Assignment on Cross-cultural Consumer Behavior and Multinational Strategies
Today, almost all major corporations are actively marketing their products beyond their original homeland borders. In fact, the issue is generally not whether to market a brand in other countries but rather how to do it. Because of this emphasis on operating as a multinational entity, the vocabulary of marketing now includes terms such as global, which refers to companies that are both “global” and “local”.
Firms are selling products worldwide for several reasons. First, with the buildup of “multinational fever” and the general attractiveness of multinational markets, products or services originating in one country are increasingly being sought out by consumers in other parts of the world. Second many firms have learned that overseas markets represent the single most important opportunity for their future growth when their home markets reach maturity. This realization is propelling them to expand their horizons and seek consumers scattered all over the world. Moreover consumers all over the world are increasingly eager to try “foreign” products that are popular in different and far-off places.
Definition and Objectives of cross-cultural consumer analysis:
To determine whether and how to enter foreign markets, marketers need to conduct some form of cross-cultural consumer analysis. Cross-cultural consumer analysis is defined as the effort to determine to what extent the consumers of two or more nations are similar or different. Such analyses can provide marketers with an understanding of the psychological, social and cultural characteristics of the foreign consumers they wish to target, so that they can design effective marketing strategies for the specific national markets involved. According to Berkman and Gilson, Cross-cultural research is a methodology for comparing cultures on the basis of similarities and differences as well as studying small segments of a total culture. Comparisons are usually made by analyzing the statistical, typological and content aspects of cultures.
- Statistical: what the demographics of a population are
- Typological: what cultural types may be identified
- Content: what kinds of values and norms people accept and live by
Traditionally, anthropologists have used cross-cultural research to explore at wide variety of topics. These include comparing love and courtship patterns and political power. Knowledge about the cultural meanings of color, for example, gives marketers some cues to effective product design, advertising and packaging for specific societies. For example, in twenty-three different cultures, “black and grey” are considered “bad” while white, blue, and green are perceived as “good”. Yellow, white, and grey are universally seen as weak but red and black are strong. And where black and grey are considered as passive colors, red is definitely active.
A major objective of cross-cultural consumer research is to determine how consumers of two or more societies are similar and how they are different. Understanding of similarities and differences that exist between nations is critical to multinational marketer who must devise appropriate strategies to reach consumers in specific foreign markets. The greater the similarity between nations, the more feasible it is to use relatively similar marketing strategies in each nation. On the other hand, if the cultural beliefs, values, and customs of specific target countries are found to differ widely, then a highly individualized marketing strategy is indicated for each country. For example, advertising will be far different for American culture and Arabian culture.
How cross-cultural consumer analysis helps a multinational marketer?
- Cross-cultural study is an extremely important activity for a multinational marketer. There are a great many cross-cultural variations in consumer behavior that are of particular interest to the marketer operating in more than one culture.
- As differences in verbal communication system across cultures are found such as the symbolic communications, multinational marketers must also take that into active consideration for success in other cultures.
- Understanding cross-cultures help marketers to understand values of other cultures which influence their purchase behavior. This understanding helps marketers making proper adaptations in their product, pricing, distribution, and promotion policies.
- Since marketers cannot satisfy the needs of the entire market, markets must be segmented. To segment markets effectively, marketers also require an understanding of other cultures.
- Values also determine whether people of a particular culture will be influenced by others in the society. Knowing this aspect of a culture helps marketers identifying reference groups that will have bearing on consumer behavior. Thus it helps marketers to tailor their promotional programs on specific reference group.
Approaching World Markets:
Recently, cross-cultural methodology has been applied to marketing research, closely aligned with developments in multinational marketing. But a controversy has emerged over best means to approach world markets; one argument maintains that markets should be segmented along national boundaries and another contends that markets are sufficiently alike to standardize marketing initiatives.
Segmentation versus Standardization:
The more traditional technique has been to treat markets as local entities; each society, or part of a society, is regarded as a unique and well-defined cultural milieu.
Ernest Dichter conceptualized six different types of countries based on the degree of middle class development. In this context, he related each type to characteristics of automobile consumption. One group of countries was defined as almost classless and contented. In what are primarily Scandinavian countries, the middle class predominates and few people are either very rich or very poor. Attitudes toward products are rational rather than status oriented, and automobiles are regarded as strictly utilitarian.
The second group was described as affluent, and includes the United States, Canada, and Holland. Few people go hungry and there is potential for upward mobility, especially at the top end of the upper middle class. Individualistic, high quality products are sought after, and automobiles tend to follow that pattern.
The third group is termed countries in transition, such as England, France, and Italy. All of these nations sustain a working class of the 19th century variety, but this class is really working at joining the middle class. Where upper class individuals still enjoy special privileges, automobiles may be opulent and expensive. England produces Rolls Royce and Italy Ferrari and Maserati. But in the United States no mass production cars appear in this $20,000-and-up category.
Group four consists of revolutionary countries; India and the Philippines are examples. Here there are extremely wealthy people, a small but growing middle class, and huge numbers of poor.
The fifth group is made up of primitive countries such as the new nations of Africa. In this there is a small, wealthy class of political leaders and foreign businessmen, but a predominantly illiterate and economically depressed population.
Finally, the sixth group is called the new class society and is made up of Russia and its satellite countries. Here a newly established class of bureaucrats represents a kind of aristocracy while everyone else seem grouped into a low middle class existence.
Generally, the recent trend in international marketing has veered away from segmentation toward greater standardization of markets. Because a significant degree of culture universally exists throughout the world marketing experts urge the more economical approach of viewing several countries one market. Erik Elinder notes that Europe has experienced a gradual breakdown in language and custom barriers due to media, migration, and tourism and suggests that advertising should be geared to all-European media rather than custom fitted for localities. Buzzell, citing the economic advantages of standardizing products, packaging, and promotion, cautions that segmentation may still be appropriate where income levels, shopping patterns, language, access to media, and other factors seem to warrant a more narrowly focused approach.
Market Expansion Strategies
In a cross cultural analysis of English, United States, Canadian, and Australian markets, Sommers and Kernan offer four strategies for expanding existing products into new markets. Their primary considerations are twofold: 1) the cultural values which will determine how a product is positioned and 2) cultural cues as to how a product may best be marketed. The strategies are:
- Same product-same promotion: In this case, a new market’s established way of indicates that a given product will be accepted and the current promotion is sufficiently widespread to sell it. Coca-Cola represents a widely successful example.
- Same product-different promotion: This method is appropriate where the new market reflects a way of life similar to that in the established market, but individual life styles are patterned differently. A standard ford, no great luxury, in the United States, would be an extravagant purchase for most New Zealanders.
- Different product-same promotion: When a new market exhibits product-use styles quite different from the present market, some reworking of the product itself may be in order. A laundry detergent might be branded and packaged differently in Europe but would still be advertised with “brightness” claims.
- Different product-different promotion: If both the cultural way of life and individual life styles is dramatically different in a new market, it may be most advisable to acquire existing firms there. Walgreen’s, for instance, entered the Mexican market by acquiring a retail chain known as Sanborn’s.
Acculturation is a needed marketing viewpoint
Too many marketers contemplating international expansion make the strategic error of believing that if its product is liked by local or domestic consumers, then everyone will like it. This increases marketing failures abroad. It reflects a lack of appreciation of the unique psychological, social, cultural, and environmental characteristics of distinctly different cultures. To overcome such a narrow and culturally myopic view, marketers must also go through an acculturation process. In a sense, cross-cultural acculturation is a dual process for marketers. First, marketers must thoroughly orient themselves to the values, beliefs, and customs of the new society to appropriately position and market their products. Second, to gain acceptance for a culturally new product in a foreign society, they must develop a strategy that encourages members of that society to modify or even break with their own traditions.
Basic Research Issues in Cross-Cultural Analysis:
The following table identifies basic issues that multinational marketers must consider when planning cross-cultural consumer research.
Factors and Examples
Differences in language and meaning. Example; Words or concepts may not mean the same in two different countries.
Differences in market segmentation opportunities. Example; The income, social class, age and sex of target customers may differ dramatically between two different countries.
Differences in consumption pattern. Example; Two countries may differ substantially in the level of use of products or services.
Differences in the perceived benefits of products and services. Example; Two nations may consume same product differently.
Differences in the criteria for evaluating of products and services. Example; The benefits sought from a service may differ from country to country.
Differences in economic and social conditions and family structure. Example; The style of family decision making may vary from country to country.
Differences in marketing research possibilities. Example; The availability of professional consumer researchers may vary from country to country.
Frameworks for assessing multinational strategies
Multinational marketers face the challenge of creating marketing and advertising programs capable of communicating effectively with a diversity of target markets. To assist in this imposing task, various frameworks have been developed to determine the degree to which marketing and advertising efforts should be either globalized or localized, or mixed or combined.
To enable international marketers to assess the positions their products enjoy in specific foreign markets, the following table presents a five-stage continuum that ranges from mere awareness of a foreign brand in a local market area to complete global identification of the brand; that is the brand is accepted “as is” in almost every market, and consumers do not think about its country of origin-“it belongs.”
A Product Recognition Continuum for Multinational Marketing
Factors and Examples
Stage One: Local consumers have heard or read of a brand marketed elsewhere but cannot get it at home; a brand is “alien” and unavailable but may be desirable.
Stage Two: Local consumers view a brand made elsewhere as “foreign,” made in a particular country but locally available. The fact that the brand is foreign makes a difference in the consumer’s mind, sometimes favorable, sometimes not.
Stage Three: Local consumers accord imported brand “national status”; that is, its national origin is known but does not affect their choice.
Stage Four: Brand owned by a foreign company is made (wholly or partly) domestically and has come to be perceived by locals as a local been “adopted” (naturalized). Examples are Sony in the United States, Coca-Cola in Europe and Japan.
Stage Five: Brand has lost national identity and consumers everywhere see it as “borderless” or global; not only can people not identify where it comes from but they never ask this question. Examples are CNN news services, Nescafe.
Again the following table presents a framework that focuses on four marketing strategies available to a firm contemplating doing business on a global basis. A firm might decide either to standardize or localize its product and either standardize or localize its communications program. The four possibilities that this decision framework considers range from a company incorporating a global strategy to developing a completely local strategy. In the middle there are two mixed strategies.
To determine which cell represents the firm’s best strategy, the marketer must conduct cross-cultural consumer analysis to obtain consumer reactions to alternative product and promotional executions:
When looking for success in a foreign market, it has been suggested that a company should remember the 3 P’s- Place, People, and Product. Often the key to success is to “be global but to act local.” The following table presents the specific elements of these 3 P’s and cites the appropriate marketing strategy when using a standardization approach and when using a localization approach:
Degree of fit between Marketing Strategies and the 3 P’s
Marketers must learn everything that is relevant to the product and product category in the society in which they plan to market, and then they must persuade the members of that society to break with their traditional ways of doing things to adopt the new product. There is an urgent need for more systematic and conceptual cross-cultural analyses of the psychological, social, and cultural characteristics concerning the consumption habits of foreign consumers. Such analyses would identify increased marketing opportunities that would benefit both international marketers and their targeted consumers. So marketers should conduct extensive cross-cultural research and set multinational strategies accordingly.
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