BJ10A0500
CROSS-CULTURAL
COMMUNICATION FOR
WORKING LIFE
Lecture V. Culture in international
marketing management
April 24, 2014
LECTURE THEMES
− Standardization vs. adaptation
− International market segmentation
− Culture and marketing communication
− Culture and pricing
− Culture and distribution
BASIC DILEMMA
-Segmentation criteria
-Target countries vs. intermarket segments
-Target coverage strategy
-Product concept
-PLC
-Positioning
-Branding
Target
Product
Pricing
-Objectives
-Approaches
-Price mix
Promotion
Distribution
-Channel structure
-Degree of integration
-Logistics
STANDARDIZATION VS. ADAPTATION?
-Message
-Media
-Channels
-MC mix
STANDARDIZATION VS.
ADAPTATION
− Not a dichotomous choice ->standardize as much as feasible
and customize as much as needed!
− Advantages:
− People will have the same standard benefits in different
markets
− Easier to benefit from positive word of mouth
− Economies of scale
− Improved quality
− Disadvantages:
− The product is not unique, difficult to differentiate from
competitors!
− Vulnerability to trade barriers-> loss of economy of scale!
QUESTIONS TO CONSIDER
− Competion is more and more global but yet, consumers
tend to resist at least to some degree the globalization
movement..
1. The standardization of marketing programmes: what
should be the degree of similarity in marketing strategies
from one country to another?
2. Organizational issues: what is required to implement a
standardized marketing strategy successfully?
CULTURE VS. CONSUMER
BEHAVIOR
− Differences in the hierarchy of needs (e.g. Maslow)
− Institutions have an effect on the marketing environment,
for example shopping hours
− Who makes the purchase decisions depends on the
culture (e.g. IDV, MAS)
− Differences in consumer involvement, cognititive styles,
perceptions of risk, uncertainty, loyalty, concept of self..
EXAMPLE: EATING HABITS?
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Number of meals/day
Duration of a meal, position in daily schedule
Composition of a meal: size, kinds, nutrition
Beverages accompanying the meal
Social function: communal vs. just feeding
Ready-made vs. prepared (servants?)
Table etiquette (hands on the table? Eating fries with
fingers?)
A FRAMEWOR FOR
CROSS-CULTURAL CONSUMER
BEHAVIOR: (Manrai & Manrai 1996)
Income
Attributes
Who
Personality
Self-concept
Identity, image
Attitude
Lifestyle
Processes
How
Consumer
The person
Values, culture
Note: Western bias!
Consumer behavior domains
Product ownership and usage
Adoption/diffusion of innovations
Complaining behavior
Brand loyalty
Responses to advertising
Media usage
Social processes:
Motivation, emotion
Group processes
Mental processes:
Cognition, learning
Language, perception
Attribution
Information processing
Communication
Decision making
CULTURAL DIFFERENCES
AFFECTING CONSUMER BEHAVIOR…
− Perceptions: shapes, colors
− Motivation: to own, to buy, to spend, to show, to
consume, to share, to give
− Learning and memory: level of literacy, education
− Age: valuation of youth – old age, purchasing power
− Sex roles: division of labor, who shops and makes
purchase decisions?
− Decision-making: nuclear vs. extended family; children’s
influence
WESTERN BIAS IN
PERSONALITY CONCEPT
Individualism:
− People should distinguish themselves from others
− Autonomous entity
− Consistency of behavior
− Norms: self-reliance, self assertion, self-expression
Collectivism:
− Fundamental interdependence
− Behavior is consequence of being responsive to others
(individual behavior situational!)
PRODUCT ADAPTATION
− Compulsory adaptation
− Different industrial standards
(e.g. oil industry)
− Safety standards
− Hygiene regulations
− Optional (but often required)
adaptations
− Consumption patterns
− Climate and the physical environment
− Adapting product to local product usage (e.g. size, taste,
packaging, manuals..)
− Dual adaptation= both product and promotion is adapted!
(e.g. McDonalds)
THREE LEVELS OF PRODUCT
(Hollensen 2011)
Low
Support services
Product
attributes
Core product
benefits
Delivery
Installation
Guarantees
After‐sales service
‐repair
‐maintenance
Spare parts
Possibilities of standardizing
elements of product
Brand name Design Price
Quality
Size and Staff behavior
Packaging colour variants
COO
Functional features
Performance
Perceived value
Image
Technology
High
CULTURE AND WAITING TIME
- What kind of waiting time is suitable/tolerated?
- Bank, restaurant, maintenance etc
- A question of:
TIME: economic time pattern or not?
RULES: are waiting lines respected?
POWER: let the least powerful wait (high PD); important
customers have direct access vs. ”first come first
served”
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REACTIONS TO
SERVICE FAILURE
− Western consumers are more likely to complain than
Eastern consumers
− US consumers have the highest overall service
quality expectations! ( domestic level of service
environment + high individualism)
− Customers with high COLL or high UAI are more likely to
give positive WOM after a positive service encounter, but
if service is bad, they DO NOT complain
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INTERNATIONAL MARKET
SEGMENTATION
How to define international markets?
1) By country / group of countries
− distribution management & media organized
nation-by-nation
− data easily available
2) By groups of customers with similar characteristics
across countries – INTERMARKET SEGMENTS
− country lines do not necessarily reflect separation
in buyer characteristics
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CRITERIA FOR EFFECTIVE
SEGMENTATION
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Measurability
Accessibility
Profitability
Actionability = resources to market effectively
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MACRO-LEVEL
SEGMENTATION CRITERIA
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Geographic location
Language, religion, education
Political factors & economy
Demographics, socioeconomic groups
Industrial structure & degree of technological
advancement
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MICRO-LEVEL
SEGMENTATION CRITERIA
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−
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Cultural characteristics
Lifestyle
Personality
Attitudes & tastes
− Benefit segmentation!
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INTERMARKET SEGMENTATION
− Intermarket segments = groups of customers who
transcend national boundaries
− global teenage market
− ”elite” lifestyle
− Use of hybrid criteria for segmentation
− Analyze commonalities and differences in consumption
patterns  identification of global segments
− combining cultural affinity zones & intermarket segments
often an efficient solution (e.g. housewives in
Mediterranean Europe with a choice of ”leading country”)
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SEGMENTATION CRITERIA
IN B2C VS. B2B
B2C
Demographics
Psychographics
Behavior
Decision Making
Media
Age, income, marital status,
family type & size,
gender, social class, etc.
Lifestyle, values, &
personality characteristics,
attitudes, tastes, culture
Use occasions & frequency,
complementary &
substitute products used,
satisfaction, etc.
Individual or group
(family) , low or high
involvement purchase,
attitudes and knowledge
about product class, price
sensitivity, etc.
Types and level of
media used, times of use,
etc.
B2B
Industry, size, location, profitability, sales, growth ,
etc.
Personality characteristics of
decision makers, organization values (e.g. social responsibility)
Order size & frequency,
complementary & substitute
products used, loyalty, satisfaction, etc.
Buying centers (size & characteristics)
consultants, purchasing criteria, price sensitivity, switching costs
Level of use, types of media used,
time of use, participation in trade shows,
Intensity of inter‐organizational communication, CHALLENGES IN SEGMENTING
MODERN CONSUMERS
− ”butterfly” or ”unmanageable” consumers
− Many traditional segmentation variables have lost their explanatory
power
− Role of culture as a factor of segmentation depends on the product
category! (culture-bound vs. culture-free products)
− Need for new perspectives on consumption
− Sociology of consumption
− New consumerism: express your true self, social awareness, selfempowerment…
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TARGET COVERAGE STRATEGY
− Undifferentiated
− standard, totally new products
− Concentrated
− choose certain segments
− Differentiated
− choose segments, treat them differently
− Niche
− one single segment
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EXAMPLE: Yoghurt consumption
in the EU (Valli & Traill 2005)
Aspects where cultural differences exist:
1) Eating occasions:
• as a dessert (France, the Netherlands, Spain, the
UK)
• as a snack (Italy, Portugal, Germany)
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2. Perceived value of different attributes:
• Bio-bifidus/organic (German, Greek, Italian,
Portuguese)
• Low-fat (German, Portuguese, Spanish)
• With fruit
• Individual portions
• Mild
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− Also differences with regard to gender, age and
education
− If you have a university degree, you are more likely to
eat yoghurt at breakfast! 
− Implications for segmentation and advertising strategy:
1) if segments are based on product needs or benefits,
they may be cross-national
2) If segmentation based on behavior (frequency or
occasion), national habits play a greater role
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INTERNATIONAL
MARKETING COMMUNICATION
− Interpretation of the marketing message?
− language differences (verbal, non-verbal)
− Media?
− economic differences (e.g. material culture)
− sociocultural differences (e.g. role of family, reference
groups
− Use of different elements of MC mix:
− advertising
- personal selling
− PR, SP
- Internet
− direct marketing
-etc.
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RESPONSIVENESS TO
ADVERTISING MESSAGES - EUROPE
- Logical, rational, information-based appeals
(German)
- Emotional and dramatic appeals (dreamorientation – escape from reality: Italy, France)
- Individualism, comparison, competition (Western
cultures)
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RESPONSIVESS TO
ADVERTISING MESSAGES–
EASTERN CULTURES
- Status, emotions, indirect expression, avoidance of
comparisons
- Use of elderly people (wisdom highly valued in Eastern
cultures)
- Example, use of animations in Japan
http://www.youtube.com/watch?v=_d3SXLxzP3E
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CHALLENGE OF HUMOR
− Is there such a thing as international humor?
− Old joke about the journalist who organized a competition to write an article
about elephants. The titles were as follows:
− English Hunting Elephants in British East Africa
− French
The Love Life of Elephants
− German The Origin and Development of the Indian Elephant from
1200 to 1950 (600 pages)
− American How to breed bigger and better Elephants
− Russian How We Sent an Elephant to the Moon
− Swede
Elephants and the Welfare State
− Spaniard Techniques of Elephant Fighting
− Indian
The Elephant as a means of Transportation before Railroads
− Finn
What Elephant Think about Finland
− If nobody laughs at your joke, tell it to a Korean!
MESSAGES AND CONTEXT IN
VARIOUS CULTURES: (Varey
2002)
HIGH
Japanese
Arabs
Latin Americans
Italians & Spaniards
French
English
Context
North Americans
Scandinavians
Germans
LOW
Swiss
Messages
EXPLICIT
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IMPLICIT
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TRANSLATION DIFFICULTIES
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USING FOREIGN WORDS
IN ADVERTISING
− To get attention (unusual, unexpected, relevant)
− Efficiency (usually English)
− Associating with COO: ”pasta Italiano”; only limited
number of words can be used
− Brands in English: cosmopolitan appeal
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COUNTRY OF ORIGIN
(COO) EFFECT
− Influences consumer perceptions: COO is used as
stereotypical information in making evaluations of
products:
− Germany: reliable, solid products, quality cars
− France & Italy: style, design, fashion pdts
− Role of the country image depends on the target country
− May change over time (e.g. image of Japanese
products)
− May depend on gender, age, education and income
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EFFECTS OF CULTURE
ON PRICING INTERNATIONALLY
− Bargaining
− Price and consumer evaluations
− International market pricing decisions
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BARGAINING
− Depends on the product type, and level of development
of the target country
− Showing negotiation skills, empowerment, may increase
trust
− When bargaining, pay attention to:
− initial power positions of each party
− degree of urgency to close the deal
− importance of negotiation margin
− possibility of tender offer (competitive bidding, will you
be eliminated from the short-list?)
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PRICE AND CONSUMER
EVALUATIONS
− Price = a proxy of quality
− depends on subjective consumer experience &
availability of information on product attributes and
information on competing products
− Non-monetary element in price: product-related
sacrifices such as time spent shopping, cooking etc vs.
the value of ”doing-it-yourself”
 depends on time-orientation & cultural appreciation of
the task
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INTERNATIONAL PRICING
STRATEGIES
1) The extension/ethnocentric position: the factory price of
goods + the export costs (price escalation!)
2) The polycentric adaptation position: local subsidiaries
fix the prices according to local market conditions
3) The intermediate geocentric position: combination of
local competition & maximization of total income
(coordination of tactical pricing)
Try to avoid the emergence of grey markets!
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VARIOUS OBJECTIVES
OF PRICING:
1) Maximize company profits/reach target profits
2) Increase unit volumes/reach target volumes/increase
cash flows
3) Develop new markets, maintain customer loyalty
4) Eliminate competitors
5) Promote the image of the company/brand
May differ in various target markets!!
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PRICING POSITION MAY
DIFFER INTERNATIONALLY
− Domestically a firm may be a low-price manufacturer, but
internationally it may be positioned in the premium
segment
− the image of ”imported” goods carries value in certain
product categories & certain markets (COO-effect)
− Examples?
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FACTORS AFFECTING
INTERNATIONAL DISTRIBUTION
− Consumers’ preferences for retail functions (amount of
service)
− Channel image and fit with the product
− Power and concentration of local distributors
− channel relationships & partner choice criteria vary:
− UAI+->reputation, written guarantees
− UAI-informal and flexible partner seeking
− IDV+, MAS+->objective criteria
− COL, FEM-> harmony in partnership, trust,
commitment
− amount of channel conflict (long-term relationships vs.
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…CONTINUES
− Channel competition, especially power of local
competitors (supported by distributors)
− Channel coverage
− Channel continuity
− Channel control
Firms tend to use the same channel internationally as in domestic markets!
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HOW DOES CULTURE AFFECT
DISTRIBUTION (Usunier & Lee 2009)
− Shopping behavior
- economic time
- hedonistic vs. utilitarian purpose of shopping
- complaining behavior
- who does the shopping?
- degree of loyalty
− Opening hours
- restrictions (religion vs. femininity-based arguments)
− Product range
- religious or legal reasons to ban products? (where are
medicines & alcohol sold? trust)
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− Willingness to serve consumers
- good vs. bad human nature (friendliness vs. negative
view of service to others)
− Waiting lines: compliance with rules
− Thefts by consumers or personnel: ethical behavior ingroup orientation
− Self-service vs. personnel in contact
- service expectations
- reactions to service failures
- automated service vs. real persons (doing & neutral
orientation: strongest preference for automated
service vs. being & affective: strong preference for
real personnel)
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EXAMPLE: Comparing shopping
behavior and retail prices
(Ackerman & Tellis 2001)
− Are there differences between American and
Chinese consumers in grocery shopping behavior
and does this reflect on prices?
− Chinese shopping style: price conscious and
pragmatic (collectivism: frugality in personal
consumption)
− High savings rate (accumulating wealth for the
family)
− Exception: gifts (symbolic meaning)
− ”Buyer is king” (retailer attitude)
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RESULTS OF THE STUDY
− Chinese:
− more extensive inspection of items, more time
to make the purchase
− Shopping as ”fun” or ”entertainment”
− Chinese shops had consistently lower prices
and profit margins! (manager’s motivation)
− American:
− Shopping as a task, not fun
− Used less time
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CASE: IKEA IN CHINA
EUROPE
VALUE PROPOSITION
Good quality, stylish furniture at prices
so low that everybody can afford it
VALUED NETWORK
Product
Stylish, functional products and home furnishings
Store Location
The suburbs, next to highways so that
access by car is easy
CHINA
Good quality, Western‐styled
aspirational brand for the middle‐class
population
Slight modifications to products to suit the local market and reflect Chinese
apartment sizes
The outskirts of cities, next to rail
networks as most customers use public
transport
CASE IKEA CONTINUES..
Price
Low‐cost
Affordable prices
Promotion
IKEA catalogue is the main marketing
tool
Advertising in Chinese social media and micro‐blogging website Weibo
has been popular
Logistics
Products are sourced and made in Raw material and products are
developing nations like China and sourced locally. Ikea also built two
Malaysia, and then shipped to Europe factories in Shanghai to avoid high
import taxes. http://www.youtube.com/watch?v=mdNwfUw
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