Social and Cultural Environments

CHAPTER 4 SOCIAL AND CULTURAL ENVIRONMENTS

SUMMARY

Culture, a society’s “programming of the mind,” has both a pervasive and changing influence on each national market environment. Global marketers must recognize the influence of culture and be prepared to either respond to it or change it. Human behavior is a function of a person’s own unique personality and that person’s interaction with the collective forces of the particular society and culture in which he or she has lived. In particular, attitudes, values, and beliefs can vary significantly from country to country.

Also, differences pertaining to religion, aesthetics, dietary customs, and language and communication can affect local reaction to brands or products as well as the ability of company personnel to function effectively in different cultures. A number of concepts and theoretical frameworks provide insights into these and other cultural issues.

Cultures can be classified as high- or low-context; communication and negotiation styles can differ from country to country. Hofstede’s social value typology sheds light on national cultures in terms of power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, and long- versus short-term orientation. By understanding the self-reference criterion, global marketers can overcome the unconscious tendency for perceptual blockage and distortion.

Rogers’ classic study on the diffusion of innovations helps explain how products are adopted over time by different adopter categories. The adoption process that consumer go through can be divided into multi-stage hierarchy of effects. Rogers’ findings concerning the characteristics of innovations can also help marketers successfully launch new products in global markets. Recent research has suggested that Asian adopter categories differ from the Western model. An awareness of environmental sensitivity can help marketers determine whether consumer and industry products must be adapted to the needs of different markets.

OVERVIEW

The Walt Disney Company, home to Mickey Mouse, Donald Duck, and other iconic characters, has a stellar reputation in many parts of the world for its family-friendly entertainment offerings. However, despite high worldwide awareness levels of the Disney brand, as of 2006, only 25 percent of the company’s revenues came from outside the United States. Now, as the company targets China, India, South Korea, and other emerging markets, it is departing from its “one size fits all” approach.

The changes underway at the Walt Disney Company illustrate how differences in the social and cultural environments impact marketing opportunities and dynamics around the globe.

76 © 2011 Pearson Education, Inc. publishing as Prentice Hall This chapter focuses on the social and cultural forces that shape and affect individual, group, and corporate behavior in the marketplace. We start with a general discussion of the basic aspects of culture and society and the emergence of a twenty-first century global consumer culture. Next, several useful conceptual frameworks for understanding culture are presented.

These include Hall’s high- and low-context culture concept, Maslow’s hierarchy, Hofstede’s cultural typology, the self-reference criterion, and diffusion theory. The chapter includes specific examples of the impact of culture and society on the marketing of both consumer and industrial products.

ANNOTATED LECTURE/OUTLINE

SOCIETY, CULTURE, AND GLOBAL CONSUMER CULTURE

 What are the two tasks of the global marketer?

Both differences and similarities characterize the world’s cultures, meaning that the tasks of the global marketer is twofold. First, marketers must study and understand the country cultures in which they will be doing business. Second, this understanding must be incorporated into the marketing planning process. In some instances, strategies and marketing programs will have to be adapted; however, marketers should also take advantage of shared cultural characteristics and avoid unneeded and costly adaptations of the marketing mix.

Marketers should be secure in their own convictions and traditions, generosity is required to appreciate the integrity and value of other ways of life and points of view. Although “cultural shock” is a normal human reaction to the new and unknown, successful global marketers strive to comprehend human experiences from the local point of view.

 Define “culture”

Culture can be defined as “ways of living, built up by a group of human beings that are transmitted from one generation to another.”

A culture acts out its ways of living in the context of social institutions, including family, educational, religious, governmental, and business institutions.

Culture includes conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next.

 Into what two main categories can culture be divided?

Culture can be divided into two broad categories:

 What is ‘material’ culture?

a) Material culture: the physical component or physical culture and includes physical objects and artifacts created by humans such as clothing and tools. b) Nonmaterial culture: the subjective or abstract culture and includes intangibles such as religion, perceptions, attitudes, beliefs, and values.

 What is a ‘cultural universal’?

“Cultural universals” are those elements of culture evident in all societies. These “universals” include:  athletic sports,  body adornment,  cooking,  courtship,  dancing,  decorative art,  education,  ethics,  etiquette,  family feasting,  food taboos,  language,  marriage,  mealtime,  medicine,  mourning,  music,  property rights,  religious rituals,  residence rules,  status differentiation, and  trade.

Global marketers should view sociocultural phenomenon of the 21st century against a background of traditional definitions.

It has been argued that consumption has become the hallmark of postmodern society; cultural information and imagery flow freely across borders via satellite TV and the Internet.

New global consumer cultures are emerging; these persons share meaningful sets of consumption-related symbols. This culture stems from the wired world in which there is an increasing interconnectedness of local cultures; it can be exploited by global consumer culture positioning (GCCP).

If we accept Hofstede’s definition of culture as “the collective programming of the mind,” then it makes sense to learn about culture by studying attitudes, beliefs, and values.

 Define “attitude,” “belief,” and “value.”

An attitude is a learned tendency to respond in a consistent way to a given object or entity. Attitudes are clusters of interrelated beliefs.

A belief is an organized pattern of knowledge that an individual holds to be true about the world. Attitudes and beliefs are related to values.

A value is an enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct; values represent the deepest level of culture.

 What is a “subculture”?

Within any large dominant cultural group, there are likely to be subcultures, smaller groups with their own shared subset of attitudes, beliefs, and values; subcultures represent attractive niche marketing opportunities.

Religion

Religion is an important source of a society’s beliefs, attitudes, and values.

 Name four of the major world religions.

The world’s major religions include Buddhism, Hinduism, Islam, Judaism, and Christianity.

Religious tenets, practices, holidays, and history directly impact the way people of different faiths react to global marketing activities.

Example:

a) Hindus do not eat beef, which means that McDonald’s does not serve hamburgers in India. b) In the aftermath of the September 2001 terror attacks in New York and Washington, D.C. and the subsequent American military actions in the Middle

Religious issues have also been at the heart of a dispute about whether references to God and Christianity should be included in a new European constitution that will be adopted now that the European Union has expanded its membership from fifteen to 27 countries.

Aesthetics

Within every culture, there is an overall sense of what is beautiful and what is not beautiful, what represents good taste as opposed to tastelessness or even obscenity, and so on. Such considerations are matters of aesthetics.

Global marketers need to understand the importance of visual aesthetics embodied in the color or shape of product, label, or package.

Likewise, different parts of the world perceive aesthetic styles – various degrees of complexity, for example – differently. In some cases a standardized color can be used such as the distinctive yellow on Caterpillar’s equipment.

A number of companies seem to be experiencing a case of the “blues,” as evidenced by names such as Bluetooth, Blue Moon, and JetBlue Airways; likewise, Skyy vodka is packaged in a distinctive blue bottle.

Because color preferences vary among cultures, such perceptions should be considered in product packaging and communications especially in highly competitive markets.

There is nothing inherently “good” or “bad” about a color; red is popular in most countries despite being the color of blood. It represents winemaking and conveys the meaning “emotional.”

Sensitivity and willingness to accommodate such perceptions helps generated goodwill: In some African countries, red is poorly received, and white connotes death in parts of Asia.

Music is an aesthetic component of all cultures, accepted as a form of artistic expression and source of entertainment. In one sense represents a “transculture” not identified with any particular nation; rhythm is a universal aspect of music.

However, music is also characterized by stylistic variation with regional or country associations (e.g., reggae with Jamaica); music exemplifies the “think global, act local” theme.

Because music plays an important role in advertising, marketers must understand what style is appropriate in a given national market. Although background music can be used

80 © 2011 Pearson Education, Inc. publishing as Prentice Hall effectively in broadcast commercials, the type of music appropriate for a commercial in one part of the world may not be acceptable or effective in another part.

Dietary Preferences

Cultural influences are also quite apparent in food preparation and consumption patterns and habits.

Examples:

a) Domino’s Pizza pulled out of Italy because Italians perceived its product to be “too American.” In particular, the tomato sauce was too bold and the toppings were too heavy. b) To successfully launch the Subway chain in India, it was necessary to educate consumers about the benefits of the company’s sandwiches. Why? Because Indians do not normally consume bread.

These examples underscore the fact that a solid understanding of food-related cultural preferences is important for any company that markets food or beverages products globally.

Companies that lack cultural sensitivity are bound to make marketing mistakes.

 Why is ‘fast food’ gaining in acceptance around the world?

While some food preferences remain deeply embedded in culture, there is plenty of evidence that global dietary preferences are converging. For example, “fast food” is gaining increased acceptance around the world.

There are several explanations for this.

a) Heads of families in many countries are pressed for time and are disinclined to prepare home-cooked meals. b) Young people are experimenting with different foods. c) The global tourism boom has exposed travelers to pizza, pasta, and other ethnic foods. d) Shorter lunch hours and tighter budgets are forcing workers to find a place to grab a quick, cheap bite before returning to work. e) As cultural differences become less relevant, such convenience products will be purchased in any country when consumer disposable income is high enough.

However, such processes can provoke nationalist backlash.

81 © 2011 Pearson Education, Inc. publishing as Prentice Hall  To counteract the exposure of its young citizens to le Big Mac and other American-style fast foods, the French National Council of Culinary Arts designed a course of French cuisine and “good taste” for elementary school children.

Language and Communication

The diversity of cultures around the world is reflected in language.

 What are the four areas of study in verbal language?

Linguists divide the study of spoken or verbal language into four areas:  syntax (rules of sentence formation)  semantics (system of meaning)  phonology (system of sound patterns)  morphology (word formation).

Unspoken or nonverbal communication includes gestures, touching, and other forms of body language that supplement spoken communication.

The spoken and unspoken aspects of language are included in the broader linguistic field of semiotics, which is the study of signs and their meanings.

In global marketing, language is a crucial tool for communicating with customers, channel intermediaries, and others. Blunders in product names and advertising are costly.

Semantic issues arise in global marketing (e.g. When Good Housekeeping magazine was launched in Japan, the closest translation in Japanese meant “domestic duties.”)

Phonology can be an issue (e.g., Colgate discovered that in Spanish, Colgate means “go hang yourself”).

Technology is providing interesting new opportunities for exploiting linguistics in the name of marketing. Young people throughout the world are using mobile phones to send text messages; it turns out that certain number combinations have meaning in particular languages.

An impact of globalization is the diffusion of English; more people speak English as a foreign language than as a native language (e.g., Nokia and Sony require English).

Foreign language study is beneficial. While acquiring language skills, students gain cross-cultural insights and develop a rapport with those who speak English as a second language.

82 © 2011 Pearson Education, Inc. publishing as Prentice Hall Training and a heightened sense of the host country cultural context are necessary to counteract the tendency to bring one’s own cultural ethnocentrism to the negotiating table.

The challenges of nonverbal communication are formidable (e.g., In the Middle East, Westerners must not reveal the soles of their shoes or pass documents with the left hand).

Westerners must pay attention not only to what they hear but also to what they see when conducting business in such cultures.

 Define “sequencing.”  Define “phasing.”

Two important communication issues may emerge:

 Sequencing concerns whether the discussion goes directly from point A to point B or seems to go off on tangents.  Phasing pertains to whether certain important agenda items are discussed immediately or after the parties have taken some time to establish rapport (see Table 4-1).

Marketing’s Impact on Culture

Universal aspects of the cultural environment represent opportunities for global marketers to standardize a marketing program. The astute global marketer often discovers that much of the apparent cultural diversity in the world turns out to be different ways of accomplishing the same thing.

Increased travel and improved communications have contributed to a convergence of tastes and preferences in many product categories.

However, the impact of marketing and of global capitalism on culture can be controversial; sociologist Ritzer laments the “McDonaldization of culture.”

 What is the International Slow Food Movement?

As a response, the international Slow Food movement boasts 70,000 members in 35 countries; it is founded on the idea that things should not taste the same everywhere. (Exhibit 4-9).

HIGH- AND LOW-CONTEXT CULTURES

Edward T. Hall forwarded the concept of high- and low-context to explain cultural orientations.

In a low-context culture, messages are explicit and specific; words carry most of the communication power.

In a high-context culture, less information is contained in the verbal part of a message. More information resides in the context of communication, including the background, associations, and basic values of the communicators.

High-context cultures function with much less legal paperwork than low-context cultures (e.g., Japan and Saudi Arabia place emphasis on a person’s values and social position)

In a low-context culture such as the U.S. or Germany, deals are made with less information about character, background, and values. Much more reliance is placed upon words and numbers.

In a high-context culture, a person’s word is his bond. There is less need to anticipate legal contingencies because the culture emphasizes obligations and trust as important values. In these cultures, shared feelings of obligation and honor take the place of impersonal legal sanctions.

Exceptions to the general tendency are found in subcultures. The U.S. is a low-context culture with high-context subcultures (e.g., the world of the central banker, for example, is a “gentleman’s” world. The word of the banker is many times sufficient for the borrowing of millions of dollars).

(Table 4-2 summarizes some of the ways in which high- and low- context cultures differ).

HOFSTEDE’S CULTURAL TYPOLOGY

Hofstede is well known for research studies of social values suggesting that the cultures of different nations can be compared in terms of five dimensions. (Table 4-3).

Three of the dimensions refer to expected social behavior, one dimension is concerned with “man’s search for Truth,” and one dimension reflects the importance of time.

The dimensions are:

 Define the four dimensions of Hofstede’s typology.

1. Power distance. This is the extent to which the less powerful members of a society accept power to be distributed unequally. “All societies are unequal, but some are more unequal than others.” High power distance: Hong Kong and France. Low power distance: Austria and Scandinavia.

84 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2. Individualist cultures: each member of society is primarily concerned with his or her own interest and those of the immediate family. (United States and Europe) a. Collectivist cultures, all of society's members are integrated into cohesive in-groups. (Japanese and other Asian cultures)

3. Masculinity. This dimension describes a society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer. Examples are Japan and Austria. Femininity, by contrast, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly competitive behavior. Examples are Spain, Taiwan, and the Netherlands.

4. Uncertainty avoidance. This is the extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations. Members of uncertainty accepting cultures are more tolerant of persons whose opinions differ from their own. Examples: Denmark and the United States. At the other end are Greece and Portugal.

For cultural dimensions in Asia, researchers developed a Chinese Value Survey (CVS)

a) A long-term orientation (LTO) versus short-term orientation to assess the sense of immediacy within a culture, whether gratification should be immediate or deferred. b) Long-term values include persistence (perseverance), a general tenacity in the pursuit of a goal. c) Ordering relationships by status reflects the presence of societal hierarchies, and observing this order indicates the acceptance of complementary relations. d) Thrift manifests itself in high savings rates. e) A sense of shame leads to sensitivity in social contacts.

These values are held within high-performing Asian countries such as Hong Kong, Taiwan, and Japan, but these values alone do not lead to economic growth.

The existence of a market and a supportive political context are also required (e.g. India has been held back by market restrictions until recently).

Hofstede’s work provides marketers insights that can guide them in a range of activities, including product development, interacting with joint venture partners, and conducting sales meetings.

For example, understanding the time orientation of one’s native culture compared to others’ is crucial.

85 © 2011 Pearson Education, Inc. publishing as Prentice Hall In Japan, Brazil, and India, building a relationship with a potential business partner takes precedence over transacting the deal. People from cultures that emphasize the short term must adapt to the slower pace of business in some countries.

 Define gaman.

The Japanese concept of gaman (persistence) provides insight into the willingness of Japanese corporations to pursue research and development projects for which the odds of short-term success appear low.

 Why is it important to understand the dimension of uncertainty avoidance?  How might we try to neutralize these high levels of uncertainty avoidance?

By understanding the dimension of uncertainty avoidance, global marketers are better equipped to assess the amount of risk with which buyers are comfortable. In countries with high levels of uncertainty avoidance, marketers should stress warranties, money- back guarantees, and other risk-reducing features.

Power distance, reflects the degree of trust; the higher the power distance (PDI), the lower the level of trust; companies in high PDI cultures prefer sole ownership of subsidiaries to provide more control.

The masculinity-femininity dimension manifests itself in the importance of achievement and possessions (masculine values), compared with helpfulness and social support (feminine values). An aggressive, achievement-oriented salesperson is better matched to Japan than Denmark.

The collective-individual orientation is an important cultural component.

Throughout much of Asia, the collectivist orientation is dominant. The U.S. is a highly individualist culture. In highly individualistic cultures, ads often feature one person; in collectivist countries, ads feature groups.

Using Hofstede’s framework can provide useful insights into the creation of culturally appropriate consumer brand images.

 What are the three types of brand images? THE SELF-REFERENCE CRITERION AND PERCEPTION

A person’s perception of market needs is framed by his or her own cultural experience. A framework for reducing perceptual blockage and distortion was developed by James Lee.

 Define the SRC.  How can we reduce or eliminate it?

86 © 2011 Pearson Education, Inc. publishing as Prentice Hall The unconscious reference to one’s own cultural values is the self-reference criterion (SRC). To eliminate or reduce cultural myopia, Lee proposed a four-step framework.  Define the problem or goal in terms of home country cultural traits  Define the problem or goal in terms of host-country cultural traits. Make no value judgments.  Isolate the SRC influence and examine it.  Redefine the problem without the SRC influence and solve SRC teaches that a vital, critical skill of the global marketer is unbiased perception, the ability to see a culture. SRC can be a negative force in global business leading to misunderstanding and failure. A person must suspend assumptions based on prior experience and success and add new knowledge.

The lesson that the SRC teaches is that a vital, critical skill of the global marketer is unbiased perception, the ability to understand a culture.

DIFFUSION THEORY

 What is diffusion theory?

Sociologist Everett Rogers distilled his research into three concepts that are extremely useful to global marketers: the adoption process, characteristics of innovations, and adopter categories.

An innovation is something new. However, a product already introduced in one market may be an innovation elsewhere because it is new and different for the targeted market. Managers find themselves marketing products that may be, simultaneously, innovations in some markets and mature or declining products in other markets.

 What are the stages of the adoption process?  Define each of the stages.

The Adoption Process

The adoption process - the mental stages from the first knowledge of an innovation to product adoption or purchase:  Awareness. The customer becomes aware for the first time of the product or innovation. Global marketers create awareness through general exposure to advertising messages.  Interest. The customer is interested enough to learn more. The customer will engage in research and seek information.  Evaluation. The individual mentally assesses the product's benefits and decides whether or not to try it.  Trial. Most customers will not purchase expensive products without a "trial." For inexpensive products, an initial single purchase is defined as trial.

87 © 2011 Pearson Education, Inc. publishing as Prentice Hall  Adoption. The individual either makes an initial purchase or continues to purchase a product. Sales reps and word of mouth are forces in the decision to buy.

Characteristics of Innovations

Five factors affect the rate of adoption:  Relative advantage: How a new product compares with existing products or methods.  Compatibility: How consistent a product is with existing values and past experiences.  Complexity: How difficult the new product is to understand and use.  Divisibility: How easy it is to try a product on a limited basis without great expense.  Communicability. How well the benefits or value of a product are communicated.

Adopter Categories

Adopter categories are classifications of individuals in a market on the basis of innovativeness. (See Figure 4-1)

Five categories have been assigned to the segments of a normal distribution:  The first 2.5 percent to purchase a product are innovators.  The next 13.5 percent are early adopters  The next 34 percent are the early majority  The next 34 percent are the late majority  The final 16 percent are laggards.

Innovators are more venturesome, more cosmopolitan, and wealthier than those who adopt later. Earlier adopters are the most influential people in their communities and have great influence on the early and late majority, the bulk of the adopters of any product. Early adopters tend to be younger, with higher social status, and a more favorable financial position than later adopters.

Persuading innovators and early adopters to purchase a product is critical; these groups must make the first move in order for eventual penetration of a product into the broader market.

Diffusion of Innovations in Pacific Rim Countries

88 © 2011 Pearson Education, Inc. publishing as Prentice Hall Since Japan, South Korea, and Taiwan are high-context, homogeneous cultures while the U.S. is a low-context, heterogeneous culture, research showed that Asia had faster diffusion rates. (See Figure 4-2)

Adoption would proceed more quickly in markets where innovations were introduced late, allowing time to assess the relative advantages, compatibility, and other product attributes.

The Asian adopter behavior differs from Western behavior. There are fewer Asian innovators since risk avoidance is high.

When Asian consumers become aware that others tried the product, they quickly follow suit.

MARKETING IMPLICATIONS OF SOCIAL AND CULTURAL ENVIRONMENTS

The various cultural factors described earlier can exert important influences on consumer and industrial products marketed around the globe.

 How can cultural factors be recognized in formulating a global marketing plan?

Environmental sensitivity reflects the extent to which products must be adapted to the culture-specific needs of different national markets.

At one end of the continuum are environmentally insensitive products that do not require significant adaptation; at the other are products that are sensitive to environmental factors.

The greater the environmental sensitivity, the more managers must address country- specific economic, regulatory, technological, social, and cultural environmental conditions.

Intel’s microprocessors can be sold anywhere because a chip is a chip, but food products have high environmental sensitivity because of sensitivity to climate and culture.

Consumer products are probably more sensitive to culture than industrial products. Hunger is a basic need in Maslow’s hierarchy; but what people eat is strongly influenced by culture. (Figure 4-2).

1. What are some of the elements that make up culture? How do these find expression in your native culture?

This question can be especially interesting if there is multicultural representation among your students. Ask students from other countries to prepare a list of cultural anomalies’ that they have found here in the United States versus their home countries. Topics should include: food, entertainment, sports, dating, studying, dorm living and other areas.

This question is designed to give students a chance to reflect upon and compare attitudes, beliefs, and values. Then students should take up the issue of aesthetics. How relevant are the performing or visual arts, both individually and to the home country population in general? Finally, language and communication issues can be explored.

2. What is the difference between a low-context culture and a high-context culture? Give an example of a country that is an example of each type, and provide evidence for your answer.

In a low-context culture, most of the message weight in a communication is carried on by the verbal component. A priority in such cultures is “getting it in writing,” and lawyers play an important role in creating and backing up agreements. In a high-context culture, the context of the communication carries more weight. The role of lawyers is reduced, and personal obligation and trust are emphasized proportionately. Overall, Japan is a high-context culture, while the U.S. a low-context culture.

3. How can Hofstede’s cultural typologies help Western marketers better understand Asian culture?

Westerners seeking a better understanding of Asian culture can benefit from the findings of the Chinese Value Survey. This survey revealed a dimension of Asian culture called “Confucian Dynamism” that helps explain the growth in Asian economies. Specifically, virtuous behavior in Asian culture is reflected in persistence, observing ordered relationships, thrift, and a sense of shame. Westerners may enrich their own experience and further their business goals by absorbing some of these cultural dimensions; Westerners should also realize that it is probably futile to try to change Asian behavior that is rooted in these dimensions.

4. Explain the self-reference criterion. Go to the library and find examples of product failures that might have been avoided through the application of the SRC.

90 © 2011 Pearson Education, Inc. publishing as Prentice Hall The self-reference criterion is a conceptual tool that helps a person eliminate ethnocentric bias when perceiving other cultures. You should ask yourself, “Am I making assumptions or drawing conclusions based on my own home-culture experience and biases?” This chapter outlines a four-step process for eliminating SRC bias.

Campbell Soup discovered a strong negative opinion toward convenience food. Campbell discovered that the attitude of homemakers toward food preparation is a major cultural factor in marketing prepared foods. Research revealed that Italian housewives devote 4.5 hours per day to food preparation versus 60 minutes a day spent by their U.S. counterparts. Increased incomes plus product innovations may have an impact on Italian attitudes toward time and convenience with a corresponding positive effect on the market for convenience foods.

5. Briefly explain the social research of Everett Rogers regarding diffusion of innovations, characteristics of innovations, and adopter categories. How does the adoption process in Asia differ from the traditional Western model?

Rogers’ work helps marketers understand the social processes at work when a new product is introduced into a culture or country. The adoption process consists of five steps, starting with awareness and ending with adoption. In the case of inexpensive consumer products, adoption means repeat purchase. The rate at which buyers proceed through the adoption process depends on the five characteristics of innovations: relative advantage, compatibility, complexity, divisibility, and communicability.

For example, starting in 1991, Russell M. Frederickson successfully launched a chain of coffee outlets in Hong Kong. Frederickson notes that he started by offering a cup of coffee that was better than the rest (“relative advantage”) at a price that encouraged consumers to try it and come back for more (“divisibility”). The shops generated additional traffic by selling tea; regular tea-drinking patrons eventually “moved up” to coffee (“compatibility”). Finally, Frederickson staffed the outlets with at least 50% Chinese so that local consumers could learn about the products from one of their own.

The shops feature posters explaining the various coffee drinks and indicating how they are pronounced (“communicability”) In view of Frederickson’s clear understanding of the diffusion process, it is not surprising that he has received many inquiries from Korea, Taiwan, and Singapore from persons wanting to start franchises. This demonstrates that both the product itself and the retailing concept exhibit the characteristics of the innovations described by Rogers. (Source: Russell M. Frederickson, “How to Sell Coffee in the Land of Tea,” Wall Street Journal (Jan. 23, 1995), p. A16.

The third aspect of Rogers’ work is adopter categories, a way of classifying individuals in term of their innovativeness. Marketers should focus special efforts

91 © 2011 Pearson Education, Inc. publishing as Prentice Hall on early adopters, who make up 13.5 percent of the potential market. They exert a great deal of influence on the mass market for a product, which Rogers calls the early and late majority.

6. Compare and contrast the United States and Japan in terms of traditions and organizational behavior and norms.

Since Japan is a high-context, homogeneous culture, while the U.S. is a low- context, heterogeneous culture, Japan has faster diffusion rates than the U.S. Adoption would proceed more quickly in Japan where innovation was introduced late, allowing time to assess the relative advantages, compatibility, and other product attributes. Japan has a long-term perspective as opposed to the short-term perspective in the United States. The Japanese adopter categories differ from those for U.S consumers. There are fewer Japanese innovators since risk avoidance is high; however, when Japanese consumers become aware that others tried the product, they quickly follow suit.

Japan ranks high on collectivism. Everyone wants to use the same products as others. This is particularly true with name brands. The Japanese want known labels with high brand image because risk avoidance is high. Buying name brands avoids the risk of a poor quality product. Americans are more individualistic and are willing to try new products and off-brands. Americans are risk-takers.

Case 4-1: Disney Adapts to Cultural Differences: The Assignment

Overview: The Walt Disney Company, home to Mickey Mouse, Donald Duck, and other iconic characters, has a stellar reputation in many parts of the world for its family- friendly entertainment offerings. However, despite high worldwide awareness levels of the Disney brand, as of 2006, only 25 percent of the company’s revenues came from outside the United States. Now, as the company targets China, India, South Korea, and other emerging markets, it is departing from its “one size fits all” approach.

1. Why is it necessary for Disney to build brand awareness in China and other emerging markets?

One glaring fact is that as of 2006, only 25 percent of the company’s revenues come from outside of the United States. Obviously, the Disney Corporation knows that it is vulnerable to any economic downturns in the U.S. economy.

“As Bill Ernest, managing director, told the Financial Times, “If you haven’t grown up with the brand, the stories, or the theme, you are not quite sure what you are walking

92 © 2011 Pearson Education, Inc. publishing as Prentice Hall into” into” The changes underway at the Walt Disney Company illustrate how differences in the social and cultural environments impact marketing opportunities and dynamics around the globe.

Moreover, Disney noted some other cultural differences between North American and European tourists and those of other countries. For example, Chinese tourist book dinner packages, For example, in India, Disney is abandoning its go-it-alone policy and partnering with local companies such as Yash Raj Films. Local managers have been given greater autonomy to develop television programming. Disney is hoping to appeal to India’s family-oriented middleclass consumers; core themes include “believe in yourself, express yourself, and celebrate your family.” A Russian version of High School Musical is also in the works. Next up: the Middle East. As Disney’s Jason Reed says, “There’s a really strong affinity between the strong family values in the region and the Disney brand. We want to go out and try to make a film that will play to families from North Africa to the Gulf States.”

2. Do you agree with Disney’s decision to pursue a localization approach in emerging markets?

(Student answers will vary depending upon agreement or disagreement). Better students will back up their arguments with fact and figures surrounding the Disney franchise in the US and other countries around the world – very good students will cite Disneyland Paris as an “example of what not to do”.

3. Why is High School Musical so successful in global markets?

High School Musical appeals to family-orientated middle-class consumers. It does not matter what country or continent they reside that makes this a successful Disney event.

Case 4-2: Fair Trade Coffee: Ethics, Religion, and Sustainable Production

Overview: The coffee industry has a lot of challenges nowadays. Such problems as oversupply and the drop of wholesale price can lead to many disputes around the world. This drop in prices is definitely having a negative impact on the supplying countries’ economies. The Fair-trade label is supposed to treat the issue of ethical standards, but customers buying coffee need to care about the fair-trade along with those who invents and promotes it.

1. Is it important for coffee marketers, such as Starbucks, Kraft, and Nestle, to create “ethical supply chains”? Why?

93 © 2011 Pearson Education, Inc. publishing as Prentice Hall It is important for coffee marketers to create an “ethical supply chain.” If people know that companies work in an ethical way it should attract more customers. The customers would expect that they would be treated the same fair and ethical way as suppliers of the market. It would be easier for these companies to expand globally because new countries would be more open for business relationship with ethically sensitive corporations.

2. A recent study by the U.K.’s Institute of Grocery Distribution determined that the majority of consumers do not buy fair-trade products. The report noted, “Self-interest is at the center of food choice for most consumers. Few consumers consider the impact of their purchase decisions on anyone or anything but themselves and their family.” Do you agree with this finding?

I agree. People can tend to be selfish in their nature. A lot of people in the world do not have “decent” incomes, thus they need to conserve money and find less expensive alternatives to feed their families. Not many buyers think about someone else as they purchase. For many people when they enter a store, they think only about getting the greatest “value” for their dollar. Money talks. Another reason why people don’t buy fair-trade products is that they don’t know what these products are and what their difference from regular products is.

3. What recommendations would you make to help cure the ills of the coffee market?

I agree with Paul Rice who considers advertising of fair-trade essential for the product to be sold. Probably there are more people who care about the principles of fair trade, but they simply don’t know that it exists. The fair-trade principle should be advertised along with places where customers can by the product. It is necessary to explain all the importance of fair-trade products for developing countries.

TEACHING TOOLS AND EXERCISES

Additional Cases: “Marketing: Who’s Really Minding the Store Globally”? Linda C. Ueltschy,; Irene Herremans; John K. Ryans Jr. HBS BH190.

“Colgate Max Fresh: Global Brand Roll-Out”, John A. Quelch, Jacquie Labatt-Randle, HBS 508009.

Activity: Students should be preparing or presenting their Cultural-Economic Analysis and Marketing Plan for their country and product as outlined in Chapter 1.

Out-Of-Class Reading: As an outside reading assignment, students will read how expanding into adjacent markets is tougher than it looks; three-quarters of the time, the effort fails. Here is how to change those odds dramatically.

Cross-Cultural Differences: To assess cross-cultural differences, students will talk to people from a different country. They can check with the office responsible for coordinating international students to obtain names. Interview at least three people and get responses to the following questions: (a) What country do you come from? (b) What is your first language? (c) Describe you country’s culture in terms of the role of women in the workforce, the benefits provided to employees, how managers treat their employees, and general management practices. (d) What were the greatest difficulties you had in adapting to your new culture? (e) What advice would you give me if I were in a marketing management position in your country?

Internet Exercise: Have students go to the homepage of The Internationalist (www.internationalist.com). Here they can start to explore the world. Have them browse around the sites and then click on International Business. They should select 2-3 countries in which they have an interest. Students are to write a 1-page impression of findings regarding the culture of these countries and be should prepared to discuss those findings with the class.

Film: Assign the film “Rising Sun.” The movie is a murder mystery based on the culture clash between Los Angeles police and Japanese multinational business interests. It is entertaining and educational at the same time.

SUGGESTED READING Books Abegglen, James C., and George Stalk Jr. Kaisha, The Japanese Corporation. New York: Basic Books, 1985. Alfino, Mark, John S. Caputo, and Robin Wynyard. McDonaldization Revisited: Critical Essays on Consumer Culture. Westport, CT: Praeger, 1998. Benedict, Ruth. Patterns of Culture. Boston: Houghton Mifflin, 1959. Brislin, R. W., W. J. Lonner, and R. M. Thorndike. Cross-Cultural Research Methods. New York: John Wiley & Sons, 1973. Dale, Peter N. The Myth of Japanese Uniqueness. New York: St. Martin's Press, 1986. Featherstone, Mike, ed. Global Culture: Nationalism, Globalization and Modernity. London: Sage Publications, 1990. Hall, Edward T. Beyond Culture. Garden City, N.Y.: Anchor, 1976. _____ and Mildred Reed Hall. Hidden Differences: Doing Business with the Japanese. New York: Doubleday, 1990. _____ and Mildred Reed Hall. Understanding Cultural Differences. Yarmouth, ME: Intercultural Press, 1990. Harris, Philip R., and Robert T. Moran. Managing Cultural Differences: High Performance Strategies for a New World of Business, 3d ed. Houston: Gulf Publishing Company, 1991. Hofstede, Geert. Cultures and Organizations: Software of the Mind. New York: McGraw-Hill, 1991.

95 © 2011 Pearson Education, Inc. publishing as Prentice Hall Lewis, Richard D. When Cultures Collide. London: Nicholas Brealey Publishing, 2000. Moran, R. and W. Stripp. Dynamics of Successful International Business Negotiations. Houston: Gulf Publishing Company, 1991.

Articles Alden, Dana L., Jan-Benedict Steenkamp, and Rajeev Batra. “Brand Positioning through Advertising in Asia, North America, and Europe: The Role of Global Consumer Culture.” Journal of Marketing 63, no. 1 (January 1999), pp. 75-87.

Bonvillian, Gary, and Willliam A. Nowlin. “Cultural Awareness: An Essential Element of Doing Business Abroad.” Business Horizons 37, no. 6 (November 1994), p. 44.

Dulek, Ronald E., John S. Fielden, and John S. Hill. “International Communications: An Executive Primer.” Business Horizons 34, no. 1 (January/February 1991), pp. 20-25.

Fedor, Kenneth J. and William B. Werther, Jr. “Making Sense of Cultural Factors in International Alliances.” Organizational Dynamics, 24, no. 4 (Spring 1995), pp. 33-48.

Fitzgerald, Nora. “Oceans Apart, but Closer than You Think.” World Trade, (February 1996), p. 58.

Ford, John B., Michael S. LaTour, and Tony L. Henthorne. “Perceptions of Marital Roles in Purchase Decision Processes: A Cross Cultural Study,” Journal of the Academy of Marketing Science, 23, no. 2 (Spring, 1995), pp. 120-131.

Ford, John B., and Earl D. Honeycutt, Jr. “Japanese National Culture as a Basis for Understanding Japanese Business Practices.” Business Horizons 35, no. 6 (November/December 1992), pp. 27-34.

Froz, Nadeen and Taghi Ramin. “Understnding Cultural Variables is Critical to Success in International Business.” International Journal of Mangement 21, no. 3 (2004), pp. 307-324.

Herbig, Paul A., and Hugh E Kramer. “Do’s and Don’ts of Cross-Cultural Negotiations.” Industrial Marketing Management 21, no. 4 (November 1992), pp. 287-298.

Hofstede, Geert, and Michael Harris Bond. “The Confucius Connection: From Cultural Roots to Economic Growth.” Organizational Dynamics, (Spring 1988), pp. 5-21.

Jacobs, Laurence E., Charles Keown, Reginald Worthley, and Kyung-I Ghymn. “Cross- Cultural Colour Comparisons: Global Marketers Beware!” International Marketing Review 8, no. 3 (1991), pp. 21-30.

Kim, Donghoon, Yigang Pan, and Heung Soo Park. “High- Versus Low-Context Culture: A Comparison of Chinese, Korean, and American Cultures.” Psychology & Marketing 15, no. 6 (September 1998), pp. 507-521.

Lin, Carloyn A. “Cultural Values Reflected in Chinese and American Television Advertising.” Journal of Advertising 30, no. 4 (Winter 2001) pp. 83-94.

Manrai, Lalita A., and Ajay K. Manrai. “Current Issues in the Cross-Cultural and Cross- National Consumer Research.” Journal of International Consumer Marketing 8, no. 3-4 (1996), pp. 9-22.

Menger, Richard. “Japanese and American Negotiators: Overcoming Cultural Barriers to Understanding.” Academy of Management Executive 13, no. 4 (November 1999), pp. 100-101.

Mintu, Alma T., and Roger J. Calantone. “A Comparative Approach to International Marketing Negotiation.” Journal of Applied Business Research 7, no. 4 (Fall 1991), pp. 90-97.

Money, R. Bruce, Mary C. Gilly, and John L. Graham. “Explorations of National Culture and Word-of-Mouth Referral Behavior in the Purchase of Industrial Services in the United States and Japan.” Journal of Marketing 62, no. 4 (October 1998), pp. 76-87.

Reardon, Kathleen Kelley, and Robert E. Spekman. “Starting Out Right: Negotiating Lessons for Domestic and Cross-Cultural Business Alliances.” Business Horizons 37, no. 1 (January-February 1994), pp. 71-79.

Ross, Martin S. “The Effects of Culture and Socioeconomics on the Performance of Global Brand Image Strategies.” Journal of Marketing Research 32 (May 1995), pp. 163- 175.

Shane, Scott A. “The Effect of Cultural Differences in Perceptions of Transactions Costs on National Differences in the Preference for International Joint Ventures.” Asia Pacific Journal of Management 10, no. 1 (1993), pp. 57-69.

Sivakumar, K., and Cheryl Nakata. “The Stampede toward Hofstede's Framework: Avoiding the Sample Design Pit in Cross-Cultural Research.” Journal of International Business Studies 32, no. 3 (2001), pp. 555-574.

Schneider, Susan C., and Arnoud De Meyer. “Interpreting and Responding to Strategic Issues: The Impact of National Culture.” Strategic Management Journal 12, no. 4 (May 1991), pp. 307-320.

Tung, Rosalie L. “Handshakes Across the Sea: Cross-Cultural Negotiating for Business Success.” Organizational Dynamics 19, no. 3 (Winter 1991), pp. 30-40.

97 © 2011 Pearson Education, Inc. publishing as Prentice Hall Usunier, Jean-Claude G. “Business Time Perception and National Cultures: A Comparative Survey.” Management International Review 31, no. 3 (Third Quarter 1991), pp. 197-217.

Yeh, Ryh-song, and John J. Lawrence. “Individualism and Confucian Dynamism: A Note on Hofstede's Cultural Root to Economic Growth.” Journal of International Business Studies 26, no. 3 (1995), pp. 655-669.