Culture & Global Marketing

1. Culture & Global Marketing

2. Importance of Culture • Culture affects market demand. • Managerial behavior is driven by his/her cultural knowledge • Knowledge 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

3. Culture Defined • Culture is the underlying value framework that guides an individual’s behavior. • Culture is reflected perceptions, social interactions, business interactions • Culture guides the selection of appropriate responses in social situations • Culture is a learned behavior. People learn do’s & don’t as they grow up

4. Culture across Countries • Some 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 business • Relationship with Time, Space & Energy • High Context – Low context cultures • Body language

5. Need for cultural Adaptation • Self-Referencing : Process by which one judges others actions with reference to one’s own native culture. Usually “Right” & “Wrong” decisions • Often leads to wrong opinions, Mistakes • Avoid self-referencing mistakes by cultural adaptation. • Cultural adaptation is a learned skill & must be mastered by Global Managers

6. Hofstede’s Cultural Dimensions • Individualism Vs Collectivism • Masculine Vs Feminism • Uncertainty Avoidance Vs Risk Taking • Power Distance • Confucian Dynamism: Long term outlook, work ethic of Chinese

7. Gannon’s Metaphors • Gannon’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, competitive • China – Harmony : Roundness, Harmony & Fluidity • Germany – Symphony : Discipline under a leader, Skilled workers working together, a well oiled machine • India – Cyclical Hindu Philosophy: Life follows a cyclical pattern

8. Rapaille’s Archetypes • Dr Rapaille simplified cultures for easier understanding by explaining it in 7 steps of decoding culture: • People don’t buy products, People buy relationships • Culture can make or break your marketing plan, sales or public relationship plans • Time, Space & Energy are the building blocks of all cultures • Design & create products/Services to solve the right problem

9. 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 works • Japan: Perfection • Germany: Made according to the standard • France: Quality = Luxury • India: Quality = Reliable • Cultural Awareness is the key to global success

10. Culture: How to do Business • The aim of business is same everywhere, but the way to do it varies across countries • Global Managers must be able to handle Culture shock • Similar 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

11. 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 Socialization • How consumers behave • How to manage people, supplier & subordinates • What guides the consumer behavior • Acceptable Behavior in business is usually acceptable behavior in society

12. Culture & Managerial Skills • Successful 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

13. Managerial Styles • Cultures 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.

14. Cultural Dilemmas • Managers face cultural dilemmas due to differences in cultures • Universalism Vs Particularism : Doing the right thing or doing things right? • Individualism Vs Collectivism in decision making • Neutral Vs Emotional • Specific Vs General : Is it just business or the whole person, individual or the entire firm • Attitudes towards Time • Attitudes towards Environment

15. Culture & Negotiations • Global 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.”

16. Cross Cultural Negotiations • First Establish Trust. Skilled negotiators identify genuine behavior of their counterparts and work towards establishing trust • Know their “Silent Language” • Body behavior • Cultural signaling • Culturally sensitive subjects • Know what to say and when to say

17. Stages of Negotiations • Non-Task Sounding: An initial period to know each other better • Task related exchange of Information: An extended Period where main issues are brought up & positions clarified • Persuasion: Attempt to make the other side see your point of view. Explaining positions, giving evidence & questioning other party’s position. • Concessions & Agreements: Concessions are made and agreements are signed

18. Limits to Cultural Sensitivity • When 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

19. Culture in B2B markets • Business Marketing Tasks • Cultural Conditioning • Organizational Culture • Relationship Marketing • Culture & Networks

20. Business Marketing Tasks • Establish the global firm as a dependable supplier operating in the local market • Understand buyer’s position • People who influence the buying decision • Role 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

21. Cultural Conditioning • Buyers tend to develop different styles of dealing with vendors • Equal or unequal relationship between supplier and buyer • Culture’s openness to change influences buyer’s attitude toward Risk • Changing vendors is seen as a Risk • Often Buyer’s prefer local suppliers • Terminating Local supplier carries bad publicity & political risks for the buyer • CEO or high executive from the vendor firm may have to visit prospective buyer as a signal of commitment

22. Organizational Culture • Organizational culture of the buyer influences the buying decisions • Single Buyer & decision maker • Engineers, staff who use the product • Top management which signs the contract • Power Brokers who influence the final decision • Global firm must be aware of the decision making process

23. Relationship Marketing • B2B sales is usually more than one single sale • Relationship 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 relationship • Upfront costs are high but it acts as a competitive advantage & an entry barrier • Adopt Buyer’s viewpoint • Accept & Demand transparency • Grow with the relationship • Be Proactive

24. Culture & Networks • Relationship 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 barrier • E.g: Keiretsu network in Japan, Glaxing in China • Military-Industry network in US

25. Foreign Entry • Culture defines “The way to do Business” • Learn & analyze local cultures before entry • Do’s & don’ts • Identify trustworthy local agents or middlemen • Identify danger signals • Know the strengths & weakness as perceived by the local culture • Establish trust & friendships • New Culture is an operational risk

26. Local Marketing • Culture affects • Consumer behavior • Local demand • Buying decisions • Brand Image • First hand experience in local markets is a must • Lessons from home country may not be applicable abroad

27. Global Management • Culture influences managerial styles and management decisions • Global managers must be knowledgeable of both cultures (Local & Home) • A new global business culture is emerging • Sensitivity to local issues is necessary for success • Global coordination is a must for global companies