavior is Hofstede’s
classification. It identifies cross cultural differences by collecting data on
employee attitudes and values for 1, 16,000 respondents from 70 countries
working in IBM subsidiaries. Hofstede isolated four dimensions that he claimed
summarized different cultures are defined as:

1) Power Distance:

The degree of inequality among the people that are viewed equitably is known as
power distance. It focused on how a society deals with the fact that people are
unequal in physical and intellectual capabilities. Power Distance in Malaysia is
highest while it is lowest in the case of Austria. In UK, Scandinavia and the Dutch
countries managers expect their decision making to be challenged, while the
French consider the authority to take decision as their right. Germans feel more
comfortable in formal hierarchies while Dutch have a more relaxed approach
towards their higher authorities.

In countries with high power distances, hierarchical organizational structures are
based on inequality among the superiors and subordinates, and juniors blindly
follow the orders of their superiors. Generally, high social inequalities are
tolerated in culture with wide differentiation in power and income distribution.
Small power distance is characterized by egalitarian societies, where superiors
and subordinates consider each other as equal. Organizations in such societies
are flat and decision making is decentralized.

Power Distance greatly affects the customer’s decision making process. In view of
power distance, researches have to find out the key persons involved in buying
decisions and formulate their field surveys accordingly.

2) Individualism vs. Collectivism

Individualism Collectivism
1 The tendency of people to look The tendency of people to belong to
after themselves and their groups and to look after each other in
immediate family’s interest alone exchange of loyalty is termed as
is termed as Individualism collectivism.
2 Such societies have strong ethics, Such societies do not have such

promotions are based on merits criteria.
and involvement of the employee
in the organizations is primarily
calculative.
3 Ability to be independent The interest of group have
considered to be a key criterion for precedence over
success in such societies. individual interest
4 Examples of such countries are Examples of such countries are
USA, France. Pakistan, Singapore, and Malaysia.

International Marketing decisions are greatly influenced by individualism vs.
collectivism appeal a product to be successful in collective societies should have a
acceptability by a group while in individualistic societies there be no need of a
product t be accepted by a group of people to be successful.

3) Masculinity vs. Femininity

Masculinity Femininity

1 In masculine societies, the In feminine societies ,the dominant
dominant values emphasize work values are achievement of personal
goals such as earnings, goals such as quality of life, care for
advancement, and success and others and friendly atmosphere
material belongings.
2 In masculine societies, people live In feminine societies, people ‘work to
to work’ live’
3 Examples of such countries are Examples of such countries are
Japan, Austria, Italy and US. Sweden, Norway, Netherlands and
Denmark.
4 Sex roles are highly distinguished Sex roles were less sharply
distinguished and there is little
differentiation between men and
women in the same job

4) Uncertainty Avoidance

Uncertainty Avoidance refers to the lack of tolerance for ambiguity and the need
for formal rules. It measures the extent to which people feel threatened by

ambiguous situations. Greece, Poland and Japan are the most uncertainty
avoidance societies and thus lifetime employment is common while Singapore,
Denmark and India are the least uncertainty avoidance societies and thus the job
mobility is common in these countries.

Culture context
The context of a culture has crucial implications in communicating and
interpreting verbal and non verbal messages .Different cultures interpret
verbal and non –verbal cues differently

.

High-context Culture Low-context Culture
1 Implicit communications such as non- Communication is more explicit and
verbal and subtle situational cues are relies heavily on words to convey the
extremely important, meaning
2 Relationship is long-lasting Relationship is temporary

3 Verbal communication are given greater Commitments are written.
sanctity

4 Knowledge is situational, relational. Knowledge is more often transferable

5 Decisions and activities focus around Task-centered. Decisions and activities
personal face-to-face relationships, often focus around what needs to be done,
around a central person who has division of responsibilities.
authority.

6 EXAMPLES:-Large US airports, a chain
EXAMPLES:- Small religious supermarket, a cafeteria, a convenience
congregations, a party with friends, store, sports where rules are clearly laid
family gatherings, expensive gourmet out, a motel.
restaurants and neighborhood
restaurants with a regular clientele,
undergraduate on-campus friendships,

regular pick-up games, hosting a friend
in your home overnight.

7 Low context culture are common in U.S.,
High context cultures are more common Western Europe.
in the eastern cultures than in western,
and in countries with low racial
diversity. For example:-INDIA. New
Zealand and the Native Americans

Difference in marketing decisions due to culture context

Marketing decisions in High- Marketing decisions in Low-
context culture context culture
1 Market promotion and advertising Market promotion and
is subtle advertising focus on explicit
display of information and facts
2 In this building relationship with Marketing firms rotate sales team
clients is extremely important, more frequently
therefore sales team tend to have
longer duration of operation in
the assigned territory.
3 Market researchers focus on Market researchers focus on
subtle and non-verbal expressions factual information
of the respondents.
Factors/Dimensions High context Low context
Lawyers Less important Very important
A person’s word Is his or her bond Is not to be relied on, ”get it in
writing”
Responsibility for Taken at highest level Pushed to lowest level
organization error
Space People breathe on each People maintain a bubble of
other private space and resent
intrusions
Time Polychromic - everything Monochromic - time is money.
in life must be dealt with Linear-one thing at a time.

in its own time
Negotiations Are lengthy –a major Proceed quickly
purpose is to allow the
parties to get o know each
other.
Competitive bidding Infrequent Common
Country /Regional Japan , Middle East United States, Northern
e.g. Europe

Cultural Homogeneity
Cultural homogeneity is defined as the number of shared facts across all possible
pairs of agents divided by the total possible number of shared facts across all
agents in a population. Cultural homogeneity is equal to one only if all agents
know precisely the same facts. A society that achieves a cultural homogeneity of
one is "perfectly stable." Perfect stability means that the society is in a steady
state and no further connections can change any agent's knowledge

On the basis of homogeneity, culture may be divided into following subsets:

Homophilous Culture:

In countries where people share same beliefs, speak the same language. And
practices the same religions are known to have a Homophilous Culture. Japan,
Korea and Scandinavian countries have homophilous culture. It takes less time
for new product diffusion in homophilous culture and relatively uniform
marketing mix decisions can be taken.

Heterophilus Cultures:

In countries with Heterophilus Cultures there is a fair amount of differentiation
in language, beliefs and religion followed .India and China fall under this category
wherein he variations in culture within a single province is quite significant .The
marketing communication strategies, in such cases, will have to incorporate new
changes and adapt to given sets of cultural norms from region to region.

ENVIRONMENTAL SENSITIVITY
Environmental sensitivity is the extent to which products must be adapted to the
culture specific needs of different national markets. A useful approach is to view
products on a continuum of environmental sensitivity. At one end of the
continuum are environmentally insensitive products that do not require
significant adaptation to the environments of various world markets. At the other
end of the continuum are products that are highly sensitive to different
environmental factors. A company with environmentally insensitive products will
spend relatively less time determining the specific and unique conditions of local
markets because the product is basically universal. The greater the product’s
environmental sensitivity, the greater the need for managers to address country-
specific economic, regulatory, technological, social and cultural environment
conditions.

The sensitivity of products can be represented on a two-dimensional scale as
shown below:

High
Food
Product Computers

Adaptation Integrated

Low Circuits

Low High
Environmental sensitivity

ENVIRONMENTAL SENSITIVITY PRODUCT ADAPTATION MATRIX

Any product exhibiting low levels of environmental sensitivity e.g. highly
technical products like microprocessors belongs in the lower left of the figure.
Moving to the right on the horizontal axis, the level of sensitivity increases, as
does the amount of adaptation. Computers are characterized by low level of
environmental sensitivity but variations in country voltage requirements require
some adaptation.

At the upper right are the products with high environmental sensitivity. Food ,
especially food consumed in the home, falls into this category because it is
sensitive to climate and culture. Particular food items such as chocolate, however
must be modified for various differences in taste and climate. The consumers in
some countries prefer a milk chocolate; others prefer a darker chocolate while
other countries in the Tropics have to adjust the formula for their chocolate
products to withstand the high temperature.

SELF REFERENCE CRITERION
When a company starts its international business, the most important thing is its
marketing strategies .The key for successful international marketing is adaptation
to the environmental differences from one market to another. The primary
obstacles to success in international marketing are person’s Self Reference
Criterion. It is an unconscious reference to one’s own cultural values,
experience, and knowledge as a basis for decisions.

Definition:

Having sold a product successfully in the domestic market a firm may assume
that the product will, without adaptation, also be successful in foreign markets.
Frequently this assumption leads to failure. The SRC refers to the assumption
that what is suitable for the home market will be suitable for the foreign market
and therefore there is no need to test whether or not the product should be
altered.

When faced with a problem of another culture, the tendency is to react
instinctively. The reaction is based on meanings, values, symbols, and behavior
relevant to one’s culture a usually different from those of the foreign culture.
Such decisions are not correct ones.

The self reference criterion can prevent from being aware that there are cultural
differences or from recognizing the importance of those difference. Thus one
might fail to recognize the need to take action, or might discount the cultural
differences that exist among countries. One might also react to a situation in a
way offensive to the host. SRC can evaluate the appropriateness of a

domestically designed marketing mix for a foreign market. Example, In U.S a
polite refusal to food or drink is acceptable but, but in Asia or Middle East a host
is offended if one refuses hospitality.

When marketers take the time to look beyond their own self-reference criteria
the results are more positive. Example, British manufacture ignoring its SRC could
sell in Japan, McVitie’s chocolate biscuits are wrapped individually, packed in
presentation cardboard boxes, and priced about three times higher than in U.K.
another best example is of Mc Donald’s which shifted to Big Mac in India where it
is known as Maharaja Mac. This burger features two mutton patties because
most Indians consider cow sacred and don’t eat beef.

The most effective way to control the influence of SRC is to recognize the effect
on one’s behavior.

To avoid errors in business decisions, it is necessary to conduct a cross culture
analysis that isolates the SRC influences and to maintain a vigilance regarding
ethnocentrism. The following steps are

Define the business problem or goal in home-country cultural traits,
habits or norms.
Define the business problem or goal in foreign-country cultural traits,
habits or norms through consultation with natives of the target country.
Make no value judgments.
Isolate SRC influence in the problem and examine it carefully to see how it
complicates the problem.
Redefine the problem without SRC influence and solve for the optimum
business goal situation.

The cross culture analysis approach requires an understanding of the culture of
the foreign market as well as one’s own culture. It is accepted that you are not
born with a culture, and that it is learned. So, culture includes all that we have
learned in relation to values and norms, customs and traditions, beliefs and
religions, rituals and artifacts.

Case Studies
CULTURE SHAPES FOREIGN MARKETING
International marketers all have stories to tell of their adventures-and misadventures-in
foreign market cultures. These cultural constraints can affect all aspects of the marketing
program. A couple of examples:
1. Cosmetics- Maybelline and Max Factor add brighter colors to their lipstick and
makeup for Latin America. Vidal Sassiin adds more conditioner and a pine aroma to
some shampoos in the Far East. Amway’s skin care line in Japan has less lather and
Amway removes the pork proteins found in some of its products for Muslim markets,
such as Malaysia.
2. Promotion- Hollywood has found the best way to promote its movies in Asia is to use
popular local musicians. When Warner Bros released “Lethal Weapon 4” in Hong
Kong, its major promotion was a music video with a very popular heavy-metal band.
Though music didn’t relate to the film, scenes from the film were interspersed on the
video. The song became the movie’s “Asian theme song”.
In Taiwan, a leading female singer made a music video based on “The English Patient”. The
studios usually don’t even have to pay the local artists because both parties benefit.

IT’S NOT THE GIFT THAT COUNTS, BUT HOW YOU PRESENT IT

Giving a gift in another country requires careful attention if it to be done properly. Here are a
few suggestions:
Japan
Do not open gift in front of a Japanese counterpart unless asked and do not expect the
Japanese to open your gift.
Avoid ribbons and bows as part of gift-wrapping. Bows as we know them are considered
unattractive and ribbon colors can have different meanings. Do not offer a gift depicting a fox
or badger. The fox is the symbol of fertility, the badger, and cunning.

Europe
Avoid red roses and white flowers, even numbers, and the number 13. Do not wrap flowers in
paper. Do not risk the impression of bribery by spending too much on a gift.

Arab World
Do not give a gift when you first meet someone. It may be interpreted as a bribe. Do not let it
appear that you contrived to present the gift when the recipient is alone. It looks bad unless
you know the person well. Give the gift in front of others in less personal relationships.

Latin America
Do not give a gift until after a somewhat personal relationship has developed unless it is given
to express appreciation for hospitality. Gifts should be given during social encounters, not in

the course of business. Avoid the colors black and purple; both are associated with the
Catholic Lenten season.

China
Never make an issue of a gift presentation-publicly or privately. Gifts should be presented
privately, with the exception of collective ceremonial gifts at banquets.

CROSSING BORDERS 1

Jokes Don't Travel Well

Cross-cultural humor has its pitfalls. What is funny to you may not be funny to others. Humor
is culturally specific and thus rooted in people's shared experiences. Here are examples:

President Jimmy Carter was in Mexico to build bridges and mend fences. On live television
President Carter and President Jose Lopez Portillo were giving speeches. In response to a
comment by President Portillo, Carter said, "We both have beautiful and interesting wives,
and we both run several kilometers every day. In fact, I first acquired my habit of running
here in Mexico City. My first running course was from the Palace of Fine Arts to the Majestic
Hotel where my family and I were staying. In the midst of the Folklorico performance) I
discovered that I was afflicted with Montezuma's Revenge; Among Americans this may have
been an amusing comment but it was not funny to the Mexican. Editorials in Mexico and U.S.
newspapers commented on the in appropriateness of the remark.

'Most jokes; even though well intended, don't translate well. Sometimes a translator can help
you out. One speaker, in describing his experience, said,"1 began my speech with a joke that
took me about, two minutes to tell. Then my interpreter translated my story. About thirty
second later the Japanese, audience laughed loudly. I continued with my talk which seemed'
well received," he said, "but at the end, just to make sure, I asked the, interpreter, 'How did
you translate my joke so quickly?' The interpreter replied, 'Oh I did not translate your story at
all. I did not understand it. I simply said our foreign speaker has just told a joke so would you
all please laugh. “

Who can say with certainty that anything is funny? Laughter, more often than not,
symbolizes embarrassment, nervousness, or even scorn. Hold your humor until you are
comfortable with the culture.

CROSSING BORDERS 2

Meishi-— Presenting Business Card in Japan

In Japan the business card, or Meishi, is the executive's trademark. It is both a mini resume
and a friendly deity that draws people together. No matter how many times you have talked
with a businessperson by phone before you actually meet, business cannot really begin until
you formally exchange cards.

The value of a Meishi cannot be overemphasized; up to 12 million are exchanged daily and a
staggering'4. 4 billion annually. For a businessperson to make a call or receive a visitor without
and is like a Samurai going off to battle without his sword. There are a variety of ways to
present a card, depending on the giver's personality and style:

Crab style -held out between the index and middle fingers. Pincer-
clamped between the thumb and index finger. Pointer - offered
with the index finger pressed along the edge. Upside down - the
name is facing away from the recipient Platter fashion - served in
the palm of the hand.

The card should be presented during the earliest stages of introduction, so the Japanese
recipient will be able to determine your position and rank and know how to respond to you.
The normal procedure is for the Japanese to hand you their name card and accept yours at the
same time. They read your card and then formally greet you either by bowing of shaking hands
or both.
Not only is there a way to present a card, there is also a way of received a car. It makes
a good impression to receive a card in both hands, especially when the other party is senior in
age or status. Do not put the card away before reading or your will insult the other person,
and write on a person’s card in their presence as this may cause offenses.
As businesses grow and professional management develops, there is a shift toward
decentralized management decision-making. Decentralized decision-making allows ex-
ecutives at different levels of management authority over their own functions. This is typical
of large-scale businesses with highly developed management systems such as those found
in the United States. A trader in the United States is likely to be dealing with middle
management, and title or position generally takes precedence over the individual holding
the job.
Committee decision-making is by group or consensus. Committees may operate on a
centralized or decentralized basis, but the concept of committee management implies
something quite different from the individualized functioning of the top management and
decentralized decision-making arrangements just discussed. Because Asian cultures and
religions tend to emphasize harmony and collectivism, it is not surprising that group decision-
making predominates there. Despite the emphasis on rank and hierarchy in Japanese social
structure, business emphasizes group participation, group harmony, and group decision
making-but at top management level.

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