International Retailing MKT501C2

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International Retailing (MKT501C2)

• Week 7 Culture

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International Culture

• It is impossible to understand the retail system
  within a country without understanding the
  culture of that country. Culture influences what
  people purchase and how those items are
  purchased.
• (Sternquist, 1998)

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Lecture Aim

• To provide students with a broad understanding of
  the issue of culture and its implications for
  retailers operating in international markets

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Learning Outcomes

• By the end of the lecture, and having studied the
  recommended reading, students should be able to
• define culture
• discuss the measurements which may be used by
  retailers to evaluate culture
• demonstrate an awareness of differences in
  cultural characteristics across markets
• make linkages between culture and other
  environmental factors which impact upon
  international retail expansion

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What is Culture?

• Tylor (1871) describes culture as "that complex
  whole which includes knowledge, belief, art
  ,morals, customs, and any other capabilities and
  habits acquired by man as a member of society.

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What is Culture? (cont.)

• Consumer behaviour expert Assael (1992) defines
  culture"Culture is the values, norms, and
  customs that an individual learns from society
  and that leads to common patterns of behaviour
  within that society.

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Defining Culture

• The distinctive way of life of a people
• Learned behaviour, which depends on the
  environment and not on heredity
• Differences in gender, ethnicity, region, social
  class etc. all influence the way in which an
  individual is socialised to his or her culture
• Some countries are multicultural, e.g. India,
  China, USA, Canada, South Africa
• The easiest way to grasp the complexity of
  culture is to examine its varied elements

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Elements of Culture

• Material Culture
• The tools, artifacts and technology of a society
• Degree of materialism in the society
• Language
• Means by which humans communicate
• May be more than one language in the market
• Verbal and non-verbal
• Reflects the nature and values of that culture
• Aesthetics
• Refers to the ideas in a culture concerning
  beauty and good taste

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Elements of Culture (cont.)

• Education
• Includes the process of transmitting skills,
  ideas and attitudes, as well as training in
  particular disciplines
• Transfer of values
• Religion
• Aids understanding as to why people behave as
  they do
• Attitudes to family and marriage
• Attitudes and Values
• Help determine what we think is right or
  appropriate
• Employee, customer, supplier attitudes/values

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Elements of Culture (cont.)

• Social Organisation
• Refers to the way people relate to other people
• People influenced by friends, family, role models
• Influences change with life stages
• Politics
• Nationalism, sovereignty, ideologies

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Understanding the Local Market

• Pepsi
• Pepsi's familiar line in its advertising campaign
  in the early 1980s was 'Come Alive With Pepsi'.
  When used in the German market it reportedly came
  out with the meaning 'Come Alive Out of the
  Grave
• Olympia
• Tried to introduce a photocopier in Chile under
  the brand name ROTO. Roto is the Spanish word
  for broken!

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High Context and Low Context Cultures

• High Context
• Where meaning of individual behaviour depends on
  the situation
• Non-verbal messages have important and intended
  meanings
• To read these messages requires a similarity of
  background
• Evident in Saudi Arabia, Japan, Southern European
  countries, Chile and Mexico

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High Context and Low Context Cultures (cont.)

• Low Context
• Where meaning is based on the words, not the
  situation
• Intentions and feelings expressed verbally - what
  you say is what you mean
• Occurs most often in countries that are
  multicultural and where people have different
  value systems, e.g. USA, Switzerland, Germany,
  Scandinavian countries, India, China, Australia,
  New Zealand

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High Context and Low Context Cultures (cont.)

• The differences in high context and low context
  cultures may be illustrated through what has been
  referred to as the silent languages
• Space
• Material possessions
• Friendship patterns
• Agreement across cultures
• Time

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Understanding the Local Market

• West Coast Sweaters
• A successful knitwear manufacturer that
  distributes its products via franchised outlets
  through California
• Held talks with a leading Japanese retail group
  in 1992, with a view to expanding into the Tokyo
  area in 1994
• The CEO flew to Tokyo to handle the deal
  personally and expected to conclude the deal in
  two days

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Understanding the Local Market (cont.)

• During initial discussions the CEO tried to
  discuss specific contract details, but the
  Japanese would not commit themselves and
  concentrated on the historical side of the
  Japanese company, and were more concerned with
  getting to know one another and the business
  relationship
• West Coast eventually got the Tokyo shops but it
  took two more visits to develop the relationship
  with the Japanese partners to the necessary level

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Understanding the Local Market (cont.)

• Laura Ashley
• The companys attempt to sell the same range of
  clothes on the Continent as found in the UK was
  not well received. Spanish consumers in
  particular found the range old fashioned and
  frumpy
• McDonalds
• In New Delhi McDonalds bowed to the needs of the
  Hindu majority by replacing beef with mutton and
  offering vegetable burgers

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Hofstedes Cultural Dimensions Model

• Individualism versus Collectivism
• Individualistic societies
• weak ties with other members of the society and
  self-interest
• small businesses and entrepreneurship should
  flourish
• greater product variety with the purpose of
  differentiating the purchaser from others
• Collectivist societies
• the group determines the individuals views and
  behaviours

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Hofstedes Cultural Dimensions Model (cont.)

• Uncertainty Avoidance
• A societys willingness to take risks
• Strong uncertainty avoidance
• concern for the future and the avoidance of risk
• e.g. the Japanese place great importance on gift
  giving and carefully choose the type of store
  where they purchase a gift
• Weak uncertainty avoidance
• acceptance of uncertainty
• risk taking

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Hofstedes Cultural Dimensions Model (cont.)

• Power Distance
• How well a society tolerates inequality
• In large power distance societies, power holders
  are entitled to privileges
• Malaysia, Guatemala, Panama and the Philippines
  have the largest power distance
• Denmark, Norway and Sweden the smallest

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Hofstedes Cultural Dimensions Model (cont.)

• Masculinity/Femininity
• How distinctly roles in society are defined, how
  people live their lives and what is important to
  them
• Masculine orientation associated with
  assertiveness and domination where money and
  things are important
• With the feminine orientation, quality of life is
  important

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Asia Pacific Region

• Characterised by a strong work ethic, close
  family ties and a solid commitment to education
• Religion's role in determining personal values
  and morals and its effect on consumers' attitudes
  towards particular products and services
• Language is often considered the biggest
  potential barrier to the marketing of goods and
  services in the region
• Retailers must be aware of many other cultural
  variations and nuances

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Management Characteristics Across Different
Cultures

• Negotiation strategies differ across countries
• French negotiators may use a win-win style of
  negotiation whereas Germans may use win-lose
  techniques
• Variations in patterns of behaviour, e.g. Spanish
  tendency to interrupt, Japanese remaining silent

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Retail Formats and Culture

• It may be mistakenly assumed that retailers who
  operate in markets which appear to be culturally
  distinct have addressed cultural differences
• Retail success can change consumer behaviour,
  e.g. McDonalds and the fast food format
• But not all internationalisation of retail
  innovations alters culture
• The made-in" concept

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Summary

• Culture is a learned pattern of life
• Culture influences retailing in many ways but
  retailing can also influence culture
• Companies should not assume that their own
  cultural values are universally acceptable