GLOBAL CULTURAL ENVIRONMENT CHAPTER OVERVIEW Defining Culture Elements of Culture Cross-Cultural Comparisons Adapting to Cultures Cultures and the Marketing Mix 1

Introduction 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 (see Exhibit 4-1). Each of these stages is heavily influenced by the culture in which the consumer thrives. 2

Introduction 3

1. Definition of Culture 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. 4

2. Elements of Culture 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) –Social Interaction (social interactions among people; nuclear family, extended family; reference groups) 5

2. Elements of Culture –Aesthetics (ideas and perceptions that a culture upholds in terms of beauty and good taste) –Religion (community’s set of beliefs that relate to a reality that cannot be verified empirically) –Education (One of the major vehicles to channel from one generation to the next) –Value System (values shape people’s norms and standards) 6

3. Cross-Cultural Comparisons Cultures differ from one another, but usually share certain aspects. Recent social psychology research reveal key cultural differences between East (high) and West (low) context cultures in how people perceive reality and reasoning (see below). High-context cultures: Interpretation of messages rests on contextual cues; e.g., China, Korea, Japan. Low-context cultures: Put the most emphasis on written or spoken words; e.g., USA, Scandinavia, Germany. 7

8 Low context High context Contextual Background of Various Countries Japanese Arabian Latin American Spanish Italian English (UK) French English (US) Scandinavian German Swiss EXPLICIT IMPLICIT

3. Cross-Cultural Comparisons Geert Hofstede’s Cultural Classification Scheme (see Exhibits 4-7A & 4-7B): –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 9

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3. Cross-Cultural Comparisons –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 11

3. Cross-Cultural Comparisons 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 (see Exhibit 4-8). –The first three dimensions (uncertainty avoidance, power distance, and collectivism) are the same as Hofstede’s constructs. 12

3. Cross-Cultural Comparisons –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. 13

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3. Cross-Cultural Comparisons The WVS encompasses two broad categories: traditional versus secular values, and the quality of life (see Exhibit 4-9). 15

4. Adaptation to Cultures 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. 16

5. Culture and the Marketing Mix 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) 17

5. Culture and the Marketing Mix Distribution: Cultural variables may also dictate distribution strategies. Promotion: Promotion is the most visible marketing mix. Culture will typically have a major influence on a firm’s communication strategy. Local cultural taboos and norms also influence advertising styles. 18