Culture & Global Marketing

Importance of Culture

Culture affects market demand.Managerial behavior is driven by his/her

cultural knowledgeKnowledge of Native culture is useful when

dealing with home markets but it has little value when dealing in foreign markets

Culture affects the nature of business negotiations

Culture acts as a hidden entry barrier, but it can be overcome with cultural sensitivity, hard work & quality

Culture DefinedCulture is the underlying value framework

that guides an individual’s behavior.Culture is reflected perceptions, social

interactions, business interactionsCulture guides the selection of appropriate

responses in social situationsCulture is a learned behavior. People learn

do’s & don’t as they grow up

Culture across CountriesSome countries are multicultural:- India,

China, US, Russia. These countries have several sub-cultures.

While many are monocultural. UK, France, Germany, Columbia, Peru etc.

Culture is the “Silent Language” in International businessRelationship with Time, Space & EnergyHigh Context – Low context culturesBody language

Need for cultural AdaptationSelf-Referencing : Process by which one

judges others actions with reference to one’s own native culture. Usually “Right” & “Wrong” decisionsOften leads to wrong opinions, Mistakes

Avoid self-referencing mistakes by cultural adaptation.

Cultural adaptation is a learned skill & must be mastered by Global Managers

Hofstede’s Cultural Dimensions

Individualism Vs CollectivismMasculine Vs Feminism Uncertainty Avoidance Vs Risk TakingPower DistanceConfucian Dynamism: Long term outlook,

work ethic of Chinese

Gannon’s MetaphorsGannon’s Metaphors offer a mental anchor for

manger who has to deal with a new culture and cannot foresee contingencies

It is a simplified, holistic representation of a culture:USA- Football: Individualistic, specialized, competitiveChina – Harmony : Roundness, Harmony & FluidityGermany – Symphony : Discipline under a leader,

Skilled workers working together, a well oiled machine India – Cyclical Hindu Philosophy: Life follows a cyclical

pattern

Rapaille’s Archetypes Dr Rapaille simplified cultures for easier

understanding by explaining it in 7 steps of decoding culture:

1. People don’t buy products, People buy relationships

2. Culture can make or break your marketing plan, sales or public relationship plans

3. Time, Space & Energy are the building blocks of all cultures

4. Design & create products/Services to solve the right problem

Rapaille’s Archetypes

The more Global, The more Local: Global companies have to localize. Quality is the key to succeed, but word quality means different things in different countries:USA : It worksJapan: PerfectionGermany: Made according to the standardFrance: Quality = Luxury India: Quality = Reliable

Cultural Awareness is the key to global success

Culture: How to do BusinessThe aim of business is same everywhere, but the

way to do it varies across countriesGlobal Managers must be able to handle Culture

shockSimilar business situations in different countries

does not imply similar opportunities. E.g: Nestle in Africa

Culture influences Management skills. So in a new country, its “Back-to-Basics” w.r.t learning local culture

Culture & Managerial Skills

Culture defines a set of acceptable & unacceptable behaviors, which forms the basis of “Way of doing Business”

Managers learn how to do business. This process is called Enculturalization and SocializationHow consumers behaveHow to manage people, supplier & subordinatesWhat guides the consumer behavior

Acceptable Behavior in business is usually acceptable behavior in society

Culture & Managerial SkillsSuccessful mangers tend to be good at

acceptable behaviors and avoid unacceptable behaviors

Lessens from past managerial experience in other countries has little value in other cultures.Success & Failures in the past will be repeated

elsewhere, before learning the local implications

Managerial StylesCultures tend to generate different

managerial styles. Management styles is heavily influenced by home country culture.Japan High Context culture influences mangers

to read body language while in US, a low context culture tends to ignore body language

Managers are usually inadequately trained to handle different cultures. Time, Money pressure compromise training.

Cultural DilemmasManagers face cultural dilemmas due to

differences in culturesUniversalism Vs Particularism : Doing the right thing or

doing things right? Individualism Vs Collectivism in decision makingNeutral Vs EmotionalSpecific Vs General : Is it just business or the whole

person, individual or the entire firmAttitudes towards TimeAttitudes towards Environment

Culture & NegotiationsGlobal business involves cross cultural

negotiations, establishing relationships with suppliers, customers, distributors & other partners Know whom you are dealing with

“In some cultures, 10AM means ‘Sometime in the morning’. Actual time on the clock has little significance.”

Cross Cultural NegotiationsFirst Establish Trust. Skilled negotiators

identify genuine behavior of their counterparts and work towards establishing trust

Know their “Silent Language”Body behaviorCultural signaling Culturally sensitive subjects

Know what to say and when to say

Stages of Negotiations

1. Non-Task Sounding: An initial period to know each other better

2. Task related exchange of Information: An extended Period where main issues are brought up & positions clarified

3. Persuasion: Attempt to make the other side see your point of view. Explaining positions, giving evidence & questioning other party’s position.

4. Concessions & Agreements: Concessions are made and agreements are signed

Limits to Cultural SensitivityWhen not to be culturally sensitive

Global Culture: Globalization is creating a global business culture. In business it may be inappropriate to dress in a local way.

Cultural Sensitivity must be inline with the business model. If the product/Service offering does not meet the buyer requirement, no amount of cultural sensitivity will help

Cultural Sensitivity does not mean giving up one’s own culture. Successful manager will know both the cultures

Culture in B2B marketsBusiness Marketing TasksCultural ConditioningOrganizational CultureRelationship MarketingCulture & Networks

Business Marketing TasksEstablish the global firm as a dependable supplier

operating in the local marketUnderstand buyer’s positionPeople who influence the buying decisionRole of the supplier’s product/Service in the buyer’s

business success

This will make the local buyer treat the global supplier as a local firm.

E.g: Cognizant in US, BASF in US, ABB in India

Cultural ConditioningBuyers tend to develop different styles of dealing

with vendorsEqual or unequal relationship between supplier and

buyerCulture’s openness to change influences buyer’s

attitude toward RiskChanging vendors is seen as a Risk

Often Buyer’s prefer local suppliersTerminating Local supplier carries bad publicity &

political risks for the buyerCEO or high executive from the vendor firm may

have to visit prospective buyer as a signal of commitment

Organizational CultureOrganizational culture of the buyer

influences the buying decisions Single Buyer & decision makerEngineers, staff who use the productTop management which signs the contractPower Brokers who influence the final decision

Global firm must be aware of the decision making process

Relationship MarketingB2B sales is usually more than one single saleRelationship marketing means marketing efforts

involving various personalized services, creation of new & additional services and customizing a firm’s offering to the needs of the buyer

Build trust for a long term business relationshipUpfront costs are high but it acts as a competitive

advantage & an entry barrierAdopt Buyer’s viewpoint Accept & Demand transparencyGrow with the relationshipBe Proactive

Culture & NetworksRelationship marketing creates a Network

between various buyers and sellers over a period of time.

Independent companies would have built up dependencies with one another creating a semi-independent companies

Network of companies often share common culture

Outside companies find the network hard to penetrate, Network form a barrierE.g: Keiretsu network in Japan, Glaxing in China

Military-Industry network in US

Foreign Entry

Culture defines “The way to do Business”Learn & analyze local cultures before entry

Do’s & don’tsIdentify trustworthy local agents or middlemenIdentify danger signalsKnow the strengths & weakness as perceived

by the local cultureEstablish trust & friendshipsNew Culture is an operational risk

Local MarketingCulture affects

Consumer behaviorLocal demandBuying decisionsBrand Image

First hand experience in local markets is a must

Lessons from home country may not be applicable abroad

Global ManagementCulture influences managerial styles and

management decisionsGlobal managers must be knowledgeable of both

cultures (Local & Home)A new global business culture is emergingSensitivity to local issues is necessary for successGlobal coordination is a must for global companies