MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 1 ELECTRONIC COMMERCE Strategies Regional markets Risks Language issues Other cultural issues Legal/regulatory issues Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 2 Strategies Exclusionary –Solely domestic Inclusionary –“Passively” international –“Glocals” (adaptive approach) –“Globals” (standardized approach) Completely standardized (“Globals”) Completely adapted Middle ground

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 3 Evaluating Markets Economic viability –Income distribution and averages –Segment potential Internet readiness –“Least Internet Ready Areas of the World” (LIRAs) (35% of World population) –“Internet Ready Areas of the World” (IRAs) (50)% –“Internet Leaders” (15%)

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 4 Internet Readiness Indices Economist –Approximately 100 measures in 6 categories Technology infrastructure General business environment Consumer and business adoption of e-business Social/cultural conditions affecting Internet use Availability of e- business support services Information and Telecommunications (ITC) International Telecommunications Union –26 indicators-e.g., Technology infrasturctures Market conditions

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 5 Internet Readiness Criteria Infrastructure availability –Performance –Types of access available Cost of access –Metered –Unmetered –Dial-up issues Proportion of population with access

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 6 LIRAS Southern Mexico Andean countries Most of Brazil Sub-Saharan Africa Remotest former Soviet Republics Laos, Cambodia Chinese interior Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 7 IRAs Coastal India Parts of Brazil Northern Mexico, Mexico City Hungary Estonia Malaysia Former Soviet Republics closer to Europe Parts of China (e.g., Shanghai, Hong Kong) Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 8 Internet Leaders U.S., Canada Western Europe Japan Australia New Zealand Taiwan South Korea Israel

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 9 Countries with Largest Absolute Number of Internet Users

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 10 Countries With the Largest Absolute Number of Users Sources: World Bank, Nielsen

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 11 Country Internet Penetration Rates by Per Capita GDP Note accounting issues! Source: Nielsen.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 12 Online Language Communities Sizable group of people communicating in the same language Not proportional to percentage of off-line speakers –Demographics of Internet users within a country –Willingness to use English or other language sites

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 13 Risks in International Expansion Over-expansion Brand dilution Over-estimation of revenue Under-estimation of costs Underestimation of competition Regulations

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 14 Area Issues Europe –High penetration rates; access outside home –Strong economies –Low credit card use –Competing technologies Interactive TV U.S./Canada –Canadian specialty shopping –High penetration rates –Weakening U.S. dollar; strengthening Canadian dollar Mexico –Growth potential –Low credit card penetration

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 15 More Regions Asia/Oceania –China/Japan Use of wireless technology for other purposes Low rates of credit card use –China Modest economic power –Japan Internet ordering through local merchants –South Korea High Internet penetration rate (45%) Faster high speed access than in the U.S. –Australia/New Zealand English language use Relatively similar culture to U.S. High shipping costs

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 16 Language Issues Prior to 2000, 96% of web sites were estimated to be in English, the “first language” of 6% of the World population 40.2% of online users are estimated to speak English to some extent 2000: Non-English speakers became majority of Internet users 75% of Europeans are multi-lingual; 90% of these include English Dangers of U.S. English –British English is international standard –“American” often perceived as misspelled –Use of slang Lesser distance to British English than to other European languages

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 17 Language Display Single-byte (Latin-based) vs. double- byte languages (Cyrillic, Arabic, Chinese, Japanese, Korean) –Characters may not be displayed correctly (“????” in Internet Explorer) –Conversion software –Brower adaptation may not be “backwards compatible” with other software

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 18 Translation Whole vs. part –FAQ, feedback forms, product specifications, warnings, shopping cart info, legal Quality of translation –Superficial –“De-centering” (“back translation) English language instruction as a product

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 19 Cultural Issues Color –Black as background “Stylish” in U.S. “Unlucky” in Asia, Europe, Latin America –Red as a “lucky” color in China but can be over-used –White and green are “unlucky” in Cina Symbolism –Dogs as pets –Numbers “Unlucky” numbers –4, 9, 13 (Japan) –4, 14 (China) “Lucky” numbers –1, 8 (China) Formality of communication

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 20 More Cultural Issues Measurement issues –Metric vs. U.S., British systems –Clothing sizes Representation of numbers –1, vs ,00 –Dates Offensive content –Specific body parts –“Revealing” content –Gestures

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 21 Government Issues Regulation –Extraterritorial laws and regulations –Privacy “Safe Harbor” procedures –Encryption restrictions Extent of regulation –Protection of small businesses –Limitations on online advertising (China) Taxation Censorship Fraud

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 22 International Internet Users Finding buyers –Local search engines Advertising Search engine optimization –Mailing lists from catalogs prior to Internet entry Demographics –Gender ratios –Socioeconomic status of users Access speed –High broadband access rates in Europe and Korea Out-of-Home Access –Portable systems Web enabled cell phones/PDAs Solar/battery powered devices for developing World Pirates and piracy

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 23 Selected Issues Internet governance –Running of “top domain” and IP numbering systems –Fear of constraining influences if countries with reputations for censorship participate Cross-border spamming –Identification –Action against offenders Censorship issues –Extreme (China, Singapore) –More modest (Europe) Gambling –U.S. based Indirect ownership of foreign sites –Foreign based –Loopholes in rules Import/export constraints Government oversight/ regulation –Extent of regulation –Policy on competition

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 24 The Culturally Customized Web Site Book objectives –Describe comprehensive study of web site evaluation by consumers in five countries –Make suggestions for adapting web sites for different cultures Book web site

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 25 Chapter 1: Cultural Customization Some issues –Values depicted –Aesthetics –Conventions –Symbolism Color –Desirability of features For reassurance To affirm values Some areas considered –Hofstede’s dimensions –High vs. low context orientation of culture

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 26 Research Level of customization vs. –Attitude (liking) –Purchase intention Both more favorable attitudes and higher purchase intentions for customized web sites in several countries –Italy –India –Netherlands –Switzerland –Spain

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 27 Web Site Classifications (Somewhat Arbitrary) Standardized –Same content for whole world – Semi-Localized –Limited local information—e.g., contact info for foreign subsidiaries – Localized –Country specific pages –Translation into local languages as needed – Highly localized –Country specific URLs –Local formats (e.g., zip vs. postal code, time) –Local content – Culturally customized –“Complete immersion” –Three levels Adaptation Symbolism Behavior –None identified; closest is

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 28 Ch. 2: The Rationale for Cultural Customization Web return on investment (ROI) Characteristics favoring customization –Open –Interactive  dialogue, culturally sensitive –Hyperlinks, self search  need for motivation –Customization opportunities from technology  ability to meet diverse customer needs –Increasing bandwidth  opportunities for integrated experience based on customization –Need to “hold” customers  need for motivation

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 29 Relevant Cultural Issues: Perception, Language Perception—what is –Noticed –Processed Language –Chinese found to learn faster visually due to pictoral alphabet Color perception –Associations, preferences –Naming Implications –Spatial orientation (right-left, left-right, up-down)  navigation modes –Translation issues Idiomatic equivalence Vocabulary equivalence Conceptual equivalence

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 30 More Language Issues Dialects Text length  formatting implications –Language structure –Use of acronyms Color categories

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 31 Cultural Issue: Symbolism Association of concepts or images with meaning (e.g., flag with patriotism) Associations will tend to vary; often based on language and experience or word sounds (Chinese) Country specific symbols

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 32 Cultural Issue: Behavior National norms Expectations of how to do things Relationships between people

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 33 Ch. 3: A Cultural Values Framework for Web Design Cultures vs. countries  may need to subdivide—e.g., –India, Ireland, Switzerland Culture vs. within-culture variation— e.g., lifestyle segmentation (VALS2)

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 34 Chapter 4—Cultural Customization: Individualism-Collectivism The extent to which goals of the individual, as opposed to the group, are valued Extent to which individual differences in behavior are accepted and/or encouraged

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 35 Country Examples High –U.S. –Australia –U.K. –Netherlands –Canada –New Zealand Middle –India –Japan –Argentina –“Arab World” Low –Guatemala –Ecuador –Panama –Venezuela –Columbia –Indonesia –China –Pakistan –Indonesia –Taiwan

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 36 Authors’ Caveats Numbers represent averages Web sites which happen to portray individualist and/or collectivist values may do so without actually having sought to customize for the particular culture Other variables are important

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 37 Suggestions for Sites for Collectivist Societies Clubs –May be “offline”—sense of belonging –Chat rooms Emphasis on community relations Family (“we”) theme –Family bonds Loyalty programs –To company or brand –Japanese: amae—loyalty to the group Links to local web sites –Demonstration of connection to local community Symbols/pictures of national identity –Flags –Architecture –Important buildings –Local role models

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 38 Suggestions for Sites for Individualist Societies Independence theme –“I-consciousness” –Individual determinism –“Invest on your terms” Strong privacy statement Personalization and product uniqueness –Unique content (e.g., self-selected news, features, adjustment of view) –Personalized products, if applicable Personal product recommendations

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 39 Chapter 5—Uncertainty Avoidance Relative importance of predictable environment, defined structure, order vs. acceptance of risk taking, reduced structure, and acceptance of ambiguity Extent of acceptance of new ways of doing things if not known Valuing conservatism and “traditional” beliefs Example: Mexican beverage company explicitly lists behaviors expected from employees

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 40 Countries High –Greece –Portugal –Guatemala –Uruguay –El Salvador –Belgium –Japan Medium –Germany –Thailand –Iran –Finland Low –Singapore –Jamaica –Denmark –Hong Kong –Sweden –Ireland –U.S. Note that no clear geographic patterns are evident.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 41 Suggestions for Sites for High Uncertainty Avoidance Societies Customer service –Personnel positioned as experts –Easily accessible on the site Guided navigation Traditional theme Connection to local stores –Depictions –Ability to return merchandise Local terminology Free –Trials –Downloads Transaction security Testimonials

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 42 Suggestions for Sites for Low Uncertainty Avoidance Societies None listed. Ideas?

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 43 Chapter 6—Cultural Customization: Power Distance Extent to which hierarchy and status are emphasized as opposed to a preference for more “distributed” power and decision making High sensitivity to those older, with seniority, and in authority Tendency to obey “suggestions” from authority figures Preference for face-to- face contact for display of respect Emphasis on hierarchical structures Emphasis on organization charts

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 44 Countries High –Malaysia –Panama –Guatemala –Philippines –Mexico –“Arab World” Middle –Taiwan –Iran –Spain –Poland Low –Austria –Israel –Denmark –New Zealand –Ireland –Norway

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 45 Suggestions for High Power Distance Societies Hierarchy information Picture of CEO and other “important” people Use of proper titles Quality assurance –“Superior quality” Awards Vision statement by CEO

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 46 Suggestions for Low Power Distance Societies None specifically listed. Ideas?

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 47 Chapter 7—Cultural Customization: Masculinity-Femininity Value of achievement, assertiveness, ambition vs. nurturance, care for others Masculine societies –Tendency toward clear gender roles –“Success orientation” –Decisiveness –Directness (depending on levels of collectivism, power distance) Feminine societies –“Oneness with nature” –Service orientation –Harmony –Modesty

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 48 Countries High masculinity –Japan –Hungary –Austria –Venezuela –Switzerland –Mexico Middle: –Malaysia –Brazil –Singapore –Israel –West Africa High Femininity –Sweden –Norway –Netherlands –Denmark –Costa Rica –Finland

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 49 Recommendations for Masculine Societies Indication of product effectiveness Quizzes, games (competitive element) “Realism” theme –Decisiveness vs. fantasy, imagery –“Rational”/performance appeals Clear depiction of gender roles and segregation –E.g., female section of Japanese search engine

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 50 Recommendations for Masculine Societies Similar considerations to “high context” societies Harmony Aesthetics Soft sell

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 51 Chapter 8—Cultural Customization: High-Low Context Importance of “context” in communication style— important information may be “embedded” in society as opposed to being more detailed and explicit with unambiguous explanation. High context societies –Politeness/indirectness are emphasized –Soft sell approach –Aesthetics Low context societies –Hard sell –Superlative word usage –Emphasis on rank and prestige of company –Explicit terms and conditions –Emphasis on logical, “linear” thinking –Action orientation –Emphasis on rationality

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 52 Countries High Context –Asia (generally) –Africa –South America –Parts of Middle East –Japan –China –Spain –Thailand –Turkey –Taiwan –Philippines Low context –Most of Northern Europe –North America –New Zealand –Australia –U.K.

MKTG 376 LECTRONIC COMMERCE Lars Perner, Instructor 53 Recommendations For High Context Societies –Aesthetics –Politeness –Indirectness –“Soft-sell” approach For Low Context Societies –Harder sell –Terms and conditions –Rank –Prestige –Superlatives