1. Cultural Dynamics in Assessing Global Markets Chapter 4 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

2. Introduction Culture refers to “the human-made part of human environment— the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society” A successful marketer must be a student of culture Culture is pervasive in all marketing activities— in pricing, promotion, channels of distribution, product, packaging, and styling Importance of culture in international marketing Understanding culture can determine success or failure in international marketing

3. Elements of Culture  Material Culture  Technology  Economics Irwin/McGraw-Hill Ž Social Institutions  Family  Political Structure  Education  The Media Ž Humans and The Universe  Belief Systems Ž Aesthetics  Graphics and Plastic Arts  Music, Drama, and Dance  Folklore  Language 4-2

4. Origins of Culture: Geography 1.Geography, which includes climate, topography, flora, fauna, and microbiology, influences our social institutions 2.Two researchers suggest that geography influences everything from history to present- day cultural values 3.First, Jared Diamond states that historically innovations spread faster east-to-west than north-to-south 4.Second, Philip Parker reports strong correlations between the latitude (climate) and the per capita GDP of countries

5. Origins of Culture: History 1.The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior 2.The military conflicts in the Middle East in 2003 bred new cola brands, Mecca Cola, Muslim Up, and Arab Cola For e.g., American trade policy depended on tobacco being the original source of the Virginia colony’s economic survival in the 1600s

6. Origins of Culture: The Political Economy 1.For most of the 20th Century three approaches to governance competed for world dominance: fascism, communism, and democracy/free enterprise 3.Necessary to appreciate the influence of the political economy on social institutions and cultural values and ways of thinking 2.Fascism fell in 1945; Communism crumbled in the 1990s

7. Origins of Culture: Technology 1.Technological innovations also impact institutions and cultural 2.Jet aircraft, air conditioning, televisions, computers, and the internet have all influenced culture 3.Arguably the greatest impact is the pill that has allowed women to have careers and freed men to spend more time with kids

8. Origins of Culture: Social Institutions Social institutions including family, religion, school, the media, government, and corporations all affect culture u The family, social classes, group behavior, age groups, and how societies define decency and civility are interpreted differently within every culture (1) Family behavior varies across the world, e.g., extended families living together to Dad washing dishes (2) Religious value systems differ across the world, e.g., Muslims not allowed to eat pork to Hindus not allowed to consume beef

9. Origins of Culture: Social Institutions (3) School and education, and literacy rates affect culture and economic growth (4) Media (magazines, TV, the Internet) influences culture and behavior (5) Government policies influence the thinking and behaviors citizens of adult citizens, e.g., the French government offers new “birth bonuses” of $800 given to women as an incentive to increase family size (6) Corporations influence culture via the products they market, e.g., MTV

10. Elements of Culture International marketers must design products, distribution systems, and promotional programs with due consideration to culture, which was defined as including five elements: 1. Cultural values 2. Rituals 3. Symbols 4. Beliefs, and 5. Thought processes

11. Irwin/McGraw-Hill It’s Not the Gift That Counts, but How Your Present It JapanDo not open a 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 the 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, cunning. EuropeAvoid 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. Copyright©2002 by The McGraw-Hill Companies, Inc. All rights reserved. 4-4

12. Irwin/McGraw-Hill 4-5 It’s Not the Gift That Counts, but How Your Present It… 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. Gift should be given during social encounters, not in the course of business. ChinaNever make an issue of a gift presentation—publicly or private. Gifts should be presented privately, with the exception of collective ceremonial gifts at banquets.

13. Definitions and Origins of Culture Culture has been conceptualized as: 1. “Software of the mind” culture is a guide for humans on how to think and behave; it is a problem-solving tool (Hofstede) 2. An invisible barrier… a completely different way of organizing life, of thinking, and of conceiving the underlying assumptions about the family and the state, the economic system, and even Man himself” (Hall) 3. A “thicket” (U.S. Ambassador Hodgson) Culture is the sum of the “values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation”

14. Irwin/McGraw-Hill Cultural Values Four Dimensions (by Geert Hofstede)  Individualism/Collective Index (IDV)  Power Distance Index (PDI)  Uncertainty Avoidance Index (UAI)  Masculinity/Femininity Index (MAS) 4-6

15. Irwin/McGraw-Hill 4-6

17. Cultural Factors Never touch the head of a Thai or pass an object over it The head is considered sacred in Thailand. Avoid using triangular shapes in Hong Kong, Korea and Taiwan. It is considered a negative shape. The number 7 is considered bad luck in Kenya, good luck in the Czech Republic and has a magical connotation in Benin. The number 10 is bad luck in Korea. The number 4 means death in Japan. Red represents witchcraft and death in many African countries. Red is a positive color in Denmark. SOURCE: Business America, July 12, 1993 Irwin/McGraw-Hill 4-7

18. Elements of Culture: Beliefs and Thought Processes Beliefs, which stem from religious training, vary from culture to culture In summary, marketers must consider larger cultural consequences of marketing actions Thought processes also vary across cultures Examples: u The western aversion to the number 13 or refusing to walk under a ladder u Japanese concern about Year of the Fire Horse u The Chinese practice of Feng Shui in designing buildings Examples: “Asian and Western” thinking

19. Factual versus Interpretive Cultural Knowledge There are two kinds of knowledge about cultures both of which are necessary Factual knowledge is usually obvious and must be learned, e.g., different meanings of colors, and different tastes; it deals with a facts about a culture Factual knowledge is usually obvious and must be learned, e.g., different meanings of colors, and different tastes; it deals with a facts about a culture Interpretive knowledge is the ability to understand and appreciate the nuances of different cultural traits and patterns, e.g., the meaning of time, and attitudes toward people Interpretive knowledge is the ability to understand and appreciate the nuances of different cultural traits and patterns, e.g., the meaning of time, and attitudes toward people Interpretive knowledge requires a degree of insight It is dependent on past experience for interpretation It is prone to misinterpretation if one’s SRC is used Interpretive knowledge requires a degree of insight It is dependent on past experience for interpretation It is prone to misinterpretation if one’s SRC is used

20. Cultural Change and Cultural Borrowing u International marketers should appreciate how cultures change and accept or reject new ideas u How cultures change, e.g., war (changes in Japan after World War II) or by natural disaster u Hofstede has shown that consumers’ acceptance of innovations varies across cultures – innovation was associated with higher individualism (IDV), and lower power distance (PDI) and uncertainty avoidance (UAI) u International marketers should be aware the extent to which cultures borrow ideas and learn from other cultures u Helps in the marketing of products from one culture to a different culture

21. Whose English? United States 1.Trunk 2.Hood 3.Convertible Top 4.Elevator 5.Toilet 6.Bathroom 7.Vacuum United States 1.Trunk 2.Hood 3.Convertible Top 4.Elevator 5.Toilet 6.Bathroom 7.Vacuum United Kingdom 1.Boot 2.Bonnet 3.Hood 4.Lift 5.W.C. 6.Tub or Shower 7.Hoover United Kingdom 1.Boot 2.Bonnet 3.Hood 4.Lift 5.W.C. 6.Tub or Shower 7.Hoover

22. Resistance to Change Acceptance of genetically modified foods (or “Frankenfood”) in Europe Acceptance of genetically modified foods (or “Frankenfood”) in Europe Working women in Masculine societies like Saudi Arabia Working women in Masculine societies like Saudi Arabia Although some cultures embrace change, others are resistant to it Although some cultures embrace change, others are resistant to it Examples of cultures that resist change:

23. Planned and Unplanned Cultural Change u Cultures that are resistant to change represent a major hurdle in marketing products Cultural change can be accomplished by: u Determining which cultural factors conflict with an innovation, thus creating resistance to its acceptance u Changing those factors from obstacles to acceptance into stimulants for change u Introducing an idea or product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance u Using a strategy of planned change by deliberately changing those aspects of the culture offering resistance to predetermined marketing goals, e.g., introducing western foods and baseball into Japan