Considerations before trading internationally
Social/ cultural differences in doing business
Introduction
Buyer’s behaviour and consumer needs are partly circumscribed by cultural norms. Managers who run
a company in foreign country need to interact with people from different cultural environments.
International business means dealing with consumers, strategic partners, distributors and competitors
who have different cultural minds sets .Culture often provides the cement for members of the same
society. It is important to gain a deeper understanding about cultural differences to grasp the intricacies
of foreign market. Cultural environment is significant for marketers because of 2 reasons


cultural forces shape the marketing mix and they are very sensitive in marketing and they
often create problems to marketers due to violations
they also create a lot of marketing opportunities which if properly used can give wider scope
China has 300 million children; the largest in the world and the children is crucial community in there.
China follows ‘one child policy’ and many Chinese families have only one child. Children get pocket
money regularly and hence they have spending power. Children are change agents too. So Pepsico
launched a fruit drink named ‘Fruit magix’ targeting children in China.
Consumer behaviour (ABCD paradigm)
Within a given foreign culture, consumption process happens in 4 stages as under:
1.
2.
3.
4.
Access
(where)
: how does the customer have access to product? Retail shops
Buying behaviour (how) : how does customer take decision? Like cultural norms
Consumption pattern (why): factors influencing pattern? like urbanisation
Disposal
: how is the product disposed? Like resale
Importance of culture in marketing mix
Dutch anthropologist Hofstede defined ‘culture’ as collective programming of mind of members in a
society or group which distinguishes it from others. Culture is learned and shared and not inherited ; it
is nurtured through family, school, peer group, religion.
The cross-cultural issues will provide more challenges and opportunities to the marketers in the 21st
Century. In the theoretic area the following themes need to be probed:


cultural impacts on activities of marketing department
cross-cultural aspects of marketing mix (products, price, promotion, and place)
Cross-cultural marketing is defined as the strategic process of marketing among consumers whose
culture differs from that of the marketer's own culture at least in one of the aspects, such as language,
religion, social norms / values, education, and the living style. Cross-cultural marketing demands
marketers to be aware of and sensitive to the cultural differences; to respect culture of the consumers
as their right in various marketplaces. If the marketers want to be the winners in the cross-cultural
marketing, they must create the marketing mix that meets the consumer's values on a right to their
culture.
Therefore, in order to match the marketing mix with consumer preferences, purchasing behavior, and
product-use patterns in a potential market, marketers must have a thorough understanding of the
cultural environment, i.e., marketing cross-culturally. However, this is does not suggest that all
marketers should focus on cultural differences to adjust marketing programs to make them accepted
by the consumers. In contrast, it is suggested that successful marketers should also seek out cultural
similarities, in order to identify opportunities to implement a modified standardized marketing mix.
To be able to skilfully manipulate these similarities and differences in the worldwide marketplaces is
the most important marketing challenges in the 21st Century.
Influence of marketing on culture
While all human behaviours, including market behaviours take place within a cultural context, human
beings are able to influence and even change the cultural context within which their behaviours take
place. Accordingly, not only does culture influence marketing; but marketing also influences
culture. Marketers can act as change agents within a culture. The interactions between marketing and
culture can be examined from three perspectives.
Firstly, culture defines acceptable purchasing and usage behaviour for both consumers and
business. Let us take business gift as an example; in cultures where a business gift is expected but not
presented, it is an insult of to the host.
Secondly, each element of culture influences each component of marketing mix. Promotion,
for instance, is strongly influenced by the language which takes prominence in brand naming and
advertising. Thirdly, marketing also influences culture, especially by contributing to change.
Self –reference and ethno centrism
Marketers have to locate the similarities in various markets and strategically make them available for
entering into the new markets cross-culturally. Marketing cross-culturally is a process during which
marketers need to continuously adjust their behaviors and marketing programs to fit into the targeted
markets. However, when entering foreign markets, marketers frequently fall into the trap of the selfreference criterion, the unconscious application of one's own culture to a market in another culture.
Self reference criterion is a term coined by JA Lee and means the unconscious tendency of people to
resort to their own cultural experience or value system to interpret a given business situation. Even
more dangerous is ethnocentrism, the belief that one's own culture is superior to any other. It is
important for the marketers know that there is no room for ethnocentrism in the 21st Century
marketing practice.
Procter & Gamble USA launched Ace detergent in Mexico where the product was originally meant for
washing machines whereas Mexican people washed clothes in the river. Ace could not compete with
local detergents .So P & G had to change the power and packing of detergent (smaller size, plastic bag
instead of card board)
The Global Marketing Mix
‘Global Marketing Mix’ can only be realistic if there is adaptability. 100% Globalisation is a myth.
‘Glocal’ is as far as a business can go. It is important, to begin with, not to confuse globalisation with
standardisation. In standardisation, the company refines its products, services, and processes so that it
can be replicated. This replication does then often happen in the international arena. However,
standardisation reduces each component of the marketing mix to a constant, worldwide. It presents a
stable global marketing mix and results in being as close as can be achieved. Unfortunately, businesses
have found such standardisation to often result in lost market share when applied. Globalisation
requires the marketing mix to experience minor (or major) adaptations so as to effectively to target
group.
The marketing mix consists of seven components: product, promotion, price, place, positioning,
people and process. If a pure global marketing mix were possible, the same configuration of these
seven components would be applicable internationally, regardless of cultural variances. While some
businesses focused on global convergence, current data suggests the need for local adaptation. This is
usually achieved by careful analysis of regional market segmentation. Adaptability of each component
of the marketing mix along segmentation is necessary for effective globalisation.
Global market segmentation provides companies with “opportunities to transfer products, brands, and
ideas across subsidiaries in different countries. These segments group regional areas into a customer
range, allowing for appropriate price and product, promotion, and appropriate positioning within the
businesses’ sector. Importantly, these segments do not always coincide with political or geographical
boundaries .For example, the market segmentation of two countries in South America may be the
same, while the northern area of Mexico may share a segment with southern border area of United
States.
The company shall adapt any of the following adaptation elements -Product features, Brand name,
Labelling, Colours, Ingredients, Price, Sales promotion and discount and Advertisement: theme, story,
media and execution .Studies show that only 4 elements are adapted by MNCs in majority of foreign
markets.
1. Product
While launching the product to foreign market, the company may or may not change the product mix
depending on cultural compatibility. Selection of product primary depends on usage pattern of
product. Deodorant usage is 80 % in USA, 28 % in Italy and 8 % Philippines. Consumer electronic
products like camera mobile phone, TV, tools may be launched without much change. Finland based
cellular phone super star Nokia had customised 6100 series handset for every market. The ring tone
shall be louder to hear in noisy Asian streets. Kraft foods, USA modify coffee for various countries. In
Britain coffee is blended with milk, in France it is sold as such to make black coffee and in Latin
America, it is blended with chicory. In Middle East, food products must have wording Halal printed
on packet, as for them Halal food is better, tasty and disease-free. Due to trend of people towards
vegetarianism, Colgate changed formulation of tooth paste to exclude animal origin ingredients like
bone ash; writes ‘100 % vegetarian ‘on its packet worldwide. Vegetarian food is best accepted by the
Hindu community and some of the Buddhists in East Asia.
The question is whether to standardise to adapt the product as standardisation allows economies of
scale. Harvard professor Theodore Levitt in 1983 suggested that standardising products in global
markets is supporting convergence rather than divergence in taste. Toyota sells different vehicles in
different countries depending on local requirement : Soluna in Thailand and Utility vehicle in
Indonesia. Toyota had designed Corolla on a world platform under the concept of standardisation and
Ford created the world car ‘Focus’. P & G sells shampoos in sachet in Asia to make it affordable as
against their normal family package. Sweetness of Coco cola is different in different countries.
Marlboro, Nike and Gillette are a few brands sold without much adaptation. Restaurants specialize in
different cultural cuisines like Mughlai, Udupi, Arabic ,Thai ,Chinese etc. Retailers who sell books,
DVDs, music album etc shall be careful to be aware about cultural and religious sensitivity.
In adapting product and promotion , the company has the following 4 choices :
Product
Promotion
Do not adapt
Adapt
Don’t
adapt
1 .Adapt only
promotion
Adapt
2. Modify both product
and promotion
3. Do not modify
4. Adapt only product
product /promotion
2. Promotion
An advertising research was done for Welch grape juice. Some ads were "promotional" type focused
on the benefits of juice—higher energy levels, great-taste , energizing, and fun." The other ads had
"preventive" appeals: They highlighted problems that could be avoided by juice—e.g reduce the risk
of cancer or heart disease, keep arteries clear free flow of blood ".When participants gave their
immediate reactions to the advertisements, Asian participants favoured the preventive messages;
British people had the opposite reaction, rating the promotional messages as more effective. This
tallied with the researchers' theories that Americans, who value achievement and independent thinking
would focus on the positive consequences of their purchasing decisions.
The French do not allow children in advertisement. Germans do not allow using the word ‘best ‘in
advertisements. In India, the advertisement of alcohol and cigarettes are banned, even though they are
allowed for sale. Of the 4 elements of marketing mix, promotion is the most visible one. People who
do not buy the product and who are not in the target customer group will also be exposed to the
promotion programs and may interrupt with their response.
The name of the brand and advertisements slogans shall be carefully chosen or translated. The theme
of advertisement may not get global acceptance. Advertisement was globally released for Camey bath
soap, portraying bathing of young women symbolically; but it was modified with reduced exposure
when released to Venezuela, France and Japan. Africans see and perceive the contents of a canned or
bottled food as shown on the labels. So, if you are selling baby food to the African market, do not put
a picture of a baby on the label. The words ‘natural and ‘herbal ‘are catchy words now used wide
spread on cosmetics marketed in Asia
3. Price
On the surface, price does not appear to have any cultural aspects or differences, but it too have some.
Pricing is a means of communication about the product and can influence relationship. High price is
perceived for high quality and low price is perceived for low quality and they serve different segments
.In developing countries, bargaining is a ritual and an enjoyable activity during the exchange process.
So the buyer sets the price higher and gives room for friendly negotiations or discounts and
settlements. This can create trust and relationship for repeated purchase. Bing Lee an electronic
retailer introduced bargain pricing in Australia and was successful. Generally in developed countries,
the prices are fixed and bargaining is considered offensive.Multi nationals must deal with problems of
dumping, escalation and gray markets.
Ayurveda is the life science of Hindus taken from age old religious texts. Ayurvedic products are
traditionally priced low because, making profit from service rendered to sick or poor is not acceptable
Indian culture. But ayurvedic medicines and herbal products are now highly commercialised and there
is shortage of supply due environmental issues .Hence they are high priced now.
GUCCI may sell a bag @ 120 $ in Italy and 240 $ in USA to cover overheads, currency fluctuations,
commission, tariff. Company like Coca Cola may set price in each country as they operate on licence.
When the product is transferred from one unit to another subsidiary, then ‘transfer price ‘ is applied. If
the charge is too low, it can be called dumping. Adoption of Euro currency has eliminated gray
marketing in many parts of Europe.
4. Distribution
Cultural variables may also dictate distribution strategies. US cosmetic maker Avon has a direct
selling model and has fine tuned its strategy in China to include small counters in departmental stores,
kiosks, teleshopping and internet retailing. Direct selling model is not generally accepted in India as
the deals are normally fixed by dealers during dining. But Dell computer was successful in China by
selling customers direct to corporate customers
In many Asian countries, the retail sellers are unorganised individuals and hence they form key
members in supply chain. Coca cola is distributed in cycles in rural India and stored in ice boxes
instead of refrigerators. Cigarettes are often sold in single in India unlike packets in the Middle East.
Uniliver, Britannia and P & G sell their products in small size packets there.
Sweden based IKEA has found a way to produce assembled furniture for the residential markets. The
customer either orders the furniture and then picks it up from warehouse location, selects it from the
warehouse directly or it delivered to door. All three delivery options as well as the company supply
operations have been fined tuned, allowing IKEA to operate over 130 stores internationally
Other aspects for marketing
a) Language
Language is used to communicate and interpret messages and the environment. As a communication
medium, language has 3 parts – spoken, written script and silent language. Silent language includes
physical space, friendship pattern and time value. Language is the mirror of culture. Even in language
of English, the word meaning may differ when spoken in UK as against other English countries like
USA or Canada. The chocolate brand ‘Snickers ‘resembles the word ‘knickers‘ meaning female
lingerie ;hence the company renamed it as’ Marathon ‘ to market in UK. Language blunders easily
arise as a result of careless usage, translation of advertisement slogans and brand names.
 In Spain , car brand Chevrolet Nova as ‘ it does not go’
 Colgate introduced a toothpaste named ‘ Cue ‘ in France where a pornographic magazine was
sold in the same name
 What sounds like a catchy slogan may be a vulgar term in the intended market, such as Ford
Pinto. The Pinto was named after a horse, but the word unfortunately is a quite vulgar slang
term in Portuguese
b) High context and Low context
Edward Hall identified two type of cultures based on the way message are communicated and
interpreted
1. High context culture: (Asia, Latin America – China, Japan, India, South Korea) where the
context is more important than the message. Verbal communication is more important than
body language. Physical space is more . Adoption of new products is faster. Relationship does
matter than product features in personal selling
2. Low context culture: (America, Europe, Sweden, Denmark, Norway, Australia). The message
content is more important than the context.
c) Colour
Colour is used for brand identity in sign boards, offices, uniforms and packaging. Colour is considered
as an important consideration for international marketing. Colour is used to present art information,
products, services, or organisation and has different meanings and aesthetic appeal. Colour can be
associated with company or brand; hence it is to be selected for marketing with discretion. Marketing
message must be conveyed with awareness about cultural significance.
For web designing, blue is considered to be an internationally accepted colour as it depicts ocean or
sky in positive way. Many banks chose blue as their corporate colour. In China, red is a lucky colour
and hence red is used to pack prestigious products, while in Africa, red is considered as colour of the
evil. In many Asian countries including India, white is associated with sorrow or peace. Green is
associated with disease in Malaysia as that colour is used in hospital apparels.
d) Beliefs
Many norms or restrictions in culture arise from religious or other beliefs which have significance in
marketing. Mc Donald’s was forced to change its cheese made from beef to mutton in India, because
cow is considered as sacred animal. Wrigley lost sales in Indonesia on the allegation that the chewing
gum contained pig fat. Hush puppies, the shoe brand lost sales in USA on the rumours that it was
made of pig skin. Gillette could not advertise its shaving razor in the Middle- east initially, as the
people over there refrain from shaving. Men do not wear gold ornaments in the Arabic culture and
hence jewellery has low scope in Arab nations. Fair and Lovely and Nivea are two fairness creams
sold well in India, where the women prefer to become fairer. Because white skin is associated with
beauty and comfort, whereas dark skin is associated with hardship
Chinese philosophy of feng shui (wind water) plays an important part in construction of buildings and
this is followed in China, Hong Kong and Singapore. It is believed that construction shall conform to
feng shiu to ensure fortune to residents and the visitors, as it allows free flow of cosmic energy and
hinders evils. The door of Hotel Mandarin in Hong Kong was erected at an angle to the street to
prevent entry of evil spirits. Hyath hotel in Singapore which was first constructed without feng shui
had to be redesigned to boost business.
Festivals are of prime significance to marketers as the sales reach peak during festivals. Saint Nicholas
day (a feast for children on 6 December) is important in Europe for toy companies and confectionary
makers. Deepavali (the festival of lights) is important in India for exchange of sweets and gifts in the
home and corporate segments. Holy month of Ramadan is important in Middle- east countries when
large amount of fruits and other goods are sold.
e) Hofstede’s model
Dutch anthropologist Hofstede conducted a research and developed a model where by every culture
can be measured in terms of 4 variables as under:
1.
2.
3.
4.
Power distance
Uncertainty avoidance
Individualism /groupism
Masculinity
Culture
Power
distance
Carefulness
(Uncertainty
avoidance)
Application in marketing
 Luxury goods
 Power brands


Individualism 
Masculine
: degree of inequality acceptable
: how people avoid uncertainty
: How people take decisions or do task
: value for dominance ,assertiveness , status





High
Malaysia(104),
Philippines (94),
Mexico(81)
India (77)
Greece(112)
Expiry dates in packing
Portugal (104)
Safety of cars
Japan(92)
France(86)
Influence decision making USA (91)
Australia(90)
in purchase
UK (89)
Advertisement
Japan (95)
Protecting environment
Austria(79)
Speed and size of cars
Italy (70)
Fashion and cosmetics
Mexico (69)
Safety and security
Low
Australia(36)
UK (35)
Denmark (18)
Austria(11)
India (40)
Malaysia (36)
UK (35)
Singapore(8)
South Korea(18)
Taiwan (17)
Indonesia(14)
Thailand (34)
Netherlands (14)
Sweden (5)
Luxury goods like car, watches, perfumes, jew4ellery, suit etc are often considered as one’s symbol of
success and they indicate masculinity. Hence Louis Vuitton and GUCCI sell well in Japan. Countries
with masculine culture will look for powerful and big size cars .Those with high fear will prefer cars
designed for safety (Volvo). Feminine culture will prefer products with aesthetics and beauty where
products shall be intended with care for customers.
Case –Marketing mix of Mc Donald’s fast food Chain, USA
McDonalds has grown internationally mainly through franchising, which combines the global brand of
its restaurant with local business people who can adapt the restaurant to local tastes and needs. Some
products are fixed throughout the organisation. French fries, for example, are available at any Mc
Donalds outlet and are subjected to high levels of quality control. Additional products are sometimes
added, based on local expectation. While one can get wine at McDonalds in France, in the restaurant’s
home country United States is chocolate milk. Other products are adapted to conform to the local
cultural values of various international markets. In Israel, for example, sandwiches are offered without
cheese as. However, the primary product mix of hamburger, fries, and a coke remains constant
throughout the global organisation.
Place, price, and positioning are heavily dependent upon appropriate market segmentation and require
adaptability. McDonalds’ strategy of place is relatively fixed, with the organisation seeking easilyaccessible, high traffic locations regardless of where they are establishing globally. Restaurant
facilities have similarities like furniture design and interior layout, although with regional variations.
Price is determined locally based on McDonald’s local positioning and the prices of competitors.
Positioning also varies widely depending on the market segmentation .McDonalds is targeting within
that geographical market segment. McDonald is positioned as inexpensive fast food in the United
States. As such, its pricing is relatively low and the quality expectations there are restricted. In the US
a typical Mc Donalds value meal costs less than 90minutes of work. Prices are significantly higher in
the United Kingdom, where consumers are willing to spend more for restaurant food in general. Here
the average McDonalds customer will work just over 30 minutes for the same meal. In Nigeria,
however, eating out in any form is seen as a great luxury. There the average worker will work over 11
hours to pay for the same McDonalds value meal. So Nigerians have the highest quality expectations
of Mc Donald’s service
Process is one area where significant economies of scale can be realised through globalisation.
Promotion is the most localised component of the marketing mix. “The consumer, not the company,
must decide what can be the same across borders,” and usually promotion is the most variable.
McDonalds used sports figures in its promotional materials, ads, and television commercials several
years ago. Rather than choose one known international sports figure, such as a Tiger Woods, the
company picked figures recognised in each respective market, with a basketball star used in the United
States, a footballer in the UK, and so on. This allowed McDonalds to project a locally appropriate
image rather than the United States.
One important aspect of adapting the global marketing mix is providing culturally sensitive primary
and secondary marketing communications. To achieve this, regional control, or at least valued input,
into promotional decisions is required. What makes perfect sense in the London home office may be
an impending disaster in the actual area of application. This regional input is one of the things that
make local ownership of Mc Donald’s franchises so desirable. The local business owner can provide
valuable insight into local market conditions and tendencies.
The restaurant carefully evaluates each new market opportunity and the best marketing practices in
each, and then develops a marketing mix for that new market segment. This sometimes results in
marketing strategy and components particular to the specific region, mixed with typical McDonalds
marketing mix components. The end result, however, is usually a quite effective marketing mix.
In conclusion, while a 100% global marketing mix is not attainable, many companies can move
successfully onto a global scale by branding globally but acting locally. Creating an adaptable
marketing strategy and component mix will allow the business to successfully negotiate cultural
differences and increase market share and profitability.