Cross-Cultural Consumer Behavior: An International Perspective CHAPTER THIRTEEN Cross-Cultural Consumer Behavior: An International Perspective

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Learning Objectives To Understand the Importance of Formulating an Appropriate Multinational or Global Marketing Strategy. To Understand How to Study the Differences Among Cultures While Developing Marketing Strategies. To Understand How Consumer-Related Factors Impact a Firm’s Decision to Select a Global, Local, or Mixed Marketing Strategy. To Understand How Lifestyle and Psychographic Segmentation Can Be Used. Here is an outline of the topics for Chapter Thirteen. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Under What Circumstances Would This English-Language Ad Attract Affluent Consumers from Largely Non-English Speaking Countries? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall If They Frequently Visit the United States and Regularly Read American Upscale Magazines Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

The Imperative to Be Multinational Global Trade Agreements EU NAFTA Winning Emerging Markets Acquiring Exposure to Other Cultures Country-of-origin Effects Most marketers agree that it is important to be a global marketer in order to survive in the market. But they also realize there are serious challenges in global marketing. Most governments are working to help the movement of goods and services by creating changes in their government. Consider the European Union’s effort to form a single market and the establishment of NAFTA, which aids the U.S., Canada, and Mexico in trade relations. These are two strong examples of the government’s role in expanding business. This web link takes you to an English-language homepage of the European Union’s website. In addition to changes in these large countries, marketers must realize that about 85% of the world’s population live in what are classified as emerging markets and include Brazil, Russia, India, and China to name a few. These countries, like the rest of the world, are being exposed to cultures from other countries and have increased interest in global products. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

The Best Global Brands - Table 13.1 Coca-Cola IBM Microsoft GE Nokia Toyota Intel McDonald’s Disney Google According to BusinessWeek, Coca-Cola is the most valuable brand in the world with a brand value of almost $67 billion. This web link goes to the Coca-Cola homepage. As with many global brands, the first question you see when you enter the web site is “Which country are you from?” Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Discussion Questions What challenges may Toyota have faced to get their status as one of the top brands? What might they have done right in their marketing strategy to achieve this status? Consider the 4Ps. Consider the competition, the customer, and the country of origin. For the 4Ps, what might be in their price, distribution, product line, and promotion? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Country of Origin Effects: Positive Many consumers may take into consideration the country of origin of a product. Country-of-origin commonly: France = wine, fashion, perfume Italy = pasta, designer clothing, furniture, shoes, and sports cars Japan = cameras and consumer electronics Germany = cars, tools, and machinery Consumers will differ in their perceived image of a product based on the country of origin (COO). COO often makes it easier for a consumer to make a decision. For example, it might be easier to pick a wine if you just choose a French wine because you know France is known for its wine. Research has shown a tie between NFC (need for cognition) and country of origin assessment. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Country of Origin Effects: Negative Some consumers have animosity toward a country People’s Republic of China has some animosity to Japan Jewish consumers avoid German products New Zealand and Australian consumers boycott French products There are some groups of consumers which can be labeled high-animosity consumers when considering country of origin. The Chinese are reacting to their occupation in WWII by Japan, the Jewish consumers to the Holocaust, and some New Zealand and Australian consumers to France’s nuclear tests in the South Pacific. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Why Do Most Global Airlines Stress Pampering Business Travelers in Their Ads? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Upscale International Business Travelers Share Much in Common. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Other Country-of-Origin Effects Mexican study uncovered: Country-of-design (COD) Country-of-assembly (COA) Country-of-parts (COP) A Mexican study decomposed COO into these three entities. Origin is now further broken into where the product was designed, assembled, and/or where the raw materials are produced. The results of the study showed differences between Mexicans and Americans and differences in age in their country-of-origin effects. On the next slide, you can see a model of COD and COM. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Conceptual Model of COD and COM Figure 13.2 In this model, we can see the impact of COD and COM on the perception of branded products. You can see the impact of COD and COM on perceived product quality. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 13 Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Cross-Cultural Consumer Analysis The effort to determine to what extent the consumers of two or more nations are similar or different. Cross-cultural consumer analysis, the similarity and differences between consumers in several nations, is important when deciding whether or not to enter a foreign market. The analysis carefully considers the psychological, social, and cultural similarities and differences among people. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Cultural Consumer Analysis Issues Similarities and differences among people The growing global middle class The global teen market Acculturation The greater the similarity between nations, the more feasible to use relatively similar marketing strategies Marketers often speak to the same “types” of consumers globally The more similar two nations, the more likely the marketer can use similar marketing strategies. As a basis of similarity, marketers often look to see if a country is more collective in its culture vs. individualistic. This is really the difference between a “we” culture and an “I” culture. In a few slides, you can see detailed differences between a Chinese and an American consumer. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Discussion Questions Are people becoming more similar? Why or why not? You no doubt have an impression of people your age in different countries. Does it seem that over time we are becoming more similar? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Comparisons of Chinese and American Cultural Traits - Table 13.2 Chinese Cultural Traits Centered on Confucian doctrine Submissive to authority Ancestor worship Values a person’s duty to family and state American Cultural Traits Individual centered Emphasis on self-reliance Primary faith in rationalism Values individual personality We can see some of the traits that are examined are values, faith, and attitude to authority. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Cultural Consumer Analysis Issues Similarities and differences among people The growing global middle class The global teen market Acculturation Growing in Asia, South America, and Eastern Europe Marketers should focus on these markets The middle class will grow globally with the largest growth coming from China and India. This creates significant opportunity to marketers who provide products and services for this middle class. In some countries, the middle class is very large. South Korea is considered to have more than 90 percent of its population as middle class. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Cultural Consumer Analysis Issues Similarities and differences among people The growing global middle class The global teen market Acculturation There has been growth in an affluent global teenage and young adult market. They appear to have similar interests, desires, and consumption behavior no matter where they live. The interesting thing about the teen market is the similarities teens share even when they live in vastly different countries. Marketers realize that teens in most countries value their cell phone and online sources. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Cultural Consumer Analysis Issues Similarities and differences among people The growing global middle class The global teen market Acculturation Marketers must learn everything that is relevant about the usage of their product and product categories in foreign countries We have learned in previous chapters that when someone moves to a new country, they go through an acculturation process where they learn the customs, rituals, and attitudes. Marketers must put themselves through an acculturation process before trying to market to a new country. If they don’t truly understand the values, beliefs, and customs of the society, they cannot really market products effectively. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Research Issues in Cross-Cultural Analysis Table 13.8 FACTORS EXAMPLES Differences in language and meaning Words or concepts may not mean the same in two different countries. Differences in market segmentation opportunities The income, social class, age, and sex of target customers may differ dramatically in two different countries. Differences in consumption patterns Two countries may differ substantially in the level of consumption or use of products or services. Differences in the perceived benefits of products and services Two nations may use or consume the same product in very different ways. Cross-cultural analysis is very difficult for many reasons. This chart gives some examples of the basic issues that multinational marketers must consider when planning cross-cultural research. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Table 13.8 (continued) FACTORS EXAMPLES Differences in the criteria for evaluating products and services The benefits sought from a service may differ from country to country. Differences in economic and social conditions and family structure The “style” of family decision making may vary significantly from country to country. Differences in marketing research and conditions The types and quality of retail outlets and direct-mail lists may vary greatly among countries. Differences in marketing research possibilities The availability of professional consumer researchers may vary considerably from country to country. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Alternative Multinational Strategies: Global Versus Local Favoring a World Brand Are Global Brands Different? Multinational Reactions to Brand Extensions Adaptive Global Marketing Frameworks for Assessing Multinational Strategies Some marketers will argue that since people are becoming more alike in so many countries, that one marketing strategy, with some small adjustments in language, are cost effective and a better idea. Other marketers believe there are national borders and that marketing strategies must stay local. This slide lists several issues which will be explored in more detail on the following slides. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 23 Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall World Brands Products that are manufactured, packaged, and positioned the same way regardless of the country in which they are sold. World brands are often created with very high-end products targeted to an affluent market. But beyond this, other marketers, including P&G, have moved to a world brand for a small percent of their product portfolio. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Why Does One of the World’s Most Highly Regarded Wristwatch Brands Use a Single Global Advertising Strategy (Only Varying the Language)? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall They Speak to Them in Their Own Language to Maximize their “Comfort Zone.” Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Border Diffusion of Popular Culture Figure 13.6 Here is a model of cross-border diffusion of popular culture. Some interesting parts of this model include promotion and distribution and the central role of the early adopter. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Are Global Brands Different? According to a survey – yes Global brands have: Quality signal Global myth Social responsibility Research tells us that global brands are indeed viewed differently than local brands. Because a brand is global, consumers worldwide must believe in it so it must be of good quality. The global myth characteristic is related to how consumers feel about themselves. The global brands make them feel like a citizen of the world, whereas a local brand gives them less power and identity. Finally, global brands tend to show more social responsibility than local brands. In part because of their sales revenue and their investment in many countries, they are viewed as more socially responsible. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Multinational Reactions to Brand Extensions A global brand does not always have success with brand extensions Example Coke brand extension – Coke popcorn Eastern culture saw fit and accepted the brand extension Western culture did not see fit At first, one would think the power of a global brand would enable it to be more successful with brand extensions. This does not turn out to be true because people are not holistic in their thinking – they do not take the overall brand name and apply it to any product group – it remains specific for the product category in which it built its reputation. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Adaptive Global Marketing Adaptation of advertising message to specific values of particular cultures McDonald’s uses localization Example Ronald McDonald is Donald McDonald in Japan Japanese menu includes corn soup and green tea milkshakes Often best to combine global and local marketing strategies Some marketers do not want a common message, positioning, and product offering throughout the world. Some, including McDonald’s, Levi’s, and Reebok, prefer to use multi-local strategies. They create different brand images for their products for different countries. The best approach is often to combine an overall global strategy with local executions which match the cultural differences of the target countries. This gives the power of a world brand combined with local marketing strategies to adapt to the different cultures. This web link will take you to a Japanese McDonald's menu which Google will translate for you. Notice how many of the products are available in other countries yet a few are unique to Japanese tastes. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Discussion Questions If your university is considering a satellite business program in Korea: How would they need to adapt the program? What would prompt these changes? Think about the parts of the educational program and how they must be altered. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Framework for Assessing Multinational Strategies Global Local Mixed Many frameworks have been created to help marketers decide whether they should focus on global, local, or mixed strategies. The framework on the following slide will guide you through some of this decision making. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

A Framework for Alternative Global Marketing Strategies - Table 13.10 COMMUNICATON STRATEGY STANDARDIZED COMMUNICATIONS LOCALIZED COMMUNICATIONS STANDARDIZED PRODUCT Global strategy: Uniform Product/ Uniform Message Mixed Strategy: Uniform Product/ Customized Message LOCALIZED PRODUCT Mixed strategy: Customized Product/ Uniform Message Local Strategy: Customized Product/ Customized Message PRODUCT STRATEGY The two main areas a marketer must consider in localized marketing strategies are their product and communications strategy. Can they sell the same product in each country or do local differences require a localized product? Food products often need to be localized as countries differ in their response to such flavors as spiciness, saltiness, sweetness, and use of ingredients. Product standardization works well on technical products. The localization of the message is a decision that is distinct from that of the product. It will depend heavily on language issues and differences in involvement level of the product. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Cross-Cultural Psychographic Segmentation The only ultimate truth possible is that humans are both deeply the same and obviously different. This is the best way of looking at global marketing, by examining psychographic groups. For example, the percent of the U.S. female population that works outside the home is the same as the percent of the Japanese female population. But when we look at the psychographics of these groups, we find that they have very different consumer behavior and attitudes to certain products. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Six Global Consumer Segments Strivers Devouts Altruists Intimates Fun Seekers Creatives After extensive research of 35,000 customers in 35 countries, researchers created these six global value groups or segments. The strivers are ambitious and materialistic, the devouts responsible and respectful, the altruists unselfish in their concern for others, the intimates focus on social relationships, the fun seekers are young in age and outlook and value a good time, and the creatives seek knowledge and have interests in books and new media. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide 36