Culture Global Marketing Importance of Culture

Culture & Global Marketing

Importance of Culture q Culture affects market demand. q Managerial behavior is driven by his/her cultural knowledge q Knowledge of Native culture is useful when dealing with home markets but it has little value when dealing in foreign markets q Culture affects the nature of business negotiations q Culture acts as a hidden entry barrier, but it can be overcome with cultural sensitivity, hard work & quality

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

Culture across Countries q Some countries are multicultural: - India, China, US, Russia. These countries have several sub-cultures. q While many are monocultural. UK, France, Germany, Columbia, Peru etc. q Culture is the “Silent Language” in International business Ø Relationship with Time, Space & Energy Ø High Context – Low context cultures Ø Body language

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

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

Gannon’s Metaphors q Gannon’s Metaphors offer a mental anchor for manger who has to deal with a new culture and cannot foresee contingencies q It is a simplified, holistic representation of a culture: Ø USA- Football: Individualistic, specialized, competitive Ø China – Harmony : Roundness, Harmony & Fluidity Ø Germany – Symphony : Discipline under a leader, Skilled workers working together, a well oiled machine Ø India – Cyclical Hindu Philosophy: Life follows a cyclical pattern

Rapaille’s Archetypes q Dr Rapaille simplified cultures for easier understanding by explaining it in 7 steps of decoding culture: 1. People don’t buy products, People buy relationships 2. Culture can make or break your marketing plan, sales or public relationship plans 3. Time, Space & Energy are the building blocks of all cultures 4. Design & create products/Services to solve the right problem

Rapaille’s Archetypes q 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: Ø USA : It works Ø Japan: Perfection Ø Germany: Made according to the standard Ø France: Quality = Luxury Ø India: Quality = Reliable q Cultural Awareness is the key to global success

Culture: How to do Business q The aim of business is same everywhere, but the way to do it varies across countries q Global Managers must be able to handle Culture shock q Similar business situations in different countries does not imply similar opportunities. E. g: Nestle in Africa q Culture influences Management skills. So in a new country, its “Back-to-Basics” w. r. t learning local culture

Culture & Managerial Skills q Culture defines a set of acceptable & unacceptable behaviors, which forms the basis of “Way of doing Business” q Managers learn how to do business. This process is called Enculturalization and Socialization Ø How consumers behave Ø How to manage people, supplier & subordinates Ø What guides the consumer behavior q Acceptable Behavior in business is usually acceptable behavior in society

Culture & Managerial Skills q. Successful mangers tend to be good at acceptable behaviors and avoid unacceptable behaviors q. Lessens from past managerial experience in other countries has little value in other cultures. ØSuccess & Failures in the past will be repeated elsewhere, before learning the local implications

Managerial Styles q. Cultures tend to generate different managerial styles. Management styles is heavily influenced by home country culture. ØJapan High Context culture influences mangers to read body language while in US, a low context culture tends to ignore body language q. Managers are usually inadequately trained to handle different cultures. ØTime, Money pressure compromise training.

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

Culture & Negotiations q. Global business involves cross cultural negotiations, establishing relationships with suppliers, customers, distributors & other partners ØKnow whom you are dealing with “In some cultures, 10 AM means ‘Sometime in the morning’. Actual time on the clock has little significance. ”

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

Stages of Negotiations 1. Non-Task Sounding: An initial period to know each other better 2. Task related exchange of Information: An extended Period where main issues are brought up & positions clarified 3. Persuasion: Attempt to make the other side see your point of view. Explaining positions, giving evidence & questioning other party’s position. 4. Concessions & Agreements: Concessions are made and agreements are signed

Limits to Cultural Sensitivity q When not to be culturally sensitive Ø Global Culture: Globalization is creating a global business culture. In business it may be inappropriate to dress in a local way. Ø 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 Ø Cultural Sensitivity does not mean giving up one’s own culture. Successful manager will know both the cultures

Culture in B 2 B markets q. Business Marketing Tasks q. Cultural Conditioning q. Organizational Culture q. Relationship Marketing q. Culture & Networks

Business Marketing Tasks q Establish the global firm as a dependable supplier operating in the local market Ø Understand buyer’s position Ø People who influence the buying decision Ø Role of the supplier’s product/Service in the buyer’s business success q This will make the local buyer treat the global supplier as a local firm. q E. g: Cognizant in US, BASF in US, ABB in India

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

Organizational Culture q. Organizational culture of the buyer influences the buying decisions ØSingle Buyer & decision maker ØEngineers, staff who use the product ØTop management which signs the contract ØPower Brokers who influence the final decision q. Global firm must be aware of the decision making process

Relationship Marketing q B 2 B sales is usually more than one single sale q 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 q Build trust for a long term business relationship q Upfront costs are high but it acts as a competitive advantage & an entry barrier Ø Adopt Buyer’s viewpoint Ø Accept & Demand transparency Ø Grow with the relationship Ø Be Proactive

Culture & Networks q Relationship marketing creates a Network between various buyers and sellers over a period of time. q Independent companies would have built up dependencies with one another creating a semiindependent companies q Network of companies often share common culture q Outside companies find the network hard to penetrate, Network form a barrier Ø E. g: Keiretsu network in Japan, Glaxing in China q Military-Industry network in US

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

Local Marketing q. Culture affects ØConsumer behavior ØLocal demand ØBuying decisions ØBrand Image q. First hand experience in local markets is a must q. Lessons from home country may not be applicable abroad

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