UBI-GM-Presentation04.050112-culture pptx

Culture is the “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 memb

Cultural Dynamics in Assessing Global Markets

Chapter 4

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc All rights reserved.

PowerPoint presentation prepared by:

Alfred Lowey-Ball Associate Professor of Marketing UBI-United Business Institutes Brussels, Belgium

MERRIL LYNCH in Japan

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc All rights reserved.

• Liberalization of Japan’s capital markets gives more freedon

of choice to private citizens

• Freeing of capital from time deposits held by the postal

system

• Opportunity for equities? Merrill rushed in

• No  No stock owning risk-taking culture in Japan

9% households invested in stocks vs 50% in US

No boost from internet connectivity

• Merrill now cutting back in Japan

• Similar hesitancy in Europe

Chapter Learning Objectives

1 The importance of culture to an international

marketer

1 The importance of culture to an international

marketer

2 The origins and elements of culture

3 The impact of cultural borrowing

4 The strategy of planned change and its

consequences

4 The strategy of planned change and its

consequences

Culture is the “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

Culture is pervasive in all marketing activities—

in pricing, promotion, channels of distribution, product, packaging, and styling

Culture is pervasive in all marketing activities—

in pricing, promotion, channels of distribution, product, packaging, and styling

Critical importance of culture in international business and marketing

Critical importance of culture in international business and marketing

Culture’s Pervasive Impact

• Culture influences every part of our lives

• Cultural impact on birth rates in Taiwan, Japan, and Singapore

Year of the dragon (1976, 1988)  good luck Year of the Fire horse (1966, 60 year cycle)  bad luck

• Culture influences every part of our lives

• Cultural impact on birth rates in Taiwan, Japan, and Singapore

Year of the dragon (1976, 1988)  good luck Year of the Fire horse (1966, 60 year cycle)  bad luck

• Birthrates have implications for sellers of diapers, toys,

schools, and colleges etc

• Birthrates have implications for sellers of diapers, toys,

schools, and colleges etc

• Consumption of different types of food influence is culture:

Chocolate by Swiss and Belgians, seafood by Japanese preference, beef by British, wines by France and Italy

• Even diseases are influenced by culture:

stomach cancer in Japan, and lung cancer in Spain

• Consumption of different types of food influence is culture:

Chocolate by Swiss and Belgians, seafood by Japanese preference, beef by British, wines by France and Italy

• Even diseases are influenced by culture:

stomach cancer in Japan, and lung cancer in Spain

Birthrates in developed countries

Patterns of Consumptions in the West

Consequences of consumption

Definitions and Origins of Culture

Culture has been conceptualized as:

to think and behave; it is a problem-solving tool (Hofstede)

life, of thinking, and of conceiving the underlying assumptions about the family and the state, the economic system, and even Man himself” (Hall)

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”

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”

Influence of culture on business behaviour

Origins of Culture: Geography

1 Geography, which includes climate, topography, flora, fauna,

and microbiology, influences our social institutions

1 Geography, which includes climate, topography, flora, fauna,

and microbiology, influences our social institutions

spread faster east-to-west than north-to-south

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

4 Second, Philip Parker reports strong correlations between the

latitude (climate) and the per capita GDP of countries

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

1 For most of the 20th Century three approaches to

governance competed for world dominance: fascism, communism, and democracy/free enterprise

4 Necessary to appreciate the influence of the political

economy on social institutions and cultural values and ways of thinking

4 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 in the USSR and Eastern Europe Undergoing change in China and Vietnam

3 Prevalence of democracy/free enterprise??

2 Fascism fell in 1945; Communism crumbled in the

1990s in the USSR and Eastern Europe Undergoing change in China and Vietnam

3 Prevalence of democracy/free enterprise??

Origins of Culture: Technology

1 Technological innovations also impact institutions and cultural

2 Railroads, autobahnen, jet aircraft, air

conditioning, televisions, computers, mobile telephones and now the

internet have all profoundly influenced culture

2 Railroads, autobahnen, jet aircraft, air

conditioning, televisions, computers, mobile telephones and now the

internet have all profoundly influenced culture

3 The birth control pill and now the male potency pills have had

the most profound influence on (Werstern??) culture

3 The birth control pill and now the male potency pills have had

the most profound influence on (Werstern??) culture

Origins of Culture: Social Institutions

• Social institutions including family, religion, school, the media,

government, and corporations are manifestations of culture

• Social institutions including family, religion, school, the media,

government, and corporations are manifestations of culture

• 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 quite strong: they differ across the world,

e.g., Muslims and Jews not allowed to eat pork to Hindus not allowed to consume beef

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 & Belgian

government offer “birth bonuses” as an incentive to increase family size

(6) Corporations influence culture via the products they market, e.g., MTV

Elements of Culture

International marketers must design products, distribution systems, and promotional programs with due consideration to culture, which

is defined as including five elements:

International marketers must design products, distribution systems, and promotional programs with due consideration to culture, which

is defined as including five elements:

Elements of Culture: Cultural Values

• Differences in cultural values, which is found to exist among

countries, affects consumer behavior

• Hofstede, who studied over 90,000 people in 66 countries,

found that the cultures differed along four primary dimensions:

• Differences in cultural values, which is found to exist among

countries, affects consumer behavior

• Hofstede, who studied over 90,000 people in 66 countries,

found that the cultures differed along four primary dimensions:

1 Individualism/Collective Index (IDV), which focuses on

4 Masculinity/Femininity Index (MAS), which focuses on

assertiveness and achievement

Individualism/Collectivism Index

• Individualism/Collectivism Index:

1 The Individualism/Collective Index refers to the preference

for behavior that promotes one’s self-interest

2 High IDV cultures reflect an “I” mentality and tend to

reward and accept individual initiative

3 Low IDV cultures reflect a “we” mentality and generally

subjugate the individual to the group

4 Collectivism pertains to societies in which people from birth

onward are integrated into strong, cohesive groups, which protect them in exchange for unquestioning loyalty

Power Distance Index

• Power Distance Index:

1 The Power Distance Index measures power inequality

between superiors and subordinates within a social system

2 Cultures with high PDI scores tend to be hierarchical and

value power and social status

3 High PDI cultures the those who hold power are entitled to

privileges

4 Cultures with low PDI scores value equality and reflect

egalitarian views

Uncertainty Avoidance Index

• Uncertainty Avoidance Index:

1 The Uncertainty Avoidance Index measures the tolerance of

uncertainty and ambiguity among members of a society

2 High UAI cultures are highly intolerant of ambiguity,

experience anxiety and stress, accord a high level of

authority to rules as a means of avoiding risk

3 Low UAI cultures are associated with a low level of anxiety

and stress, a tolerance of deviance and dissent, and a

willingness to take risks

3 Dimensions influencing business behavior

Elements of Culture: Rituals, and Symbols

• Rituals are patterns of behavior and interaction that are learned

and repeated vary from country to country, e.g., extended lunch hours in Spain and Greece

• Rituals are patterns of behavior and interaction that are learned

and repeated vary from country to country, e.g., extended lunch hours in Spain and Greece

• French and German attempts to

preserve the purity of their languages from English

• French and German attempts to

preserve the purity of their languages from English

• Language as Symbols: the

“languages” of time, space, things, friendships, and agreements

• Language as Symbols: the

“languages” of time, space, things, friendships, and agreements

Elements of Culture: Rituals, and Symbols

• In Belgium and Canada, language has been the focus of

political disputes including secession

• In Belgium and Canada, language has been the focus of

political disputes including secession

• Aesthetics as Symbols: the arts,

folklore, music, drama, and dance

of a culture influences marketing

• Aesthetics as Symbols: the arts,

folklore, music, drama, and dance

of a culture influences marketing

• Differences in language vocabulary

varies widely

• Differences in language vocabulary

varies widely

Metaphors exemplifying cultures

Elements of Culture:

Beliefs and Thought Processes

Beliefs, which stem from religious training, vary from culture to culture

Beliefs, which stem from religious training, vary from culture to culture

In summary, marketers must consider larger cultural consequences

• The western aversion to the number 13 or

refusing to walk under a ladder

• Japanese concern about Year of the Fire Horse

• The Chinese practice of Feng Shui in designing

buildings

Examples: “Asian and Western” thinking

Factual versus Interpretive

and different tastes;

it deals with a facts

and different tastes;

it deals with a facts

Interpretive knowledge is the ability tounderstand and appreciate the nuances

of different cultural traits and patterns,e.g., the meaning of time, and attitudestoward people

Interpretive knowledge requires adegree of insight

It is dependent on past experience forinterpretation

It is prone to misinterpretation if one’sSRC is not taken into account

Interpretive knowledge requires adegree of insight

It is dependent on past experience forinterpretation

It is prone to misinterpretation if one’sSRC is not taken into account

Cultural Change and Cultural Borrowing

• International marketers should appreciate how

cultures change and accept or reject new ideas

• How cultures change, e.g., war (changes in Japan

after World War II) or by natural disaster

• 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)

• International marketers should be aware the extent to

which cultures borrow ideas and learn from other cultures

• Helps in the marketing of products from one culture to

a different culture

Planned and Unplanned Cultural Change

• Cultures that are resistant to change represent a major hurdle

in marketing products

Cultural change can be accomplished by:

• First, determine which cultural factors conflict with an

innovation, thus creating resistance to its acceptance

• Second, change those factors from obstacles to acceptance into

stimulants for change

• Third, marketers can cause change by introducing an idea or

product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance

• Firms can use 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