1. Global Marketing Management, 5e Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 1 Chapter 4 Global Cultural Environment and Buying Behavior

2. Chapter Overview Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 2 1. Definition of Culture 2. Elements of Culture 3. Cross-Cultural Comparisons 4. Adapting to Cultures 5. Cultures and the Marketing Mix 6. Organizational Cultures 7. Global Account Management (GAM) 8. Global Customer Relationship Management (CRM)

3. Introduction Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 3 Buyer behavior and consumer needs are largely driven by cultural norms. Global business means dealing with consumers, strategic partners, distributors, and competitors with different cultural mindsets. Within a given culture, consumption processes can include four stages: access, buying behavior, consumption characteristics, and disposal (Exhibit 4-1). Each of these stages is heavily influenced by the culture in which the consumer thrives.

4. Exhibit 4-1: The A-B-C-D Paradigm Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 4

5. 1. Definition of Culture Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 5 There are numerous definitions of culture. In this text, culture (in a business setting) is defined as being a learned, shared, compelling, interrelated set of symbols whose meanings provide a set of orientations for members of society. Cultures may be defined by national borders, especially when countries are isolated by natural barriers. Cultures contain subcultures that have little in common with one another.

6. 2. Elements of Culture Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 6 Culture consists of many interrelated components. Knowledge of a culture requires a deep understanding of its different parts. Following are the elements of culture: Material life(technologies that are used to produce, distribute, and consume goods and services) Language (language has two parts: the spoken and the silent language) Blunders of translation are common either direction (Exhibit 4-2) Back-translation can help avoid problems

7. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 7 Exhibit 4-2: Notice to Guests

8. 2. Elements of Culture Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 8 Social Interaction(social interactions among people; nuclear family, extended family; reference groups) (Exhibit 4-3). Aesthetics (ideas and perceptions that a culture upholds in terms of beauty and good taste) (Exhibit 4-4). Religion (community’s set of beliefs relating to a reality that cannot be verified empirically) (Exhibit 4-5). Education (One of the major vehicles to channel from one generation to the next) (Exhibit 4-6). Value System(values shape people’s norms and standards) (Exhibit 4-7).

9. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 9 Exhibit 4-3: Rules to Start Cracking the Guanxi Code in China

10. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 10 Exhibit 4-4: The Meaning of Color

11. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 11 Exhibit 4-5: Higher Education Achievement

12. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 12 Exhibit 4-6: Dentsu Lifestyle Survey

14. High-context cultures: Interpretation of messages rests on contextual cues; e.g., China, Korea, Japan.

16. 3. Cross-Cultural Comparisons Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 15 Geert Hofstede’s Cultural Classification Scheme: Power distance: The degree of inequality among people that is viewed as being equitable Uncertainty avoidance: The extent to which people in a given culture prefer structured situations with clear rules over unstructured ones

17. 3. Cross-Cultural Comparisons Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 16 Individualism: The degree to which people prefer to act as individuals rather than group members. Masculinity: The importance of “male” values (assertiveness, success, competitive drive, achievement) versus “female” values (solidarity, quality of life). Long-term orientation versus short-term focus: Future versus past and present orientations

18. 3. Cross-Cultural Comparisons Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 17 Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) Project GLOBE is a large-scale ongoing research project that explores cultural values and their impact on organizational leadership in 62 countries (Exhibit 4-9). The first three dimensions (uncertainty avoidance, power distance, and collectivism) are the same as Hofstede’s constructs.

19. 3. Cross-Cultural Comparisons Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 18 The remaining six dimensions include: collectivism II, gender egalitarianism, assertiveness, future orientation, performance orientation, and humane orientation. World Value Survey: The WVS is organized by the University of Michigan. The WVS has been conducted multiple times and the population covered is much broader than in other similar studies.

20. 3. Cross-Cultural Comparisons Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 19 The WVS encompasses two broad categories: traditional versus secular values, and the quality of life (Exhibit 4-9).

21. Exhibit 4-9: World Value Survey Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 20

22. 4. Adaptation to Cultures Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 21 Global marketers need to become sensitive to cultural biases that influence their thinking, behavior, and decision making. Self-reference criterion (SRC):Refers to the people’s unconscious tendency to resort to their own cultural experience and value systems to interpret a given business situation. Ethnocentrism refers to the feeling of one’s own cultural superiority.

23. 5. Culture and the Marketing Mix Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 22 Culture is a key pillar of the marketplace. Product Policy: Certain products are more culture-bound than other products. Food, beverages, and clothing products tend to be very culture-bound. Pricing: Pricing policies are driven by four Cs: Customers Company (costs, objectives, strategy) Competition Collaborators (e.g., distributors)

24. 5. Culture and the Marketing Mix Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 23 Distribution: Cultural variables may also dictate distribution strategies. Promotion: Promotion is the most visible element of the marketing mix. Culture will typically have a major influence on a firm’s communication strategy. Local cultural taboos and norms also influence advertising styles. (See Exhibit 4-10.)

25. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 24 Exhibit 4-10: McDonald’s Chinese New Year Promotion (Hong Kong)

26. 6. Organizational Cultures Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 25 Organizational Culture: Most companies are characterized by their organizational (corporate) culture. A model of organizational culture types includes the following four cultures (Exhibit 4-11): Clan culture Adhocracy culture Hierarchy culture Market culture Additional business cultures exist in countries as well (Exhibit 4-12).

27. Exhibit 4-11: Model of Organizational Culture Types Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 26

28. Chapter 4 Copyright (c) 2007 John Wiley & Sons, Inc. 27 Exhibit 4-12: Seven Distinctive Business Cultures

29. 7. Global Account Management (GAM) Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 28 The coordination of the management of customer accounts across national boundaries are referred to as global account management (GAM). Global Accounts’ Requirements: May require a single point of contact May demand coordination of resources for serving customers May push for uniform prices and terms of trade May have standardized products and service May require a high degree of consistency in service quality and performance May requiresupport in countries where the company has no presence

30. 7. Global Account Management (GAM) Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 29 Managing Global Account Relationships: Clarify the role of the global account management team. Make incentive structure realistic. Pick the right global account managers. Create a strong support network. Make sure that the customer relationship operates at more than one level. GAM should be flexible and dynamic.

31. 8. Global Customer Relationship Management (CRM) Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 30 The process of managing interaction between the company and its customers is called customer relationship management (CRM): Helps in customer retention Helps in richer communication and interactive marketing Helps in tailored services Helps to maintain a closer contact with the customers

32. 8. Global Customer Relationship Management (CRM) Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 31 Benefits of CRM: A better understanding of customers’ expectations and behavior Ability to measure the customers’ value to the company Lower customer acquisition and retention costs Ability to interact and communicate with customers in countries where access to traditional channels is limited

33. 8. Global Customer Relationship Management (CRM) Chapter 4 Copyright (c) 2009 John Wiley & Sons, Inc. 32 Guidelines for Successful CRM Implementation: Make the program business-driven rather than IT-driven Monitor and keep track of data protection and privacy laws in those countries where CRM systems are being used or are in the planning stage A good database is the main pre-requisite. Rewards being sent out to customers are relevant, targeted, and personal.