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4 Social and Cultural Environments

Learning Objectives

1. 4-1 Define culture and identify the various expressions and manifestations of culture that can impact global marketing strategies.

2. 4-2 Compare and contrast the key aspects of high- and low-context cultures.

3. 4-3 Identify and briefly explain the major dimensions of Hofstede’s social values typology.

4. 4-4 Explain how the self-reference criterion can affect decision making at global companies, and provide a step-by-step example of a company adapting to conditions in a global market.

5. 4-5 Analyze the components of diffusion theory and its applicability to global marketing.

6. 4-6 Explain the marketing implications of different social and cultural environments around the globe.

Case 4-1 Strange Brew: Coffee Culture Around the World

Coffee beans are the second-most widely traded commodity in the world (Can you guess what is number 1?). According to legend, the bean’s stimulant properties were discovered hundreds of years ago by a goat herder in Kaffa, a highland region of Ethiopia. Beans and plants were eventually transported across the Red Sea to the Arabian Peninsula. By the end of the fifteenth century, coffee cultivation had taken root in Yemen, and a hot beverage brewed using roasted beans quickly became part of Islamic cultural life.

The growth and evolution of the global coffee trade from the early 1600s through today is documented in many sources, including John Keay’s history of the British East India Company. In the fertile valleys of Yemen, Captain John Jourdain found groves of plantings that he called “cohoo.” Jourdain wrote:

The seeds of this cohoo is a great marchandise [sic] for it is carried to Grand Cairo and all other places of Turkey and the Indias. 1

As Keay notes, traders had indeed brought coffea Arabica from Africa to the Middle East for cultivation. “Kahwa” was the word used in the Arab world. The crop was cultivated only in this region, and, at the time, no market for coffee existed in Europe.

By the 1660s, coffee had become the staple export of the Red Sea ports. Gradually, coffee made its way to Europe. London’s first coffee house opened in 1652; diarist Samuel Pepys was a regular patron. Venetian traders imported coffee from Egypt and sold it to wealthy citizens of the Venetian Republic; Italy’s first coffee café was opened in the early 1680s.

Although the British East India Company dominated the export trade at the Yemeni port of Mocha, by the end of the seventeenth century the rival Dutch East India Company (Verenigde Oostindische Copagnie) had established coffee plantations in Indonesia on the island of Java. Other European nations followed suit, introducing the crop in their far-flung networks of colonies. Coffee had gone global!

Today, coffee culture continues to spread around the globe. The brew is even becoming popular in countries such as India and China, where tea has traditionally been the hot beverage of choice (see  Exhibit 4-1 ). Meanwhile, in Ethiopia, where coffee was first discovered, conflict is brewing between government budget needs and consumer aspirations: The government wants to generate more revenues by boosting exports of premium coffee beans, while consumers want to drink more coffee made from those same beans.

Exhibit 4-1

Starbucks recently opened a Reserve Roastery in Shanghai.

Source: AFP/Getty Images.

The conflicting priorities of commerce and consumption in Ethiopia, the broader acceptance of coffee worldwide, and the rapid growth of coffee-centric brands such as Starbucks illustrate the ways that the social and cultural environments impact marketing opportunities and dynamics around the globe. This chapter focuses on the 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, including Hall’s concept of high- and low-context cultures, Maslow’s hierarchy of needs, Hofstede’s cultural typology, the self-reference criterion, and diffusion theory. The chapter also cites specific examples of the impact of culture and society on the marketing of both consumer and industrial products.

Clearly, coffee’s popularity is on the rise around the world. It remains to be seen, however, how rising levels of consumption can be balanced with increased production in Ethiopia and other emerging markets. You will have the opportunity to explore the issue in the continuation of this case at the end of the chapter. The discussion questions at the end of the case will give you a chance to reflect further on “lessons learned.”

4-1 Society, Culture, and Global Consumer Culture

1. 4-1 Define culture and identify the various expressions and manifestations of culture that can impact global marketing strategies.

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

Any systematic study of a new geographic market requires a combination of tough-mindedness and open-mindedness. While marketers should be secure in their own convictions and traditions, an open mind is required to appreciate the integrity and value of other ways of life and points of view. Put simply, people must overcome the prejudices that are a natural result of the human tendency toward ethnocentricity. Although “culture shock” is a normal human reaction to the new and unknown, successful global marketers strive to comprehend human experience from the local point of view. One reason cultural factors challenge global marketers is that many of these factors are hidden from view. Because culture is a learned behavior passed on from generation to generation, it can be difficult for outsiders to fathom. However, as they endeavor to understand cultural factors, outsiders gradually become insiders and develop cultural empathy. There are many different paths to the same goals in life: The global marketer understands this and revels in life’s rich diversity.

Anthropologists and sociologists have offered scores of different definitions of culture. As a starting point,  culture  can be understood 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. Those institutions, in turn, function to reinforce cultural norms. Culture also includes both conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next. Organizational anthropologist Geert Hofstede defines culture as “the collective programming of the mind that distinguishes the members of one category of people from those of another.” 2  A particular “category of people” may constitute a nation, an ethnic group, a gender group, an organization, a family, or some other unit.

Some anthropologists and sociologists divide cultural elements into two broad categories: material culture and nonmaterial culture. The former is sometimes referred to as the physical component or physical culture; it includes physical objects and artifacts created by humans such as clothing and tools. Nonmaterial culture (also known as subjective or abstract culture) includes intangibles such as religion, perceptions, attitudes, beliefs, and values. It is generally agreed that the material and nonmaterial elements of culture are interrelated and interactive. Cultural anthropologist George P. Murdock studied material and nonmaterial culture and identified dozens of “cultural universals,” including 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. 3

It is against this background of traditional definitions that global marketers should understand a key worldwide sociocultural phenomenon of the early twenty-first century: 4  Consumption has become the hallmark of postmodern society. As cultural information and imagery flow freely across borders via satellite TV, the Internet, and other communication channels, new global consumer cultures are emerging. Persons who identify with these cultures share meaningful sets of consumption-related symbols. Some of these cultures are associated with specific product categories; marketers speak of “coffee culture,” “credit-card culture,” “fast-food culture,” “pub culture,” “soccer/football culture,” and so on. This cosmopolitan culture, which is composed of various segments, owes its existence in large part to a wired world in which there is increasing interconnectedness of various local cultures. It can be exploited by  global consumer culture positioning (GCCP) , a marketing tool that will be explained in more detail in  Chapter 7 . In particular, marketers can use advertising to communicate the notion that people everywhere consume a particular brand or to appeal to human universals.

Attitudes, Beliefs, and Values

If we accept Hofstede’s notion of culture as “the collective programming of the mind,” then it makes sense to learn about culture by studying the attitudes, beliefs, and values shared by a specific group of people. 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, in turn, are closely related to values. A  value  can be defined as an enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct. 5  In the view of Hofstede and others, values represent the deepest level of a culture and are present in the majority of the members of that particular culture.

Some specific examples will allow us to illustrate these definitions by comparing and contrasting attitudes, beliefs, and values. The Japanese, for example, strive to achieve cooperation, consensus, self-denial, and harmony. Because these all represent feelings about modes of conduct, they are values. Japan’s monocultural society reflects the belief among the Japanese that they are unique in the world. Many Japanese, especially young people, also believe that the West is the source of important fashion trends. As a result, many Japanese share a favorable attitude toward American brands. Within any large, dominant cultural group, there are likely to be  subcultures —that is, smaller groups of people with their own shared subset of attitudes, beliefs, and values. Values, attitudes, and beliefs can also be surveyed at the level of any “category of people” that is embedded within a broad culture. For example, if you are a vegetarian, then eating meat represents a mode of conduct that you and others who share your views avoid. Subcultures often represent attractive niche marketing opportunities.

Religion

Religion is an important source of a society’s beliefs, attitudes, and values. The world’s major religions include Buddhism, Hinduism, Islam, Judaism, and Christianity; the last includes Roman Catholicism and numerous Protestant denominations. Examples abound of religious tenets, practices, holidays, and histories directly impacting the way people of different faiths react to global marketing activities. For example, Hindus do not eat beef, which means that McDonald’s does not serve hamburgers in India (see  Case 1-2 ). In Muslim countries, Yum! Brands successfully promotes KFC in conjunction with religious observances. In the Islamic world, Ramadan is a time of fasting that begins in the ninth month of the Islamic calendar. In Indonesia, home to the world’s largest Muslim population, KFC uses Ramadan-themed outdoor advertising to encourage Indonesians to come to the restaurants at buka puasa, the end of each day’s fast. Business at KFC Indonesia’s 500 units increases as much as 20 percent during Ramadan.

When followers of a particular religion believe they have been offended, the response can sometimes be tragic (see  Exhibit 4-2 ). In the aftermath of the September 2001 terrorist attacks in New York and Washington, D.C., and the subsequent U.S. military actions in the Middle East and Afghanistan, some Muslims have tapped into anti-American sentiment by urging a boycott of American brands. One entrepreneur, Tunisian-born Tawfik Mathlouthi, launched a soft drink brand, Mecca-Cola, as an alternative to Coca-Cola for Muslims living in the United Kingdom and France. The brand’s name is both an intentional reference to the holy city of Islam and an ironic swipe at Coca-Cola, which Mathlouthi calls “the Mecca of capitalism.” London’s Sunday Times called Mecca-Cola “the drink now seen as politically preferable to Pepsi or Coke.” 6  In 2003, Qibla Cola (the name comes from an Arabic word for “direction”) was launched in the United Kingdom. Founder Zahida Parveen hoped to reach a broader market than Mecca-Cola by positioning the brand “for any consumer with a conscience, irrespective of ethnicity or religion.” 7

Exhibit 4-2

In 2014, jihadist gunmen opened fire at the Paris office of Charlie Hebdo, a satirical weekly that had published cartoon images of the Prophet Muhammed. Seventeen people were killed in the attack.

Source: Richard Milnes/Alamy.

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 must understand the importance of visual aesthetics embodied in the color or shape of a product, label, or package. Likewise, different parts of the world perceive aesthetic styles—various degrees of complexity, for example—differently. Aesthetic elements that are attractive, appealing, and in good taste in one country may be perceived in an entirely different way in another country.

In some cases, a standardized color can be used in all countries; examples include Caterpillar Yellow, the trademark of the earthmoving equipment company and its licensed outdoor gear. Likewise, Cadbury has trademarked the color purple for its chocolate confectionary packaging. In surveys about color preferences, 50 percent of respondents indicate blue is their favorite—and it is favored by a wide margin over the next-preferred color. The use of blue dates back millennia; artisans in ancient Egypt, China, and Mayan civilizations all worked with the color after the advent of mining led to the extraction of minerals containing blue pigment. Because it was rare and expensive, blue came to be associated with royalty and divinity. 8  Today, Tiffany Blue is a trademarked color that the luxury goods marketer uses on its gift bags and boxes. When Prince William and his family visit other European royalty, blue is a frequent wardrobe choice (see  Exhibit 4-3 ).

Exhibit 4-3

Members of the British royal family make diplomatic tours during which their wardrobe choices often reflect cultural awareness. When the Duke and Duchess of Cambridge arrived in Germany in 2017, the duchess wore Prussian blue; Prince William wore a matching tie.

Source: KAY NIETFELD/AFP/Getty Images.

Because color perceptions can vary among cultures, adaptation to local preferences may be required. Such perceptions should be taken into account when making decisions about product packaging and other brand-related communications. In highly competitive markets, inappropriate or unattractive product packaging may put a company or brand at a distinct disadvantage. New color schemes may also be needed because of a changing competitive environment.

There is nothing inherently “good” or “bad” about any color of the spectrum; all associations and perceptions regarding color arise from culture. Red is a popular color in most parts of the world: Besides being the color of blood, in many countries red is tied to centuries-old traditions of viticulture and winemaking. One eight-country study of color perceptions found that red is associated with perceptions such as “active,” “hot,” and “vibrant”; in most countries studied, it also conveys meanings such as “emotional” and “sharp.” 9  As such, red has positive connotations in many societies. In contrast, in Korea, it is taboo to write a person's name in red ink. Why? Because traditionally, red was used to record the names of the deceased. Blue, because of its associations with sky and water, has an elemental connotation with undertones of dependability, constancy, and eternity. White connotes purity and cleanliness in the West, but is often associated with death, mourning, and funerals in China and other parts of Asia. Attitudes are changing quickly among the younger generation, however; today, many Chinese women rent white wedding gowns and pose for photos with their friends to commemorate graduating from university! 10

Another research team concluded that gray connotes inexpensive in China and Japan, whereas it is associated with high quality and high cost in the United States. The researchers also found that the Chinese associate brown with soft drink labels and perceive the color as connoting a beverage that tastes good; in contrast, South Korean and Japanese consumers associate yellow with soft drinks that “taste good.” For Americans, the color red has those associations. 11

Music is an aesthetic component of all cultures and is accepted as a form of artistic expression and a source of entertainment. In one sense, music represents a “transculture” that is not identified with any particular nation. For example, rhythm, or movement through time, is a universal aspect of music. But music is also characterized by considerable stylistic variation with regional or country-specific associations. For example, bossa nova rhythms are associated with Argentina; samba with Brazil; salsa with Cuba; reggae with Jamaica; merengue with the Dominican Republic; and blues, driving rock rhythms, hip-hop, and rap with the United States. Sociologists have noted that national identity derives in part from a country’s indigenous or popular music; a unique music style can “represent the uniqueness of the cultural entity and of the community.” 12

Music provides an interesting example of the “think globally, act locally” theme of this book. Musicians in different countries draw from, absorb, adapt, and synthesize transcultural music influences, as well as country-specific ones, as they create hybrid styles such as Polish reggae or Italian hip-hop. Motti Regev describes this paradox as follows:

Producers of and listeners to these types of music feel, at one and the same time, participants in a specific contemporary, global-universal form of expression and innovators of local, national, ethnic, and other identities. A cultural form associated with American culture and with the powerful commercial interests of the international music industry is being used in order to construct a sense of local difference and authenticity. 13

Because music plays an important role in advertising, marketers must understand which style is appropriate to use in their campaigns in a given national market. Although background music can be used 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. Government restrictions must also be taken into account. In China, authorities have the power to dictate which songs can be marketed and performed, as the Rolling Stones can attest. Rock music journalism must also conform to state mandates, as the publisher of Rolling Stone magazine learned (see  Exhibit 4-4 ).

Exhibit 4-4

The March 2006 inaugural issue of Rolling Stone’s Chinese edition featured local rocker Cui Jian on the cover. Global superstars U2 were also profiled.

Source: Frederic J. Brown/AFP/Getty Images.

Dietary Preferences

Cultural influences are also quite apparent in food preparation and consumption patterns and habits. Need proof? Consider the following examples:

· Domino’s Pizza, the world’s largest pizza-delivery company, 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. Domino’s had better luck in India, where it localized its recipes with offerings that include pizza keema do pyaaza, peppy paneer, and five peppers. 14  Today, Domino’s is the largest foreign fast-food chain in India, with more than 700 stores.

· When Dunkin’ Donuts opened its first Indian outlets in 2012, morning business was slow because most Indians eat breakfast at home. Success finally came after the company introduced a new menu item: Original Tough Guy Chicken Burgers. 15

These examples underscore the fact that a solid understanding of food-related cultural preferences is important for any company that seeks to market food or beverage products globally. Titoo Ahluwalia, chairman of a market research firm in Mumbai, has pointed out that local companies can also leverage superior cultural understanding to compete effectively with large foreign firms: “Indian companies have an advantage when they are drawing from tradition. When it comes to food, drink, and medicine, you have to be culturally sensitive.” 16  Companies that lack such sensitivity are bound to make marketing mistakes. To avoid this kind of problem, when Subway expanded into India, the company chose two U.S.-educated Indian brothers to help open stores and supervise operations.

Although some food preferences remain deeply embedded in culture, plenty of evidence suggests that global dietary preferences are converging. Over the past half century, the fast-food culture has gained increased acceptance around the world. Heads of families in many countries are pressed for time and are disinclined to prepare home-cooked meals. Millennials, who are open to different cultures and lifestyles, are experimenting with different foods. In addition, the global tourism boom has exposed travelers to pizza, pasta, and other ethnic foods. Shorter lunch hours and tighter budgets are forcing workers to find a place to grab a quick, cheap bite before returning to work. As food-related cultural differences become less relevant, such convenience products are likely to be purchased wherever consumers’ disposable incomes are high enough to afford them (see  Exhibit 4-5 ).

Exhibit 4-5

SPAM, the iconic brand of canned ham, is a reliable, if unglamorous, pantry staple in American households. SPAM is so deeply embedded in American food culture that there is even a SPAM Museum in Austin, Minnesota, home to parent company Hormel Foods Corporation.

In South Korea, SPAM is regarded as a delicacy, often packaged in gift sets for holiday giving. It turns out that SPAM is a favorite of Chloe Kim, the American gold medalist in snowboarding at the 2018 Winter Olympics in PyeongChang, South Korea.

Source: Jodi Cobb/National Geographic Image Collection/Alamy.

As we have seen, such processes can also provoke a nationalist backlash. 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 on French cuisine and “good taste” for elementary school students. The director of the council is Alexandre Lazareff. In his book The French Culinary Exception, Lazareff warned that France’s tradition of haute cuisine is under attack by the globalization of taste. More generally, Lazareff spoke out against perceived challenges to France’s culinary identity and way of life. His concerns are not unjustified: While McDonald’s continues to open new restaurants in France (today there are more than 1,100 outlets), the number of traditional bistros and cafés has declined steadily for years. Despite McDonald’s success, the French have coined a new buzzword, le fooding, to express the notion that the nation’s passion for food goes beyond mere gastronomy:

To eat with feeling in France is to eat with your head and your spirit, with your nose, your eyes, and your ears, not simply your palate. Le fooding seeks to give witness to the modernity and new reality of drinking and eating in the twenty-first century. . . . Everything is fooding so long as audacity, sense, and the senses mix. 17

The Cultural Context

Globe to Globe: Shakespeare Around the World

Why would a small troupe of actors and a handful of stage managers take it upon themselves to produce an English-language version of Hamlet in every country on the planet over the course of two years? “I’ll tell you why … ,” says Hamlet in Act 2, Scene 2 of Shakespeare’s play. Former Globe Theatre Artistic Director Dominic Dromgoole offers this concise explanation: “Hamlet is of benefit to everyone.”

The Globe to Globe world tour began in April 2014, the 450th anniversary of the Bard’s birth, and wrapped up on London’s South Bank in 2016, the 500th anniversary of his death. Convinced that everyone, everywhere, has a right to see Shakespeare’s play, Dromgoole characterizes his goal of providing a unique cultural exchange alternatively as both “mad” and “utterly affirming.”

Exhibit 4-6

One performance took place at Calais Jungle, a camp for displaced migrants who hoped to enter the United Kingdom via the Eurotunnel.

Source: Anthony Devlin/PA Wire URN:25420563/Associated Press.

How can a centuries-old play be relevant to today’s audiences? Despite the obstacles presented by the play’s early modern English vocabulary, the dialogue draws people in. At the original Globe Theatre in London, many members of the audience stood (“groundlings”) and there was no cover over the stage. Bathed in natural light, actors looked out at audience members and addressed them directly. The same was true in the modern staging. “That’s what Shakespeare is all about,” says Dromgoole. “When Hamlet asks questions, you know you are being spoken to.”

In addition, the architecture of the play translates well to many cultures. The opening scene with two nervous soldiers on the battlements at Elsinore castle is a good example. “People everywhere understand it,” Dromgoole says. Then, of course, there is the appearance of a ghost—also universally recognized.

As another example, Dromgoole points to the scene in which a young man who is seething with rage confronts Claudius, a smooth-talking, practiced politician. Audiences lock into the scene literally and directly, even if the nuances of language are lost. As Naeem Hayat, one of the actors who portrayed Hamlet, says, “Direct communication opens up Hamlet’s humanity.”

In a textbook example of “markets are global, markets are local,” the show changed from country to country according to the dictates of different venues. In Spain, for example, the play was presented in an opera house. In Djibouti, the performance took place in front of the Red Sea.

Hamlet’s meaning also took on a local resonance that varied from one country to another. For example, when the play was staged in Phnom Penh, Cambodia, Dromgoole saw a connection between Claudius and the notorious Khmer Rouge revolutionary Pol Pot. At the United Nations in New York City, Dromgoole linked Ophelia’s father Polonius to the functionaries who go about their tasks of diplomacy with modest virtue. In a Middle Eastern country, some audience members interpreted the play as an indictment of a monarchy beset by corruption. The company also performed in refugee camps harboring migrants from war-torn countries such as Syria (see  Exhibit 4-6 ).

Sources: Dominic Dromgoole, Hamlet, Globe to Globe: Taking Shakespeare to Every Country in the World (London, UK: Canongate, 2017); “Alas Poor Dominic,” Presentation by Dominic Dromgoole and Naeem Hayat, Financial Times Weekend Festival, London (September 2, 2017); Steven Greenblatt, “Their Hours upon the Stage,” The New York Times Sunday Book Review (April 23, 2017), p. BR 1; Harriet Fitch Little, “Home and Away: The Globe to Globe Hamlet Project,” Financial Times (April 22, 2016).

Language and Communication

The diversity of cultures around the world is also reflected in language. A person can learn a great deal about another culture without leaving home by studying its language and literature; such study is the next-best thing to actually living in another country. Linguists have divided the study of spoken or verbal language into four main areas: syntax (rules of sentence formation), semantics (system of meaning), phonology (system of sound patterns), and morphology (word formation). Unspoken or nonverbal communication includes gestures, touching, and other forms of body language that supplement spoken communication. (Nonverbal communication is sometimes called the silent language.) Both 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, suppliers, channel intermediaries, and others. The marketing literature is full of cringe-worthy anecdotes about blunders such as embarrassing pronunciations of product names and inept translations of advertising copy. As you can see from  Figure 4-1 , pronunciation subtleties associated with certain Chinese characters can trip up well-meaning gift giving in China. For example, it would be a bad sign to give an umbrella to a business acquaintance because it would be the equivalent of hoping that his or her business fails.

Figure 4-1

In China, it is bad luck to give a book, an umbrella, or a clock as a gift. Why? The character for “book” is pronounced shu, which sounds like “I hope you lose (have bad luck).” “Umbrella” (san) sounds like “to break into pieces or fall apart.” “Clock” (zhong) sounds like “death” or “the end.”

In China, Dell had to find a meaningful interpretation of “direct sales,” the phrase that describes the company’s powerful business model. A literal translation results in zhi xiao, which is the Chinese term for “illegal pyramid marketing schemes.” To counteract the negative connotation, Dell’s sales representatives began using the phrase zhi xiao ding gou, which translates as “direct orders.” 18  Similarly, a team of translators was tasked with compiling a dictionary to help fans of American football in China understand the game (see  Figure 4-2 ).

Figure 4-2

Thanks to a team of academics who compiled an encyclopedia of American football terms, Chinese sports fans should have a better understanding of NFL games. For example, the Chinese translation for blitz is “lightning war against the quarterback.” Onside kick is rendered as “gambling kickoff” or “short kick,” while punt is “give up and kick it back.” The authors of The American Football Encyclopedia also interpreted sack as “capture and kill” or “capture the quarterback”; play action is “pass after fake run.” Hail Mary pass translates as “miracle long pass,” and touchdown is “hold the ball and touch the ground.”

When the British/American retail-development firm BAA McArthurGlen sought approval for a U.S.-style factory outlet mall in Austria, local officials wanted to know, “Where’s the factory?” To win approval for the project, McArthurGlen was forced to call its development a “designer outlet center.” Another linguistic issue: The American making the marketing pitch incorrectly rendered the name “Nike”—a prospective anchor tenant at the proposed outlet center—when speaking to French audiences. Summoning his rudimentary language skills, the American assumed that the shoemaker’s name would be pronounced “NEEK” in French. Imagine his dismay when a sympathetic colleague took him aside and told him that the correct pronunciation was “NIk” (rhymes with “bike”). It turns out that “NEEK” is not just the “F-word” in French; it is the “F-word” in the sense of “fornicating with animals”! 19 “fornicating with animals”! 19

Anheuser-Busch and Miller Brewing both experienced market failures in the United Kingdom because of their use of the phrase “light beer” in their marketing campaigns; this phrase was understood as meaning “reduced alcohol levels” rather than “fewer calories.” Now Miller Lite is marketed in Europe as “Miller Pilsner.” 20

Phonology and morphology can also come into play. Colgate discovered that in Spanish, colgate is a verb form that means “go hang yourself.” IKEA is known for product names based on Scandinavian cities and children’s names. However, in Thailand, the furniture giant had to hire linguists and native speakers to help render product names in Thai. The reason? The names for products such as the Redalen bed and Jättebra (a flower pot) had sexual connotations when pronounced in Thai. The solution: The team of native speakers proposed vowel and consonant changes to certain names so they would not sound offensive. 21

Whirlpool spent considerable sums of money on brand advertising in Europe, only to discover that consumers in Italy, France, and Germany had trouble pronouncing the company’s name. 22  Conversely, Renzo Rosso deliberately chose “Diesel” for a new jeans brand because, as he once noted, “It’s one of the few words pronounced the same in every language.” Rosso has built Diesel into a successful global youth brand and one of Italy’s top fashion success stories; the company’s annual sales revenues exceed $1.2 billion. 23

Technology is providing interesting new opportunities for exploiting linguistics in the name of marketing. For example, young people throughout the world are using cell phones to send text messages; it turns out that certain number combinations have meanings in particular languages. For example, in Korean the phonetic pronunciation of the numerical sequence 8282, “Pal Yi Pal Yi,” means “hurry up,” while 7179 (“Chil Han Chil Gu”) sounds like “close friend.” Also, as many digital-savvy young teens in Korea can attest, 4 5683 968 can be interpreted as “I love you.” 24  Korean marketers are using these and other numerical sequences in their advertising.

One impact of globalization on culture is the diffusion of the English language around the globe. Today, more people speak English as a second language than there are people whose native language is English. Nearly 85 percent of the teenagers in the EU are studying English. Despite the fact that Sony is headquartered in Japan, the company makes it clear to job applicants in any part of the world that it does not consider English to be a “foreign language.” The same is true for Finland’s Nokia. Matsushita introduced a policy that requires all managers to pass an English-language-competency test before being considered for promotion. This move came after top management at Matsushita concluded that a staid, exclusively Japanese corporate culture was eroding the company’s competitiveness in the global market. The English-language requirement is a potent symbol that this Japanese company is focusing on globalizing its operations. 25

The challenges presented by nonverbal communication are perhaps even more formidable. For example, Westerners doing business in the Middle East must be careful not to reveal the soles of their shoes to hosts or pass documents with the left hand. In Japan, bowing is an important form of nonverbal communication that has many nuances. People who grow up in the West tend to be verbal; those from Asia exhibit behavior that places more weight on nonverbal aspects of interpersonal communication. In the East, it is expected that people will pick up on nonverbal cues and intuitively understand meanings without being told. 26  Westerners must pay close attention not only to what they hear but also to what they see when conducting business in such cultures.

Deep cultural understanding that is based in language can be an important source of competitive advantage for global companies. The aggressive expansion of Spain’s Telefónica in Latin America provides a case in point. As Juan Villalonga, former chairman of Telefónica, noted, “It is not just speaking a common language. It is sharing a culture and understanding friendships in the same way.” 27

Several important communication issues related to culture may arise. One is sequencing, which concerns whether the discussion goes directly from point A to point B or seems to go off on tangents. Another is phasing, which pertains to whether certain important agenda items are discussed immediately or after the parties have taken some time to establish rapport. According to two experts on international negotiations, several distinctly American tactics are frequently employed during negotiations that may be effective with other Americans, but require modification when dealing with people from other cultural backgrounds. In any communication situation, speakers offer a variety of cues that can help astute observers understand the speaker’s mind-set and mental programming. Here are some examples: 28

· Americans typically want to “go it alone.” As a result, they may be outnumbered in a negotiation situation.

· Many Americans like to “lay their cards on the table.” However, in some contexts, it is important to build rapport and not “get to the point” immediately.

· Americans tend to talk too much and to talk when they should be listening and observing. In some cultures, long silences are valued. Nonverbal communication cues can be just as important as words.

Such “unwritten rules” of communication are found in other cultures as well. In the United Kingdom, for example, sociologist Kate Fox has identified the “polite procrastination rule” governing workplace encounters and meetings. Rather than getting down to business right away, meetings often begin with small talk about mundane topics such as traffic and weather. Fox recounts interviewing a Canadian businessman on assignment in Great Britain who noted the following:

I wish someone had warned me about this earlier. I had a meeting the other day and they’d all been dithering and talking about the weather and making jokes about the M25 for what seemed like half an hour, so I suggested maybe we could get started on the contract and they all looked at me like I’d farted or something! Like, how could I be so crass? 29

It turns out that the English predilection for “weather-speak” is characterized by several unwritten “grammar” rules. For example, native speakers of British English intuitively comply with, and demonstrate competence with, the “reciprocity rule” (i.e., when someone comments on the weather, one must reply) and the “agreement rule” (i.e., if someone says “Oooh, it’s cold,” one must concur), among others. This observation, Fox points out, “tells us quite a lot about Englishness.”

Marketing’s Impact on Culture

Universal aspects of the cultural environment represent opportunities for global marketers to standardize some or all elements of 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. Shared preferences for convenience foods, disposable products, popular music, and movies in North America, Europe, Latin America, and Asia suggest that many consumer products have broad—even universal—appeal.

In recent times, increasing travel and improving communications have contributed to a convergence of tastes and preferences in a number of product categories. The greater opportunities for cultural exchange and the globalization of culture have been seized upon, and even significantly accelerated, by companies that have seized opportunities to find customers around the world. Nevertheless, the impact of marketing and, more generally, of global capitalism on culture can be controversial. For example, sociologist George Ritzer and others lament the “McDonaldization of culture,” which, they say, occurs when global companies break down cultural barriers while expanding into new markets with their products. As Ritzer noted:

Eating is at the heart of most cultures and for many it is something on which much time, attention and money are lavished. In attempting to alter the way people eat, McDonaldization poses a profound threat to the entire cultural complex of many societies. 30

“A great cook tells his story, not that of his neighbor or what he has seen on television. The future is ‘glocal’ cooking, both global and local.” 31

Alain Ducasse, Louis XV restaurant, Monaco

Fabien Ouaki is living proof that persons outside of academe and government have also joined the battle against McDonaldization. Ouaki is the former managing director of Tati, a legendary French discount retailer with a flagship store in Paris. In the late 1990s, Ouaki opened new stores in select countries, including the United States. Ouaki, the son of the company founder, once claimed that “personal revenge” was one motivation for entering the U.S. market. “As a Frenchman, it makes me sick to see kids crying to go see ‘Titanic,’ eat at McDonald’s, or drink Coke. I want to see New Yorkers crying to have a Tati wedding dress,” he said. 32

Similarly, the international Slow Food movement boasts tens of thousands of members worldwide. Slow Food grew out of a 1986 protest over the opening of a McDonald’s on a popular plaza in Rome; every two years, Slow Food stages a Salone del Gusto in Italy that showcases traditional food preparation. As a spokesperson said, “Slow Food is about the idea that things should not taste the same everywhere.” 33  In 2016, in celebration of the 30th anniversary of the Slow Food movement, the Terra Madre Salone del Gusto gastronomy exposition was spread across various locations in Torino (see  Exhibit 4-7 ).

Exhibit 4-7

According to event organizers, the challenge of Terra Madre Salone del Gusto 2016 was political, cultural, and social: To assert that good, clean and fair food is a human right. Attendees sampled artisanal meats, cheeses, breads, and much more.

Source: Marco Imazio/Alamy Stock Photo.

4-2 High- and Low-Context Cultures

1. 4-2 Compare and contrast the key aspects of high- and low-context cultures.

Edward T. Hall has suggested the concept of high and low context as a way of understanding different cultural orientations. 34  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, while much more information resides in the context of communication, including the background, associations, and basic values of the communicators. In general, high-context cultures function with much less legal paperwork than is deemed essential in low-context cultures. Japan, Saudi Arabia, and other high-context cultures place a great deal of emphasis on a person’s values and position or place in society. In such cultures, the granting of a business loan is more likely to be based on “who you are” than on formal analysis of pro forma financial documents.

In a low-context culture, such as the United States, Switzerland, or Germany, deals are made with much less information about the character, background, and values of the participants. Much more reliance is placed on the words and numbers in the loan application. By contrast, Japanese companies, such as Sony, traditionally paid a great deal of attention to the university background of a new hire; preference would be given to graduates of Tokyo University. Specific elements on a résumé, by comparison, were less important.

In a high-context culture, a person’s word is his or her bond. Because such as culture emphasizes obligations and trust as important values, there is less need to anticipate contingencies and provide for external legal sanctions. Shared feelings of obligation and honor take the place of impersonal legal sanctions—which helps explain the importance of long and protracted negotiations that never seem to get to the point. Part of the purpose of negotiating, for a person from a high-context culture, is to get to know the potential partner.

For example, insisting on competitive bidding can cause complications in low-context cultures. In a high-context culture, the job is given to the person who will do the best work and whom one can trust and control. In a low-context culture, one tries to make the specifications so precise that the threat of legal sanction forces a builder, for example, to do a good job. As Hall has noted, a builder in Japan is likely to say, “What has that piece of paper got to do with the situation? If we can’t trust each other enough to go ahead without it, why bother?”

Although countries can be classified as high or low context in terms of their overall tendency, exceptions do arise with regard to specific subcultures. Consider the United States, a low-context culture with subcultures that operate in the high-context mode. The world of the central banker, for example, is a “gentleman’s” world—that is, a high-context culture. Even during the most hectic day of trading in the foreign exchange markets, a central banker’s word is sufficient for him or her to borrow millions of dollars. In a high-context culture, there is trust, a sense of fair play, and a widespread acceptance of the rules of the game as it is played.  Table 4-1  summarizes some of the ways in which high- and low-context cultures differ.

Table 4-1 High- and Low-Context Cultures

4-3 Hofstede’s Cultural Typology

1. 4-3 Identify and briefly explain the major dimensions of Hofstede’s social values typology.

Organizational anthropologist Geert Hofstede was introduced earlier in this chapter in a discussion of his widely quoted definition of culture. Hofstede is also well known for research studies of social values that suggest the cultures of different nations can be compared in terms of five dimensions (see  Table 4-2 ). 35  Hofstede notes that three of the dimensions refer to expected social behavior, the fourth dimension is concerned with “man’s search for Truth,” and the fifth reflects the importance of time (for more information, visit www.geert-hofstede.com).

Table 4-2 Hofstede’s Five Dimensions of National Culture

Source: Stephen P. Robbins and Mary Coulter, Management, 12th ed. (Upper Saddle River, NJ: Pearson Education, 2014), 87.

The first dimension is a reflection of the degree to which individuals in a society are integrated into groups. In  individualistic cultures , each member of society is primarily concerned with his or her own interests and those of his or her immediate family. In contrast, in  collectivistic cultures , all of society’s members are integrated into cohesive in-groups. High individualism is a general aspect of culture in the United States and Europe; low individualism is characteristic of Japanese and other Asian cultural patterns.

The second dimension,  power distance , is the extent to which the less powerful members of a society accept—even expect—power to be distributed unequally. Hong Kong and France are both high-power-distance cultures; low power distance characterizes Germany, Austria, the Netherlands, and Scandinavia.

Uncertainty avoidance , the third dimension in Hofstede’s model, is the extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations. Members of uncertainty-avoiding cultures may resort to aggressive, emotional, intolerant behavior; they are characterized by a belief in absolute truth. Members of uncertainty-accepting cultures (e.g., Denmark, Sweden, Ireland, and the United States) are more tolerant of persons whose opinions differ from their own.

Achievement , the fourth 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 and are concerned with issues such as the welfare of children.  Nurturing , by contrast, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior. Japan and Austria rank highest in masculinity; Spain, Taiwan, the Netherlands, and the Scandinavian countries have some of the lowest ratings on this dimension.

Hofstede’s research convinced him that, although these four dimensions yield interesting and useful interpretations, they do not provide sufficient insight into possible cultural bases for economic growth. Hofstede was also disturbed by the fact that Western social scientists had developed the surveys used in the research. Because many economists had failed to predict the explosive economic development of Japan and the “Asian tigers” (i.e., South Korea, Taiwan, Hong Kong, and Singapore), Hofstede surmised that some cultural dimensions in Asia were eluding the researchers. This methodological problem was remedied by a Chinese Value Survey (CVS) developed by Chinese social scientists in Hong Kong and Taiwan.

The CVS data supported the first three “social behavior” dimensions of culture: power distance, individualism/collectivism, and achievement/nurturing. Uncertainty avoidance, however, did not show up in the survey results. Instead, the CVS revealed a dimension,  long-term orientation (LTO)  versus  short-term orientation , that had eluded Western researchers. 36  Hofstede interpreted this dimension as concerning “a society’s search for virtue,” rather than truth. The dimension assesses the sense of immediacy within a culture—that is, whether gratification should be immediate or deferred. Long-term values include persistence (perseverance), defined as a general tenacity in the pursuit of a goal. Ordering relationships by status reflects the presence of societal hierarchies, and observing this order indicates the acceptance of complementary relations. Thrift manifests itself in high savings rates. Finally, a sense of shame leads to sensitivity in social contacts.

By studying Hofstede’s work, marketers can gain insights to guide them in a range of activities, including developing products, interacting with business partners, and conducting sales meetings. For example, understanding the time orientation of one’s native culture compared to that of others is crucial (see  Table 4-1 ). In Brazil, India, Japan, and Mexico, building a relationship with a potential business partner takes precedence over transacting the deal. As they say in Latin America, “Uno no vive para trabajar … Uno trabaja para vivir!” (“One doesn’t live to work … one works to live!”). Conducting business in this region of the world should never come at the expense of enjoying life. People from cultures that emphasize the short term must adapt to the slower pace of business in some countries with a longer-term orientation.

Similarly, the Japanese notion of gaman (“persistence”) provides insight into the willingness of Japanese corporations to pursue research and development (R&D) projects for which the odds of short-term success appear low. When Sony licensed the newly invented transistor from Bell Laboratories in the mid-1950s, for example, the limited high-frequency yield (sound output) of the device suggested to American engineers that the most appropriate application would be for a hearing aid. However, gaman meant that Sony engineers were not deterred by the slow progress of their efforts to increase the yield from their investment. As Sony cofounder Masaru Ibuka recalled, “To challenge the yield is a very interesting point for us. At that time no one recognized the importance of it.” Sony’s persistence was rewarded when company engineers eventually made the yield breakthrough that resulted in a wildly successful global product—the pocket-sized transistor radio. 37

The power distance dimension reflects the degree of trust among members of society. The higher the power distance index (PDI), the lower the level of trust. Organizationally, high PDI finds expression in tall, hierarchical designs; a preference for centralization; and relatively more supervisory personnel. In cultures where respect for hierarchy is high, subordinates may have to navigate through several layers of assistants to get to the boss. In such cultures, superiors may easily intimidate lower-level employees. Research has suggested that, when evaluating alternatives for entering global markets, companies in high-PDI cultures prefer sole ownership of subsidiaries because it provides them with more control. Conversely, companies in low-PDI cultures are more apt to use joint ventures. 38

J. Byrne Murphy learned about power distance and the differences between U.S.-style individualism and the French style when he was negotiating to build the first American-style designer outlet mall in France. As he recounts in his book Le Deal:

In France, there always seemed to be more glory for those who pursued solo endeavors.… Individualism seemed always to be loudly proclaimed, while the praise for team effort seemed to me to be distinctly muted.

I saw this national trait play itself out regularly in our weekly managers meetings. I’d always end each meeting with my exhortation to coordinate all efforts between departments to ensure that there would be no time lost, no surprises.

But there were always surprises.

Each week I’d leave the team meeting full of optimism that this time we were all in the same boat, all coordinated, all members of one disciplined crew team, all pulling our oars together, all moving rapidly forward in a straight line. And the next week I’d realize I was not only full of optimism but also of naiveté. Because I’d discover we weren’t in the same boat. We weren’t in any boat. A more accurate analogy was that they were running in a footrace, each in separate lanes. Marketing in Lane 1, Sales in Lane 2, Finance in Lane 3, and so on. And as each runner sprinted through the week, they didn’t look left or right, or even acknowledge there were other runners. …

“Why,” I continued to ask myself, “do they all think so differently? Why can’t they coordinate their own actions before problems arise?”

Ultimately, Murphy realized that he would have to change his own behavior patterns. He resolved to explain to his managers the American concept of teamwork within the French context; after he did, the project moved forward more smoothly. 39

Steelcase, a U.S. company that makes office furniture, also uses data about national cultures. Its 11-nation study was used as input to the design process for global customers. Among its findings: 40

· Short term versus long term: Enduring relationships are more valued in India and China than in the United States.

· Cooperative (feminine) behaviors versus competitive (masculine) behaviors: Flexible work arrangements such as telecommuting are becoming more common in the Netherlands. By contrast, in India, professionals rarely work from home.

· Collectivistic versus individualistic: Expressing the strength of a corporate institution is important in Southern Europe, so lobbies in office buildings tend to be grandiose.

4-4 The Self-Reference Criterion and Perception

1. 4-4 Explain how the self-reference criterion can affect decision making at global companies, and provide a step-by-step example of a company adapting to conditions in a global market.

As described earlier in this chapter, a person’s perception of market needs is framed by his or her own cultural experience. A framework for systematically reducing perceptual blockage and distortion was developed by James Lee and published in the Harvard Business Review in 1966. Lee termed the unconscious reference to one’s own cultural values the  self-reference criterion (SRC) . To address this problem and eliminate or reduce cultural myopia, he proposed a systematic, four-step framework:

1. Define the problem or goal in terms of home-country cultural traits, habits, and norms.

2. Define the problem or goal in terms of host-country cultural traits, habits, and norms. Make no value judgments.

3. Isolate the SRC influence and examine it carefully to see how it complicates the problem.

4. Redefine the problem without the SRC influence and solve for the host-country market situation. 41

The Walt Disney Company’s decision to build a theme park in France provides an excellent vehicle for understanding SRC. While planning their entry into the French market, how might Disney executives have done things differently by using the steps of SRC? Let’s start at step 1 and examine Disney’s home-country norms; then we will proceed with the remaining steps to see which cultural adapt ations should have been made.

1. Step 1Disney executives believe there is virtually unlimited demand for American cultural exports around the world. Evidence includes the success of McDonald’s, Coca-Cola, Hollywood movies, and American rock music. Disney has a stellar track record in exporting its American management system and business style (see  Exhibit 4-8 ). Tokyo Disneyland, a virtual carbon copy of the park in Anaheim, California, has been a runaway success. Disney policies prohibit sale or consumption of alcohol inside its theme parks.

2. Step 2Europeans in general, and the French in particular, are sensitive about American cultural imperialism. Consuming wine with the midday meal is a long-established custom. Europeans have their own real castles, and many popular Disney characters come from European folk tales.

3. Step 3The significant differences revealed by comparing the findings in steps 1 and 2 suggest strongly that the needs upon which the American and Japanese Disney theme parks were based do not exist in France. A modification of this design is needed for European success.

4. Step 4This would require the design of a theme park that is more in keeping with French and European cultural norms—that is, allowing the French to put their own identity on the park.

Exhibit 4-8

Disneyland Shanghai opened its doors on June 6, 2016. The specific date—6/16/2016—was chosen for a reason: “Six” sounds like the word liu in Chinese, and means “smooth.”

Source: Ng Han Guan/Associated Press.

Entrepreneurial Leadership, Creative Thinking, and The Global Startup

Brian Chesky and Joe Gebbia, Airbnb

Brian Chesky and Joe Gebbia are entrepreneurs. They developed an innovative product, created a brand, and started a company to market it. By applying the basic tools and principles of global marketing, the duo has achieved remarkable success.

As is true with many entrepreneurs, Chesky and Gebbia’s idea was based on their own needs and wants. In 2007, Chesky was working in San Francisco as an industrial designer and sharing an apartment with Gebbia. Both had previously studied at the Rhode Island School of Design. The pair were living in an apartment that they could barely afford, so they purchased some extra mattresses and rented them out during a design conference. The rental price also included breakfast.

The following year, Chesky and Gebbia set up a Web site, Airbnb.com, that allowed people to rent out spare rooms in their homes or apartments. The idea caught on quickly, boosted in part by the growth of “sharing-economy” startups such as ride-sharing services Uber and Lyft and collaborative office company WeWork.

Changes in cultural patterns are also contributing to this trend. Sociologists use the term “distributed trust” to describe a situation in which people put their trust in a community. The app-powered digital revolution is the latest manifestation of this concept. Thus, group oversight at Airbnb and other sharing-economy startups has become a source of social glue and a new pattern of trust. Indeed, to overcome the long-held perception that “strangers equal danger,” the Airbnb Web site includes host profiles, peer ratings, and a feedback system.

In Airbnb’s first decade of existence, more than 200 million travelers used its listings in more than 190 countries. The company’s logo, which it calls “Bélo,” is intended to communicate universal belonging. Its design incorporates several distinct elements: the letter “A”; a heart shape; and the symbol for “pinning” a location on Google Maps (see  Exhibit 4-9 ). Today, Airbnb is valued at more than $30 billion, and its listings run the gamut from a few dollars a night for a couch to sleep on to $10,000 or more for a chateau in France or a luxury yacht.

Exhibit 4-9

Airbnb’s logo is designed to communicate the brand’s essence of “universal belonging.”

Source: Pe3k/Shutterstock.

Paris, New York, London, and Rio are Airbnb’s top countries in terms of number of listings. The company’s Rio bookings got a boost in 2014 when the World Cup was held in Brazil; the same thing happened in 2016 during the Summer Olympics. Airbnb was also an official partner of the 2016 games. In London, Airbnb will miss out on hundreds of millions of dollars in revenues because it has limited rentals to 90 days per year to comply with local laws.

Chesky and Gebbia also moved quickly after former U.S. President Barack Obama loosened restrictions on travel between the United States and Cuba in December 2014. Knowing that Cuba would be an idiosyncratic, unique place to do business where regulations can change quickly, Airbnb sought local advice. In addition, because most Cuban citizens lack easy access to the Internet, Airbnb had to be nimble to adapt.

Finding an easy way to remit payments to hosts also posed a challenge. Fortunately, a preexisting legal framework governed the country’s casas particulares home-rental network. In a country where the average monthly income is approximately $25, Airbnb’s $250 average Cuban booking fits the Cuban government’s priority of finding a remedy for the country’s economic situation.

Despite—or perhaps because of—Airbnb’s popularity, its business model has attracted the attention of housing authorities and the hotel industry. For example, New York’s attorney general declared that most of Airbnb’s listings in the Big Apple are illegal. Some permanent residents in key cities also claim that prices for affordable housing have gone up as owners opt to rent their properties on a short-term basis to tourists rather than on a long-term basis to locals.

Sources: Gillian Tett, “In Our Fellow App Users We Trust,” FT Weekend Magazine (November 25–26, 2017), p. 62; Jonathan Openshaw, “Airbnb Cofounder Opens up His Own Home,” Financial Times (September 20, 2017), p. 11; Will Connors, “Deal Raises Airbnb’s Game in Rio,” The Wall Street Journal (May 27, 2016), pp. B1, B5; Alexandra Wolfe, “Weekend Confidential: Brian Chesky,” The Wall Street Journal (May 28–29, 2016), p. C17; Erin Griffith, “Airbnb’s Coup in Cuba,” Fortune (May 1, 2016), p. 35.

The lesson that the SRC teaches is that a vital, critical skill of the global marketer is unbiased perception—that is, the ability to see what is so in a culture. Although this skill is as valuable at home as it is abroad, it is critical to the global marketer because of the widespread tendency toward ethnocentrism and the use of the SRC. The SRC can be a powerful negative force in global business, and forgetting to check for it can lead to misunderstanding and failure. While planning Euro Disney, former Disney Chairman Michael Eisner and other company executives were blinded by a potent combination of their own prior success and ethnocentrism. Clearly, this approach was not the best one. Today, the park is known as Disneyland Paris; a second venue, Walt Disney Studios Park, was launched in 2002 to encourage multi-day visits. Although it is a top tourist destination, the venture has experienced financial losses in all but a handful of years. Avoiding the SRC requires a person to suspend assumptions based on prior experience and success and to be prepared to acquire new knowledge about human behavior and motivation.

4-5 Diffusion Theory42

1. 4-5 Analyze the components of diffusion theory and its applicability to global marketing.

Hundreds of studies have described the process by which an individual adopts a new idea. Sociologist Everett Rogers reviewed these studies and discovered a pattern of remarkably similar findings. Rogers then distilled the research into three concepts that are extremely useful to global marketers: the adoption process, characteristics of innovations, and adopter categories. Taken together, these concepts constitute Rogers’s  diffusion of innovation  framework.

An innovation is something new. When applied to a product, “new” can mean different things. In an absolute sense, once a product has been introduced anywhere in the world, it is no longer an innovation, because it is no longer new to the world. Relatively speaking, however, a product already introduced in one market may be an innovation elsewhere because it is new and different for the targeted market. Global marketing often entails just such product introductions. Managers find themselves marketing products that may be, simultaneously, innovations in some markets and mature or even declining products in others.

The Adoption Process

One of the basic elements of Rogers’s diffusion theory is the concept of an  adoption process —the mental stages through which an individual passes from the time of his or her first knowledge of an innovation to the time of product adoption or purchase. Rogers suggests that an individual passes through five different stages in proceeding from first knowledge of a product to the final adoption or purchase of that product: awareness, interest, evaluation, trial, and adoption.

1. Awareness: In the first stage, the customer becomes aware for the first time of the product or innovation. Studies have shown that at this stage, impersonal sources of information such as mass-media advertising are most important. An important early communication objective in global marketing is to create awareness of a new product through general exposure to advertising messages.

2. Interest: During this stage, the customer is interested enough to learn more. The customer has focused his or her attention on communications relating to the product and will engage in research activities and seek out additional information.

3. Evaluation: In this stage the individual mentally assesses the product’s benefits in relation to present and anticipated future needs and, based on this judgment, decides whether to try it.

4. Trial: Most customers will not purchase expensive products without the “hands-on” experience marketers call a “trial.” A good example of a product trial that does not involve purchase is the automobile test drive. For health care products and other inexpensive consumer packaged goods, a trial often involves actual purchase. Marketers frequently induce a trial by distributing free samples. For inexpensive products, an initial single purchase is defined as a trial.

5. Adoption: At this point, the individual either makes an initial purchase (in the case of the more expensive product) or continues to purchase—adopts and exhibits brand loyalty to—the less expensive product.

Studies show that as a person moves from evaluation through a trial to adoption, personal sources of information are more important than impersonal sources. It is during these stages that sales representatives and word of mouth become major persuasive forces affecting the decision to buy.

Characteristics of Innovations

In addition to describing the product adoption process, Rogers identified five major  characteristics of innovations . These factors, which affect the rate at which innovations are adopted, are relative advantage, compatibility, complexity, divisibility, and communicability.

1. Relative advantage: How a new product compares with existing products or methods in the eyes of customers. The perceived relative advantage of a new product versus existing products is a major influence on the rate of adoption. If a product has a substantial relative advantage vis-à-vis the competition, it is likely to gain quick acceptance. When compact disc players were first introduced in the early 1980s, industry observers predicted that only audiophiles would care enough about digital sound—and have enough money—to purchase them. In reality, the sonic advantages of CDs compared to LPs were obvious to the mass market; as prices for CD players plummeted, the 12-inch black vinyl LP was rendered virtually extinct in less than a decade. (But vinyl is making a comeback!)

2. Compatibility: The extent to which a product is consistent with existing values and past experiences of adopters. The history of innovations in international marketing is replete with failures caused by the lack of compatibility of new products in the target market. For example, the first consumer VCR, the Sony Betamax, ultimately failed because it could record for only 1 hour. Most buyers wanted to record movies and sports events; thus they shunned the Betamax in favor of VHS-format VCRs, which could record 4 hours of programming.

3. Complexity: The degree to which an innovation or new product is difficult to understand and use. Product complexity is a factor that can slow down the rate of adoption, particularly in developing country markets with low rates of literacy. In the 1990s, dozens of global companies developed new, interactive, multimedia consumer electronics products. Complexity was a key design issue; it was a standing joke that in most households, VCR clocks flashed “12:00” because users didn’t know how to set them. To achieve mass success, new products have to be as simple to use as, for example, slipping a prerecorded DVD into a DVD player.

4. Divisibility: The ability of a product to be tried and used on a limited basis without great expense. Wide discrepancies in income levels around the globe result in major differences in preferred purchase quantities, serving sizes, and product portions. For example, CPC International’s Hellmann’s mayonnaise was simply not selling in U.S.-size jars in Latin America, but sales took off after the company placed the mayonnaise in small plastic packets. The plastic packets were within the food budgets of local consumers, and they required no refrigeration—another plus.

5. Communicability: The degree to which the benefits of an innovation or the value of a product may be communicated to a potential market. A new digital cassette recorder from Philips was a market failure, in part because advertisements did not clearly communicate the fact that the product could make CD-quality recordings using new cassette technology while still playing older, analog tapes.

Adopter Categories

Adopter categories  are classifications of individuals within a market on the basis of innovativeness. Hundreds of studies of the diffusion of innovation demonstrate that, at least in the Western world, adoption is a social phenomenon that is characterized by a normal distribution curve (see  Figure 4-3 ).

Figure 4-3 Adopter Categories

Five categories have been assigned to the segments of this normal distribution. The first 2.5 percent of people to purchase a product are defined as 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; and the final 16 percent are laggards. Studies show that innovators tend to be venturesome, more cosmopolitan in their social relationships, and wealthier than those who adopt products later. Early adopters are the most influential people in their communities, even more so than the innovators. Thus, the early adopters are a critical group in the adoption process, and they have great influence on the early and late majorities, who account for the bulk of the adopters of any product. Several characteristics of early adopters stand out: They tend to be younger, with higher social status, and in a more favorable financial position than later adopters. They must be responsive to mass-media information sources and must learn about innovations from these sources, because they cannot simply copy the behavior of innovators.

One of the major reasons for the normal distribution of adopter categories is the interaction effect—that is, the process through which individuals who have adopted an innovation influence others. Adoption of a new idea or product is the result of human interaction in a social system. If the first adopter of an innovation or new product discusses it with two other people, and each of those two adopters passes the new idea along to two other people, and so on, the resulting distribution yields a normal bell shape when plotted. 43

Diffusion of Innovations in Pacific Rim Countries

Based on a cross-national comparison of the United States, Japan, South Korea, and Taiwan, Takada and Jain presented evidence that different country characteristics—in particular, culture and communication patterns—affect diffusion processes for room air conditioners, washing machines, and calculators. Proceeding from the observation that Japan, South Korea, and Taiwan are high-context cultures with relatively homogeneous populations, whereas the United States is a low-context, heterogeneous culture, Takada and Jain surmised that Asia would show faster rates of diffusion than the United States (see  Figure 4-4 ).

Figure 4-4 Asian Hierarchy for Diffusion of Innovation

A second hypothesis supported by the research was that adoption would proceed more quickly in markets where innovations were introduced relatively late. Presumably, the lag time would give potential consumers more opportunity to assess the relative advantages, compatibility, and other product attributes. Takada and Jain’s research has important marketing implications. These authors noted: “If a marketing manager plans to enter the newly industrializing countries (NICs) or other Asia markets with a product that has proved to be successful in the home market, the product’s diffusion processes are likely to be much faster than in the home market.” 44

4-6 Marketing Implications of Social and Cultural Environments

1. 4-6 Explain the marketing implications of different social and cultural environments around the globe.

The various cultural factors described earlier can exert important influences on marketing of consumer and industrial products around the globe; thus, they must be recognized and incorporated into a global marketing plan.  Environmental sensitivity  reflects the extent to which products must be adapted to the culture-specific needs of different national markets. A useful approach is to view products as being located on a continuum of environmental sensitivity. At one end of the continuum are environmentally insensitive products that do not require significant adaptation to the environments of various world markets. At the other end of the continuum are products that are highly sensitive to different environmental factors. A company with environmentally insensitive products will spend relatively less time determining the specific and unique conditions of local markets because the product is basically universal. The greater a product’s environmental sensitivity, the greater the need for managers to address country-specific economic, regulatory, technological, social, and cultural environmental conditions.

The sensitivity of products can be represented on a two-dimensional scale, as shown in  Figure 4-5 . The horizontal axis shows environmental sensitivity, and the vertical axis the degree for product adaptation needed. Any product exhibiting low levels of environmental sensitivity—integrated circuits, for example—belongs in the lower left of the figure. Intel has sold more than 100 million microprocessors because a chip is a chip anywhere around the world. Moving to the right on the horizontal axis, the level of sensitivity increases, as does the amount of adaptation needed. Computers exhibit moderate levels of environmental sensitivity; for example, variations in country voltage requirements require some adaptation. In addition, the computer’s software documentation should be in the local language.

Figure 4-5 Environmental Sensitivity Versus Product Adaptation

At the upper right of  Figure 4-5  are products with high environmental sensitivity. Food sometimes falls into this category because it is sensitive to climate and culture. As we saw in the McDonald’s case at the end of  Chapter 1 , this fast-food giant has achieved great success outside the United States by adapting its menu items to local tastes. General Electric’s turbine equipment may also appear on the high-sensitivity end of the continuum; in many countries, local equipment manufacturers receive preferential treatment when bidding on national projects.

Research studies show that, independent of social class and income, culture is a significant influence on consumption behavior and durable goods ownership. 45  Consumer products are probably more sensitive to cultural differences than are industrial products. Abraham Maslow, a psychologist who studied human motivation, developed a hierarchy of needs ranging from the most basic needs to the more abstract. Hunger is a basic physiological need in Maslow’s hierarchy; humans share a biological imperative to obtain a meal, but what we want to eat can be strongly influenced by culture. Evidence from the front lines of the marketing wars suggests that food is probably the most sensitive category of consumer products. The ongoing controversy about genetically modified organisms (GMOs) in the food supply is a case in point. American consumers are generally accepting of foods containing GMO ingredients; Europeans are much less accepting.

Thirst, like hunger, shows how needs differ from wants. Humans all have a biological imperative to secure hydration to sustain life (see  Exhibit 4-10 ). As is the case with food and cooking, however, the particular liquids people want to drink can be strongly influenced by culture. Coffee is a beverage category that illustrates the point. As noted in  Case 4-1 , coffee has been consumed for centuries on the European continent. By contrast, Britain has historically been a nation of tea drinkers, a legacy of the East India Company’s exploits in India and China. Britons from all walks of life ascribe a variety of medicinal properties to “a nice cup of tea,” and the custom of taking afternoon tea is firmly entrenched in British culture. 46  In the 1970s, tea outsold coffee by a ratio of 4 to 1.

Exhibit 4-10

In countries where water from the tap or well may be contaminated, bottled water is a convenient alternative. The fastest growth in the industry is occurring in developing countries; in the past five years, bottled water consumption has tripled in India and more than doubled in China. Many consumers also choose bottled water as an alternative to other beverage choices. However, the Earth Policy Institute and other groups view bottled water as an overpriced, wasteful extravagance. The International Bottled Water Association disagrees with that view. A spokesman said, “We’re an on-the-go society demanding convenient packaging and consistent quality, and that’s what bottled water provides.”

Source: Gurinder Osan/AP Images.

Brits who did drink coffee tended to buy it in instant form, because the preparation of instant coffee is similar to that of tea. By the 1990s, however, Britain was experiencing an economic boom and an explosion of new nightclubs and restaurants. Trendy Londoners looking for a nonpub “third place” found it in the form of Seattle Coffee Company cafés. An instant success after the first store was opened by coffee-starved Americans in 1995, by 1998 Seattle Coffee had 65 stores around London. Starbucks bought the business from Seattle Coffee’s founders for $84 million. Today, Starbucks has overcome the challenge of high real estate prices and has more than 345 company-operated cafés in the United Kingdom. 47  One of the newest Starbucks cafés is a Star Reserve store near London’s famous Covent Garden (see  Case 4-1 ).