International Marketing

1
International Marketing

• Tim Beal
• Lecture 8
• 8 May 2001

2
Today

• Culture
• Market and Environment research and analysis
• Taiwan video
• If time
• Exam 26 June, 9.30-11.30

3
Culture

• What is culture?
• Categories of cultures
• Why is important for international marketing?
• Role of language
• What are the implications of culture?

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What is culture?

• Many definitions
• the set of values, assumptions and beliefs shared
  in common by a group

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Definition

• values
• prestige? Money? Respect of parents, peers,
  boss?
• Assumptions
• time appointment at 5 means 5, or 5-6, during
  evening
• Beliefs
• 4 is an unlucky number, white is symbol of
  puritydeath

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Boundaries of culture

• Boundaries are fuzzy
• Sometimes conterminous with country
• Samoa, Japan..
• Many countries are multicultural
• Stronger linkage with language
• Chinese, German
• What about English?

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Culture only part of story

• Class
• Ethnic background
• Religion
• Gender

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Class

• Rich tend to be more cosmopolitan
• May have more in common with rich of other
  cultures than poor of own

9
Ethnic background

• Lots of people are members of multiple cultures
• eg Americans - Afro-Americans, Asian-Americans,
  Hispanics, WASPS
• WASP
• white anglo-saxon protestants
• New Zealand
• Maori, Pakeha, Asian, Islander ..all NZ

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Religion

• Nationality no longer much guide to religion
• Only small of Moslems are Arabs
• Christians strong in Africa, South Korea...

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Multiple groups - multiple cultures

• Cultural studies started with small, relatively
  isolated cultures
• Pacific islands (Margaret Meade in Samoa)
• IM deals with customers subject to diffuse and
  complex cultural influences
• Multiple layers of culture
• eg Chinese NZer, Jewish American
• Mixed ethnicity

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Change

• Culture changes
• affected by other cultures
• American values strong influence in IM
• Contact with foreigners
• Education
• Marketing

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Categorising cultures

• Hofstedes four primary dimensions
• Halls High and Low context cultures

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Hofstede

• Individualism - collective
• Power distance
• social inequality
• Uncertainty avoidance
• tolerance of ambiguity
• Masculinity/femininity
• assertiveness.caring for others

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High context - low context cultures

• Analysis originated by Hall
• Relative importance of spoken and silent
  languages
• the more important the silent, the higher the
  context

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low and high

• Low context
• rely on spoken and written language for meaning
• high context
• use and interpret more of the elements
  surrounding explicit message
• Swiss, Germans, ..US..Brits...Italians...Arabs...J
  apanese

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Japanese

• Japanese language varies with age, sex and social
  position of speaker and listener
• same sentence will vary depending on-
• boy with boy
• woman with woman
• child to parent
• junior to senior or superior

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Language

• Strong connection between language and culture
• Spoken (written explicit)
• Silent (understood)

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Languages in IM (I)

• Some countries have one official language
• England, France, Germany, Japan
• Some have two
• Wales, Canada, Belgium, NZ
• Some have three or more
• Switzerland, China, Russia

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Languages in IM (II)

• Difference between spoken and written language
• most marked with Chinese
• separation between written and spoken language
• also a factor in English
• UK, USA have strong regional dialects that are
  not reflected in standard written language
• could be an issue in TV adverts

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Languages in IM (III)

• Official status may be important
• reflection of large number of speakers
• legal requirements (eg Canada)
• Official status may reflect political situation
  rather than commercial realities
• Welsh, Maori, Irish

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Who speaks what?

• First language (mother tongue)
• Chinese 1000
• English 350
• Spanish 250
• Bahasa Indonesia 225
• Hindi 200
• Arabic 150
• Bengali 150

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International languages

• English is main business language
• Used as lingua franca
• often second best
• not mother tongue of either person
• may mask miscommunication
• English now comes in many forms
• American, British, Indian, Singapore...
• Importance of global English
• Avoid slang

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English as international language

• Challenged by
• German (Eastern Europe, Turkey)
• Spanish
• Chinese(Pacific Asia)
• Hindi (India)
• vernacular renaissance
• Vernacular websites

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Danger of using English

• May mask substantial differences in business
  practice and culture
• May give English native speaker false sense of
  superiority and security

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Problems of translation

• Translation is a skilled business
• In general, translation should be done INTO
  mother tongue
• Need to verify translations
• Cultural nuances can be crucial

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Silent language

• non-verbal communication
• what actions, signs and symbols communicate
• Hall claims that 90 of message in high-context
  cultures is communicated silently

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Aspects of silent language(I)

• Time
• importance of being on time varies
• Space
• distance between people
• Things
• material possessions. Flaunting wealth

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Aspects of silent language(I)

• Friendship
• importance of personal relationships differ
• Agreements
• based on laws or informal customs?

30
Self-reference criterion

• Automatically refer to our own cultural values
• Need to step aside and identify cultural aspect

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James Lee - 4 step approach

• Define problem/goal in own cultural traits,
  habits norms
• Define in foreign terms
• Isolate the SRC aspect
• Redefine the problem

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Cultural sensitivity

• Some goods and services are more sensitive to
  culture than others
• Closer to religious and family practices less
  likely to be changed by marketing
• Food and drink often culturally sensitive
• eg forbidden foods such as pork, beef, dog
• manufactures less culturally sensitive
• TV, cars, etc

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Cross-cultural analysis (I)

• Determine relevant motivations
• what needs are fulfilled?
• Determine behaviour patterns
• how frequently are these products purchased?
• Determine what cultural values are relevant to
  product
• is product in conflict with cultural values?

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Cross-cultural analysis (II)

• Decision-making
• who makes decisions? consensus? autocratic?
• Determine appropriate promotion
• what is valued? what is taboo?
• eg dogs in Islamic cultures (NZ education video)
• Determine appropriate distribution
• What is available, what is expected?

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Culture and IM

• Dont assume anything
• Every aspect of marketing mix must be re-examined
• Utilise members of target culture
• But dont assume that they are typical

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Market and Environmental research and analysis

• Environment broader term than market
• eg wine market in China
• Start broad then narrow
• start with examination of broad business
  environment
• Then focus on characteristics of wine market
• customer tastes, distribution etc

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research and analysis

• Research - getting and structuring information
• Analysis - using the information to answer
  specific questions
• eg what price will consumers pay for my bottle of
  chardonnay?

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Structure

• Environmental frameworks
• overview of environmental and market analysis
• environmental analysis for screening
• identifying promising markets
• Use of indicators
• pc GDP
• Market research companies

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Environmental frameworks

• PEST
• SLEPT
• C factors
• Overlap
• Link with SWOT

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PEST - political

• Political
• Examples?
• Examples
• Malaysian government and sending students abroad
• Attitude of government to imports from NZ (lamb,
  apples)
• Boycotts (South Africa, Japan)
• protection of local industry

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PEST - economic

• Economic
• Examples?
• Examples
• size of economy
• growth rate
• type of economy (market orientation?)

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PEST -Social/cultural

• Social/cultural
• Examples?
• Examples
• do people drink wine?
• Only men? What age? Class?
• Effect of religion

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PEST - Technological

• Technological
• Examples?
• Examples
• electrical standards (240V 110V?)
• telecommunications
• repair and servicing facilities

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SLEPT

• add Legal
• Social/cultural, Legal, Economic, Political,
  Technological

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SLEPT -legal

• Legal
• Examples?
• Examples
• can your goods be imported?
• (eg Alcohol banned)
• packaging and labelling requirements
• permitted additives

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C factors

• Culture
• separate and important factor
• Competitors
• Currencies
• Specific companies may develop own frameworks
• Key is to identify factors which will have impact
  on your marketing

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Overview of environmental analysis

• Researching global markets Philip Cateora
• majority of mistakes could be avoided with better
  information
• Information is the key component in developing
  successful marketing strategies
• General information for market opportunity
  assessment (environmental)
• Specific information for 4 Ps

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International information

• Information becomes more crucial in international
  markets
• constraints of time and cost
• Even large corporations face constraints
• Research is the art of the possible
• never enough time or money
• Quality information is expensive

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Objectives

• Marketing research is the systematic gathering,
  recording, and analysing of data to provide
  information useful in marketing decision making

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Systematic and useful

• systematic
• what you do for one market you should do for the
  others to enable comparisons
• learn from mistakes
• gain experience - build up institutional
  knowledge
• Useful
• not knowledge for its own sake
• tool for decision making

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Tools and techniques

• Basically the same whatever the market
• Used for same purposes
• marketing decisions
• Questions vary
• Availability of techniques, data, etc vary

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Types of research

• General information about country, area, market
• country ltgt market
• information about trends to forecast marketing
  requirements
• Specific market information

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General to specific

• Broad picture
• which countries drink/import wine?
• Select promising countries for further research
  (screening)
• Go into more depth
• perhaps exclude further countries (iterative
  process)

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Ending up

• End with specific answers for marketing decision
  making
• Which distributor should we use?
• What should our pricing strategy be?
• What should the package look like?

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What happens in practice?

• Information and analysis is expensive
• IM extends the boundaries for what is required
• Reluctance

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International domestic

• When companies go from domestic to international
  they need to spend money on things that werent
  necessary before
• They knew their customers, the laws, the
  geography
• Learning curve
• But domestic markets becoming more multicultural
  gtgt requiring more research

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Examples

• Kid R us in Puerto Rico
• Didnt realise that kids wore uniforms to school
• Clothes too heavy for hotter climate
• US auto manufacturers exported left-hand drive
  cars to Japan
• Japanese drive on left

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Research process

• Define problem and objectives
• Determine sources of information
• Compile information
• Analyse, interpret and present the results

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Define problem and objectives

• Self reference criterion blinds us to questions
• Questions are usually based on assumptions
• eg hot milk-based drinks

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hot milk-based drinks

• UK - evening, sleep-inducing
• Thailand - morning for stimulation
• US - either morning or evening but only in cold
  weather
• Need to step back to ask the right questions

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Availability of data

• Varies considerably from country to country
• Lot in US..not so much in China
• Data collected by government, trade associations,
  private companies
• Data may be collected but not made available
• eg security reasons

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Reliability of data

• Healthy scepticism
• Why is data collected?
• eg tax
• What are incentives for falsification?
• tax, customs, etc
• World exports gt world imports
• Why?
• Tariffs apply to imports not exports

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Comparability of data

• Time periods may vary
• Categories may be different
• even if same words are used
• Read the small print

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Validating secondary data

• Who collected and why?
• why would it be falsely reported?
• For what purpose was it collected?
• How collected (methodology)?
• Is data consistent?
• internally
• with other know data

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Secondary gtgtPrimary

• Secondary data starting point
• then move on to primary data
• Market selection example of process at work
• Paper by Nick Ashill and Graeme Solloway
• Discuss next week under strategy

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Examples of indicators

• Political stability
• Economic growth rate
• pc GDP
• Disposable income

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pc GDP

• pc GDP/GNP most popular single measure of wealth
• Country A - pc GDP US30,000
• Country B - pc GDP US300
• Customers in A are 100 times richer than in B
• But are they?

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Limitations of pc GDP

• pc - hence an average
• distribution not equal
• Even in poor countries rich and middle class
  can be affluent markets

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distribution of wealth

• distribution of wealth varies
• social class
• ethnicity
• may be related to class
• geographical location
• eg Chinese coastal provinces
• Auckland versus Invercargill

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Exchange rate fluctuations

• As currency fluctuates against US so does
  apparent GDP
• real changes less than currency fluctuation
• Lot of economy is domestic
• leads to questioning of appropriateness of
  trade-based exchange rates

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Purchasing power parity rates

• measures relative purchasing power of currencies
  over same types of goods and services
• Still uncertain but gives better indication of
  real wealth
• Differences between two calculations can be
  dramatic

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China

• conventional calculation - US300-370
• PPP - I770-1044
• Moreover, disposable income high in relation to
  pc GDP
• rents, etc. low
• Unequal distribution of income
• Undeclared income

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China - market opportunity?

• gtgtmuch more market opportunity than conventional
  pc GDP figures suggest
• Same happens in many other poor countries
• eg India - 100-120 million middle class
• More data in the reader

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Market research in action

• Examples in reader, course webpage
• Quality information is expensive
• But lack of quality information is more expensive
• missed opportunities
• expensive mistakes

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Today and next week

• Today
• Culture
• Environmental analysis
• Market research
• Next week
• Global strategy and distribution
• Korea
• video