LECTURE 3:

THE ROLE OF CULTURE IN

INTERNATIONAL
MARKETING

Lecturer: Tien Nguyen

AMN431 Course Outline
Week Content
1 Scope and Framework for International Marketing Analysis of
2 The Role of the International Environment Foreign
Environment
3 The Role of Culture in International Marketing
4 International Consumer Research Market
5 International Market Selection Selection
Mid semester break and Entry
6 Foreign Entry and Competitive Advantage
7 International Marketing and Product Strategy
Marketing
8 Marketing Services Overseas Mix
9 International Marketing Communication Strategy
10 Pricing for International Markets
11 International Channels of Distribution
Globalisation
12 Building the Global Brand and Emerging
13 Contemporary International Marketing Themes
Issues
Learning Objective of Lecture 3

 Understand the concept of culture and the

different elements and dimensions of culture.
 Understand how the elements of culture are
expressed by people (consumers).
 Address cultural differences and how they can be
measured.
 Appreciate the impact of cultural elements on
international marketing
 Wal-Mart wants to enter
South Africa (Retail Planet,
15/03/12)
 Wal-Mart Stores Inc. placed a $4.25 billion offer to
buy up the shares of South African retailer Massmart
Holdings Ltd. as a way of entering South Africa's
market.
 “You’ve got a growing African class of consumers who
can afford to buy more consumer goods,” says Aly-
Khan Satchu, an investments expert. "South Africa
presents a compelling growth opportunity for
Walmart and offers a platform for growth and
expansion in other African countries,”.
 As a recent 3-week-long public-sector strike shows,
South Africa is not an easy market to enter. Nearly
one-quarter of its 49 million citizens is unemployed;
40 percent live at or below the poverty line.
Cold Stone Ice-cream to
debut in Vietnam
Sizzlin’ Steak to enter
Vietnam
H&M to close Hong
Kong flagship store
(Inside Retail 30/07/12)

 Swedish retailer H&M will close its flagship store in Hong Kong owing to
soaring retail rents. The 30,000 sqft store in Central district will be
vacated in the third quarter of 2013 after opening its doors in 2007.
 H&M's location is reportedly to be replaced by Spanish retailer Zara,
who will be paying US$1.4 million monthly, double H&M's current
rent.
 Hong Kong tops the rankings of world's most expensive retail rents,
according to the latest research by property advisor CBRE.
 In previous years, most foreign retailers chose Hong Kong as their initial
entry point to the mainland China. However, when Hong Kong rents
began to soar in 2009, the volume of retailers flocking into Hong Kong
slowed. Many retailers are now going straight to mainland China, where
rents are relatively lower.
International Brands fail due
to Culture
 International Distance
CAGE Model (Ghemawat, 2001)
• Language • Colonial Ties
• Religion • Local Currency
• Social Norms • Political Stability
• Relation with Authority • Laws and regulations
• Context Relevance • Institutions
• Perception of Time • Commercial and
Trade Agreements
• Aesthetics and Vanity
• Duties, Taxes, and
Cultural Administrative Quotas
Distance Distance

• Country physical
distance
• Ports and Airports • Population
• Access to Oceans and Geographical Economic • Income
Rivers Distance Distance • Development
• Highways • Education
• Size of country • Unemployment
• Transport • Cost of Labour
• Weather • Life Expectancy
• Neighbouring countries • Family Size
• Telecommunication
 1. Definitions of Culture
 Culture is the human-made part of
human environment – the sum
total of knowledge, beliefs, art,
morals, laws, customs, and any
other capabilities and habits
acquired by humans as members
of society
 Culture affects every part of out
lives, everyday, from birth to
death, and everything in between.
It even affects how we spend
money, and how we consume in
general…

4-10
 1.1 Definitions of Culture
• Traditional definition of culture
– Culture is the sum of the values, rituals, symbols, beliefs, and
thought processes that are learned, shared by a group of
people, and transmitted from generation to generation
• The use of something new is the beginning of cultural change
The marketer becomes a change agent – Why?

4-11
 1.1 Definitions of Culture

“Culture is the collective programming of the

mind that distinguishes the members of one
category of people from those of another.”
Geert Hofstede

4-12
Examples

 Western European has strong preferences for ready meal.

How about the East?
 Domino’s world largest pizza. Why they are not successful in
Italian market?
 Global consumption for wine, chocolate, flowers…
 Subway chain went into Indian market
- Educating the beliefs, benefits of bread/sandwich
 Humans make adaptations to changing environments
through innovation

13
 Culture
 Culture is:
 Prescriptive: prescribes form of
acceptable behaviour
 Learned: people are not born with culture
 Dynamic: interactive
 Subjective: based on people’s shared
beliefs

 Three key elements of Culture

 Language and communications systems
 Material culture and artefacts
 Expressions of Culture

Symbols: Words, Rituals: Collective

gestures, objects
or pictures that are
recognisable and
have specific
meaning
activities that are an
essential element of
social activities

Values: At the
Heroes: People core of culture
who possess the are values:
qualities highly tendencies to
prized in that prefer certain
culture affairs over
others.
Levels at which Culture Operates
 Global Culture
 global values
 National
 values in which institutions are
based
 Industrial
 values and norms of industry
 Organisational
 general business patterns of firms
 Group Culture:
 shared values of a group
 Individual Behaviour
 Cultural

Elements
Time - assumptions about time vary across cultures
 Language - precision versus ambiguity
 Religion - beliefs
 Consumption patterns - material possessions / dress,
mealtimes
 Business/social customs – bribery, etiquette,
status, jokes, music.
 Importance of the context -verbal / non-verbal cues
 Relationship with authority (Hofstede, 1980)
 Nationalism
 Language
 Local language capabilities play an important role in international
marketing. Lost in translation
◦ aids in information gathering and evaluation
◦ provides access to local society
◦ important for company communications

 Verbal language
◦ how words are spoken
◦ gestures made and body position assumed
◦ degree of eye contact

 Non-verbal language:
◦ time flexibility and sensibility
◦ personal physical space and personal touching
◦ non-verbal gestures and signaling
 Main Languages in the World

http://www.andaman.o
rg/BOOK/reprints/web
er/rep-weber.htm
Language
Blunders
 Manners andCustoms/
Material Elements
 Products are used differently according to manners and customers
 Material culture is related to the way society organises its economic
activity.
 The ability of marketers to reach consumers is affected by ownership
of radios, personal computers or televisions.
 Potential problem areas for marketers arise from an insufficient
understanding of:
◦ different ways of thinking in the host country
◦ the decision-making process and personal relations
◦ the allocation of time for negotiations.
 Example: The number eight in Chinese culture is of great
significance.
◦ Its pronunciation in Cantonese sounds like the same as the words for ‘to make
money’.
◦ The Beijing Olympic Games will begin at 8 a.m. on 8/8/08.
◦ Six, eight and nine are considered lucky numbers.
◦ One, four, and seven are considered unfortunate.
 Aesthetics

 What is good taste?

 What is and what is not acceptable?
 For example, attitudes towards sex in
advertising differ across cultures.
 Colours can have symbolic value (e.g.
white is the colour of mourning in India
and Japan).
 International firms must be mindful of
local tastes and concerns when
designing their facilities.
Chinese the world's biggest
luxury spenders (Inside Retail 07/01/13)
 Chinese luxury spending has grown the fastest outside of Greater
China, at a rate of 31 % abroad, says Bain & Company.
 Bain's study showed that weaker Euro and growing overseas
travel have pushed Chinese shoppers to make 60 per cent of their
total luxury purchases outside the mainland.
 The total impact of Chinese spending therefore makes the
Chinese consumer the top spender in luxury worldwide,
accounting for 25 per cent of total luxury purchases globally.
 “Chinese consumers have gone from a developing market to a
global segment that the world’s largest luxury brands must
address successfully,” said Bruno Lannes, a Bain partner in
Greater China.
 “Changes in what they want and how they shop are now a
central issue for the luxury sector,” he said.
 Among Chinese shoppers, Louis Vuitton, Chanel, and Gucci
 VANITY (Economist , 31/08/09)

 Venezuelans are the world’s vainest people, followed by

Mexicans, Russians and Turks, according to Roper Starch
Worldwide.
 A poll of 1,000 people in each of 30 countries found that 65%
of Venezuelan women and 47% of men say that they think
about how they look “all the time”. Venezuelans, who also
hold the record for deodorant-use, spend an average of 20%
of household income on personal care products.
 Globally only 23% of women and 16% of men think constantly
about their appearance. Respondents to the survey also report
that the best way to stay attractive is to get a good
night’s sleep. Dental care and drinking lots of water are next in
importance.
 Overall….How does Culture Impact on
International Marketing?

 Affects needs and wants of potential buyers

 Impacts on expectations and preferences
 Impacts on the way messages are received and
interpreted (communication and perceptions)
 Pervades all elements of the marketing mix.
 Coffee culture grinds Starbucks'
Australian operation (Retail Planet 03/08/08)
 Starbucks US giant announced that it would close 61 of its 84
Australian outlets, due to "challenges unique to the Australian market“.
 Starbucks Asia Pacific president John Culver mentioned, “I think what
we've seen is that Australia has a very sophisticated coffee culture”.
 Both Sydney and Melbourne have Italian enclaves lined with cafes
where old men sip espressos at outdoor tables through the day
and trendy young couples gather in the evening for a coffee.
 Starbucks' idea of making itself a "third place" in customers' lives
between home and work was a novelty in the United States, where in
many small towns cafe culture consisted of filter coffee on a hot
plate. But the situation was different in Australia, where baristas have
been plying their trade at steaming espresso machines since the
1950s.
 "People come in our cafe because they know us and they know
they'll get good coffee, we're part of the local community”
 Many customers do not want to buy their coffee from a corporate giant
and those who had tried Starbucks were not impressed by the
product, saying it did not compare with the numerous local coffee
shops available.
 Can we measure
Cultural
Differences?
 Hofstede (1980) & Hofstede & Bond (1988):
 116,000 surveys of employees at IBM on 40 countries
(1971- 1973). He later expanded 10 countries.
 Five underlying dimensions to measure cultural differences
across countries.

 Trompenaars and Hampden-Turner (1997)

 30 companies and five dimensions in 25 countries.

 Hall (1976)
 High vs. Low Context: importance of verbal and non-verbal
 Hofstede (1980) &
Hofstede & Bond
 (1988)
Individualism vs Collectivism Masculine & Feminine 
 Individualism: The extent to which people in a  Relationship between gender & work
culture look after their own interests and roles
those of their immediate family, and  Masculine cultures: strong minded,
achievements valued
individualistic, assertive
 Collectivism: groups, ties are tight, people  Feminine cultures: modest, relational,
born into collectives
concerned with quality of life
 Power Distance  Long-term vs Short-term
 The degree to which inequality of power and
wealth is accepted
Orientation
 Long-term - thrift, perseverance, trust
 High: accepted, Low: play this down
 Short-term - chase immediate returns,
 Uncertainty Avoidance competitive, opportunism, price focus
 Degree to which people feel threatened by
uncertain or unknown situations
 High: places premium on job security,
career
patterns, rules, trust
 Low: greater willingness to accept risks, &
Cultural Analysis
Context Cultures (Hall,
1976)

 High context culture

 In a high context culture the social context of what is said strongly affects the
meaning of the message
 for example, Japan and Saudi Arabia

 Low context culture

 The meaning of the message is explicitly expressed by words and is less
affected by social context.
 for example, North America
Addressing Cultural Differences
for International Marketing
 Embrace local culture.
◦ Be the best possible corporate citizen.
 Build relationships.
◦ Local ties are invaluable in expansion and countering
political
risk.
 Employ locals and gain cultural knowledge.
◦ The best way to understand a market is to grow with it.
 Adapt products and processes to local markets.
◦ Constant and consistent product redevelopment efforts are
needed.
 Coordinate by region.
◦ The transfer of best practice is critical.
 Next Week: Lecture 4

 International Consumer Research

 Read Chapter 6, Czinkota et al. (2011)

 For tutorial read:

 Case study: “Easy Flames BBQ” located in
blackboard