1. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 1 Global Marketing Management Masaaki Kotabe & Kristiaan Helsen Third Edition John Wiley & Sons, Inc., 2004

2. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 2 Chapter 4 Global Cultural Environment and Buying Behavior

3. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 3 Chapter Overview 1. Defining 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)

4. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 4 Introduction Buyer behavior and consumer needs are largely driven by cultural norms. 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. 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). 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. Each of these stages is heavily influenced by the culture in which the consumer thrives.

5. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 5 1. Defining 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. 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 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. Cultures contain subcultures that have little in common with one another.

6. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 6 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: 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;

7. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 7 2. Elements of Culture (contd.) reference groups) reference groups) –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)

8. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 8 3. Cross-Cultural Comparisons Cultures differ from one another, but usually share certain aspects. Cultures differ from one another, but usually share certain aspects. High-context cultures: Interpretation of messages rests on contextual cues; examples: China, Korea, Japan, etc.). High-context cultures: Interpretation of messages rests on contextual cues; examples: China, Korea, Japan, etc.). Low-context cultures: Put the most emphasis on written or spoken words; United States, Scandinavia, Germany, etc.). Low-context cultures: Put the most emphasis on written or spoken words; United States, Scandinavia, Germany, etc.).

9. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 9 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

10. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 10 3. Cross-Cultural Comparisons (contd.) Geert Hofstede’s Cultural Classification Scheme (see Exhibit 4-8a & 4-8b): Geert Hofstede’s Cultural Classification Scheme (see Exhibit 4-8a & 4-8b): –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

11. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 11 3. Cross-Cultural Comparisons (contd.) –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

12. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 12

15. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 15 Cross-Cultural Comparisons (contd.) Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) 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 61 countries (see Exhibit 4-9). –The first three dimensions (uncertainty avoidance, power distance, and collectivism) are the same as Hofstede’s constructs.

16. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 16 Cross-Cultural Comparisons (contd.) –The remaining six dimensions include: collectivism II, gender egalitarianism, assertiveness, future orientation, performance orientation, and humane orientation. World Value Survey: World Value Survey: –The WVS is organized by the University of Michigan. –The WVS has been conducted multiple times and the population covered is very broad.

18. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 18 Cross-Cultural Comparisons (contd.) The WVS encompasses two broad categories: traditional versus secular values, and the quality of life (see Exhibit 4-10). The WVS encompasses two broad categories: traditional versus secular values, and the quality of life (see Exhibit 4-10).

19. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 19 4. Adapting to Cultures Global marketers need to become sensitive to cultural biases that influence their thinking, behavior, and decision making. 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. 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. Ethnocentrism refers to the feeling of one’s own cultural superiority.

20. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 20 5. Culture and the Marketing Mix Culture is a key pillar of the marketplace. 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. 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: Pricing: Pricing policies are driven by four Cs: –Customers –Company (costs, objectives, strategy) –Competition –Collaborators (e.g., distributors)

21. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 21 5. Culture and the Marketing Mix (contd.) Distribution: Cultural variables may also dictate distribution strategies. 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. 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.

22. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 22 6. Organizational Cultures Organizational Culture: Most companies are characterized by their organizational (corporate) culture. Organizational Culture: Most companies are characterized by their organizational (corporate) culture. A model of organizational culture types includes the following four cultures (see Exhibit 4-12): A model of organizational culture types includes the following four cultures (see Exhibit 4-12): –Clan culture –Adhocracy culture –Hierarchy culture –Market culture

23. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 23 7. Global Account Management (GAM) The coordination of the management of customer accounts across national boundaries are referred to as global account management (GAM). The coordination of the management of customer accounts across national boundaries are referred to as global account management (GAM). Global Accounts’ Requirements: 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

24. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 24 7. Global Account Management (GAM) (contd.) »May require a high degree of consistency in service quality and performance »May support in countries where the company has no presence

25. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 25 7. Global Account Management (GAM) (contd.) –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.

26. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 26 8. Global Customer Relationship Management (CRM) The process of managing interaction between the company and its customers is called customer relationship management (CRM): 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

27. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 27 8. Global Customer Relationship Management (CRM) (contd.) Benefits of CRM: 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

28. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 28 8. Global Customer Relationship Management (CRM) (contd.) Guidelines for Successful CRM Implementation: 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 data is the main pre-requisite. –Rewards being sent out to customers are relevant, targeted, and personal.

29. Chapter 4Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 29 Copyright © John Wiley & Sons, Inc. 2004